Posted by Dan Caruso
June 15, 2009
Think back to the year 2000. Were you in the middle of the big Internet and Telecom Boom? Frenzied was the pace. Staggering amounts of money were being raised. Start-ups with barely defined business plans had little trouble getting funding. Companies went public while losing large sums of money and their stock prices rose sharply. This nostalgia brings back the lyrics of an old song:
“Those were the days my friend. I thought they’d never end.”
How young were you? How experienced were you relative to the job you had? What about your boss? Your boss’ boss? Your CEO? How many people were really qualified for the job they had?
And the investors: what did they know? They were raising money without bounds. The quicker they put it to work, the more they could raise. Just as with management, the investors who understood the Internet happened to be young and, as a group, not all that savvy at investing.
Fast forward two years. It’s now 2002. Enron. Worldcom. Global Crossing. Pets.com. The medieval ages lasted for 1,000 years. The aftermath of the tech meltdown seemed to last even longer. But as bleak as the sector looked in early 2005, the renaissance was right around the corner.
Now it is 2009. Even the meltdown seems like a distant memory. Telecom stocks are holding up well in this worldwide financial crises. Infrastructure–fiber, wireless, content distribution networks–is in strong demand. If you are in telecom or Internet, the future (even in the midst of a recession) looks dandy.
Perhaps never before has a large group of very young professionals experienced a dramatic boom, an catastrophic bust, and a strong resurgence in the span of less than 10 years. Armed with all the experience of this complete cycle, this group of entrepreneurs, management and investors are now entering the prime of their careers. And the strong resurgence is probably only in its infancy.
The question is:
“What have we learned?”
Certainly we have had the benefit of a lot of mistakes. Are we taking full advantage of the learnings of the boom and bust? Or, now that we have the opportunity, will we repeat the same mistakes of the late 1990’s.
I continue to be amazed at how many in our industry blame everyone but themselves for what happened during the boom. It was Bernie Ebbers’ fault. Jeff Skilling poisoned the industry. Joe Nacchio was a crook. Blame the bankers: Jack Grubman, Frank Quattrone, Mary Meeker and Henry Blodget.
Certainly all these folks shoulder a huge burden. But for every one of them, there are hundreds of the rest of us. And most of us would do well to reflect on our own actions and behavior.
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