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What The Bubble Got Right

Posted by ryuzaki0 on from the where's-my-ubiquitous-wireless dept.

dtolton writes "Paul Graham has written an article entitled What the Bubble Got Right. In recent years the roaring tech bubble has become a byword, yet Paul does an excellent job of articulating what it got right."

4 of 340 comments (clear)

  1. Lessons learned. by jedaustin · · Score: 5, Interesting
    I think the bubble was great.. for one reason: Lessons learned.

    Now I can jump up and down and DEMAND a development server and have plenty of examples to back up my need for one.

    I'll now be the first person to raise my hand and ask the following question: "So, how will this make money?"

    Whenever I hear New - anything - my instant reaction is BULLSHIT!

    Those were great times; I wouldn't trade them for anything

    I think the lessons learned are worth the pain.

    JD

  2. People couldn't see through the bubble? by YU+Nicks+NE+Way · · Score: 5, Interesting

    I call bullshit. In 1999, my son was taking an enrichment course in our local school system. The particular unit was on finance -- so Iassigned this then ten-year-old boy to read _The madness of crowds_. He read it and said "Dad, is the current stock market another tulip craze?" Now, granted, he's a really smart kid -- but I suggest that if any ten-year-old can read a book about tulips and the south sea company and recognize that the internet bubble was more of the same, then lots and lots of grownups could, too.

    1. Re:People couldn't see through the bubble? by darnok · · Score: 5, Interesting

      It's all about context - your son had just read the book, so the ideas in it were at the front of his mind.

      I've traded futures and shares for many years, so I knew a bubble when I saw one - recognition that a bubble was happening was part of my training, if you want to look at it that way. However, one of my close friends, who is a *very* savvy businessman and has held very high level roles with multiple global corporations, used to argue with me that "everything has now changed with the Internet", "stock dividends are irrelevant now" and so on. Lots of investment advisors were saying the same thing; presumably some were trying to profit by boosting the stock they wanted to sell, and others were too dumb to know any better.

      I pointed out to my friend that this had been said many times before, which he knew, but he thought the Internet bubble was The Big Leap Forward. His background covered 20+ years of business in manufacturing and IT, and he'd seen the Internet and related technologies could make changes to those areas that were an order of magnitude more significant than anything else he'd seen. All of this is still true, so he's not actually wrong.

      As others have said, spikes in Yahoo, Cisco, MS, Sun etc. share price will happen, but the infrastructure that supports these companies is probably the safer investment bet in the long term. That said, a lot of people (myself included) felt that Cisco was one of those infrastructure companies, but it was part of the bubble - it can be hard to distinguish between the two.

  3. I take issue with one point... by bckrispi · · Score: 5, Interesting
    Options are a good idea because (a) they're fair, and (b) they work.

    Options were part of my compensation when I first started my current job back in '99. We went IPO in Spring '00. About a dozen of the higher-ups became millionares at the opening bell. At the height, my options weren't worth anywhere near millions, but it was fair chunk o' change for a 1-year-out-of-college grunt. Unfortunately, I wasn't vested, so I couldn't excercise any of my options...

    I just reached my 5-year anniversary, and my initial option grant is now fully vested. It is also fully worthless. After being delisted from NASDAQ, even if I could find someone OTC to buy, the share value is but a fraction of my excercise price. Now I do know people who worked for larger companies who have made, and continue to make, a decent return on their option grants. It is a great incentive to both keep the employee productive (his production has an impact on the stock price) and loyal (encourage him to stay with long vesting periods). But there are just as many of us "survivors" who took a lower salary with option grants who got burnt on the deal.

    --
    Xenon, where's my money? -Borno