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Ask HN: How was life for a regular dev during the dot com burst?

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Re: Ask HN: How was life for a regular dev during the dot com burst?

#101

Post by im_down_w_otp »

ip26 wrote: post #43
im_down_w_otp wrote: post #35

Earlier quoted context omitted.

> It was very depressing but also educational. Indeed. When 2008 hit, it was reminiscent of what ~2002 felt like, except instead of tech it was basically happening to everyone. In that way I felt more prepared to deal with the new crisis because I'd learned from the old one.

What did you learn?

Several things:

- Any news about a "recovery" has nothing to do with the reality you are likely facing.

- The worst of it is in the long-tail, not necessarily the initial shock.

- The change in the market from, "We can grow our way out of anything!" to, "Quick! Circle the wagons and lay low." happens a lot more suddenly than you expect, but there are also warning signs.

- You're super valuable and totally super employable right up until the moment that you're not, and in the wrong place at the wrong time you have no control and almost no influence over changing that, so be prepared to weather it or jump ship.

- Super high software developer salaries seem somehow correlated to VC-pumping, and when the market fundamentals kick in, you're likely to find yourself facing steep cuts, so live like you're a mechanical engineer, not a lottery winner.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#102

Post by cleandreams »

I had 12 years at a major tech company, then I contracted for awhile. Before the bust I felt like a film star fielding calls whenever I was looking for work. Fun is the word; I was so in demand. When the bust hit I was actually choosing to take some time off (and taking classes). After that I was the only person in my Java class who got a job, out of 35 or so, and that job was one third my previous contractor hourly, and it was intermittent. On, off, on, off, with that small company. One of my friends in my class was unemployed for two years. I live in SF and the Mission had been flooded with bright young wannabes with shiny degrees, and they all disappeared during the bust. One horrifying thing happened that I was close to. The small company that I had gotten a gig with went under and the CEO committed suicide. That was a few months after my final check. He was a brilliant and funny guy. I have had a lovely run of success lately and I try to remember how much of it is luck plus timing. Also we underestimate the true hardness of hard times. Best to be appreciative.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#103

Post by kelp »

wishinghand wrote: post #85
williamDafoe wrote: post #77

In November 2000 my options were worth $2.4m on paper but they did not start vesting until January. In January they were worth -$1.5m and never exceeded the strike price again, at a company that is still public and worth > 10 billion today. They laid me off in february. I got healthy in 2 months and found a small startup with a 15% paycut but the CEO was a WeWork-level crook with a jet and he absconded with all the m…

I don’t know how stock options work. If you’re laid off do you no longer have access to them?

If you’ve vested any, which is usually 25% after the first year, and then monthly for the next 3 years. You get to keep those shares if you can buy them at your strike price. If you get laid off, you may only have 90 days to exercise (buy) your vested options before you lose that right. Some companies more recently are extending that time.

In the dot com crash era it was common for your options to have a strike price higher than the stock price (under water) so no sense in exercising them, since they are worth negative.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#104

Post by toast0 »

wishinghand wrote: post #85
williamDafoe wrote: post #77

In November 2000 my options were worth $2.4m on paper but they did not start vesting until January. In January they were worth -$1.5m and never exceeded the strike price again, at a company that is still public and worth > 10 billion today. They laid me off in february. I got healthy in 2 months and found a small startup with a 15% paycut but the CEO was a WeWork-level crook with a jet and he absconded with all the m…

I don’t know how stock options work. If you’re laid off do you no longer have access to them?

To qualify as IRS Incentive Stock Options (ISOs), they have to expire shortly after you're no longer an employee; some companies these days offer options than will instead become non-qualified and have a much later expiration, but that wasn't common in the dot-com boom.

For companies that expect to survive for years after the layoff, they may give you X months on payroll, and then Y months severance. Your options expiration because of no longer being an employee would generally start after the X; but I think most of the layoffs then were immediate --- the companies needed you off payroll ASAP, so they could stop paying healthcare and what not.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#105

Post by kelp »

nostrademons wrote: post #62
grepthisab wrote: post #31

This thread is scaring me. Question on exercising and such. I have all exercised options, but not all vested, been here about 2 years, so half vested. Didn't pay taxes at exercise because there was no difference between exercise price and market price. What happens taxwise if my company goes under? Don't I only owe taxes if I sell vested options?

If you exercised at market price then there's no tax liability. The shares are yours now; your exercise price is your cost basis, and you pay capital gains taxes when you sell on the difference between sale price and exercise price. The situation that caught lots of employees in the dot-com bubble is that they exercised stock options where the market price at time of exercise was a lot more than the strike price (whi…

I had several friends and coworkers end up in this situation. Lucky for me, I started late enough that my options were underwater before my first year cliff and stayed that way...

Re: Ask HN: How was life for a regular dev during the dot com burst?

#106

Post by shinteao »

davismwfl wrote: post #5

I went through it, and started a company soon after it crashed and then a couple more during the downturn. Ironically a lot of money can be made in downturns if you know where to look and how to approach it. What I saw and experienced was enterprise devs basically just kept doing what they did. Startup devs that could went into (or back in some cases) to enterprises. Enterprises used it as an opportunity to snag up g…

>Ironically a lot of money can be made in downturns if you know where to look and how to approach it.

Can you expand on this? I'm honestly curious about what machinations begin once a company dies or the market sinks.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#107

Post by jjav »

grepthisab wrote: post #31

This thread is scaring me. Question on exercising and such. I have all exercised options, but not all vested, been here about 2 years, so half vested. Didn't pay taxes at exercise because there was no difference between exercise price and market price. What happens taxwise if my company goes under? Don't I only owe taxes if I sell vested options?

Did you file 83b election when exercising at market price? If yes, you already paid the taxes (which were $0). If not, there may be taxable income at vesting periods. Talk to tax professional. I'm certainly not one.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#108

Post by bsenftner »

I was director of research for a live video over the internet startup. This being pre-Flash video, it was quite a bit of engineering. We had live events, interactive sessions with popular bands, and game shows. Then in about a month, it all disappeared. I returned to the video game industry, which I'd been trying to leave for some time... After a stint doing a PS2 game for Pandemic, I went into visual effects.

Re: Ask HN: How was life for a regular dev during the dot com burst?

#109

Post by anadem »

I had just gotten hired as employee #9 by a startup which was growing fast making software network components, and after me three more devs were hired in the next month.

Next month we moved into a much bigger office, with a lovely view and lots of space for growth - then boom, the crash (gradually) struck: the three people who'd come in after me were let go, one at a time, and the rest of us were asked to work part time - volunteering how much part of the time was. We split the office and squashed into a small part.

I worked one day on / one day off for a couple of years (maybe a bit less) while our boss scrambled for sales. He was a great guy, was very open and helpful to us all, and did eventually get the company back on its feet and eventually sold it. The five founders did well, the boss retired three years later, and even I did OK (worked for the company that bought us for eight more years, then also retired.)

Re: Ask HN: How was life for a regular dev during the dot com burst?

#110

Post by H8crilA »

ChuckMcM wrote: post #74
jonahbenton wrote: post #50

Will briefly share my story, then offer advice: I was VP Tech at a high profile ad driven startup. We raised $50M (Softbank money in those days). Spent a lot of it scaling up on Sun hardware, ran TV ads, saw tremendous response, then a week later the bottom in the ads business model dropped out. Literally a week later. Amazing. We went from close to 300 staff in March (60 of which reported to me) to 7 in October. The…

I would emphasize this: worrying about the next bubble bursting is a distraction, like following the shiny. It is good you are asking the question, but the right plan to be making- a career plan- is what is important, and whether there is a bubble or not is kind of irrelevant. Internalizing that can be the best thing any developer does. It is way more impressive to talk about all the skills you have acquired in your…

Interestingly this is also the attitude of many money managers (Warren Buffett, to take the best known example). You'd think at least they would take explicit, timed preventive action. Many (most?) of them don't.
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