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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?

#61

Post by ralphc »

im_down_w_otp wrote: post #28

I graduated from college right amidst the bubble bursting, and it was brutal. Fresh college grads and junior developers were competing with displaced veterans for entry-level positions. ~1 year prior I had been offered $120k/yr to drop out of school and move to Pittsburgh to take a job. I decided to stay in school to finish my degree instead, and by the time I did the bottom of the market had fallen out and I was une…

Did you look into the history of the Pittsburgh company? My guess is you did the right thing, in a year you could have been in a strange city looking for a job with no degree.

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

#62

Post by nostrademons »

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 (which means an income tax liability for the difference), but then there was a lockup and they weren't able to sell the stock until after it had dropped significantly. As a result, they had tax bills that were higher than the market value of the stocks they owned.

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

#63

Post by vladus2000 »

I wasn't out of college long, but I managed to survive two layoffs where I worked. We had almost no turnover in developers for a year or two because basically no one was hiring, normal for that job at that time was probably around 20% per year if not higher. There were no jobs to have, some of the people that were laid off didn't get jobs for upwards of a year, and some of those I know that did, ended up moving to get a job (I am not in one of the top 3 cities for it). They also really didn't give raises or promotions during that time either.

When I was in school, the comp sci program was so full it was hard to get into classes, hard to find a computer free in a lab to do the assignments/projects. The same college a few years later didn't have that problem from people I talked to. I never looked up the numbers, but I would imagine the number of people going into it dropped quite a bit, at least if the anecdotal stories I heard are to be believed.

Where I worked had nothing to do with experimental tech or anything, we lived on selling somewhat specialized, expensive software and hardware. The problem was, no one wanted to spend money.

It was somewhat demoralizing, as the second round of layoffs really hurt and it wasn't a fun job anymore, but I couldn't do anything about that for awhile.

I also know people who invested poorly that had all of their savings evaporated. Some people were paid partially in stock that pretty much went to 0 very quickly. It wasn't the best time.

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

#64

Post by phd514 »

Spinosaurus wrote: post #54
phd514 wrote: post #37

I was ~1.5 years out of college and at a small dot-com with a niche SaaS at the time. I distinctly remember 9/11 and the chill that came over our office that day. That passed in time, but our economic prospects never recovered. I used to hit the gym in the mornings and then work ~10am-7pm and I distinctly remember the day ~9 months later when the VP of engineering called me on my cell while I was finishing up my work…

> found one in fintech in NYC I'm interested in hearing which, if you care to share.

Well, it was nearly 20 years ago and with SoX and all the other regulations, the fintech industry now is essentially unrecognizable from what it was then. I worked for a bulge-bracket investment bank whose business today is dramatically different and a hedge fund that is no longer solvent. The reason it was good for me was that I was an inexperienced developer and I got to work with much more talented developers in an environment where results mattered. I learned a lot and became a lot better myself.

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

#65

Post by mmaunder »

I worked for etoys.com in London and Santa Monica. Was worth $6bn at peak market cap and got delisted after dropping from $80 a share to below a buck. I survived multiple layoffs. Ran their warehouse management software for Europe. Lots of people got screwed. Big tax bills after exercising options and not selling and watching it drop. Family investing and losing everything. The perl community was fairly invested in etoys because we were a big Perl Apache and MySQL shop. Met my wife there. Was fun during the good times but layoffs suck and so does having the job market shrink. Taught my wife and I what not to do and how to run a lean but growing biz. Today we run a self funding company of 40 people in the cybersecurity space. So it all worked out just fine.

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

#67

Post by H8crilA »

seibelj wrote: post #59
H8crilA wrote: post #24

Earlier quoted context omitted.

That happened because you exercised and didn't sell? Also, we may be hearing many stories like that after the Bitcoin bubble when IRS goes through the records more carefully. Always remember to take profits the instant you make those profits, put some of that cash aside for yours and IRS's sake. Always.

No, that is nothing like bitcoin. Stock options get exercised at fair market value and you immediately owe taxes on the paper profits, even if you never get a cashout. For example, if your strike is 10 cents and when you finally exercise the FMV of the company is $1 per share, you have 90 cents of profit per share even if the company is still private. Bitcoin is a commodity, if you buy at $10k and the value drops to…

I meant for people that bought low and then traded around the top. If you switched BTC to, say, ETH around the peak - you created taxable income. Even if you've lost almost everything since then.

A buy, full ride up and down to the same level, followed by a sell shouldn't be taxable income.

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

#68

Post by rukuu001 »

I was a junior enterprise dev at the time, and was largely shielded from any fallout. Felt lucky to have work, but safe.

Now, I’m highly exposed to startup economy, older and spend more time managing than coding, so...... feeling a little shaky right now.

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

#69

Post by pm24601 »

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?

> 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.

Early exercise with a 83b election?

You will be fine.

The tax problem happens like this:

1. Your option strike price is $0.01/sh

2. The current price as set by the board (or the stock market if public) is $10/sh

3. You exercise 2000000 shares

4. You write a check to your company 2000000 sh * $0.01/sh = $20000

The fair market value (as determined in step #2) is 2,000,000 sh * $10/sh = $20,000,000

The IRS says "wait a minute you only paid $20,000 for something that is worth $20,000,000".

The difference $20,000,000 - $20,000 = $19,980,000 was a 'gift' that requires taxes to be paid.

Now lets do the 83b election with early exercise. In that case the FMV == the strike price on the options. The difference is $0 You are paying FMV and there is no 'gift'.

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

#70

Post by ralphc »

I switched jobs in 1998, and was at a biggish, stable company in the Atlanta area, feeling lucky as I heard about stories like this out in California.

When it happens again, I don't think it will be as bad. In addition to learning from the lessons of the past, remember that everyone had to buy hardware, servers, big-ass monitors, all that. Now personal laptops are cheaper plus everything's on AWS now, you scale up or down.

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