It was the best of times, it was the worst of times. I was working in the tech industry during the first dot-com bubble... and it was AMAZING! There were tons of parties, opulent offices (some with shark tanks), companies getting funded and awesome giveaways at tradeshows. However, something this good doesn’t last and we all know how fast it popped. There are plenty of stories of how companies blew through $100 million in funding almost overnight – Boo anyone?
While it isn’t official, many are saying we are in the middle of another tech bubble – which is quite a contrast considering that we are still trying to get out of a recession. You would think that it would be the other way around. Regardless, I say bring it on. There is nothing wrong with funding being pumped into many companies in a few concentrated business segments. As much negativity as there is around bubbles – in this case, the tech one – I like to look at the many positives it brings:
+ Jobs – more VC money going into tech companies means money to spend on hiring. We’ve seen companies grow from 15 to 115 within the year. With more companies growing, there will be a more competitive environment for skilled workers, as well as new opportunities for college grads just getting into the market. Note that this is not happening overnight. However, considering the struggles the economy has brought the job market in the past two years, any sign of job creation is a welcome relief.
+ Boost to Other Segments – when tech companies thrive, so do other industries that support it. I’m talking about party planners, conference organizers, office suppliers, commercial real estate and even PR. We all benefit as tech companies have more money to spend to grow their companies. Now, it’s our job to support these companies to help them compete.
+ Lessons Learned – we all learn from mistakes and the biggest ones seem to have the most resonating effect. The first tech bubble is no different as entrepreneurs and business leaders were provided a great lesson on what not to do. The bubble taught us about irresponsible business management. The business leaders today who worked through the industry a decade ago have a better understanding on how to make a business successful, and how to manage it carefully.
There are many signs that this current tech bubble won’t experience a dramatic decline. People are smarter and can see where and when the fallout may come. As such, companies are being responsible with their spending and have made business decisions that protect themselves and their investors (steady growth, flexible cloud-based IT environments, hard line on contract negotiations). In the meantime, this is going to be a wild ride so put your seatbelt on and get your armor.