All good things come to an end and the Dotcom era was no different. I was reading the latest issue of Wired and they did a small little commentary on the dotcom era, a look 10 years back. I figured it would be a good time for me to reflect upon the end of an era as well. At the time I had a job in the Microsoft Network Service Providers group, soon to be renamed the Communications Sector of North America. I was working with the Telecom providers and the Network Equipment Providers. As the article points out the NASDAQ hit 5049 on March 10, 2000. A pinnacle it has not gotten close to since. A popular book was DOW 36000. Looking back at it now the idea that the DOW would reach 3600 seems very dim-witted. A generation of youth was about to be lost, not because they had been killed in a war, but they were all going to be so filthy rich by 25 they would not need to work.
When the bust hit it hurt my job pretty severely as all the customers I was covering at the time were either in or tied to the Telecom industry. Budgets dried up as most of the companies had overspent on infrastructure and were not recouping their costs. As a whole the communication Sector at Microsoft was left struggling with what to do next. Where was revenue going to come from? Every customer had the save me money pitch ready, sounds very familiar in today’s world. We did not have a silver bullet. Then like today Microsoft was a platform company. When we did savings calculations it was with fuzzy math and fuzzy logic. Always with the mantra, buy now and save later.
From a technology perspective however there were good things happening on the platform during the dotcom collapse. The Windows Active Directory was becoming the standard directory service in major enterprises. Microsoft Exchange was winning over Lotus Notes , to become the corporate email standard. Microsoft SQL Server continued to improve and in most accounts you would find two DataBases (Microsoft SQL Server and Oracle). We were releasing Microsoft Sharepoint Server which in time would become a $1 billion business.
When I look back at this era a coupe of things standout to me. The Venture Capital floating around was like nothing we will ever see again. I made frequent trips down to the valley so I witnessed a lot of what money could buy. I remember towards the end of the dotcom era I was having a beer with my friend Gopi and the bar was empty, except for a group of 10-15 people who seemed to be celebrating. they were young (we all were). Gopi said to me upon seeing them, “It used to be that this meant they just received funding, now it means they are going out of business”. Not long after the company Gopi worked for, Allegrix, would watch as their VC would pull the money out from under them. As quickly as the money came it went.
A second thing was when these companies got money they spent money. If you give a bunch of young single people a bunch of money, there is no telling how they will spend it. Based on the furniture some of these offices had they spent it well. Being young companies they liked to party. I was at a Microsoft Partner Summit in Atlanta. A company called Coppernet rented out the top floor of the Westin Hotel (70th Floor). To this day I do not know what Coppernet did. Never heard of them before, never heard of them since. It was there I met a few executives from this company called Enron.
A third area we seemed to neglect during this period was basic business fundamentals. There was so much hype about a new world of business and the breaking down of old models that we seemed to forget what was good about business. The basic principles set forth by Luca Pacioli still did apply. You need debits and credits and things like Income statements, Balance Sheets and Cash Flow statements do matter.
You can look back on this and think of all the money people lost and say what a failure. But I think that would miss the point. Around this time Bill Gates was at the yearly Davos Conference in Switzerland. He was being grilled by reporters about this whole Dotcom explosion and asked repeatedly, ” how will these companies make money?”. Finally an exasperated Gates said, “You’re missing the point! It’s the build out of the infrastructure that is important”. I think that is the true legacy of the dotcom era. A lot of companies had the right vision, but the infrastructure was not there. During this time telecom Providers were building out DSL service. Cable Companies were working on Cable Modem offerings. At the time they were crude and a bit hard to set up. The Wi-Fi services we have come to expect wherever we go were still being built out. Around all this was what the capabilities of these services were, still were not fully understood. I remember a Telecom provider of Wi-Fi services wanted to provide hotspots in airports where people could pull up with laptops and download a movie over wi-fi they could watch on the plane. Sounds nice, but at 10 mbs it will take a long time to download a movie. Not to mention you need to build an inventory of movies and a billing system. I am not saying it will not happen but in the year 2000 the technology was visible, but not ready for prime time yet.
If you fast forward to todays world many of the new market offerings we see today were laid down 10 years ago. The idea of Software as a Service (not AND, for the Microsoft folks reading). We can look to SalesForce.Com as one the survivors from that era and true success stories. If you look at Cloud Computing this is a “big boy” version of the Application Service Provider model. Rather than small start-ups with data center space at Exodus or Level3, you have companies like Google, Amazon and Microsoft providing the infrastructure or platform ( I believe Microsoft is making a big mistake with Azure the platform, but that is another blog)..
Unlike the current financial crisis I shall look back at the dotcom era very fondly and we should all be thankful for the legacy it has left us. The internet was born in this era and so many of the promises it did not fulfill at the time are now becoming reality. It was a wild ride at the time but it was also a lot of fun. I have often said when business is in a state of chaos it is one of the times you will feel the most alive. Thanks dotcom era, may you rest in peace.
Good Night and Good Luck
March 2, 2010