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

Got stuck with a huge tax bill on my stock options when Yahoo went under, took 10 years of brutal back to back contracts to pay it off. The state didn't care that I had nowhere near the opportunities again they just mercilessly hammered me for taxes until I paid it off a couple years ago but took nearly 15 years to pay off the tax debt and meanwhile I could invest in nothing else.

From my observations during the time, what your experience as a dev was depended entirely on what sort of company you were working for. If you were working for one of the SV hotshots, then the odds were that you had a rough time of it.

However, most of the devs I knew (including myself) were not, and that set of devs were no more affected by the bubble burst than society at large was.

Around 1992, my friend and I started doing desktop database apps as a side gig while we worked at a consulting firm doing IT. We decided to do this full time. With connections in the music industry, we started doing websites and online stores for some big names like Rolling Stones, Aerosmith, Phish, and others. By then there were about 5-6 of us, working out of my friend's house. We weren't real employees, and only got paid when my friend walked into the room and started handing out $50 bills. Our online stores morphed into an award-winning product for small and medium-sized merchants, that you could pick up for $19.99 at Staples, CompUSA, etc. In 1996 we incorporated, and I was hired as the first official employee/lead programmer. I think I was making about $50K by then; we had grown and moved into a real office. A couple of years later, we had the first single-shopping-cart online mall. I was making $85K. We had almost 70 employees. In 2000, a Canadian company bought us for $45M and I was given another raise to almost $110K, but then things fell apart quickly. The last 6-8 months I was basically paid to drink coffee and sit around. By 2001 we were kaput. My 60,000 stock options, when I could finally do anything with them were worth about $1200, down from an initial value of ~1.8M CAD. I had bought a truck, and had put a downpayment on my house, but that was about it. I flailed around for a few years looking for programming work, and then got the job I have now, doing IT at a local University. I'm making about $50K again :/ It was a lot of work, with (mostly) great people, and for a while we were on top of the world. In some ways you could say we were Amazon before Amazon. If we hadn't gone under, Amazon probably would have bought us. Perchance to dream..

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 good devs at a bit of a discount in many cases.

To be fair, true developers were not really negatively affected at least not more so than other professions. One nice side affect I thought was that the crash cleared out most of the people claiming they were developers but had no real experience or talent. Most of my friends and people I worked with were fine and at worst might have gone back to an enterprise gig or in many cases were already there and didn't really miss a beat.

IMHO, if we have a crash this time (versus just a softening market), it will be similar as the need for quality software devs won't disappear. It will take longer to find a position in general and there won't be as much money floating around but decent developers are not going to have a hard time putting food on the table or finding work. Remote work will suffer, pay will suffer and VC dollars will drop dramatically, but the average developer will be fine.

    occasional recessions are useful because they 
    destroy bad ideas (not exclusively bad ideas, 
    but many bad ideas) and therefore free up resources 
    for new ideas. Some of which will be good, some bad.

I was a lucky one I guess. One day we came into work and there was guards at the the door checking IDs. About 1/2 the place got let go that day. We went from having dreams of being millionaires to just being happy we had jobs. I bailed out at some point, but the place is still going, some of the same people are even still there! It was scary as hell to see this place go from 80 people to 100 something and back to 80 in just a year or two.

Life is what you make it. I chose to remain independent for my career. Both 2000 and 2007 came and went and unless someone told me, I wouldn't know we were in a recession or stock market crash.

Perhaps I missed out on a few opportunities but I never really wanted to trade my freedom for the chance of money.

If you have a good network and do quality work, you will be in demand regardless of the market. There will never be a shortage of people that need good, quality work done and are willing to pay for it.

Backdrop: I was inspired by games and went to CS undergrad with the hopes of becoming a videogame developer and ultimately a designer/director. I started college just as BBS distribution gave way to the World Wide Web; I had to learn HTML in order to distribute my shareware games.

Moonshots: I dropped out of school with only a year left to graduate because the Web development startup I launched with two of my friends was getting out of control. We were charging over $100/hr in the 90s and still having to turn down clients. We worked on amazing projects I can barely remember and made a pile of cash. But we were kids and couldn't get along so we split. I joined another startup that got bought out and put more cash in my pocket which led to me following leadership to yet another startup... that died pretty hard in the Fall of 2001.

Aftermath: Money, parties, travel, and then boom... it was over. Although I had been an irresponsible child with my earnings, I had the good fortune of having some saved some before I was laid off - and I could collect unemployment benefits.

Like everyone else, I couldn't find work anywhere. There was a flash cartoon back then called "Laid off: a day in the life". Good times, good times. I went back to school to finish earning my BS in CS. While in school I tried desperately to get a job in the service industry. I couldn't even land a job waiting tables. Managers told me that they had plenty of people that could work at any time and they didn't want to fuss with people who had school schedules. One manager told me he had over 1,500 applicants at his new restaurant. After having held a Director title in 2001, I ended up starting over again with a fresh degree and a job as a Jr Videogame Programmer in 2003. At least I was working on videogames instead of web! (spoiler, I'm back in web, but that's another story)

I still don't think I've fully come to terms with the unrealistic expectations I developed early in my career. I rose to success quickly because I had a head start in web tech just as the industry around it was taking off. After the crash I had to work hard for things like everyone else which means coming to terms with the realization that I am not as special as I thought I was.

IIRC, It was the perfect storm. Y2K bug projects were complete, Microsoft had been found guilty of monopolistic practices, the euro conversion projects were winding down or complete. I think Greenspan was raising the fed rates, and taxes were due, so people were selling to pay those. Then 9/11 happened and that was the final nail in the coffin.

This was the first, "learn to code," era that I recall, so there were a lot of not-necessarily computer savvy people in the industry, and they were getting hired. Once things started to slide, companies just stopped hiring as a sort-term strategy, many held layoffs too. Many people were pushed out of the industry for good. I was stuck as a contractor and in-between contracts out of blind luck. I was 4-5 years into a promising career and I couldn't find work for 6 months. I felt absolutely worthless.

Fortunately I knew a guy who was a partner at my previous contracting firm. He just pulled a CIO position in a city 2 hours away and they needed someone to take over their engine (software shop). I had to pick-up and move, but I got a job that paid a lot less than my previous ones.

I survived, partly because I worked hard, like I was scared to lose my job. I still work that way. People take notice and will call you when they switch companies and need to fill a position. Because of this, I haven't had to do a formal / cold interview since the dot bomb.

I was at ask.com during the crash. The first bad part for me was the options. I planned on selling them the instant they vested. A week before vesting they were trading in the low hundred dollar range. The day they vested they were in the dollar range, with a strike price of 10 dollars. Thank goodness I didn't exercise them or I'd be stuck in the tax boat. So it was demoralizing, but I still had my salary, and I was young enough for that to be enough.

I weathered three rounds of layoffs and that was pretty harsh too. Every morning we'd check fuckedcompany.com and look for Ask in there. One morning it popped up with a 60% layoff in two days. It was almost exactly right; 16% of staff were laid off. Someone mis-heard the number.

I was in a smaller off-shoot office, so when people were cut they were called into the managers office, and while there security would pack their desk. When they came out of the office the box was just sitting on the floor, right outside the door. By the second round the manager just wouldn't come in that day, and the main office would send some stranger to do it.

At first I rationalized the people who were cut as people who weren't valuable, weren't adding to the bottom line. They were the less technical people, and their jobs were more nebulous, so it was easy to ease any mental pangs. It was a way of coping with something similar to survivor's guilt. Then when I was laid off, well, it was a tough time for me personally. I couldn't help applying the same rationale to myself. I wasn't valuable. I wasn't adding to the bottom line. The company is better off without me.

They gave me a pretty nice severance check. I convinced them to keep me on for another week to document my project. It was actually one of the only cash-positive projects at the company, due to contracts with Visa and Nike. That extra week pushed me into 2 years of tenure, which bumped my severance from two months pay to three.

I did not do anything mature with the money.

Generally the attitude I saw was to hunker down and try to weather the storm. Nobody interviewed because nobody could get recruiters to answer the phone. And nobody wanted their manager to think they were interviewing; that was a great way to be called in first during the next round. And lots of late nights working; gotta show you're still committed, despite everything crumbling around you.

I was a young-ish dev at a smallish (200 or so people) company in the Bay Area during the dot-com crash. I came in one day to find that something like 1/3 of the people in the company, seemingly chosen at random, no longer worked there. Those of us who remained were consolidated into one floor instead of the two we had before. My salary and options were not affected, and the (basic by modern standards) free food stayed pretty much the same, though I think WebVan was no longer around to deliver it. I left soon after that, and the company lived on in cockroach mode for years. I think it was eventually acquired, but I haven't paid much attention.

One reason my experience wasn't catastrophic was that I was at an infrastructure company, not a hype-driven one like Pets.com. If/when the current ad bubble bursts, average devs will fare best working at companies several steps removed from the hype. People may not want micro-targeted ads, but they'll still need software.

9/11 truly tanked the economy. Business stopped for a month after that terrible day and it took years to recover. Seeing friends lose their jobs never get easy no matter how many times you say your goodbyes.

I was working at a dotcom, a geocities knockoff, that had recently gone public and had climbed up to around $30/share. I had options that I had already exercised as I was being clever thinking I'd sell them after holding them for a year. But I was still locked out as an employee, and we all watched as the the price dropped over a period of weeks. After a while it was under my exercise price so I lost money. All told it wasn't a lot of options and not a lot of money I lost either. A couple of decades later I sold the position to take the loss and offset other stock gains.

The layoffs happened in two rounds - the first round the severance packages were rumored to be generous. The second round, my round, we got two weeks pay.

This was spring of 2001. People had trouble finding a job, but they were still out there. I got another one for summer of 2001 but they laid me off after three months, and then 9/11 happened ten days later.

After that it was brutal. Up here in Portland, no one was hiring at all. One time a job opening came up and all the applicants were taken to a large conference room where we all took a silent written exam together, with applicant names anonymized to protect against discrimination. I got that offer and rejected it, which completely freaked out the agency recruiter that was representing me. Nike and Intel would occasionally advertise programming contracts for $12/hour - php, perl - and they would be swarmed with applicants. I'd talk to agency recruiters but they kept getting laid off, so it'd be a different one every couple of weeks.

I was taking unemployment, I toyed with a business idea, and I eventually thought I'd try out contracting - I cold-called a prospective client that had a small company, and he brought me on for $25/hour, usually working at his condo with him and ordering pizza together. A few months later - Feb. of 2002 I believe, I got my first more official-ish contract for $55/hour, and I've been in business as a backend architectural contractor/consultant ever since.

Over that period of tim, I found that consulting is kind of a leading indicator of the economy. When times are bad, maybe you can get good gigs at employers that need help but are reluctant to commit to an employee. But if times are just starting to go bad, non-employees can be let go quicker.

Anyways, remember that the dotcom crash got mixed up with the post-9/11 chaos, so the next crash probably won't have the same impact. Also, remember that recessions are cyclical. It gets better by definition. I still believe that 2001 and 2007 were Weird in a way that recessions usually aren't. And a recession might even be good for the younger generation since they tend to clear away people that have jobs but shouldn't, leaving more future openings for the folks that are still hustling and learning.

2002 - I was about to start university studying comp-sci, meanwhile, I was working as a security guard in Toronto at HQ of one of the largest banks in Canada. The majority of guards were laid off software developers that couldn't find a developer position. Some were actively trying to move to trades.

We launched right at the beginning of the end, although we didn’t know it at the time.

Everyone thought they were making tons of money, based on valuations that were only on paper. Kind of like losing $5B and still thinking it’s a valuable company.

I first noticed problems when we repeatedly had potential client me be dark when we showed up for meetings. They were just gone, and no one bothered to Let you know. They had other things to worry about.

We didn’t get to the point where we could exercise options, but some people were badly burned at time time. If you exercised a million dollars worth of options and hold them past the end of they year, you owed taxes. If the shares were now worth zero, you still owed the taxes. This bit the rank and file, who thought they were getting rich, and ended up poorer than before. (IIRC you could carry forward the loss, but that’s no good if that was the only stock you ever got)

We got bought, and had dead end jobs for a while, before they laid us off. Was not too hard to find a job again.

I recommend reading about tulip mania. It’s amazing how similar that was.

I was living in Florida, working for a Boston-based WebDev/ISP consultancy. Smart people, high-flying projects, free snacks, nerf shenanigans, constant hiring, with bonuses for you-name-it. I'd recently gotten a nice bonus for bringing on my good friend as the office's systems administrator.

Business slowed, clients missed payments, people started watching f*d.com, the first round of layoffs came, the execs did a tour and promised all was ok, the second round of layoffs came. We spend a lot of time at Starbucks contemplating plan B.

One day I came in and the laptop wouldn't connect to the network. I stick my head in my friend's office, and say "My laptop won't connect, is there something I should know?" He gets that deer in the headlights look, rushes off to check with the management, and a meeting is convened where the third layoff happens, something I'm part of and he's not (Probable cause for me being out: I didn't play ball on a traveling assignment I didn't want, was OK with the outcome. My friend hung on to the bitter end, and we laugh about it now.) The hardest day was sending back the extra paycheck the company had accidentally sent.

I started looking for jobs, but I started getting calls from friends who heard I was available for a week here, a month there, a six-month thing, etc, etc. I wound up forming an LLC and staying self-employed until decided I needed a nice safe job just before the financial crisis.

There weren't a lot of jobs.

I was at one place through much of the boom, eventually they folded. I was the last employee, part of my job was winding down and archiving the assets. After that, jobs were a bit scarce.

I didn't mind the break, though it was a bit demoralizing. Much like today, if you can create a name for yourself, it's easier to get hired.

It was a rough point in time. In the dot com boom, people who could rub two lines of visual basic (for applications) were getting jobs. If you did not like your job, you could make a phone call and have a few offers waiting for you by the end of the day. Glorious stock options at promising startups after fleecing larger companies in panics about y2k and missing the boom. The parties and travel...

We were joking about the pets.com of the world - buying pet food, selling it at a loss, and trying to make up for it in volume. At least we had a business model that made money, a foosball table, and actual personal offices for each developer. When the stock market tanked... everything just shut down. People stopped buying or investing - and anything that assumed growth, for the most part, died. Starbucks with long, long queue lanes were empty.

As some companies died, there were opportunistic shops that were looking for solid talent. As they sold off our little shop of ten people, I ended up getting an offer and then being one of the folks left behind to turn the server room lights off. I had negotiated a start date a few months into the future, and very thankfully, they honored the offer. Things got worse. There were several more bits of belt tightening - we had a 25% round of layoffs later as the impacts of a bad economy really hit home. I did well/got lucky - but while the first round cleared out a lot of 'charlatans', I saw many solid people go on that black Friday

Salaries dropped - or at least stopped growing for most senior people. The rise of off-shore came and the realities of global economies eventually settled in. Large swaths of people turned their back on development... and here we are today, where it can be tricky to find solid folks again. The Wheel of Time turns, and Ages come and pass, leaving memories that become legend. Legend fades to myth, and even myth is long forgotten when the Age that gave it birth comes again.

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 unemployed for 7 months and finally landed my first professional software development job in Washington State for less than half the salary of the job I'd previously declined.

I thankfully had my CAD/CAM background & contracting to fallback on while hunting for those 7 months, but it was enormously demotivating & disenfranchising. I was within a couple weeks of just abandoning a career in software entirely and going back to what I knew permanently.

I expect it all worked out in the end, as I'm now CEO of a startup doing a thing I'm really interested in and have successfully raised money to fund it along side our early revenue. But, it was still immensely crappy at the time and shocking to see just how extreme the pendulum can swing in terms of available jobs, pay scales, etc.

I went from being a hotshot who had multiple offers all the time with sign up bonuses to somebody who could send out 100 resumes and not get a single response and once I got a response I was offered much less than I was used to. It was very depressing but also educational. It took me quite a while (probably too long) to accept this new reality. I feel the same may happen to a lot of Startup guys who make big money in their 20s now.

Not all success is your own making. Often you are just riding a wave that takes you up but will also take you down if you are not careful.

I guess I was an 'average dev' at that time. I was developing applications for a company that sold software to banks. Around 2000 I was into client/server computing, working with VB, C++ and Tuxedo for a transaction monitor.

I never really felt the bubble burst. Maybe raises were slower for a while, but I don't remember it. Mostly a non-event.

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 took a 5% pay cut at an incredibly boring bank. But I wasn't unemployed at all. My dotcom job was nothing amazing. They teased an IPO but never got within a mile of it. My salary ($65k?) felt like a fortune at 22 years old but wasn't astronomical.

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 workout and asked when I would be in the office. He said to come straight to his office when I got in. About 85% of the company was laid off that day and I was among the "lucky" ones who was not.

What followed was almost straight out of the Silicon Valley sitcom. Management know our existing product was a dead-end, but with 85% of the company laid off, our remaining VC funds gave us a decent runway, so they decided to pivot to ... something. That is, the entire company (about ~15 of us) would sit around in the boardroom and try to come up with new product ideas. Needless to say, that went precisely nowhere.

The CEO was pushed out fairly shortly after that and I had been brought in through his network. My layoff came about ~6 months later in the second round of layoffs which constituted only me. Thanks to the VP of engineering going to bat for me, I did get 3 months of severance. I spent 9 months looking for another job and finally found one in fintech in NYC which turned out the be, to this day, one of the best jobs of my career. I also met my now-wife and many of my best friends there. That time was both the most traumatic experience of my working career and the best thing to happen to me at the same time. I know it was much harder on many other people, but it turned out for the best for me.