
Ask HN: How would you prepare for another “dot com” bust? - akras14
I wasn&#x27;t a developer during the last &quot;dot com&quot; bust.<p>I was wondering what advice, if any, those who lived through the past &quot;dot com&quot; bust would have for younger developers, in case we have another one coming our way.<p>I am assuming keeping a healthy savings account is always a good idea.<p>Do you have any other advise? Any other stories on what to expect would be appreciated as well.
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rdegges
I didn't live through the famous "Dot Com" bust either, but here's what I've
been doing:

    
    
      - I max out my 401k every year.
      - I max our my IRA accounts as well (5,500 additional dollars).
      - With what is left of my pay, I take 40% of it and save it. After I built my 6 month buffer of savings, I started putting extra money into taxable investment accounts with Wealthfront (I'll likely move this to Vanguard at some point).
      - I've always kept my cost-of-living expenses as low as possible. For me, this meant (until last week) that my wife and I lived in a very small, very cheap, 1 bedroom apartment on the outskirts of the East Bay (Walnut Creek).
      - I cook a lot of my meals myself instead of going out.
      - I try to fill my free time up with cheap / fun activities: programming, lifting weights, biking, playing games with friends.
      - I just recently purchased my first home. This means I can stop 'wasting' money on rent, and start building equity. I view the home purchase as a strategic investment to save wealth instead of expend it.
      - I build side projects that help me earn extra $$. Nothing crazy, but not too bad either.
    

My hope is that by being financially conservative, keeping a 6 month safety
buffer, and investing strategically for retirement (I do index funds), I'll be
decently well off even if something horrible happens.

~~~
gumby
My understanding is that Wealthfront is quite expensive. What is your
experience? Do you think you'd be better off simply splitting it into 50%
index equities and 50% treasuries?

~~~
toomuchtodo
Either use a three fund plan (Google "bogleheads three fund") or a target date
fund, either of which you'd do at Vanguard. This is the cheapest, most
efficient passive investment method.

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hijinks
The late 90s was really a different time. There were job ads for tech
companies that pretty much read. "If you know how to type we want you!"

So the talent pool was very different. There's a lot more tied to tech and
software these days then the late 90s when the web was new.

Just think of it this way. GE in the 90s was still a manufacturing first
company. Now they are trying to re-brand as a software first company.

I wouldn't worry about a ghost town in silicon valley type bust like the late
90's. You might see funding dry up but its not going to be like it was. I hope
not at least

~~~
thecupisblue
Exactly. Also, at that time not everyone had access to Internet 24/7 by their
side. Now, at least 2 billion people do, with more to come. Tech isn't going
anywhere, it's a part of our lives, just like all these startups are.

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ramtatatam
You can ask this question as well: how do you prepare for another `2008
crisis`

And it seems the only way is to gain capital so you can use it when the time
is right. How do you gain capital? Most people would only be able to reduce
consumption in order to save their money.

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amorphid
I was a recruiter during the 2008 bust. That was not a good time to be the
person hired to hire people :) I have a few random bits of advice, that mostly
boil down to have a sense of urgency, and take what you can get:

* if you need a job, and you've got exactly one crappy offer in front of you, take it, as you can take a better job if one comes along, and it's not in your responsibility to create a compensation package that is attractive enough to retain you

* when interviewing, if you can get an interview, pay extra attention to what the employer really wants & speak to that, as they may have a ridiculous number of candidates to choose from, so you need to be as relevant as possible

* if you see a job for which you're a fit, don't wait to apply to it (I posted a job ad in March of 2009 for a generalist software engineer in CA, and within an hour I had received 65 applications, most of which were qualified candidates with experience, and the person hired was in that batch & is still with the company)

* don't talk about how crazy things are out there with a potential employer, as you don't need/want to remind that employer that you're one of many choices available

* have some marketable skills in your toolset, just in case that fun-but-niche language doesn't map to any job openings for which you'd like to apply

* interview with companies you'd like to join when you don't need another job, even if it's just opening the door with a phone interview, as a warm relationship is easier to call when you need a job than a cold one

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rhapsodic
I remember the first dot-com boom that began in the late nineties. That,
combined with a strong, growing US economy, the sudden need for every company
to have a web presence, and the need for millions of lines of legacy code to
be be tested for Y2K bugs meant that programmers were in ridiculously high
demand and short supply.

As a result, a lot of really incompetent people were able to get jobs as
programmers. It was unbelievable. I remember working with people who spent
their days in a fog of confusion, stopped dead in their tracks by simple
compiler errors.

When the bubble finally deflated, a lot of those incompetent people lost their
jobs, and struggled to find new ones.

But by and large, the programmers at the other end of the bell curve did just
fine. They kept their jobs through layoffs, or if they lost their job because
a dot-com employer went belly-up, they had little trouble finding a new job.

So my advise is, if you strive to be a top-tier software developer, you should
be able to weather any ups and downs in the job market with little trouble.
Really good software developers will continue to be in short supply for the
foreseeable future.

~~~
anexprogrammer
> But by and large, the programmers at the other end of the bell curve did
> just fine...

Sure doesn't align with the experience I had or _any_ of my tech friends had
in the UK in the post-Y2K bust. The _only_ person I know who did "just fine"
had, through sheer luck, joined a huge corporate 6 months before bust. Yes
there was a lot of incompetent garbage that got cleared out too. Some were
laughably bad. But for decent folks...

The contract market effectively disappeared for 2-4yrs+. (Good luck going back
to perm). A friend who was CTO of a "best place to work.." SME watched them
shrink from ~180 people to 10 or so. When he exited he was on 1/3 the rate.

Then there was the friend, who was a truly excellent developer, who had his
home repossessed as he had effectively zero income for 3+ years. He got out of
IT completely in the end. Another buddy, who was a little older, took early
retirement and his wife went full time (non-IT). Or another friend who
disappeared at home repossession, never heard of since.

Then there was the after effects of all the ex seniors, contractors and CTO
chasing everything they could do right down to junior roles just to pay the
bills.

Quite a few ended up tiding over in something far beneath them on half or less
salary. Many took a 5-15 year hit on career taking years to get back to
similar seniority (often pay never recovered). There was perhaps 5 years of
take abnything you can get and keep your head down. Hirers only look at the
previous role and rate for "dev" that was you surviving, not the ones before
of CTO and years of lead. Ex-contractors or ex-founders are often frowned on.

That was for the folks at the decent end of the bell curve. The types that
were always learning.

~~~
rhapsodic
My perception is strictly anecdotal, based on my experience in the US, in the
medium size city where I live, which is neither a tech hub nor a tech desert.

I still feel fairly confident that if the unemployment rate among programmers
in the US was to rise to, for example, an enormous 15%, I would be able to
keep myself among the 85% that remains employed.

I wonder if your experience, which is quite different from mine, has to do
with the differences between labor laws in the US and the UK. In the US,
programmers are virtually all non-union, and employers can be fairly choosy in
who they keep and who they get rid of.

Is it perhaps the case in the UK that, by law, most downsizing has to be
seniority-based rather than merit-based?

~~~
anexprogrammer
Very much anecdotal, and I'm sure I saw people hit harder than many in quiet,
unexciting companies who just kept working - I was contracting as were a fair
number of my friends. It felt like a nationwide hard stop - there was almost
nothing but agency fishing expeditions going on jobserve.

> fairly confident ... I would be able to keep myself among the 85% that
> remains employed.

For my whole career upto the dot com bust in 01 I'd have confidently agreed.
After 2.5 years struggling to get work and seeing the same with skilled
friends I realised how much was down to luck. By the time I got work again
many opinions had changed. I still have much of the frugality.

Certainly I knew of US people having issue, and I was surprised to read
recently on HN [1] someone widely known having a very similar experience.

Not sure about laws - I don't think so, it seemed to affect everything.
Definitely not unions though. Unions and IT is rare, though there are some
union members in govt, or old industries.

[1]
[https://news.ycombinator.com/item?id=12218583](https://news.ycombinator.com/item?id=12218583)

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codezero
I lived through the previous dot bomb.

I worked at Red Hat and mostly survived the initial wave of layoffs as the
support team was outsourced to India, I moved to the QA team but I was young
and unmotivated and eventually got laid off myself in 2002.

Not much changed, but I wasn't married and it wasn't a problem for me to move
back in with my family.

I think the simplest answer is to be comfortable with living frugally.

Ultimately if you work in high tech you will be fine because you can probably
do OK working in a more menial job, you just need to swilling your pride a
bit. Move away from the expensive city you live in and get to work. The
economy will recover and you should reflect on why your role was downsized.

Was it you, or your role? For me it was a bit of both. I decided to go to
college and learn something new. Unfortunately I learned physics :P. I worked
in a new field for six years and it was fun. As he economy recovered and
crashed again then recovered again I went back into tech. For a while I did
support again by now I'm doing engineering.

Basically, save money, utilize your 401k, prepare for 60 not 30. Play the long
game. When things turn down, live frugally, keep your options open, and be a
little selfish. When they are good, save extra, and still try to live
frugally.

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DrNuke
Develop some skill for the local economy and make sure you have a local
network within your community to rely on. Eg: teacher, carer, cook, bartender,
shop assistant or similar.

~~~
convolvatron
how pedestrian! (I find it a lot more rewarding to work as an independent
machinist/welder than to come into a tech office every day and not ever be
sure what I'm supposed to be doing..oddly, the pay is a lot less)

~~~
DrNuke
Ehehe. you know, globalism is retracing so it may be the time to rediscover
local opportunities for local markets. Happy new year!

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matt_s
The dot com bust was when huge valuations and VC funding was going to
companies that had little business plan or even little notion of how to make
money. So good advice would be to stay away from those types of companies,
regardless of boom or bust.

Always have marketable skills and maybe if you are specializing in something
now at your job (e.g. front-end JS dev) then make sure your other skills don't
stagnate.

It seems if there is a 'bust' of some sort it would be more industry specific
since there are less companies around trying silly things as their entire
business model which is what happened before. I think it would more happen as
a slow downturn in an industry rather than a sudden cliff.

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probinso
people with monolithic career growth are those most affected by industry
busts.

