So the degree to which you are affected depends on your risk/return equation. There are always "get rich" opportunities (which are usually balanced by "high risk" aka "get poor" results.)
The later the stage, the closer you are to the bubble bursting. This is happening -all the time-. (Think dot com, mobile, great recession, crypto (web3), and (to come) AI.
Don't misunderstand me. There -are- winners. Even in dot com. There are winners in every bubble. Lots of companies came through dot com just fine. Some grew mega rich (think Amazon).
Some companies will make coin on AI. Ultimately every business will end up using it in some form or another. Right now the miners are grabbing shovels and staking their claims. Most will go home empty handed. Some will create generational wealth.
What was it like in the aftermath of dot com? A lot of miners hanging around with nothing to do, waiting for the next field to open up. Me? I'm not a miner. I sell shovels and jeans.
Or they invested heavily in flipping houses and they got destroyed. One thing that is not talked about much is that a lot of those people that got crashed in the Great Recession had good jobs and great credit, so of course it made sense to them to own six or more houses as investments.
A couple lessons:
- most of the ideas funded were predictive of the future, many were a decade early so those companies did not survive. Mark Roberge of Stage 2 Capital/Hubspot suggested recently that virtually none of the current AI startups will survive, but join one anyway so you can get into the next wave that will.
- those that survived in any form went on to some great IPOs/exits. Being early suuuuucks, but having a 2-3 year head start on a trend pays off when the market returns. Most of the winners in GenAI today for this pattern. If you can be adjacent to a big winner (which in hindsight were pretty obvious: Google, Amazon, Facebook) you do well.
- general sentiment on tech/internet was super negative, it was better not to talk about it because “fad/fraud” was the general response
- if you could find any revenue generating opportunity, you were better off than everyone who raised capital
By all appearances, we’re trending towards an AI apocalypse/tech down-turn. Much like in 2000, it took a new generation of college grads getting jobs and eventually making into management before buyer behavior started changing.
We forget that tech doesn’t change markets, the buyers of tech do.
One good strategy in a downturn is to go pure play PLG to SMBs and buckle in for 3-5 years.
FC.com example snapshot:
https://webarchive.loc.gov/legacy/20020909235327/http://www....