Notes On Startup – Four big Lessons from dot-com Crash

It was the period between 1995 to 2000 where investors across the world started investing on internet based startups hoping that all the internet based companies will make money, however by 1999 dot-com bubble started to collapse which is typically referred as dot-com crash.

image credit zero to one book
image credit zero to one book

Entrepreneurs who stuck in Silicon Valley between 1995 to 2000, learned four big lessons from the dot com crash. That still guide business thinking today.

  1. Make incremental advances
    • Grand vision inflated the bubble, so they should not be indulged. Anyone who claims to be able to do something great is suspect and anyone who wants to change the world should be more humble, small, incremental steps are the only safe path forward
  2. Stay lean and flexible
    • All companies must lean which is code for “unplanned”, You should not know what your business will do, planning is arrogant and inflexible.
  3. Improve on the competition
    • Don’t try to create a new market prematurely. The only way to know you have a real business is to start with an already existing customer, so you should build your company by improving on recognisable products already offered by successful competitors.
  4. Focus on Product not Sales
    • If your product requires advertising or sales people to sell it, its not good enough. Technology is primarily about product development, not distribution. Bubble era advertising was obviously wasteful, so the only sustainable growth is viral growth.

Try things out “Iterate”, Treat Entrepreneurship as agnostic experimentation

These lessons have become dogma in startup world; those who would ignore them are presumed to invite the justified doom visited upon technology in the great crash of zero and yet the opposite principle are probably more correct.

  1. It is better to risk boldness than triviality (lack of seriousness or importance)
  2. A bad plan is better than no plan
  3. Competitive market destroy profits
  4. Sales matters just as much as product

Reference: Book Zero To One By Peter Thiel

Continue reading – Startup Thinking – Perfect Competition vs Monopoly

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