One of the definitive satires of the dot com burst came from The Simpsons. Bart and Lisa were wooed by an edgy soul-patched-wearing tech leader who was giving out stock options on toilet paper rolls. Of course, by the end of the episode, we saw him stealing the copper wiring out of the wall.
This is the type of image a lot of people who survived the dot com burst may have in mind for the crypto sector. Big offices and champagne today, empty offices and just pain tomorrow. However, that’s not quite fair or accurate.
The fact is that the leaders in crypto had the benefit of learning a lot from the dot com bubble and have already been able to sidestep a lot of the landmines that blew up in the 90s.
1. More Grounded Founders
The people starting and running the companies have seemingly learned lessons from their more lavish predecessors.
In the 90s, the perceived infinite potential that the internet posed seemingly blinded a lot of newly minted millionaires from considering the fact that this bubble could ever burst. One famous story comes from Boo.com founder Ernst Malmsten calling a Lear Jet 35 Concorde “a bit cramped,” only to go under 18 months later.
Today’s entrepreneurs have heard all of these stories are far more mindful of the fact that success can be fleeting. They seem to be spending their money on growing their business, instead of getting a bigger jet.
2. Less Institutional Money
The dot com wave was largely backed by venture capitalists and accredited investors. This obviously brought Wall Street into the mix and made things a lot more volatile on a national level.
However, the rise of crypto has been the exact opposite of that. It’s been mainly self-financed by people building their product, with almost no help or interference from Wall Street.
3. A More International Presence
As severe as the dot com burst seemed to all of North America, the shockwaves weren’t really felt overseas. Most of the stock was sold in the US, and the head offices that closed their doors were on American soil.
Most of the dot com damage happened to North American companies, whereas Cryptocurrency is widely used on an international level. Yes, it is most popular in the US, but it already has a larger international presence.
4. Dot Com Survivors Who Have Learned From Their Mistakes
The crypto market also has fewer business school dropouts and more MBAs.
The sector has the benefit of learning from the dot com mistakes, with lots of savvy gray-haired leaders and advisors who survived the bubble burst 20 years ago, and can show young companies how to avoid the same mistakes.
The internet was wildly new and completely different than any other game-changing product we had ever seen in the 90s. There was a widespread feeling that this was going to change everything, which led to no clear vision of what the future would actually look like.
We’re still not sure what a future with Fintech could look like for the masses. But one thing is for certain, everyone is approaching it more cautiously thanks to the dot com nightmare.