Blog-Layout
Do we get another dotcom bubble burst
Dieter Weisshaar • May 15, 2023
Foto von Casey Horner auf Unsplash
Is the IT market crashing?
If your are old enough, you have seen the rise of tech companies at the end of 90th of last century. Web Content, eCommerce and startups were the exciting topics, til the point when the dotcom bubble burst. It was the time when salaries went crazy in this sector, the company evaluations and stock markets were on all time high and venture capital market
was overheated.
It was the time when IT experts
in new technologies were rare. Most companies wanted to have a digital or e-commerce strategy. The baby boomers were between 30-40 years old. It was more an education and skill problem than a resource problem. When the markets imploded there was a pretty large labor force available and unemployment rates in the EU were around 5-10%. After the burst, it was pretty hard for the highly paid experts to find new jobs and unemployment was going up.
That is different today. Todays war for talent has a resource issue as well. Experts on new technologies are as rare as always but we have a large proportion of the baby boomers retiring in the coming years and the pool of talents available to be educated in new technolgies will shrink. Hence we will not face a massive unemployment effect on IT Experts as in the early 2000th. High skill Tech Labor markets will remain tight. On the other hand there is an opportunity as new technologies such as AI in coding software may boost productivity.
The situation on the capital market is only slightly different. Companies in the late 90th of the last century were evaluated high and IPOs provided a lot of cash to the tech companies. A lot of companies were cash burning and when the stock markets crashed, and the cash was spent, the companies went either bankrupt, got sold and restructured. Hence a lot of IT experts were released. That is pretty much the same as today beside the labor market absorbing the IT experts. On the other hand stock markets so far have been pretty reliable despite the war and other crisis. There is still enough money in the market which is looking for good investments even if due to interest rates alternatives are available. Source
But if you don't have a cash generating business model, it is getting far harder to get additional funding today. That will put company evalutions under pressure as some of them will be on firesale. Companies which are not depending on a cash injection are facing a high demand for digitization and that will most like continue to improve efficiency at customer side to stay competitive or creating new digitized business models.
Despite the continued demand for digitization
there will be a slower growth
as companies adopt their investment
in an upcoming recession Source typically. That will force tech companies to build pipeline differently and cause larger efforts to create growth.
Take away: Based on these observations and when the recession will be as mild as expected, there will be most likely continued growth
in the market for digitization projects based most modern technologies and skills. The labor markets will remain tight and the war for talent continues. New technologies
as the adoption of AI is causing productivity gains on the IT and the business side. Cash burning businesses will be under pressure
to restructure and seek fundings if they haven't got a superior business model or technology. Tech experts released will find a new job easily. All of this will most likely not cause the same massive bubble burst as in 2001 ff.
Safe Harbour:
This blog may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the current opinion on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these statements, or base any decision on this blog, which reflect the opinion only as of the date of this presentation. Please keep in mind that the author will not obligating himself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.
Growing the business is on the agenda of almost very board room. Expectations are high, a business plan can be created quickly but achieving growth isn't as easy. To gain market share your company needs to beat market growth but how can this be done.
On our famous online book store you find far over 60.000 books on strategy but only a good 4.000 on strategy execution or implementation. There are far more universities that offer marketing and only a few on sales as a major. Creating the ambition, the project goals, the strategy is a cool thing and requires great thinkers. Taking the things to daily execution requires an additional skill which is rare, may be perceived as boring but is the key success factor for every company.
You receive a new project and on the first view it looks complex and you need to get your arms around it. How can you structure a complex situation to discover various perspectives and approaches. At C-Level you may not even have all the information or expertise to resolve it on your own. Some ideas that worked for me.
You may have seen the rise of tech companies at the end of 90th of last century. Web Content, eCommerce and startups were the exciting topics, til the point when the dotcom bubble burst. It was the time when salaries went crazy in this sector, the company evaluations and stock markets were on all time high and venture capital market was overheated.
Marketing budgets are always a discussion topic. What can a CEO expect if a percentage of revenue is spent for corporate marketing? Have the goals been defined and expectations aligned. Marketing can not meet expectations if the ecosystem is not supportive. Let's have a deeper look in the B2B sector and the dependencies.
Investors and shareholders ask their board members to scale up the business - grow faster than market and create value. That is a fair expectation. Let's have a look on some key success factors and considerations.
This is probably one of the hardest questions to answer. How much do I need to spend to win a customer and close a deal. This varies highly by market, product, target group, persona - let's have a look at the IT B2B market.
Cloud businesses achieve far higher company evaluations than traditional software companies. Rightly so, as their growth capability will out perform traditional software licenses and support business models.
Warum scheitert die Energiewende? Die Politik kann oder will nicht nachrechnen. Es liegt an einer kleinen Zahl um es vereinfacht darzustellen: Der Wirkfaktor (Wirkungsgrad etc.) der Wärmepumpe. Unser Strom ist viel zu teuer.
Every single day, when you open Social Media, you got told that there is a New Work and new leadership skills. It is indisputable that leadership has changed from decades ago and that is rightly so. In the light of the new resignation and war for talent, great leadership skills are fundamental for every company. But we should not miss out Expertise as a skill.