Is the Tech Bubble About to Burst?
NEW YORK (TheStreet) -- In September of 1999, I moved to San Francisco and, for about two years, worked for a company that sells sports hospitality packages to corporations. In the shell of a nut, my job was to cold call Presidents, CEOs and VPs of Sales at companies -- from the Fortune 500 to recent IPOs -- and pitch them on ticket and hospitality packages for themselves and their clients to events ranging from the Masters to the Super Bowl. The size of a typical deal -- anywhere from $10,000 to more than $100,000.
And, in large enough numbers to register, these guys spent money like drunken sailors. Usually their company's money, but, on occasion, their own fresh IPO proceeds.
For example, there was a guy named Woody Shackleton, VP of Sales at Foundry Networks, established in 1996, public in 1999 and sold to Brocade Communications (BRCD) in 2008. Shackleton, now on the Michael J. Fox Foundation board, cashed in on what was, at the time, the biggest IPO debut ever. Not only did he spend money with me to send his clients to events, he took about 15 seconds to decide on a $30,000 purchase to attend the Major League Baseball All-Star Game in Seattle with his kid.
Looking back, that $30,000 splurge seems like nothing when you consider I witnessed it as a 25-year old. Plus, so many stock option-fueled and tech-related obscenities were happening at the time and have happened since. For goodness sake, just a few days ago we had an app that says "Yo" receive more than a million dollars in funding. Not only did it receive funding, but a gaggle of obnoxious venture capitalists and "entrepreneurs" defended the insanity.
The defenses of "Yo" triggered an uneasy feeling inside of me. And it's a sense similar to the one I had back in 1999-2000 when it didn't take a whole ton of persuasion -- just a little persistent aggressiveness -- to get IPO millionaires to spend their new-found riches on over-priced hospitality. That willingness to spend came crashing down with the stock market, particularly the tech sector.
After the implosion, you couldn't get companies who routinely dropped six figures on sporting events to spend a dime. Closing a $10,000-$15,000 deal was like pulling teeth. And I'm talking about from IPOs such as Foundry Networks to huge divisions within companies such as Nokia (NOK) (Nokia was still a pretty big deal in 2000).