The Wheel Turns
Note: I originally posted this on Quora in response to the question "what was Silicon Valley like after the dot-com bubble burst?" Given that things have started to look more than a bit "frothy" around here - and given that leaving this on Quora means no-one will see it (even as compared to this blog with its 16 readers) - I figured I'd repost my answer here.
It depended on who you were and where you were.
Let me explain... at that time (IMHO) there were two types of people working in Bay Area dot-coms.
The first group were what I'll call the Originals. These were the people who started doing web stuff in 92/93. They were largely true believers - and extreme form of idealistic early adopter. As one of these people, I can say that we honestly believed that we were changing the world. We were democratizing content, changing business models, disrupting entire industries. We were revolutionaries who were going to shake the status quo until all the dinosaur businesses came tumbling down.
The second group were what I'll call the Carpetbaggers. These were the people who (in 97/98/99) noticed the boom and instead of taking jobs at Morgan Stanley or Enron or Bain or Oracle moved to the Bay Area and joined dot-coms. Their dream was less revolutionary and more mercenary. They saw a huge new industry being created and realized that could accelerate their earnings and their career by jumping in.
When the shit hit the fan I think that most of the Carpetbaggers kind of saw it coming. Sure, you had the folks who'd bought $1M houses on no-money-down mortgages based on unrealized returns... but they were somewhat uncommon. For most of these folks the crash kind of turned into a big "eviction" party of sorts. People ran around trying to grab the aeron chairs and computers and such from their offices as they were closed. People went to rooftop cocktail parties to celebrate layoffs and went to raves to say goodbye to friends moving back to New York or LA. There was a "last round" kind of feeling that was half sad and half "what a ride."
For the Originals, however, it was the end of a dream. The revolution had failed, the dreams didn't come true. The vision had been slowly co-opted and then undercut and then imploded. For these folks, the period after the crash was hugely depressing. For some, it was a call to change their lives. People moved to the desert, changed careers to "something more meaningful" or simply went wandering for a bit. These people had parties as well - but they felt more like wakes. A lot of these folks had advanced in their careers (due to the headstart they had) to the point where the actual crash itself was deeply painful. I know that I had to personally lay off a ton of people (shutting down entire offices). For zealots and idealists - this was a tough tough time.
After everything shook out, the Bay Area effectively returned to life as you would have recognized it circa 1990 or so. Tech retreated to the enterprise. Jobs required effort, ability and connections to land. Compensation became standard again. Rents dropped some - but the big deal was that you could actually FIND a place to live again. Restaurants in SOMA closed.
There was a sort of collective hangover at that point. Everyone was a little listless. A little irritable. A little grey and used feeling.
And then the wheel turned again. And there were new true believers (a new generation of Originals). And the Carpetbaggers started showing up again.
Here we are now.