Ah those beautiful years 2001-2002!

by bold-lichterman

For the Millennial generation who did not really know it, the economic world went through a major crisis in 2001-2002, following what we called “the bursting of the bubble ” which began in March 2000 with the collapse of the Nasdaq, and continued until the end of 2002.

Start March 2000 the Nasdaq had climbed to more than 5,100 points … early October 2002 he hit a low point of 1100 points, i.e. a drop of nearly 80% in 2 and a half years.

It was indeed a major collapse, colossal, commensurate with the madness that had taken place in the previous 2 years, as this graph perfectly shows:

Ah those beautiful years 2001 2002

Besides, the 2008 crisis would appear almost like a nice correction …

At the start of 2000, young entrepreneurs who wanted to finance themselves announced “valuations” of 10 million francs, or 1.5 million euros for their powerpoint company. But 1 year later, it was the ice age, the easy money of the previous years had disappeared and the opportunistic entrepreneurs were leaving to get warm in their consulting companies or the large companies they had left, as quickly as they had arrived!

If we can’t really predict what the future holds, we can without a doubt bet that there will be here and there other periods of exuberant madness, as there will also be new stock market crashes and major crises that will follow them. It will happen, but we can’t say when. Tomorrow because of a rise in tensions with North Korea, in 6 months on the occasion of a hypothetical bursting of the bitcoin bubble, in 2 years if Uber collapses, he who has at one point been valued 68 billion dollars, in 5 years … Who knows.

We must all the same note that since 2009 Wall Street has risen almost uninterruptedly, without ever knowing the slightest correction (defined as a decrease of 10%, a krack being at -20%), the Nasdaq thus passing from 1300 points to close to 7000 today, i.e. x5 years in 8 years (equivalent to + 20% / year approximately). But to immediately put it into perspective, we will notice that the Nasdaq had tripled in just 18 months between late 1998 and early 2000, which was undoubtedly the sign of an irrational madness, very different from the strong but continuous surge that we have known since the beginning of 2009.

Going back to 2001-2002, I must say that with hindsight I am looking forward to some of those difficult years. After 2 easy lifting for Photoways between January (500,000 euros) and April 2000 (another 500,000 euros), a more complicated one in October 2000 (300,000 euros), we had to lift at the beginning of 2001, and there it was particularly sporty. Some shareholders at the time telling me that they no longer even had 1000 euros for Photoways, others conditioning their stake on what I also remit significantly.

I had complete confidence in the Photoways model because it was inherently virtuous: on the one hand high value provided to 1st customers who recognized it well (for example I received emails such as “you changed my life”, “thank you for existing” …), and on the other hand friendly economics (gross margin net of all variable costs greater than 50%). We just had to wait for the mature market, for the number of customers to rise as the rate of equipment in digital devices and broadband progressed (those who have known 56K modems will understand, only one photo showed 4 ′ to be uploaded at the time!).

If we were able to last 2 years, squeezing the buttocks, being frugal, and deploying active but smart marketing to publicize the service, we were most likely saved.

In April 2001, I succeeded in raising 800,000 euros, also putting it back out of my pocket and committing myself to stick with that for 2 years, at the cost of a massive dilution. But life is priceless. And I take the trouble to negotiate a very comfortable performance stock option plan, in case we are able to create value. All in all a very fair deal, because in April 2001 Photoways was short of cash, therefore at the bedside, and therefore de facto was not worth much.

Subsequently, Photoways will grow strongly, will be profitable from the summer of 2003, and will have a very good year 2004 (from memory 6 million euros in turnover and 600,000 euros in net income)… before a roundtable of 24 million euros in July 2005, at the time of record. Photoways will boost sales to 17 million euros in 2005, then acquire the English Photobox in spring 2006 (merger 62/38), which will become the Group’s global brand by ease, will establish itself as the clear European leader , and the whole will be sold for 550 million euros in October 2015, which again constitutes the record for an e-commerce company in France.

But in April 2001, in the freezing cold of the crisis, with these 800,000 euros raised, you first have to essentially tighten the buttocks, create value, hold on …

And there, no other alternative, no other choice than to be tenacious, frugal, rigorous, smart, creative, innovative, and to get the money where it is, namely from customers, with a focus on their satisfaction. All the necessities that make you, in the end, develop a beautiful profitable company and become a successful entrepreneur.

Somewhere, this period was an excellent school, much more formative certainly than if we had launched with a silver spoon in the mouth, a lot of money on a big valuation.

The reality is simply that too much money too fast has a good chance of killing niak, creativity, thoroughness, realism, the need to be smart, and the need to fetch every euro in turnover. at customers …

Knowing at a given time the famine, the lean cows, clearly helps to perform better when times are better, to magnify your sense of economic realities, and to give you a more precise sense of money!

In any case, that’s my conviction.

Echoing this, a great American VC said a few years ago that entrepreneurs who had struggled initially had a much better chance of succeeding afterwards …

The initial article is available on the author’s blog Michel de Guilhermier.

The expert:


Michel de Guilhermier is the president and founder of Day One Entrepreneurs & Partners.