(Way back in 2004, I ambitiously started a blog called Telecommedy with the intention of writing on it every day. I stopped writing there in 2005. C'est la guerre. In the interest of posterity and hubris, I am slowly moving those posts over here so that all of this inanity can be concentrated in a single forum and not pollute the intenets any more than necessary.)
I know you've heard of the bubble. It's the mysterious force that appeared around 2001 and shrank your 401(k), took your job, and ogled your wife when you weren't looking. For those of us who lived in the bubble, it was a beautiful place, filled with happy people, optimism, milk, and honey (the milk and honey were usually added to lattes). Now that it is gone, some of us still like to gather in the local watering hole and reminisce about days gone by.
How much do you want?
In the heyday of the bubble, good employees (and many mediocre employees) received recruiter calls on a daily basis. These grew increasingly ridiculous as the frenzy exploded, moving from calls gauging interest to calls offering outrageous employment packages (moving expenses! stock options! company car! supermodel!). It made everyone feel wanted, and allowed employees a chance to take some risks. The most popular sentiment, one that was heard in nearly every startup company, was "If they fail, I'll just get another job at another company making more money." And it was true - working at a company that failed was not seen as a blot on your record, but instead as valuable startup experience, especially if you were an officer (CEO, CTO, VP of Anything) in the failed company. And no, that has nothing to do with why so many companies failed in the end. Really.
Most of the startup companies of the bubble era were located in California, although a significant number sprung up in the Dallas and Boston areas. When the boom was really ... um, "booming", there were startups in every corner of the globe. However, there was no reason to despair if you didn't live near a startup, as most of them had nearly unlimited travel budgets and would let you live just about anywhere that you wanted to. Relocation packages were incredibly generous and teleworking was popular for just about everyone except hardware engineers (no, even in those heady days you couldn't get a company to build a lab in your basement for you). Even in California, employees would commute long distances by living in the Hills and working in the Valley. (Ok, that sounds like something out of a revisionist Civil War drama starring Australian actors, but it's not. Ask a Californian for details. Most are more than willing to explain this issue to you ad nauseum.) Since people were working very long hours, they just crashed at work or in a company-rented apartment nearby. True story: it was possible during the boom to pull into the parking lot of a seedy condominium complex in San Jose and park next to a dozen cards that each cost more than the condos. They pay was great, the lifestyle not so much.
One of the more coveted items of the telecomm bubble era was the stock option. Nearly everyone has heard the phrase, but very few really understand the concept. Basically, the company gives an employee, investor, friend of the officer, ex-wife of the officer, or customer the right to purchase stock in the company at a certain price. That price is ludicrously low - usually pennies - but it's still a lot more than the startup company is worth at the time that the options are granted. The employee then works like a dog for years in the hopes that someday, somehow, the company will go public ("IPO") or get sold ("cash in") and the options will be worth something more than the option price ("strike price"), at which time the IRS ("insert profanity here") will take away most of the gains to pay for important government expenses ("Congressional swimming pool").
Unbeknownst to many people, but knownst to option-holding telecommies, there is an insidious law in the US called the AMT (Alternative Minimum Tax, or Aggravating Money Transfer) that appears to be specifically designed to attack innocent, hard-working, loyal, puppy-petting, kitten-loving, baby-kissing telecomm workers. Here's how it works. You, Mr. Employee are granted a small bucketfull of stock options at 10 cents apiece. You don't actually pay money for them, you can't sell them to anyone, and you don't actually own all of them until you labor here for the next four years, but they are yours nonetheless. At the end of your four-year incarceration, your company is one of the lucky few to go public. The stock is now trading at 10 dollars, and you have started pricing out a Porsche turbo that costs more than your college tuition. But, of course, you can't sell them yet. Employees are "locked in" and can only watch as investors (who never worked for the company and can't even spell "SONET") trade the stock for enormous returns. Six months later, the lockup ends and you decide to actually pay for your options so that you can sell them at your leisure. You write a check to the company for 10 cents per share AND THEN PAY TAXES ON A GAIN OF $9.90 PER SHARE. That's right, even without ever selling the stock and without ever realizing a penny in gain, you owe a HUGE amount to the US government. Sounds fair, no?
But wait, it gets better. Suppose you believe in your company and are convinced that it will be the one to weather the coming storm. You don't sell your stock and eventually it drops to 10 cents a share. No harm, no foul - right? You took a risk, but at least you didn't lose money. WRONG! Your friendly neighborhood IRS agent still wants that AMT. Yep, you can actually lose money on the stock and still have to pay AMT on the initial purchase. There are hundreds of people who bought their stock options and didn't make enough to pay the taxes in the end. There are even some who took out loans from the company to exercise their options early (a way to avoid AMT - you're buying when they're only worth 10 cents). These people actually OWE money to their company for something that they never owned. Imagine how fun that scenario is - you get laid off and get a bill for your options at the same time. It's like having your girlfriend break up with you and stealing your car, too, although with less chance of a good-bye snuggle.
The few, the proud, the lucky bastards
Yes, there are some people who made money during the bubble, and more power to them. Anyone who worked long, hard hours for little pay deserves to make a few bucks in the end. Many people who made money on their initial stock options put the money into other telecomm stocks and lost their shirts in a more complex process than simply failing and having the IRS take their house. However, a lucky few took their money out of telecom at just the right time. Maybe they were smart, maybe they were lucky. Personally, I consider them smart when I need a loan and lucky when they refuse to see the merits of my request, but you can judge them in whichever way your personal religion allows.
The bubble was fun. Geekniks were huge parties, nearly everyone was in a good mood, obscure relatives thought you were smart, and high-school reunions were an opportunity to gloat. Now that the bubble has popped, most telecommies are back to working at a normal pace - some with a little more debt, some with a turbo Porsche parked in the garage. And nearly everyone is just waiting for the next bubble to come along so that THIS time they can do it right. Because surely we won't make the same mistakes this time - plus we still have 28 payments left on the Porsche.