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This article was published on June 26, 2020

Leading startups through dot-com and ’08 crash makes me optimistic about COVID

From the dot-com crash to COVID — what I’ve learned leading startups through crises

Leading startups through dot-com and ’08 crash makes me optimistic about COVID
William Reeve
Story by

William Reeve

CEO, Goodlord

William Reeve is CEO of, non-Exec Chairman of Nutmeg, and non-Exec Director at Dunelm PLC. He is a serial entrepreneur, who co-f William Reeve is CEO of, non-Exec Chairman of Nutmeg, and non-Exec Director at Dunelm PLC. He is a serial entrepreneur, who co-founded Fletcher Research, and Secret Escapes, as well as an experienced angel investor. He has previously served in a number of the leading internet businesses in the UK/Ireland as a founder, in an operating role, in a non-executive role, or as an investor.

A crisis can feel like the end of the world. When the dot-com bubble burst in 2001, it ripped the heart out of a new industry — London’s Soho district felt like it had tumbleweed blowing through it. Then 2008 rolled along and we found out what a true crisis looked like. Or at least we thought we did. The last few months have seen a global meltdown of unfathomable proportions. 

Yet whilst this crisis will hit deeper and wider than the others I’ve led businesses through, there are also reasons why running a startup now is a better place to be than when the bubble burst or the financial crisis hit. 

The dot-com crash in 2001 truly was the bursting of a bubble. Too many poor companies had been buoyed up by the wave of internet-induced hype. When the party ended, the fundamental weaknesses of the UK’s — and the world’s — dot-com scene were revealed. 

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Companies who had more solid foundations were, mostly, able to weather the storm. But it was still a rocky period for all involved, including those in the advertising, media, and creative industries who’d boomed as the bubble grew. 

Different landscape

At the time, there wasn’t much of a VC community, nor a deeply entrenched tech ecosystem to fall back on. So, back in 2001 the only solution was to focus on old fashioned profitability.

IPOs were no longer an option, exits were scarce, so survival became the aim of the game. Those with sensible, scalable businesses were able to cling on and ride it out. 

My business back then, Forrester Research, had remained grounded even as it doubled in size in two years, and when it then halved in size rapidly after the bubble burst, it had a profitable core business model to revert to — and the business pushes on today, twenty years later.

Many of its then rivals, such as Jupiter Communications, MAID/Dialog and ‘First Tuesday’, who had forsworn profitability as a brake on growth, never developed the right profit habits and are no longer here to tell their stories.  

Weathering the next storm

The 2008 financial crisis called for a different kind of leadership. By the time Sequoia released their oft quoted RIP Good Times presentation, rumblings of a major crunch had been brewing for months. Those of us in tech had felt relatively insulated from what we perceived to be a private equity and credit industry issue.

The businesses I was involved with, including LOVEFiLM, and the nascent Graze and Zoopla, seemed to be doing well. Then Lehman Brothers collapsed and we couldn’t ignore it any longer.

Bankers, lawyers, and property businesses were all hit extremely hard, and the world of startups had to weather the storm. With bank runs and bailouts even of the most famous names, everyone was deeply spooked. 

But the market was in a stronger position than before. Funding rounds collapsed, but others were saved by a recently augmented community of savvy VCs who saw opportunities. Forward thinking scale-ups acquired struggling competitors for a song, as Zoopla did when it acquired PropertyFinder from News Corp in 2009.

IPOs dried up once more, but for companies who weren’t publicly listed, consumer demand was still there to be won. Ambitious leadership and long-term planning were the focus; this was the era that movie streaming finally came of age, Apple launched its App Store, and eBay sold Skype to venture capitalists for $2 billion. 

The financial crash was drawn out over two years, and the recovery arguably took longer. Smart founders took heed — they streamlined offerings, focused more on digitization, invested in stronger marketing strategies, and prioritized scalability. Crucially, those who remembered Sequoia’s 2008 advice of “do one cut now that’s deeper than you think” were those who moved fastest in March 2020. 

The silver lining today

Because the COVID-19 crisis has been like no other. It hit the whole world in the space of a few weeks and no-one has been spared the impact. Never have we felt so acutely aware of the global, interconnected nature of the economies we have built.

Startups in the travel and leisure space were totaled immediately by the speed of the fall-out. Few others have been immune to the colossal economic and social shifts we’ve experienced. 

Yet there are reasons to be cheerful when it comes to the UK’s tech community. Compared to 2001 and 2008, the startup ecosystem of 2020 is strong.

We have a genuine VC community, all operating on their own independent funding cycles and therefore, theoretically, relatively insulated from the sharp shock of the past few months. Exits have been canceled, funding is being held back and valuations have naturally taken a hit, but the capital remains.

Alongside VCs, we have a wider investment landscape that is much more established. From the British Business Bank, to Innovate UK and the existence of venture debt providers such as Kreos and Silicon Valley Bank — more funding is available from more sources than ever before. Good ideas will continue to attract backing. 

Better startups than ever before

What we also have are better startups. Our tech community was thriving because it consisted of smart people, backed by smart investors, doing cool things that people were happy to pay for.

Unlike in 2001, or even 2008, these businesses care about revenue. They might not be profitable but they are — mostly — not profligate, and they know how to tighten belts accordingly. 

And whilst consumer demand is down, our psychology of how we pay for things has shifted in the last decade. Micro-payments and subscriptions to tech companies is de rigueur. We are better at monetizing our offerings, and the offerings themselves are fundamentally better. 

Music and video piracy has been replaced by subscription music and movie streaming; free VoIP services like Skype are being eclipsed by freemium Zoom; fintech leaders like Nutmeg and Transferwise have strong unit economics and proven business models, unlike their ancestors.  

Startups which have focused on cloud-based, scalable systems backed up by teams used to working from home are those who are handling this best.

Incumbent laggards who have long resisted the full digitization of their offerings are being rapidly outpaced by those who embraced it. Founders who lived through 2008 and learnt the lessons are seeing their experience pay dividends now. 

This isn’t to paint too rosy a picture of what is a crippling time for many. There will be scores of companies that can’t weather this storm. But there are glimmers of hope. Our startup infrastructure is one of the strongest in the world. The portfolio of UK-based tech companies is impressive, diverse, and well-backed. VCs and access to funding might be clipped, but it won’t disappear.

A crisis throws us into chaos, but technology provides the tools that enable life to go on. And the recovery shines a light on the role leadership, teamwork, and ingenuity has in the building of great businesses.

For entrepreneurs, now is time to put those qualities to the test, hold their nerve, and seek out a way forward that can survive in this strangest of new normals. 

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