Echoing a bunch of common responses: a lot of the crash and burns were reality catching up with wild expectations — we had business with pets.com and there were times where they had a room full of “technical” staff who had no idea how the web worked but were more or less openly counting down the days until they became rich. If you’re working somewhere where there isn’t a realistic plan for the numbers to work, that’s a good cue to reconsider your risk exposure.
That didn’t mean that people who were good didn’t also get hit, so there are two other points I’d consider: lots of the dotcom bubble workers spent money as quickly as they made it, often locking in fixed commitments like car payments or mortgages so they had only a short period of solvency if their income changed dramatically. Having reserves is a great peace of mind measure, as is knowing which expenses you could cut quickly if needed – especially if, say, you went from $$$ at a cool sexy company to $$ at a boring but stable job.
The other thing is considering correlated failures: if everyone around you works in the same industry, you’re going to be competing with them for jobs and unable to sell a house at a good price if the market sours broadly. That doesn't mean you should flee SV but you would want to be prepared to stay put for awhile with large reserves. Similarly, focusing your investments in the same field can end badly — here I’m thinking of a trend-following sales guy who got laid off and had to explain to his wife that he’d also put most of their savings into dotcom stocks which all tanked at the same time.
That didn’t mean that people who were good didn’t also get hit, so there are two other points I’d consider: lots of the dotcom bubble workers spent money as quickly as they made it, often locking in fixed commitments like car payments or mortgages so they had only a short period of solvency if their income changed dramatically. Having reserves is a great peace of mind measure, as is knowing which expenses you could cut quickly if needed – especially if, say, you went from $$$ at a cool sexy company to $$ at a boring but stable job.
The other thing is considering correlated failures: if everyone around you works in the same industry, you’re going to be competing with them for jobs and unable to sell a house at a good price if the market sours broadly. That doesn't mean you should flee SV but you would want to be prepared to stay put for awhile with large reserves. Similarly, focusing your investments in the same field can end badly — here I’m thinking of a trend-following sales guy who got laid off and had to explain to his wife that he’d also put most of their savings into dotcom stocks which all tanked at the same time.