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The recession and the Web design industry

Posted: 15 Apr 2010 09:20 AM PDT

in The recession and the Web design industry

By Andy Walpole

In the autumn of 2008, at least for a few weeks, it looked as if the very walls of capitalism were going to fall on to the heads of its participants. The once mighty Lehman Brothers, an American corporate monolith since the 19th century, imploded overnight on September 15 and declared itself bankrupt; and then in the following month $10 trillion in market capitalisation was lost from global markets.

There was panic on Wall Street, in the City of London, Berlin, Paris and most major financial centres as stocks crashed and the politicians spent billions of taxpayers money to prop up the banks.

The credit that corporations and individuals in the West had become dependent on evaporated overnight and forecasters were warning of an impending Great Depression.

As the vocal billionaire commentator George Soros stated:

"This is a crisis unlike any other. It's a total collapse of the financial system with tremendous implications for everyday life."

18 months later and the dark prophesies of a repeat of the 1930s have not materialised. Although the economies of Europe and North America have suffered greatly, those of Australia, China and India have remained relatively buoyant.

Within the Western economies different sectors have faired better than others. Manufacturing has been pulverised, but new media and the digital economy have continued to expand – albeit at a slower pace than previously expected. Consequently, the web design industry has faired reasonably well in these difficult times.

People in The recession and the Web design industry
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The dot com crash

For those that have been involved in the industry since its inception then this is the second time they have experienced a recession – the first being 10 years ago.

In the late 90s both investors and the technology sector rubbed off each other in an orgasm of expectation. Viewing the web – correctly, as it happens – as a new era in commerce, money was showered recklessly across digital businesses.

There were plenty of interesting ideas being flung around, but the technology was still relatively primitive and was not able to meet user expectations – in particular, internet connection speeds were very slow.

Speculators rushed in and the stocks of newly floated internet-based companies soared, but as it become apparent that they were investing in a dot com castle made of sand the NASDAQ collapsed as quickly as it had grown.

Tristan Louis found himself at the centre of the digital storm after being employed as a Senior Technical Advisor to the CEO of Boo.com – one of the more infamous failures from that era.

Boo.com was set up to sell fashion clothing across North America and Europe. It was a vast undertaking which, at the time, was like building a retail Roman Empire on the web.

And the management were completely out of their depth.

“Most days, to be honest, were days when we realized that there were substantial issues,” remembers Tristan today, “However, we felt that we could fix most of them before anyone noticed.

“The realization that Boo.com was in trouble, to me, was after the first week of sales. I realized that the amount of money we were bringing in was nowhere near the amount we needed to bring in to justify our valuation”.

Incredible as it may sound today but Boo.com went through $188 million of VC money in six months and all without a development plan. When Tristan started working there in the summer of 1999 the launch was already delayed and although he tried to implement a structured plan it was too little too late.

When the eCommerce company entered the fledgling commercial market six months after it’s original launch date it was severely panned for its poor user experience. The frontend of the site was heavily reliant on JavaScript and Flash and all at time when the vast majority of internet users were connected via dial-up.

Boo.com is still remembered today as a notable failure of that era but there were many others in the whirlwind of madness that people like Tristan Louis were sucked up in to:

“I felt that things couldn’t go on forever but, at the same time, that feeling kept getting challenged. I thought the market would crash in 1998. Then in 1999. Then in 2000.

“The issues now faced by economies around the world are much larger than any of the issues we faced. However, just as the dotcom world faced itself on the edge of destruction – remember that a majority of dotcoms didn’t survive the dotcom crash – we are now faced with an economy that has been on the brink”.

Boo-com in The recession and the Web design industry
Dot com internet failure boo.com