The scale of the global IT collapse in 2000 shocked the investment community
Ten years ago IT entrepreneur Rod Drury was in San Jose airport when he heard some bad news about IBM.
"And we watched their share price tank and then suddenly the dominoes started to fall," Drury says.
Over the course of a few days the whole world changed, he says.
"The fundamental assumptions that things are moving to the web is still absolutely valid ... it was just too hyped up at the time."
But as technology stocks tumbled Drury, co-founder and chief executive of online accounting company Xero, was already thinking about the possibility of another boom.
"I think the biggest emotion I had going through it was, 'I hope I'm around when this [boom] happens again'."
However, Drury does not think the technology market will boom as it did a decade ago.
"It's much more sensible, it's actually backed by facts now whereas before it was just air and hype," he says.
"It feels like now that the promise of the internet that was put out there in 2000 is actually being delivered on in 2010."
In 1999 the applications company co-founded by Drury, Glazier Systems, was sold to Advantage Group for about $7.1 million.
Advantage Group, which enjoyed fast growth, bullish forecasts and a glamorous owner in Eric Watson, epitomised the hype surrounding the IT boom.
Before the global bubble burst shares in Advantage in 1999 hit a high of $5.65 but by 2002 they were worth only 33c.
Brett O'Riley, chief executive of industry body NZICT Group, says the first sign of trouble was in debt markets during the first part of 2000.
"So where previously there had been enormous amounts of debt finance available for companies, that started to tank," he says.
"And I can remember being in New York in 2000 talking to equity investors and we were basically arriving in one door as analysts were walking out the other carrying the contents of their desk in a box."
Market commentator Arthur Lim, a senior investment analyst in Auckland back in 2000, says the scale of the global collapse shocked the investment community.
New Zealand was lucky it had not caught the investment fever to the same extent as the US or Australia and did not have that many IT-type companies on the market, Lim says.
"So we were spared to a great extent."
But the bubble of 2000 was not the first.
"Essentially we were going back to the way it was in 1986 whereby you could basically flog anything related to IT in the market," Lim says.
"And the share prices would head up to the roof and if you throw in a name like Eric Watson the share price would double virtually overnight."
As technology fever spread around the globe analysts in the US began using new revenue-based valuations, rather than the more common profit or cashflow methods, to justify unrealistic stock prices, Lim says.
"None of those [more common methods] could justify the kind of prices that these dotcom companies especially were trading at," he says.
"When the whole thing collapsed I think everybody realised it was just the emperors have no clothes."
However, during recent years technology stocks have been coming into their own, with companies like Google showing how to actually make money, he says.
Lim does not expect to see a repeat of the tech bubble of 2000.
"But the market unfortunately as we've seen over the years has got a propensity to latch on to the next big things."