Of the newer batch of technology companies, Facebook, as a very profitable enterprise, is a rare exception. Other big names like Netflix, Tesla, and the still private Uber are burning through billions of dollars each year as they try to scale. The promise is that they will one day look like Amazon when they do, dominating markets — but with the financial security of massive levels of cash flow to reinvest in still enviable growth markets.

Nevertheless if we go back to 2001 and the Internet bust, things did not look so good for Amazon. There was even talk of Amazon’s going bankrupt. I think what happened to Amazon leading up to the bust and afterwards is instructive when thinking about the new crop of technology darlings.

Let’s start with a price chart from the internet boom and bust. What you see is a double top in 1999 above $100 a share before Amazon lost over 95% of its value and fell to a low of almost $5.50.

Source: Yahoo Finance

With Amazon trading above $1350 a share, you are up 13x in the 19-odd years from the peak during the Internet Bubble and almost 250x from the lows in 2001. That is a very enviable recovery. So clearly, becoming the next Amazon would be a very good thing.

Now, if we go back to the Internet bust, Amazon was a loss-making company that was trying to grow as fast as it could into as many online retail spaces as it could, while burning through a huge amount of cash to fuel that growth. When the Internet boom collapsed, the company was left exposed because it not only had a large cash burn rate, it also had started to take on debt to fuel growth.

The denouement came in February 2001 with a negative research note from Lehman Brothers’ Ravi Suria. The Lehman convertible bond analyst covered Amazon because the Internet company had issued convertible debt at the top of the market, since the debentures offered bond investors an attractive upside due to a likely conversion into equity as stock prices rose. That held down the funding costs for Amazon. The company issued 10-year paper at 4.75% in January 1999 and then still more debt in February 2000 at 6.75%. Both issues were junk-rated.