What's Next for 'Dot-Com' Casualties?
Many Layoff Victims Face Anguish and Introspection
By LISA GIRION, Times Staff Writer
Sunday, November 26, 2000
When Bill Rosenkrantz was laid off last summer after 15 grueling months at a Los Angeles-based Internet company--his third start-up in four years--soul searching was as high on his agenda as was finding a job.
"I've really taken a step back and said, 'What do I really want?' " said the 33-year-old Washington native.
"I so much want to find the right thing, it almost prevents me from putting myself out there because I don't want to make that same mistake," he said. "It's made me a little gunshy."
"It" is the great Internet shakeout of 2000, the "dot-com" disaster that has slashed stock prices of dominant players such as Yahoo and forced others out altogether. Adios, Pets.com. Bye-bye, Pop.com. Sayonara, Mortgage.com. The failure and retrenchment announcements litter chat rooms like so many pink slips on factory floors.
An estimated 22,267 laid-off dot-com pioneers are reeling from the assault that the first major downturn in the nascent industry has made on their careers, personal lives and psyches. While association with a "dot-gone" has become a sort of "new-economy" badge of honor, the unease among the cyber class is as palpable today as was the sense of invulnerability only a few months ago.
And whether they are headed for the perceived safety of an established company or they can't wait to hitch up with the next start-up roller coaster, dot-goners are locked in a sort of grown-up game of musical chairs: Almost everybody wants to have his next gig in place before the music stops.
"We'll see some more," said Hal Varian, dean of UC Berkeley's School of Information Management. "I don't think we'll see an acceleration in the rate of failures, but I don't think we're out of the cycle yet. There are still some weak companies out there."
The shakeout is a predictable stage for a new industry, Varian said, recalling the auto industry recession of 1910 that shuttered all but a few of more than 240 companies that had jumped in between 1904 and 1908. Most of the castoff workers found jobs at Ford, which had figured out a better way to put cars together.
Experimentation and consolidation. "That's what we're seeing now," Varian said. "You have to expect this kind of thing."
However inevitable, the dot-com shakeout is a bracing jolt of reality. Although the layoffs so far probably amount to less than 1% of the estimated 2.3 million jobs that the U.S.-based Internet economy had created by 1999, their increasing frequency has injected a heavy dose of anguish, humility and introspection into the Information Age work force.
"People who have been working only when the times are good are now learning the harsh realities of economic cycles," said Annemarie Curry, managing director of Apex Direct Search Inc., a Los Angeles-area tech-sector search firm.
For all but the true techies, finding a job isn't the same cakewalk it was even a few months ago, headhunters and outplacement consultants said.
"You can't go wave your resume out on the street and get hired," said John A. Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago-based outplacement firm that has tracked dot-com layoffs since December.
Challenger's tally, which does not include November, reported 5,677 layoffs in October, the fifth record month in a row. Only two weeks into November, the number of dot-com shutdowns was on pace to exceed last month's record 22, said Tim Miller, president of Webmergers.com, a market research site based in San Francisco.
"It's getting very ugly," said Arnold Peter, a lawyer with Littler Mendelson, who negotiates "out deals" between executives and dot-coms not always able to live up to their financial pledges to employees. "It's pretty bad out there with a lot of these start-ups. They've just simply overcommitted themselves."
Having moved from Houston to San Francisco, Liz Nalbandian said she "was just settling in" as merchandising coordinator for TheMan.com when the site called it quits Nov. 1, less than a month after she started.
"I'm kind of upset, not mad or anything, but just kind of upset that I was hired on and then let go so easily," said Nalbandian, 24.
Now, she said, she is being "very picky about where I work because I don't want to work for another failing company again. Right now, with the dot-coms, I'm just not up for it."
Dot-com refugees fall into two camps, said career consultant Neal Lenarsky, who runs Burbank-based Strategic Transitions Inc. "One is 'Get me back into a big company, please. I want big assets. I want a big budget again. I don't want to have to raise a measly $5 million every few months."
"The second is those who got the entrepreneurial bug and they won't go back," Lenarsky said. "They'd rather live in a one-bedroom apartment. They want to go on to the next big thing. They are serial entrepreneurs who expect to have two, three, four or five failures before they have a success. They just don't want to go back [to a traditional company]. They'd rather not have oxygen."
Deborah Skelly, who spent seven months in the new economy, is wistful.
"I've never had a job that used every part of me--plus parts I never knew existed. It was very elating. I would get there early in the morning and I would think it was lunchtime and it would be 4 in the afternoon," said the former chief executive of Shoppingtheworld.com.
"The other side," she said, "is it is a wild ride and there is something to be said for being in a big company where you know you're getting your paycheck and there is some security."
Skelly was in New York City seeking financing for the designer apparel and accessories site "when the correction happened" last spring. By October, Skelly was winding the start-up down and trimming its staff of "really enthusiastic, really smart" fashionistas. Skelly, a former film production executive and William Morris talent agent, said it's too soon to say what she will do next.
Michael Dowling, another William Morris agent turned e-CEO, also is at a crossroads since shutting Ifuse.com, the Generation Y entertainment venture that he started with a partner in his dining room less than two years ago. Only six months after Ifuse's hip launch party at Bauhaus on La Brea, Dowling was overseeing the start-up's "emotionally wrenching" wind down.
"I still have the stomach for an earlier-stage company that has an interesting technology or product or service," said Dowling, 32. "I'm not as interested in going back into a big corporation."
The shakeout, a bit of a Rorschach test, has led others to conclude the opposite.
Options, schmoptions. They don't want to return to the Internet rat race, to 16-hour days and six-day weeks. The Gold Rush is over, they say, and lenient pets-at-work policies and catered lunches don't cut it. The only reason to trade a more normal existence for a dot-com, say several people on both sides of this decision, is to satisfy an entrepreneurial itch.
"The days of making millions of dollars are definitely over," said Sara Thomas, 33, who is looking to leave a Los Angeles dot-com that went through a round of layoffs recently.
"I don't even know if I was in it for that reason, but it definitely was a draw. But it's not worth giving up your whole life--my family, my friends. I just feel so disconnected from the world now. It's just a job. I just want to go and earn my paycheck like everybody else and be able to go home and enjoy my life."
The layoffs were almost as difficult for those left behind as for those who were let go, Thomas said. "It was pretty painful, very emotional. Everyone was crying. I had to let one person go. We haven't been the same since."
The camaraderie of a dot-com collapse is largely, and perhaps predictably, played out virtually.
"There was a great internal network of people at Pop. We exchanged e-mails with tips and offers," said David Bernstein, a content producer at Pop.com when it closed in September.
But some dot-gones are mourned more traditionally. When Julia Frazier's boss at Fastv.com told her the primary investor, a prince from the United Arab Emirates, had pulled the plug, she said the site's Fourth of July party that night turned into a staff wake.
"He said, 'Julia, can you call everyone and tell them they no longer have a job?' and I said, 'Are we still having the party? Are you still getting the keg?' "
Hitting the job market with all your blood-sweat-and-tears dot-com colleagues can be awkward, said Frazier, who was vice president of interactive services at Fastv.com, her eighth start-up experience. Instead, she decided to take a temporary consulting assignment, ease up on her hours and regroup.
"You feel a little exhausted. It's like when you get over a relationship but you're not ready for another one. You don't want to withdraw, but you don't know what you want to do next," Frazier said.
She views the layoffs as the unfortunate but inevitable downside of doing exhilarating work in a new industry.
"You have to go into these things knowing you are sticking your neck out. You are on the edge," Frazier said. "The thing about the bleeding edge you have to remember is you have to bleed. You can't be all shocked and dismayed. That's just part of it."
Samantha Martin figured that out, the second time she was laid off. The first time, when the Internet-related magazine she worked for folded, she said, "It was all rather traumatic. It was my first real job after school. It wasn't as easy as my second time around."
The second time, when TheMan.com shut down, Martin, 26, viewed her layoff as a "well-deserved vacation."
Still, it was not without its lesson. The job Martin is scheduled to start next week is with the online arm of a well-established bricks-and-mortar company. "I did my homework with this company," she said, "and I feel very comfortable that I won't have to go through the whole job-interviewing process again anytime soon."
Like Martin, Bill Rosenkrantz now knows what he doesn't want.
"I don't want to find myself at 45 afraid to buy a house because I don't know how long my job will last," said Rosenkrantz, whose resume includes an MBA from UCLA and a consulting stint at Deloitte & Touche.
He has had offers, but, five months after his layoff, Rosenkrantz hasn't found the job he wants.
"It really gives you a perspective," he said. "I want to do something I enjoy, something I believe in."
Nine months after moving his wife from New York City to San Francisco, Ty Wenger, former editor of the shuttered TheMan.com, said he is fielding offers to jump into the next big thing.
"Now what seems all the rage are books about the death of the Internet economy," Wenger said. "They are all in a tizzy to get their books out, so the cottage industry of failing dot-coms is going to survive for a while."
'Dot-Com' Job Cuts
Here's a look at layoffs at Internet "dot-com" companies from Dec. 1999 to Oct. 2000:
Total Layoffs
October: 5,677
Sectors With the Most Layoffs
Services: 8,113
Retail: 5,450
Health and fitness: 2,190
Portal: 1,786
Entertainment: 1,643
Source: Challenger, Gray & Christmas Inc.
Copyright 2000 Los Angeles Times