What I Saw at the Meltdown (Working for a Dot-Com)

The American Prowler ^ | /21/2005 | Paul Beston

[nickcarraway]

NEW YORK -- Last week marked five years since the stock market bubble finally began to burst. The Nasdaq hit its all-time high on March 10, 2000, and then began a steady plunge that marked the birth of a long bear market.

The long bull market that preceded it was a remarkable time, but also a costly one. On the plus side, we got a technology whose transformational effects can't be overstated. On the down side, the dawn of the Internet also spawned the dot-com craze, one of the loopier periods in American business history and proof positive that so long as there are human beings, we will remain vulnerable to the Utopian impulse.

I know: I was there. Well, sort of.

In keeping with a lifelong habit of boarding trains just as they are leaving the station, I joined a Manhattan-based dot-com in March 2000. The company was actually not a dot-com strictly speaking, in that its product was not a website hawking goods or distributing content, but its fortunes, such as they were, relied on the continued boom of what was then called the New Economy.

Like most dot-coms, the company had no profits to speak of, and it had been trying longer than most. The leadership was not concerned, however. On the contrary, when I joined that March the mood was euphoric. Convinced they were in the vanguard of a new way of doing business and that naysayers just didn't "get it," the leadership instituted a massive hiring plan.

"Right now, the priority is to get big," the CEO told employees at my first company meeting. "We need to ramp up the hiring process."

I wondered how more hiring was going to help us get to profitability sooner, but then I was pretty new to the business world and figured I was being small-minded. No one else seemed concerned about profitability, and they were all so bright. Most company meetings were spent mocking our competitors or old-line, established companies that any day now would wash up on the rocks of obsolescence. Profitability was not mocked so much as ignored.

The HR department instituted a lavish employee entertainment program, with regular company parties, cruises, and a raft of perks and benefits. Fortunately, it never got to where employees were playing foosball in the kitchen, or bringing their dogs to work, but hey, we were New Yorkers, not San Franciscans.

Still, self-indulgence was the rule: to this end, employees generally chose their own job titles. As Manager of Corporate Communications, I managed no one and reported to a Director of Corporate Communications, who directed me and not much else except an occasionally sharp British wit. We worked with a VP of Marketing who would have been fired for sexual harassment before lunch at any reputable company; he supervised a Marketing Director, who did all the real work in the department. Weekly marketing meetings were a frontal assault on stale old concepts like project management and accountability, along with extensive discussion of new movies. When it came to work, efforts were modest.

"I'm sending out an e-mail a day on this," the VP said, referring to whatever spontaneous initiative we were pursuing that week on company debt. He could only fit in one e-mail a day because the rest of the time he was web surfing (a popular employee pastime) or ogling women half his age. When some in the marketing department couldn't get out of bed in time for our 11:00 meetings, he helpfully moved them to afternoons.

Our ostensible mission was to "brand" the company and increase visibility, but this was a tall order because none of us was entirely sure what the company did. We were struggling because the CEO kept changing his mind about that, and also because, all in all, the company really didn't do much. Given this vacuum, others in the company were free to define what they did almost however they wished.

MY FAVORITE SELF-APPOINTED fiefdom belonged to the 24-year-old Director of Software Architecture. He was in charge of the company's "technology platform," which was, of course, a half-baked nonstarter designed to burn cash. He heard that I had been assigned to write some copy on the technology and took me out to lunch, wherein he ambushed me with geek questions, shaking his head as I demonstrated my ignorance of APIs and the changes to human consciousness that were just around the corner.

"How can you write about the platform when you don't understand it?" he fumed. "We're trying to change the world here." The Architect, as I came to view him, saw himself as a new mandarin of the digerati, and he was dancing on my analog grave. I wondered why I'd ever left the nonprofits.

Another fiefdom was inhabited by a lovely Spanish woman who came in at 11 and left at three every day. She always dressed like she was going out to a very upscale after-hours club, which in a sense is what the company was, except it kept shorter hours. No one really knew what she did. She was in charge of competitive research one month, quantitative analytics another. All anyone knew was that she was beautiful and had a hypnotic voice, and for a very long time, this more than sufficed. Some colleagues liked to leave her voicemails just so they could hear her outgoing message.

"I think she was the most beautiful woman I've ever seen," an old colleague told me recently. "What did she do, though? Was she in marketing?"

When the market started hemorrhaging, the leadership was very slow to react. Hiring continued for a time, and the delusional company meetings persisted for much longer. Morale remained high since the CEO steadfastly refused to lay off anyone, thereby upholding the company's core value, immunity from consequences. We staggered through the rest of 2000 as the dot-com collapse became first a trend and then a fait accompli. But the values of the new utopian capitalism died hard.

Finally in early 2001, the layoffs began, first in a surgical strike that the CEO promised was a one-time event, and then in ongoing, and often unannounced, waves. People finally began to lose faith, and they scrambled for soft landings, but the job market was none too hospitable. Those of us who remained took on more responsibility, at least in a manner of speaking. I began managing a graphic designer who reported to work sporadically, with excuses for his absences ranging from apparently ongoing deaths in the family, to a sudden marriage, to troubles with the INS. HR was very supportive of me in making clear to him that if he messed up for a seventeenth time, he was really going to be in trouble.

The new realities were most bitter for the company's legion of younger employees, many of whom were working their first job after school. For them, the dot-coms had been a glorious extension of college, with salary and benefits thrown in. Now it was all crashing down and they would have to get real jobs. It was reminiscent of the 1960s, when the student radicals had to traipse off to graduate school once the fun was over burning flags and slandering soldiers.

By the time the planes hit on September 11, 2001, the company was down to about half of its peak size. The events of that day, and their devastating effect on the economy, accelerated the shakeout. I knew that my own days were numbered, but I wasn't having any luck in the job market. I managed to hold on at the company for another six months.

AS DIFFICULT AS THAT PERIOD was for everyone -- the recession may have started with the dot-coms, but it didn't end there -- I couldn't help but find pleasure in seeing the guilty punished. The many industry magazines devoted to Internet coverage shrunk from 200-page, ad-laden manifestos, to 80-page, elegiac husks. Underlying the post-mortems was the barely-contained rage that the house party had ended, and that accountability had returned like a couple of angry parents. I thought that this must have been what it was like to read Ramparts after Nixon was re-elected.

Now it all seems so much further away than five years. Our culture purges dead wood and elevates upstarts with such ruthless rapidity that the dot-com euphoria hardly seems any more relevant in 2005 than the pet rock craze of the 1970s. It was just one of those moments in time when a group of people -- Investors? Venture capitalists? Journalists? All of us? -- went a little mad, but the spasm passed.

The technology marches on, and god bless it. The culture is gone, and good riddance. Or, as one of my colleagues used to say at the end of every vaporous marketing meeting: "Whatever, dude."

Paul Beston is a writer in New York City.

[PBRSTREETGANG]

"We need to talk about your TPS reports."

[beaver fever]

You rock!

Although I think my Hawaiian parrots are going to be jealous of the eagle.

Oh well I guess they'll just have to get over it.

[RippleFire]

"I think she was the most beautiful woman I've ever seen," an old colleague told me recently. "What did she do, though? Was she in marketing?"

LOL

[expat_panama]

 "the stock market bubble finally began to burst...  ...Nasdaq hit its all-time high...  ... then began a steady plunge that marked the birth of a long bear market."

Where's the 'barf alert'. 

This article is just the kind of stuff that most people just lap up like kittens.   Everyone likes to talk about the clowns that got swept up in the fad and nobody sees the majority that moved their money out of tech stocks into large caps (in 2000) then into small caps ('01 to present).

Mar. '00 was a shift out of tech stocks.  The "market crash" (drop in prices of all kinds of stocks) happened right after 9/11--followed by a recovery.  Right now we're getting a shift out of housing stocks.  Big deal.

Back in '91 I was in a bank listening to a manager brag about how his fund had bailed out safely in mid '87.   After I pressed him he admitted that they'd also missed out on prices surpassing '87 peaks just two years later.

[kevkrom]

I don't have horror stories this bad, but I worked at a small contracting firm that sold a lot of services to these clueless dot-coms ("selling shovels to gold-diggers", as my boss called it). The worst case I deal with was a company with no busienss plan and no revenue model getting $10 million in venture capital. The investor's first request: develop a business plan. Shouldn't that have been done before the investment?

These guys were also kiting checks to us while trying to secure funds...

[stacytec]

This company sounded doomed from the getgo. I would have been sending out my resume the second I sat in one of those meetings.

[ItsOurTimeNow]

I was just about to say the same thing. It's eerily familiar to the "Web Site Development, Marketing, and Strategy" firm that I worked for in 2000.

The entire sales staff was laid off - because the company wasn't making enough money. So, to the President, who had just purchased an Audi A6, it made sense to lay off the only people who bring in new business.

[clee1]

Oh yeah....

People running businesses just because they received venture capital to do so; regardless of the facts that they a) had no business management experience, and b) had no reasonable expectation of earning a profit.

Silly, in retrospect.

[T-Bird45]

The culture is gone, and good riddance. Or, as one of my colleagues used to say at the end of every vaporous marketing meeting: "Whatever, dude."

His colleague's saying reminds me of the saying over 20 years ago after oil prices collapsed and caused the speculation house of cards to come down with it, taking banks down.

"God, please send us another oil boom -- we promise not to piss it away."

[ItsOurTimeNow]

Exactly.

We had a "Chief People Officer" - much like the title of Chief Executive Officer, it was a very well-paid position.

The CPO, as she preferred to be called, was a battle-axe feminist with a degree in Psychology. Her "job" was to mediate between personnel disputes. That's it. $90 grand a year to sit in an office, play solitaire, and occasionally get involved in the personal lives of co-workers.

A vastly over-paid busybody, yet her position outlasted those in both the sales and marketing departments.

[ReagansShinyHair]

Investors can be greedy, greedy, greedy. I briefly did investgative work for investors, such as background checks on CEOs of companies they wanted to inveset in. Even when I reported that the CEO had previously defrauded people of boatloads of money, the investors would look at me and say, "But this deal sounds really good!" If you're so blinded by greed that you'll hand your money over to a known white-collar criminal, you get what you deserve.

[redgolum]

I remember in 2000 my boss, a recent grad of a prestigious MBA school, telling me, a farm boy that wandered into the engineering field, that there was no reason the boom couldn't last forever.

I stopped putting money in my 401 k at that point. All the options were for tech stocks, and I had figured out that the Internet boom was all vapor.

[clee1]

Uh huh. Me too.

I pulled all my money out of the tech sector about 6 months before the crash. People said I was crazy.

However, while they all lost tons of money, I made out like a bandit!

[JudgemAll]

Something I dont understand. Most people have money being hoarded somewhere and ready to be poured out at a tempted sin's notice. What made all these people with all this money throw it at the Dotcoms and not some other project?

Of course Clinton largess and issuance of taxpayer dollars to banks and what not must have helped.

[bert]

.....I wondered why I'd ever left the nonprofits....

His writing implies he never did and still hasn't.

[kb2614]

I saw the memo.

;-)

[KevinDavis]

I had a job interview with a dot-com company that had it's own programming language.

[groanup]

This says it all:

I couldn't help but find pleasure in seeing the guilty punished.

"The fault lies not in the starts, Cassius. It lies with us."

Those weren't real jobs.

[clarissaexplainsitall]

Whatever, dude.

[engrpat]

During that period I worked with a group of guys that had the market all figured out, at leas they thought they did. They were day trading the dot com market, taking out second mortgages, draining all savings just to put in the market. They couldn't understand why I wouldn't join them..well besides being cheap...I just couldn't figure how a stockholder could make money when the company didn't the response was, "you don't understand the new economy." Long story short, I retired 4 years ago at age 60, they are my age and older and are still working to payoff debts from the bust. They were right, I didn't understand the new economy.