Laid-Off Dot-Commer? Let's Party by Michelle Delio
NEW YORK -- Yesterday you were worth $1 million on paper. Today you're calculating how much you can collect from unemployment.
The dark cloud of impending dot-com doom is spreading throughout the tech industry. Every day seems to bring news of another dot-demise, and suddenly the words, "I'm leaving to join an Internet startup" provoke not jealousy but snickers of disbelief.
In Manhattan, the state of the industry can be gauged by attending the monthly "pink slip party" for victims of dot-com downsizing, hosted by the Hired Guns consulting firm and held at Rebar, a popular downtown pub.
September has been a particularly harrowing month in the New York City area dot-com industry, with layoffs at Drinks.com, homePortfolio.com, Priceline, Kozmo, Deja.com, GovWorks, StarMedia and eBillboards, and closings at Miadora and Pseudo.
About 200 people now attend the monthly mixers, compared to 30 for the first pink-slip party held in July, said Hired Guns President Allison Hemming. It's a "safe haven for dot-com-miserating," she said.
The crowd typically includes a mix of the recently removed, those who suspect they might soon get pink-slipped, and currently employed people in search of a good time (and, one suspects, a tiny bit of gloating), along with recruiters and representatives of dot-com companies that are looking to hire.
"Attendance is completely dependent on who had a downsize that month. You can tell by the returns from our e-invitation what companies are sending out pink slips, as the RSVPs usually come in clumps," Hemming said.
Hemming says that the recent wave of layoffs and "restructurings" aren't the beginning of the end, but part of a cycle that is a natural element in the growth of the dot-com industry.
She thinks that entrepreneurs responded to the "land grab" and "build market share" mantras of venture capitalists by bulking up their headcount without examining the impact it would have on the bottom line.
"Then, when the investor community came back and began to enforce getting to profitability -- which, by the way, is not a bad thing -- cuts had to be made and clearly they cut the most bloated parts of the balance sheet: human capital and marketing."
Hemming also believes that the cuts that many dot-coms are now making are probably too deep and will ultimately end up affecting service, "which is a tremendous concern for customers on the Web."
Economist Kovacs Janos agrees, adding it's likely that dot-com firings will increase before the industry stabilizes in a year or so.
"But e-business is an inescapable fact of the future and the industry will soon find a happy medium where their head counts aren't bloated or inadequate," Janos said. "But first there will be more cutbacks. This downward cycle hasn't bottomed out yet."
Wednesday night's pink slip party crowd was slightly cynical, yet still optimistic -- despite the fact that the room was packed with young dot-commers who'd seemingly just lost their "invulnerability" virginity.
"I thought I was set for life," mourned Kevin Cummings, a slightly tipsy 23-year-old Web designer who had worked at a recently deceased dot-com which he refused to identify.
"I was going to be the next Bill Gates, except I wasn't going to be as stupid as him," Cummings said. "I was planning to retire when I was 30. But I suspect it's damn hard to retire when you're unemployed."
Conversations centered on what people were looking for now in employers: stability, a definite market niche, strong management and financing and a solid business plan.
"The previously pink-slipped are asking startups tough questions now," Hemming said. "People want to know: What's your burn rate? Can we see the management team's résumés? Who funded you?"
"They're digging deep and asking questions that they never would have asked before, when those stock options were dangled like carrots to entice them."
Judging by the general flow of conversation, most pink-slip party attendees want to stay in the dot-com world, but they also want their next job to be with a more established company, or with "click and bricks" -- companies with a real-world presence as well as a virtual one.
"They now know that the IPO dream may be just that -- a dream. So 401(k)s and 40-hour work weeks are definitely starting to look good to them," Hemming said.
Another thing that people seemed to be particularly irked about were the companies who "tell you everything is fine while upper management is preparing to bail out".
"We should have known we were on a sinking ship when the rats -- those guys formerly known as our bosses -- started leaving," said one pink-slipper who preferred not to be identified.
Hemming agreed, and noted that she'd heard time and time again how the business' founders "weren't in the building when the ax came down."
Other signs of impending doom according to Hemming: Is it a me-too business? Are we moving towards profitability? Do the founders/leaders have a strong commitment to the business? Is it a crowded marketplace, and where are we within that field? Am I seeing an exodus of staffers? Are positions that are open left open for long periods of time?"
Hemming says the parties are a labor of love, supported by local tech businesses like Angel Networks, which donate the maintenance of the pink-slip website.
The good news at Wednesday's party was that a significant part of the crowd appeared to be looking to hire some of the newly fired.
Hemming said that with the talent market as tight as it is, every company that goes under provokes a new feeding frenzy for seasoned dot-com employees.
Still, the room was crammed with those who would most likely be free to watch daytime TV for awhile.
Hemming says that she'd really like to know why it took a market downturn to make people start focusing on profitability.
"Good business practices should have been on the top of entrepreneurs' minds long before their investors required it," she said.