THE NET'S NEXT ERA: Dot-Commers Who Won't Say Die
NOVEMBER 14, 2001
Untold thousands are sticking with their choice to try to build something new and valuable. Here are some of them -- and their reasons for hope
Sonja (not her real name) is a member of an endangered species. She's a dot-commer -- more specifically, a producer at an online news operation (no, not this one). As you may have heard, content Web sites -- actually, most consumer sites -- aren't a growth industry these days. In fact, Sonja's employer has laid off more than 40% of her colleagues so far this year.
She has survived the bloodletting, but the fact that things aren't looking good in her line of work is inescapable. "I don't think this kind of business is viable as we know it," says the 33-year-old New Yorker.
Despite the signs that a pink slip could be imminent, though, Sonja is staying put. She hasn't sent out a single résumé. Nor has she bothered to network to find a potential lifeline if her ship were to sink. "The only way I am going to leave my job is if the company shuts down," she says. "If I had my druthers, I would stay here. I still believe in what we do. The product we put out is really good." Such statements sound either courageous or crazy, especially since they come from the main breadwinner in a household with two kids.
MORE JADED. Call it loyalty or call it folly, Sonja isn't alone. Although they've dealt with funding emergencies, business-model revamps, and one or more rounds of layoffs, thousands of employees are sticking with their jobs at dot-coms. Once members of a giddy vanguard who snickered at the losers stuck in boring office jobs, many of today's dot-commers are a more jaded bunch who realize that the next paycheck could be their last.
Or that their last paycheck was indeed the last, but that they just haven't been told yet. "When I got my job, a lot of my friends said, 'A month and you'll be out of there,'" says Justyn Makarewycz, 26, who took a job as a marketing manager at an online portal for gays and lesbians in San Francisco in July. "They've been saying that for the past four months.'"
These dot-com holdouts have any number of reasons for not returning to the shelter of bricks and mortar. For one thing, "a lot of us believe that the bad things that happen to other people can't happen to [us]," says Peter Cohan, a technology consultant and author of investing books in Marlborough, Mass. "I've seen a lot of people operate under this illusion right up until the company pulled the plug."
"LIFE IS SHORT." At the same time, though, many Net believers think riding the wave until it crashes is the right career move. They believe this even more strongly in the wake of the terrorist attacks in New York and Washington that have left much of the nation reciting a "life-is-short" mantra. Says Matthew Graves, a public-relations exec who left an agency in June to do public relations for online music company Listen.com in San Francisco: "I would be better off doing this more interesting work for just three months than staying in a cushy job. You have to take the fear of losing your job out of the equation."
That's easier to say if, like Graves, you're 27, single, mortgageless, and otherwise relatively debt-free. But even dot-commers with financial burdens and mouths to feed talk the same way. Lou Friedmann, who is married with two young children and owns a house, left a management position at direct-marketing agency Brierly & Partners in February to become marketing VP at optionsXpress.com, an options-trading site based in Chicago. Internet trading sites generally have been in big trouble lately, though optionsXpress has grown from zero accounts to 5,000 since its launch in January and expects to turn a profit in the first quarter of 2002 at the latest.
"If I were a middle manager at some company, I wouldn't have a lot of job security," says Friedmann, 33. "Even though this company is small and it isn't established, I have a feeling of safety -- if only because I feel like I have more direct control over my destiny." Plus, he gets the added benefits of gaining broad experience and having fun. "You are highly accountable," says Friedmann, whose company has 18 employees. "There isn't a big team, so you have to wear a lot of hats."
"VIABLE BUSINESS." Many who are digging in believe that their companies are surviving because of more than sheer luck. In fact, they feel managements have learned enough from the mistakes of failed dot-coms to be among the chosen few that will survive.
Makarewycz is one who thinks his company may have turned the corner. He was laid off from the gay and lesbian portal in March. A month later, he was hired back as a contractor before getting a full-time position again in July. Today, the site has added e-commerce, travel services, and subscription-based personals to pump up its cash flow. "We're taking services that were free before and creating ways to make money out them," he says. "I think there's a place for a site that provides services to the gay and lesbian community that is also a viable business."
Many dot-commers also take comfort in the idea -- accurate or not -- that the Internet sector may have seen the worst of the shakeout, says Tim Miller, president of WebMergers.com, a San Francisco research firm. The 33 Internet companies that closed in October represented only a tiny increase from the 32 shutdowns in September -- which was the lowest number of closures since the 22 in September of 2000. Since January of 2000, some 716 Internet companies have shut down or declared bankruptcy -- with 69% of them going south this year.
"HALF-BUILT LINER." Still, 7,000 to 10,000 Internet companies are now doing business, Miller says. Thus he defends employees who decide to remain at dot-coms. "They're not sticking with the Titanic," says Miller. "They're sticking with the half-built liner that is still in dry dock that is going to launch at some point." Adds Alice Rodd O'Rourke, executive director of the New York New Media Assn.: "The first group was the vanguard. Now we have another group that is going to do it better, smarter, in a way that is more integrated with traditional business."
Money is clearly still a draw for many of this new breed of Net employee. Many say they increased their base salaries by at least 10%, with some reporting a boost of 50% or more over their previous salaries. Reflecting revised expectations, however, none still believe they'll necessarily hit the jackpot with stock options. "Your chances are probably better of winning the lottery," says Graves. Friedmann, who took a compensation package at optionsXpress that essentially matched his old one but provides upside potential through stock options, wonders if they'll ever kick in: "They're a risk," he admits.
Many say they're hanging onto their dot-com jobs for the same reasons that U.S. workers migrated by the thousands to Internet jobs in the first place. Those reasons include the chance to work with an inspiring leader, commitment to a vision, or a desire to escape the drudgery of corporate life. Makarewycz, who is gay, left his job at Fleishman Hillard, a PR firm with thousands of employees in a variety of countries, for a chance to do work that involved the gay and lesbian community. "I wanted to do something more meaningful," he says. "There was also the opportunity to learn and to develop my career."
MAGNETIC PULL. Listen.com's Graves, a music buff, sought out a work environment where talking about music all day long could be part of his job description. "Not only did I get a job doing something I love but I work with people who are well connected with things going on with digital music," he explains.
Friedmann, meanwhile, was lured over by his friend David Kalt, optionXpress' president, who previously founded a software company where Friedmann once worked. "He's magnetic," Friedmann says. "That part worked for me. He was on the phone with me every week: 'You got to get over here.' It was hard to resist." Notes Emory Winship, a managing partner for Conversus Group, a consulting firm to struggling New Economy companies: "The major reason people hang in there is a belief in the vision and a belief in the leadership."
Of course, it's impossible to watch so many jobs in your industry disappear without feeling some pangs of worry. "Sometimes I wonder if we are blind optimists," says Sonja. "I can relate to people who say the best thing for them is doing work that is meaningful," adds Cohan. "But it would be prudent for people who have jobs in the Internet space to be looking around."
Therein lies the biggest challenge for today's dot-commers: trying to gain some level of professional security while staying in the jobs they like so much. The problem is, when those great jobs go away, there aren't a lot of others to find.
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By Eric Wahlgren in New York
Copyright 2000-2001, by The McGraw-Hill Companies Inc. All rights reserved.
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