The shame of dot-coms

To dot-com or not? A Silicon Valley job seeker with the kind of resumé any dot-com company would drool over keeps having the -same conversation at the companies he's considering.

"Every interviewer keeps telling me, ‘We're not a dot-com company - we have real technology!'" he says. "No one wants to be ‘a dot-com company' anymore because they won't find anyone who wants to work there."

Last year, even in the midst of record-low unemployment in the US and a shortage of technical talent, the dot-coms got away with offering rock-bottom salaries in exchange for a tiny slice of equity. The most unlikely of business plans - say, selling pet food over the Web - suddenly seemed like sure winners. Employees began to expect nine months of working like crazy, followed by an initial public offering (IPO), followed by induction into the ranks of Internet billionaires.

With dot-com burnouts blazing across the Internet like a meteor shower, many dot-com companies are struggling to find the talent they need. (For a daily recap of the recently fallen, check out www.dotcomfailures.com, an ever-gleeful Web site with the tag line "Kick 'em while they're down.")Some are even trying cosmetic makeovers to hide their dot-comness: where companies used to trademark the "dot-com" into their names, now many are busy erasing all overt mention of the Web: in just the past few weeks, Shopnow.com changed its name to Network Commerce, Stockup.com became Preference Technologies and JFax.com became j2 Global Communications. And there are many more examples.

Even blue-chip companies like Amazon.com, eBay and Yahoo! have been hit hard by the sea change, with stocks taking a 50 per cent plummet this year. In June, Yahoo! became desperate enough to hold a pep rally/open house to attract new talent, complete with rotating presentations by "Chief Yahoo!" David Filo and Chief Scientist Udi Manber. In pre-IPO years, Filo and Manber hadn't needed to beat the bushes.

Did it work in getting more engineers to sign on? "That isn't something we care to comment on," says Yahoo! spokeswoman Lauren Strain. But it's nevertheless clear that being what industry analysts like to call a "pure Internet play" is now making it all the more difficult to fill vacancies.

"Every Internet company I've spoken with is trying to hire a hundred people," says one job-hunting engineer. "There just aren't a hundred people out there for every dot-com with a new idea."

What does it all mean to prospective job seekers? Is it time to head for the Fortune 500 and leave Internet startups to flounder without you?

Not quite. But current events require information technology professionals to adopt new strategies before going dot-com.

"We're out of that euphoric era, when you could go public with a lot of arm-waving and end up wealthy," says Gary Fernandes, who nevertheless recently left a management career at Electronic Data Systems to become chairman and CEO of Texas-based GroceryWorks.com. "But the Internet is still the future. There are still huge opportunities for people who know how to spot business opportunities and how to manage cash flow."

Don Ledwick, a recruiter at San Jose-based Professional Search Associates, recommends that job hunters act like venture capitalists and evaluate a prospective employer's business plan. This means not just looking at the job itself, but also taking stock of how experienced the leaders are, what level of competition the company faces, how deep its pockets are and whether the company has any unique value to bring to the market beyond an advertising campaign.

Stock market volatility has accelerated job volatility - both in terms of layoffs and people walking away from failing ventures. That's why it's critical to know before you sign on how successful the company has been in attracting new talent, and how quickly. Smart employees also need to cut ties and try elsewhere at the first sign of trouble, to leave before layoffs ever hit.

"There's a tendency to work vigourously to save a dying company, rather than to leave when the going is still good," says Ledwick. "That's a mistake. If the company isn't making it, then change jobs. In this industry, you need to be acclimated to the idea of leaving fast if you need to. It's OK to have two or three startups on your resumé in the last five years. You won't be downgraded, especially if you interview well."

Job seekers also need to wake up to the fact that they may not need to trade salary for an equity stake any longer - they can negotiate vigourously for both. Tom Call, a technical recruiter at California-based RHI Consulting, an IT placement firm, estimates that every good candidate his company works with will have as many as nine solid job offers. That makes for a lot of negotiating power, especially in an era of waning stock valuations.

"Overall, I've seen job hunters successfully saying, ‘Yes, I'm interested in equity, but give me a good salary, too,'" he says. "The dot-coms are realising they have to pay the market rate on salaries, with the market as volatile as it is. It's always a risk when you're counting on a good portion of your payback to be in options. Most dot-coms won't be around long enough for their employees to get fully vested. For the most part, candidates are more educated now and less willing to deal."

Inside the dot-com culture

So, what's it really like to work at a dot-com? For years now, you've heard about the long hours, the relaxed dress code, the cots in the hallways, the shower in the basement and the so-called perks, such as being able to bring your dog to work so you don't have to feel bad about never being home to walk it. But deciding if an Internet startup is right for you means thinking about much more than that.

Dot-coms have been laying people off and going out of business all along, even if you've read about it in the press only recently. So the first thing you need to consider is your appetite for risk.

Ask Dan Bergkamp, who, after due diligence, joined a successful dot-com only to find himself out of a job four months later when the company laid off its entire customer service department. He nevertheless looks upon that four months as a great experience and harbours no ill will toward the company.

"I went in not knowing if I would succeed in that environment, and I came out knowing I could," he says. "They paid me fairly. I learned a lot. So I took what I could from that experience and moved on."

Working at a dot-com also means you need to perform at your peak all the time - because everyone is watching you. Leave at 6pm instead of 11pm, even if you're done for the day, and you risk having people say you just don't fit in.

"There is almost a day-to-day assessment of the investment in human capital," says Bret Martin, a recent veteran of three startups who now works at Sun Microsystems. "Everyone is snooping into your business, wanting to make sure you're doing your job today. And if things start to go bad, everyone is looking to assign blame in short order."

Martin nevertheless says, "Startups are great! It's exciting stuff, particularly if you like uncharted territory and living the life of entropy. A startup can create a sense of family, where you're emotionally tied to one another. You work together, then you ski together and golf together. You begin to feel tremendously close, so much so that if the company can keep meeting its payments, it's enough for you to put up with a lot."

Both Martin and Bergkamp say they agree that no one can live the dot-com life forever. Bergkamp, who has two small children, is considering joining a more established company like Cisco Systems, which has offered its employees both stability and spectacular stock growth in the past few years.

Martin has joined a new business unit at Sun that he says offers the autonomy and excitement of a startup, with the added advantages of health benefits, a relatively relaxing 55-hour workweek and a paycheck he can count on to not bounce.

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