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What's Next for 'Dot-Com' Casualties?

Many Layoff Victims Face Anguish and Introspection

November 26, 2000|LISA GIRION | TIMES STAFF WRITER

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."

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