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Dot-Com Shakeout Spells Opportunity

Posted on 23 September 2008

Amy Fried uses adjectives such as “disorganized, inconsistent, and chaotic” to describe the year she spent working for a dot-com selling online software applications. She chose not to name the company because the dot-com community is small and bad-mouthing former bosses is not wise. Fried is now a headhunter specializing in New Media for Roz Goldfarb Associates in New York City.

For Fried, the consolation to her stressful dot-com stint is that it provided her with a valuable learning experience. “I had to endure constant pressure because of poor management,” she says. “All the employees were at the whim of a 28-year-old president who was winging it. He would change direction every few weeks or wake up in the middle of the night with a brainstorm and make it a mandate the next day.” Fried admits she blindly walked into a bad situation, never considering that it would turn out to be a nightmare. She’s not alone.

Not long ago, the word “dot-com” had magical connotations. Landing a dot-com job meant membership in an exclusive club–the cyber elite–not to mention a fast road to big money and early retirement. Only fast-track superstars gained admittance. They worked around the clock and enjoying indulgent perks (health club membership, massages, gourmet meals) to offset the grueling hours. Yet, rather than nurture business relationships, these dot-com renegades would dump difficult clients on a whim.

The New Economy was fluid, powerful, and fueled by an open funding faucet that appeared as if it would never shut off. Built on a vision of creative freedom, Internet companies eventually paid a hefty price for waste and disregard for basic management principles. Many of the failures became the subjects of front-page headlines. The London-based Internet retailer, for example, quickly bolted through $135 million ($23 million per month).

And the Good News?
The harsh realities of the business world have brought dot-coms back to earth. But now, if you have your feet planted squarely on the ground and are willing to think along practical lines, a dot-com employment opportunity may be ideal. Experts like Dennis Anderson, CEO of Andcor Companies in Minnesota, now think that dot-coms have to be evaluated using conventional business criteria–and held to the same standard.

Jobseekers should always be wary of dream peddlers, especially in a slowing economy. Think twice about taking a chance on any start-up business with an uncertain future. If you’re considering a dot-com, find out if it’s financially secure and has an experienced management team at the helm. If management asks you to take a gamble on a company that could be the next Microsoft, offering stock options in lieu of a competitive salary, head for the door.

If you entertain fantasies of launching your own dot-com, carefully weigh your chances of succeeding. The days of easy venture capital funding are over. Most venture capital firms will be reluctant to pour money into highly speculative start-ups, according to Anderson.

Dick Sirbu, chairman and CEO of the Colorado-based investment company Sirbu Enterprises, expects an overall return to old economy values. “Under Old Economy rules,” he says, “you built a company to make money. On the other hand, New Economy companies concentrate on initially spending money on marketing programs to expand the business before it’s even on solid ground.”

A New Era
The myth of the profitless Internet has been blown to smithereens. “We’ve entered a new era,” observes Tim Cahill, co-founder of “Profits will be the goal from the onset.”

Jack Kyser, chief economist at the Los Angeles County Economic Development Corporation, offers sage advice: “Be brutally honest in all decisions if you’re considering launching a dot-com. Don’t make assumptions about anything. Consider the marketability of your product or service, watch the competition, and keep tight reins on spending.”

“Working for a dot-com can be exciting,” says David Mather, managing director of West Coast operations for Christian & Timbers, “if you know what you’re getting into beforehand.” Good dot-coms do exist: The key to finding them is asking plenty of questions. Speak to employees, especially former ones, and find out about working conditions.

“Screen the CEO and find out what long-term plans are in place,” Fried advises. “Don’t be timid about grilling management. If you’re going to be working like a dog you have a right to know what to expect.”

Finally, harbor no illusions about working for a dot-com. “The Internet has changed the way we work,” observes Michael Tchong, editor of the Iconocast, a San Francisco Internet newsletter that closely follows the e-marketing industry. “You’re not going to cut it with a nine-to-five mentality,” he says. “People must get used to working 50- and 60-hour weeks. Farmers began work at the crack of dawn and quit at sundown. So must we.”

It’s all about adjusting to change. That’s an old story these days.

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