Despite troubles, dot-coms are still a top choice
So how are things in the dot-com world these days? That all depends on whom you talk to. Like asking a stockbroker, an economist and a Depression-era grandfather where to invest that $10,000 windfall, the answers are often a mix of hype, conflicted motives and clear-eyed analysis.
Consider: the international outplacement firm Challenger, Gray and Christmas reported in late August that its running total of dot-com job cuts increased 55% from the month before from 7,592 to 11,785. A nerve-wracking trend if it continues.
But don’t gloat too soon. Jobs are still plentiful says San Francisco-based media consultant Lori Gottlieb, a former studio exec and ex-editor of the online teen zine Kibu.com. “You’d have to be pretty clueless not to land a job (in Silicon Valley) within a week.”
Adds one human resources expert: “Salaries are skyrocketing.”
Which isn’t going to stop the fun at the wildly successful and gleefully macabre FuckedCompany.com, which takes daily pleasure publishing the rumors of fresh dot-com deaths and the Dilbert-like memos of their flailing execs. No questions about it, there’s no dearth of Internet companies of every species — e-commerce, entertainment, health and fitness and portals — that are either wracking up debt faster than a freshman with daddy’s gold card or simply going belly up.
The bona fides of entertainment dot-coms, in particular, recently suffered their highest-profile fizzle. With billionaire Microsoft alum Paul Allen’s Vulcan Ventures behind it (and with zeitgeist meisters Steven Spielberg, Jeffrey Katzenberg, Ron Howard and Brian Grazer attached) Pop.com went plop, out of the biz of streaming original comedy content over the Web before it ever got out of the gate.
The $10 million that Vulcan reportedly lost on the deal may be a drop in the bucket to Allen, but it does beg the question: If these guys can’t do it, who can?
“Profitable companies are few and far between,” says Vernon Keenan, a San Francisco Bay Area-based Web analyst. But, the Internet in all its iterations is here to stay — a global phenom that’s being led by U.S.-based innovations in software, hardware and business models.
“There’s no place like Silicon Valley,” he continues.
Or Los Angeles and Orange counties for that matter. In 1999, for example, venture capital firms pumped $2.5 billion into area online companies, according to the PriceWaterhouseCoopers Money Tree Survey.
Demand still strong
And a less formal survey of a number of nationwide executive search firms reveals that for top talent, the demand from the ‘Net sector for chief exec and financial officers, and exec veeps of all stripes remains as high as ever.
“There’s been no perceptible slowdown,” says Bruce Babashan, exec veep and managing director at DHR Intl.
The dynamic of the hiring process, however, has changed. “It’s more deliberative than it was (a year ago),” Babashan continues.
Now that stock options have nowhere near the pulling power they did before dot-com stocks crashed and burned in April, job candidates are carefully structuring their employment deals. Cash is back and, adds Babashon, many execs are insisting that some of their salary be placed into an escrow account.
Signing bonuses and consistently rising base salaries have also become de rigeur notes Bill Simon, managing director of global media, entertainment and convergence at Korn/Ferry. Chief operating officer and CEO compensation, for one, has been inflating at a healthy rate.
“Two years ago the average salary was ($150,000-$200,000) per year. Now you’re looking at ($275,000-$350,000),” Simon says.
The reason? Dot-com volatility notwithstanding, there’s a lot of competition for exec talent.
According to Simon, salary increases are making up for money job candidates are leaving on table, either because they’re foregoing iffy stock options or having to leave year-end performance bonuses at their old jobs.
“What’s happened in the marketplace is healthy. (A year ago) people were getting rich for 45 minutes and then they were getting screwed. Now there’s some rationality back in the business,” says Babashon.
And, apparently, less hyperventilating among execs looking to enter the wired world.
“People who just want to get into a dot-com no matter what I’m not hearing from as much,” says Jennifer Happillon, a director at cFourPartners/ITP Worldwide.
But she is getting inquiries from executives who want to build viable businesses, noting, “A year ago people seemed to have abandoned due diligence That has definitely changed.”
The health of the job market at the midlevels of management is a little harder to determine. On the one hand is the constantly expanding list of dot-coms that are either laying off, suddenly shuttering or at least warning of mass layoffs (“Hang in there. We expect to know our destiny by late September,” urged one site topper in mid-August). The last two senior execs Happillon placed laid off 20% of their new charges within 10 days of moving into their corner offices.
Among recent high-profile additions to the entertainment dot-com list of the troubled: Michael Ovitz’s Scour Inc., which dialed back its workforce from 70 to 18 at the beginning of September; LoadTV, which laid of nearly half its workforce; and the now-infamous DEN, which fired all of its 200 employees when it went out of business in May. Among those companies that are continuing in business or just starting up, hiring plans are a mixed bag.
New-kid-on-the-Web Romp.com, which launched May 15, plans to expand its business but not by adding substantially to its current roster of 30 employees. Rather, the privately held company, will add new shows to its Webcasts using freelance producers and indie online studios. (See related sidebar).
At Creative Planet meanwhile, the stated plan is to expand the 300-plus workforce by at least 25%. The entertainment industry service dot-com eliminated 35 jobs from its online editorial side in early August, but company CEO Allen DeBevoise announced plans to hire 80-90 new workers to build software and databases.
And execs at one L.A.-based contingency staffing company report that, as far as they’re concerned, from the exec veep level on down, the dot-com job market is as healthy as ever.
“There’s a big need for people who’ve been exposed to Internet technology and who have experience in the TV and film production world,” says Julie Scott of L.A.-based Profiler. “The more a person marries the technical to the creative side of themselves, the greater chance they have of landing a good job,” she says.
Scott’s company recently placed a number of art directors at a couple of ‘Net firms, all starting at between $75,000 and $100,000 per year plus benefits and stock options. Some of the successful new employees moved to their new jobs after their old dot-com employers laid them off.
“The bad news is, you may have lost your job,” says John Challenger “The good news is you have new skills and new knowledge that is proving to be very valuable in the marketplace.”