Certain facts are indisputable. The rapid expansion of the Internet--and the concomitant rise of myriad Web ventures--has proven economically unsustainable. While technology still continues to evolve and find its way into the recesses of our global village, many related businesses have fallen by the wayside. Companies that hyperspecialized, serving niche markets where demand was nil, were the first to go. But now the major players seem to be downsizing, consolidating, merging. The hiring wave that swept millions of workers into the dot-com office has diminished. Or has it?
The dot-com downturn starts at the top, provided you look behind the numbers. The National Venture Capital Association, for example, just released statistics that demonstrate continuing, vigorous investiture. Over 100 American venture capital funds raised $28 billion during the 3rd Quarter 2000, up 16 percent from the 2nd Quarter and 44 percent from the 1st. But almost all (93 percent) of this capital was channeled to existing VC firms with established track records. Newer, more unpredictable VC firms were practically shut out.
Challenger, Gray & Christmas, a Chicago-based placement firm, crunched the numbers and found that nearly 9,000 dot-com workers lost their jobs in November 2000, more than doubling the number from the previous month. Since Challenger began tracking these statistics in December 1999, more than 30,000 Internet-related jobs have been eliminated. Even the boardrooms at large companies have been bloodied. More than 20 dot-com CEOs were let go in October 2000, far and away the worst attrition rate of any U.S. industry. WebMD and AltaVista were among the major players who lost their leaders.
Let me add one interesting side note: Dot-coms have not been especially prudent in filling these executive vacancies, which may signal another fundamental problem. TechWeb cited a recent investigation by an international security company, which claimed to find a number of indiscretions in the dossiers of dot-com directors. Cursory background checks revealed that nearly 40 percent of those Internet executives sampled had illegal activities in their past. That's four times the national average in all other industries.
Like everything else in life, truth is not absolute--everything depends on context. A quick survey of press clippings and releases seems to contradict the notion that dot-coms are folding up their tents and sealing their doors. Paul Pellman, the CEO of refer.com, told Business Wire that member businesses were still "aggressively hiring" across all categories. "Despite the closing of several dot-coms," Pellman affirms, "recruiting talented people remains a daunting challenge."
The Wall Street Journal seems to agree. "Despite Market Woes," one headline recently affirmed, "Dot-Coms Are Hiring." The article surveyed a number of industry consultants and experts in order to determine the hiring health of Web companies. One source described dot-com employment demand as "still smokin' hot." Another claimed that senior managers with e-biz backgrounds always have "three or four opportunities to consider."
The prodigious talent base in Silicon Valley, home to many pioneering dot-com firms, has been sucked dry. Not only are tech companies sprouting up all over the place, they are casting their nets a little wider to find Internet-ready talent. In fact, the very nature of recruiting has been changed by new technology. Jobseekers everywhere are united on the Web, equally qualified to land jobs and equally willing to relocate if necessary. Provincial bias has finally given way; the well-traveled worker is a desirable commodity. Hiring managers can satisfy diversity or specialization directives and fill open positions.
Perhaps the Internet industry downturn will ultimately prove necessary. The benign abuses of power and privilege that come with overnight success must be tempered--there really aren't any shortcuts to lasting commercial success. Candice Carpenter, the founder and CEO of iVillage.com, may have said it best. At one recent industry function, she claimed that dot-coms are just now "getting down to the hard, slow work of building real companies, real businesses."
