51,631 dot com layoffs

February 2, 2001 12:37 AM

51,631 dot com layoffs as of Feb. 01, 2001. Is it that the web allows us to simultaneously view the usual failure of 99% of new businesses, a sign of the coming recession, or just a result of bad business plans and get rich quick schemes? Or was it simply too good to last? Whatever the reason, it's depressing.
posted by crushed (19 comments total)

It's the first possibility. It's all online now, we just didn't hear about it when it was offline businesses (remember the software revolution of the 80's? or the CD-ROM revolution of the late 80's/early 90's? where did all those companies go?).
posted by mathowie at 12:47 AM on February 2, 2001

"I'll take "Blissful Ignorance" for $1000, Alex"
posted by Optamystic at 1:11 AM on February 2, 2001

I just noticed, Matt, that you responded to both this post and the next in ten minutes or less. Is this some kind of magic or do you have one of those bell systems like those in old houses...you know the kind that ring downstairs when someone upstairs needs something? Or... do you just constantly check the site, like I do? :)
posted by crushed at 5:01 AM on February 2, 2001

We should also note that offline businesses are getting reamed, too. GE is going to lay off 68,000-103,000 people over the next few years. In Chicago, several candy manufacturers recently closed up shop, taking with them some of the city's last high-paying, blue-collar jobs. And this is only the beginning, folks.

I don't mean to drag abortion into this, but I analogize the situation as New Economy job:Old Economy job::embryo:person, insofar as I do not feel such a great sense of loss or depression when a one-year-old venture disappears, no matter how great its potential. Established companies, on the other hand ...

At the Brach's plant that closed here, the Tribune talked to a guy who had worked there 28 years. Now he won't be able to have a pension when he retires. Why? Those go to people who had worked there for 30 years. He had the folly to come of age in a time before 401(k). Poor bastard. Literally.
posted by luke at 7:26 AM on February 2, 2001

My sister was layed off from GE's GXS, luckily they like her so much that she was immedietly hired by another GE firm. Here I used to think that GE was a safe bet.
posted by riffola at 7:48 AM on February 2, 2001

A and C, but not B; oh, and D, too.


posted by briank at 7:55 AM on February 2, 2001

51,631 from a total of how many that work in the industry? Over what period of time? How does that compare to other high-tech sectors?

By not providing the answers, I'd suggest that The Standard's layoff tracker is worthless.
posted by normy at 7:57 AM on February 2, 2001

Can we talk ourselves into a recession?
posted by john445 at 11:11 AM on February 2, 2001

Of course that number is ridiculously understated: thousands of angel-funded or founder-funded startups which launched in 1999 and early 2000 were cut off stillborn when the VC market dried up in mid-2000, cutting loose 3-10 employees each, none of which ever hit the radar of the major layoff trackers. A year ago in New York essentially every Class B building south of 40th street and north of Wall Street had 2 or 3 of these companies (some had dozens), and 90% of them have vanished.

Another undercount factor is the "voluntary" downsizing -- people who quit in 2000 when it became clear that their options or other equity would never catch and who went back to school or old line industry. I know a half-dozen people myself who had applied to business school as a just-in-case measure who are now happily ensconced there ("a great time to be on the sidelines," as one investment banker-turned-dot com biz dev guy-turned HBS first-year told me recently.)

Finally, the substantial disinvestment in Internet spending at virtually every bricks and mortar companies -- many of these companies have downsized their e-business teams to 1997 levels, 50%, 70%, 90% down from their high water mark within the last 18 months. A lot of these workers kept their jobs, but in far less glamorous capacities.

I'd say that there are easily 150,000 fewer people working in dot com, and Internet-focused software, consulting and services now than there were in February 2000.


posted by MattD at 11:41 AM on February 2, 2001

A standard I use to indicate how rapidly the dot.com trend is fading is by way of the patented Loft-O-meter. The San Francisco Loft-O-meter for this quarter indicates a 51,631% decrease in neighborhood swallowing, loft construction.
posted by poodle at 12:47 PM on February 2, 2001

He had the folly to come of age in a time before 401(k). Poor bastard. Literally.

Are you really sure that he was born illegitimate?

*smirk*

posted by Tin Man at 1:25 PM on February 2, 2001

Can we talk ourselves into a recession?

Of course! With something called a self-fulfilling prophecy. People hear the economy is going downhill, they stop consuming, and the economy does go downhill...

posted by Neb at 1:27 PM on February 2, 2001

Of course! With something called a self-fulfilling prophecy. People hear the economy is going downhill, they stop consuming, and the economy does go downhill...

Of course, so lets start talking the other way!
posted by john445 at 1:44 PM on February 2, 2001

Perhaps Yahoo should take on at least the last 31 of those laid off in a rather urgent way?
They seem to need them badly. For example abuse@yahoo/egroups occaisionally responds to complaints a month later, but that is a priviledge, usually they do not respond AT ALL.
It would appear to be getting worse. Take a look at this site:
http://www.geocities.com/vaksam/index.html
Last week it was a 1,000 + 5mb+ site of fairly dry and inoffensive intellectual commentry on Psychology, Economics, Philosophy etc, including the entire contents of two published books. Although frequently extended it had been much the same way for 3 years. As you will see, since then it has become a 404 error. Yahoo/Geocities deleted the site, without warning, for no discernable reason. At least 600 pages used to link in to the site, the views are reliably around the 2,000 a day mark.
YET, the only reason Yahoo/Geocities has provided bears no relation to anything about the site as it existed.
****
(o) use your home page (or directory) as storage for remote loading or as a door or signpost to another home page, whether inside
or beyond Yahoo GeoCities;"
****
The site, in fact, had only ever a single obscure link to one sub-section of another homepage.
To go back to Yahoo's staffing problems. Not only does Yahoo appear to have insufficient staff to clarify this in response to about 10 queries by the former webmaster, but they apparently do not have sufficient to acknowledge over 200 queries from OTHER PEOPLE on the subject.
Further, their telephones would now seem to be manned soley by answering machines.
It has become beyond incredible.
On hearing of metafilters I determined to post the information here because, it would seem, the same thing could happen to ANYBODY with a Geocities site at any time.
Personally I have never heard anything like it before, but I am afraid we may hear of it again more and more.


posted by Seva_D at 1:57 PM on February 2, 2001

I'm just glad my job is still here-- for now at least. best of luck to everyone else!
posted by cell divide at 2:02 PM on February 2, 2001

Seva_D, interesting -- of course, all the content and conmmunity sites are understaffed in one sense. Content and (especially) community take a large amount of work to manage appropriately -- but there simply isn't a corresponding cash flow to justify the work on a free site, even as (relatively) prosperous a free site as Yahoo! Even AOL, which gets $20 a month per member, has huge areas of poor content and community management.

Pretty much the only economically adequate solution to the problem are self-regulated communities ... but this tends not to be effective when the interests being protected are not the "community" interests per se but the financial interest (in revenue, clicks, avoidance of copyright infringement liability, etc.) of the for-profit site owner.
posted by MattD at 5:02 PM on February 2, 2001

Seva_D, somewhat off-topic. I sympathize, but this isn't really the best forum. Inscrutable TOS bootings have been around for years, at AOL, Geocities, wherever. I hope you had a backup. (I recently had a password issue at Geocities. I had an account I couldn't log into, and no way to get anyone there to assist me fixing it.)

I've said it before and I'll say it again: the vast majority of those 50,000 (or 150,000, or however you're counting) had no business being in this industry in the first place. I'm sure that even an extreme bad example like Kibu.com had a few talented people working behind the scenes (though they said a chatroom system was a year away, which means I tend to doubt it), but almost everyone else had recently arrived from celebrated careers in the latte industry, and very few of them were technical staff. Of the well-managed companies, take Amazon. Some dozens of the workers laid off there were highly paid loading dock jockeys.

I don't wish ill to anyone. (I'm between jobs myself.) But we were in a tech bubble, and that burst. Good riddance. Now the people who stay will be more dedicated, more realistic, more capable, and more experienced. Those who are frightened back to the safe confines of bricks and mortar, as it were, still have room for opportunity (despite a slowdown, the US economy is still adding jobs).

Now, I'm not completely in denial. In parallel with the overall downturn, there's an overreaction to the burst bubble, and places like Pyra, with a viable product and smart, dedicated people, are finding it hard to get funding. That's just as boneheaded as the VC glut of '99. From an investor's perspective, it's a bear market. Investments made now, with an expectation of profit with a long percolation time, will do well. Metaphorically, it's a good time to buy, because stocks (and ideas and opportunities) are cheap. If you don't need an immediate payoff, this is still an industry that represents the future.
posted by dhartung at 7:14 PM on February 2, 2001

Dhartung is really on the money. Quite simply, most of these companies didn't deserve to stay in business. Sure, the people probably deserved to keep their jobs, but their managers were total morons. They forgot the first rule of business.

You don't have to make a profit, but you have to cover your costs.

Sadly, most CEOs, CFOs, COOs and investors were morons who failed to remember what they had learned in their fancy universities. They hired the wrong strategists (who charged the earth to keep telling these dummies that it was okay not to make any money yet), the wrong staff (just because they have a degree - in Art - doesn't mean they'll make a good despatch manager) and kept plugging the wrong message.

Dhartung is right. Things are going to be much better from now on.
posted by wackybrit at 10:58 PM on February 2, 2001

I actually do think that there has been something of an over-correction which resulted in a lot of good companies with good products and good staff going under.

First, it is not an artifact of 1997-2000 bubble thinking to operate growing, innovative companies at a loss for periods of several years, buoyed up by debt and equity investments. Most pre-commercial-Internet era technology companies grew up this way, and essentially all media properties (which is what consumer dot-com sites really were, not technology companies at all) grew up that way. Every magazine, television and cable network, newspaper, etc., operates at a loss for years after it is founded. In 1993, before anyone had heard of the world wide web and most people had never received or sent an e-mail, Silicon Valley was full of venture capital funds, and many of them had been around for years and years.

Second, the venture capital community has taken a view which is quite radically skeptical: that the supply of cool new technology CANNOT be assumed to create its own demand. In other words, if you are a former Oracle VP with five engineers you've been paying from a second mortgage and you've developed a terrific new B2B infrastructure / exchange product, in February of 2001 the VCs are likely to ask you "what was the sales volume of B2B infrastructure / exchnage producs in 2000?" and treat the answer as the definitive market size for your product. They will be deaf, in most cases, to any argument that the availability of your product will cause more companies to want acquire B2B infrastructure / exchange technology to improve their operations.

Now, surely, a hell of a lot of VCs got led down a primrose path by ridiculous pro-formas founded on the notion that the product would magically grow a massive market, but it is just as wrong for them to totally ignore the 40 year history of the commercial computing and technology market in which time and time again the availability of cost-effective tools did, indeed, create their own buyers. (After all, one didn't size the market for Palm Pilots by adding up the number of people who'd bought those cheap Casio 64KB organizers, but rather by adding up the number of people who bought Day-timers and Filofaxes and assuming a significant percentage would go digital once the solution got good enough...)

Dhartung is very right, though, by pointing out that many, many of the people who were in the (most broadly construed) Internet business 10 months ago did not belong there. The ease of coming up with a good idea and the (unprecedented) ease of finding money to launch them, as well as the (fantastically unprecedented) sense that one could just run the biz for a year, have an IPO, and be a multi-multi-milionaire, combined to propel a hell of a lot of people into startups who had no true and compelling reason to do so. People who didn't know better ended up running businesses, and people who actually did know or suspect that they didn't have the chops actually to run a business disregarded their instincts and took the gamble, especially since the gamble was largely with other people's money.


posted by MattD at 8:16 AM on February 3, 2001