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Out but not down

They fueled the dot-com revolution, then lost it all when it crashed. So how are these young tech castoffs faring today? Just fine, thank you, and they promise to be back.

"In the business world," says a young dot-commer who landed on her feet, "you learn to roll with the punches."

Bill Martin is just 23, but already, with a heady year of running an Internet start-up behind him, he's had the ride of a lifetime. "I started Raging Bull in 1998 with two college partners in a basement, with $20,000," says Martin, who's talking via cell phone from the back seat of a Manhattan taxi. "I was at the University of Virginia, and that summer we decided that rather than do an internship, we would start a business. We had no dramatic business plan - just a love for financial markets and the online community."

Raging Bull (Ragingbull.com) is a stock market discussion site on the World Wide Web. Stock chat sites were nothing new, but Raging Bull had a couple of fresh features: Subscribers could, with a mouse click, permanently filter out boring or ignorant chatters and could bookmark the savvier commentators for easy reference. Over that summer, Martin says, "with no money, through grass-roots marketing, in three months we went from zero to 150,000 page views a day." They had negligible revenue and decided to stop trying to the people who made it fly.

"It was like the Children's Crusade," says Bill Lessard, who worked for an Internet chat site called Theglobe.com and now runs a New York-based discussion site called Netslaves.com. "A lot of people who were young would put in crazy hours and go for days without sleep. I was the oldest guy at Theglobe [at 27], working for two 23-year-olds who never shaved. People would rollerblade to work and not bring shoes, and at the end of the day their tube socks would be black."

"I remember a launch party for a Web venture in New York," says Jason Chervokas, cofounder of At New York, the Internet journal of New York's "Silicon Alley." "I looked around and said, `It's like the '60s.' Culturally, forming an Internet company occupied the same place that forming a band did in my generation - be cool, get rich, meet chicks - much the same impulse. There was a sense of exploring something new that drew a younger crowd."

For many, the lure of the dot-com world was partly that there were no credentials: Nobody had a degree in "e." It was all what you knew and could do. "There were zero barriers to entry," says Thomas Underwood of Chicago, who worked for two dot-com firms until he was fired last October.

"There are things I have done that no way in hell anyone my age could have done in any other industry or any other time," says Mikko Von Ronne, 29, of Cambridge. She has worked for three dot-coms, including ThingWorld.com, a Watertown company that specializes in Internet marketing for professional sports teams and entertainment companies. At ThingWorld, she says, "I sat in Universal Studios and told them how to market their movies; I met with executives of multimillion-dollar companies and had them ask me how to be successful on the Internet."

Beyond the vanity of being young in a young game, many in the dot-com generation had the conviction that they were not only younger but fundamentally different from previous generations. Many supposed that the old business rules and assumptions didn't apply. "There was so much exuberance," says John Challenger, CEO of the Chicago-based outplacement firm Challenger, Gray & Christmas, which is busily looking for jobs for laid-off young dot-commers. "It was anti-establishment. The old economy was being replaced by the new economy; it was a vision of what the world could be."

And however fuzzy and ill-defined, that vision was brighter and cleaner, just and true, with hints of Aquarius. "Generation X is doing just fine," crowed financial columnist Meredith Bagby on the Globe op-ed page in September 1999. "That's because we are in the midst of our own rebellion. No, we are not marching on Washington, burning our bras, or storming college campuses. We are slowly taking over where it really counts - the economy."

With a booming economy and seemingly endless opportunity, old ideas about security, loyalty to the organization, and moving gradually up a hierarchical ladder with appropriate rewards at every stage seemed outdated and unnecessary.

Kristen Gariepy, 27, of Arlington is an independent PR specialist who worked for ThingWorld.com before going out on her own. She says: "For the young person being given these opportunities, to be involved in things you never thought you could be involved in, is so exciting, overwhelming, tiring, and has so much passion." She compares her career with that of her father, who worked for a large high-tech company for 33 years, and "every year there was a 3 percent pay raise, and then after three to five years you moved up a level: There was this ladder. The idea is that you would be rewarded. It's a different mentality than I ever have had. For me, if I am involved in doing something I really love, I am rewarded."

Kristen's father sees the difference, too: "The professional generation in their 20s does not see a future tied to a particular employer," says Richard Gariepy, 52, of North Attleborough. "When I started, I thought I had a 10-year horizon, which got longer. But young people have a one-to-two-year horizon."

And why not? Why should they wait to work their way up, after all, when they could be senior managers at 25? There have always been young people in business - from K Mart to Wall Street - but seldom did they get to be so senior and so powerful so fast. "I was talking to CFOs [chief financial officers] who were 22," says Naomi Clark, 28, who was marooned recently when her employer, a Denver company that managed computer services for dot-coms, went bankrupt without warning. "The industry seemed to attract the brightest, youngest, most ambitious and adventurous."

No, they wouldn't make the mistakes their elders made. "The lessons of downsizing, mergers, and leveraged buyouts taught this generation that to put control in anyone else's hands is dangerous," wrote Bagby, the Gen X commentator. "We watched our parents dedicate their lives to one company only to suffer layoffs in return. As a result, we have learned to count on ourselves rather than a corporation."

The excitement, power, and thrill of pioneering are intoxicating, and some young dot-commers even use the language of drugs. "It's like a cocaine addiction," says Von Ronne. "You have so much freedom to be creative and passionate; you are making a difference that's not possible in, say, investment banking." She cites a friend who left the e-world but had to get back into it: "She said, `I have to have the rush, the adrenaline, the excitement.' "

"The term in Silicon Valley is `You have to drink the Kool-Aid,' " says Underwood - a reference to the poison-laced concoction taken by disciples of the Rev. Jim Jones in the infamous Jonestown mass suicide. Not that you commit suicide, explains Underwood, but that you have total faith in what you're doing and a willingness to gamble everything.

Young dot-commers came to believe, says Wendy Handler, assistant professor of management at Babson College, "that anything is possible; that if you have a great idea, you can be a millionaire overnight; if you only work for someone with a great idea, you'll be a millionaire overnight."

"My generation is willing to take bigger chances," says 26-year-old software engineer Lenny Rosenfeld of Allston, recently laid off by Zentropy: Partners, an Internet design and marketing firm in Cambridge, "to go through peaks and valleys for bigger rewards. My parents got married at 21 and had me by 25. The focus was on family and stable, consistent growth. Now the climate is `I can't wait; I must be hyperaggressive and take bigger risks for bigger rewards.' It's not that we're a me generation - it's just a different view of the world."

The short-term outlook spawned a short-term approach to business, expressed in such catch phrases as "land grab," "first to market," "get big or go home" - all based on a blitzkrieg theory. Long-range planning, building in value, providing for a rainy day, and meeting new competition were "old economy" ideas. "A lot of young people viewed business models as stodgy," says venture capitalist Jack Biddle of Novak Biddle Venture Partners in McLean, Virginia. In the land-grab theory, he says, "you get your 120,000 acres, and others go away and leave you to enjoy your monopoly. But it didn't happen."

Bubbles start slow, but they pop fast. The real dot-com craze lasted from about 1998 to 2000, and at its height, almost any business idea that had ".com" at the end of it easily drew millions in venture capital, and when it went public - usually within a short time of its founding - its stock went through the roof. "A couple of years ago," says Von Ronne, "people would have ideas and have investors willing to put money in before there was a business plan." For a while, young dot-commers had the Midas touch.

By late 2000, however, it was over for Pets.com, Garden.com, Urban Box Office, Eve.com (cosmetics), ToySmart, CraftShop.com, PetStore.com, and many others. Locally, doors closed at Furniture.com, Mainstream.com and Shoplink.com (both grocery services), and MotherNature.com (a vitamin retailer). Even dot-coms that didn't close, such as Priceline (210 jobs lost) and Razorfish (120), a consultant to businesses that want to use the Web, drastically cut costs by sloughing off workers. The stock price of Wetherell's CMGI, the great patron of e-ventures, fell from $138 at the end of 1999 to $5 and change a year later.

Meanwhile, the Nasdaq 100 index, heavy with technology and dot-com stocks, lost 52 percent of its value between March 30, 2000, and January 5, 2001, falling from 117 to 56. At least 130 Internet-based companies closed in 2000, laying off 8,000, according to industry watcher Webmergers.com. Counting layoffs at Internet companies that have not closed, The Industry Standard, an Internet industry magazine, places the figure at 43,192 between December 1999 and January 15, 2001.

What did happen? Infatuation with all things "e" cooled, competition intensified, an economic boom sputtered, a stock market bubble burst, and thousands of people, most of them young, were shown the door.

When a bubble pops, some people say, "Of course, what did you expect?" Web graphic designer Chris Kaminski, 29, of Brooklyn left APBnews.com, a crime news site, shortly before it declared bankruptcy in May 2000. "I didn't like the way it was going," says Kaminski, now freelancing. "A lot of the dot-com failures didn't know what business they were in. Some of them thought, `We're on the Web, so we're a Web company.' What value was being added? Why would I want to buy pet food on the Web when I can go across the street and buy it in a store? My ferret is hungry now."

But the younger dot-commers, most of whom were in high school (or junior high) when the recent boom started, did not see the bust coming. "An older person says things based on history, like `This was good while it lasted,' " says Handler. "But for the youth, it's a harder lesson to learn, because it's all they know." "A lot of them are feeling like they were looking through rose-colored glasses," says Challenger, the outplacement specialist. "This is their coming of age."

Some were as shocked and angry as their elders ever have been. Rosenfeld graduated from Union College in Schenectady, New York, in 1996 and has since had four jobs, counting a period freelancing. In 1998 he joined a video game start-up in Silicon Valley, disliked the culture and cost of living, and in 1999 took a job with the Cambridge office of Zentropy: Partners. He thought it was a stable situation. Then, on November 3, Rosenfeld says, "there was an e-mail message telling 60 people to come to a 12 o'clock meeting. Everyone else, 32 people, was told to leave the building for a couple of hours. They called us into a room and said, `You're being laid off. It's not a reflection on you personally.' A lot of people felt betrayed. Management let me down personally. There was no communication."

Peter Cushing, 23, of Lynn took a marketing job last August with Xalient, a Web graphic design company in Boston founded (out of an earlier incarnation) last May. He had graduated from Saint Anselm College in Manchester, New Hampshire, with a degree in politics and classics and had picked up Internet knowledge from college internships. "I was really sold on the company," Cushing says. "It had the team atmosphere I was looking for: full bore ahead, put your head down and go for it, hard work will pay off. I was convinced that if I put my talents on the line, money, promotions, and good fortune would follow."

In November he was called into the CFO's office. The human resources director was also there. "I'm making jokes about Catholic school," he says, "about being called to the principal's office. I thought they wanted me to get my 401(k) paperwork in. He says: `Shut the door. There's no easy way to do this: We don't have the money to keep you. We'll do what we can, give you 2 weeks' severance.' It was such a shock. I said, `You guys have derailed my life, and you're giving me 2 weeks? The rug has been pulled out from under me.' "

Cushing is one of the lucky ones: He can live with his parents, and he didn't buy a new car or a condo during the boom. Others weren't so lucky. Clark left a good job in London in January 2000 after being hotly wooed by a firm in Denver that provides security and support for dot-com Web site servers. In late November, she was fired when the company (which she declines to name) failed. "We didn't get our last two weeks' pay or our expenses," Clark says. "We were told to pack up - they were taking phones away from our ears, saying, `We have to have the phones now.'

"I was going to America to make my fortune in dot-com land," Clark says bitterly, "and now I'm eating humble pie. My lease is up in February; I haven't been able to pay my rent. Stupidly, I didn't save anything. You have a certain lifestyle, and when things go horribly wrong, how are you going to pay for these things?" At the moment, she's working in a clothing boutique to bring in a little money and has no idea what she will do.

It's no surprise, perhaps, that as dot-commers push 30, they have a more jaded view of the e-world. Underwood, 29, was recruited last August by a Chicago dot-com he declines to name after leaving a promising position at Deloitte & Touche, a Big Five accounting and consulting firm. "It was a nice package, the same as I had at Deloitte - $105,000 and a nice pool of options," he says. He was fired in October. Unlike Rosenfeld and Cushing, however, he is married and has a mortgage and a 5-month-old baby. "I'm not looking for any dot-com company," says Underwood. "I'm looking for a large company that needs to figure out the Internet. I have a lead at IBM."

On the whole, though, the youngest dot-commers still have an upbeat view of the world. Cortney Eshelby, 23, of Boston's North End graduated from Plymouth State College in New Hampshire in 1999 and got a marketing job last April in the Boston office of iXL, an Atlanta-based Internet consulting company whose Web site boasts of "really cool projects, really smart people, 13 locations in North America and Europe, 22 paid days off, board rooms, game rooms, and room to grow." It offered Eshelby a pink slip after five months.

Is she mad? Not a bit. "I loved my time there," she says. "I don't regret it at all. I was disappointed, but it was a learning experience - I learned a lot about the business world." Will she give up the dot-com scene? No, she has found a job at Boston-based Digitas, which calls itself "a powerful technology and marketing engine to help big businesses become leading e-businesses." Eshelby says, "In the business world you learn to roll with the punches."

A select few, like Martin and Gariepy, are upbeat not only because they are young but also because they have dodged the bullet. Misha Katz, 22, of Brookline is another survivor: He was a cofounder (at age 19) and chief technical officer of Furniture.com and helped grow it from two to 250 employees. He left that company in January 2000 to help found 3plex.com of Cambridge, which sells Internet software for the trucking industry. Furniture.com is gone, but 3plex is adding management and expanding its space near Harvard Square. "Relative to other 22-year-olds," says Katz, "I am way ahead in terms of the experiences I have had."

To be sure, for most young people, rejection has a way of modulating dreams and making the dreamers tougher, more skeptical, less beamish. To older dot-commers, the promise of easy riches rings hollow. "I have friends who were millionaires for a week and a half," says Von Ronne. "I was not a sneaker millionaire - I was in the store but never got to try on the shoes." She left ThingWorld almost a year ago, did some temporary consulting to other dot-coms (including Abuzz.com, a New York Times company), and now says, "I'm in the process of figuring out what I want to be when I grow up." She is considering graduate school, possibly in creative writing. (In December, ThingWorld laid off 70 percent of its staff and offered itself for sale.)

Some of the disappointed say they will look much harder in the future, ask more questions, take the high-flown rhetoric with a grain of salt. Eshelby and Cushing both say they took the glorious promises at face value, and they mean not to make that mistake again. "I'm like a kid who's been been burned by a pot," Cushing says. "The pot could be stone cold, but I'm tentative about touching it again." Even so, he says, "the only way to do something realistic is to shoot for the idealistic."

It's a Wednesday last November at the Ronald Reagan International Trade Center in Washington, D.C., two blocks from the White House. In a large auditorium, rock music throbs as red and blue lights flash from the ceiling and rotating abstract designs are projected on high pale walls. On either side of the stage, oversize human figures appear on large screens, each with a shimmering red-lighted border.

It sounds and looks like the Avalon Club on Lansdowne Street, but no, it's "Bootcamp for Start-ups," a two-day conference produced by Garage.com, a two-year-old pep squad cum investment bank based in Palo Alto, California. Founded in 1997 by Guy Kawasaki, 46, a former executive with Apple Computer, Garage.com holds these seminars periodically all over the country.

Judging by this packed room, the lust for entrepreneurship is alive and well. An estimated 500 people subscribed at $1,200 apiece ($750 with advance registration), and they pay close attention while scribbling notes as panels of venture capitalists soberly recite the do's and don'ts. There's a lot of detail, but the underlying message is clear: They're looking for ventures based on solid technological innovations, and their eyes glaze at passionate dreamers with pie-in-the-sky dot-com schemes. Most of these people (at least 80 percent males) appear to be well over 30.

"This is an older crowd," says Kawasaki during a break between sessions. "They've been in two or three jobs. The students with the clever idea and the cute domain name are not in this crowd. They're gone."

Nevertheless, true entrepreneurs are believers, and some cannot accept that the days of easy money and assured success are over. "They don't get it yet," says Biddle, the venture capitalist. "I just left a board meeting of a company we're backing, and they laid out a plan that called for an additional $80 million. A lot of entrepreneurs don't realize this [downturn] is not a 30-day blip."

While the youth who have been disappointed have kept their spirits up, the newest generation is coming along behind them, and they are just as optimistic and irrepressible, just as eager for their dose of Kool-Aid. Here and there in this auditorium, one finds the raw youth in rumpled clothes who believe they've got the next great idea and expect soon to spread their wings and fly over the barricades.

Luke Fronefield, 21, a student at Dickinson College in Carlisle, Pennsylvania, is downright bubbly. He is tall with slightly unruly short brown hair and glasses. "I'm writing a book about young entrepreneurs," he says, "and want to be one myself. I'm excited about e-trading. That area is stale, and I think it could be more interactive. A software application could help." He's gathering no moss: "I'm getting a team in place, and we're writing a business plan. We'll be at the seed funding stage soon." He's not the least daunted by the dot-com slump. "There's still a ton of opportunity out there," he insists. "A lot of bad ideas are being ignored, and bad businesses are being shut down. We'll now have an opportunity to see the true champions." He means to be one.

Then there's Phil Kerpen, also 21, who's gone a bit further. He quit the University of Pittsburgh to found Startupstarter.com, which his business card describes as "the virtual incubator for serious start-ups." The idea seems to be to start a company that starts companies: "For now," Kerpen's minimal Web page says, "we're working on starting our company. Soon, we'll help you start yours." Kerpen says he's got a strong investor and two associates helping to get his site up. Eager to recruit a work force, he visited Capitol Hill after the election and went around to defeated legislators' offices in hopes of hiring soon-to-be-jobless staffers. "I handed out fliers," he says. "I got a lot of positive reaction but fewer resumes than I expected. I may go back and do the whole Hill."

His dream sounds like a will-o'-the wisp, but then he's young. One imagines the skeptical reactions old fogies must have had to the young Steve Jobs or to Marc Andreesen, cofounder of Netscape. The young have energy, ideas, and faith in themselves. And that's a good place to start. "I'm confident that I can execute," Kerpen says. "Financing will not be a problem. I think I'm in a rosy scenario already."