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Palo Alto Online

Publication Date: Wednesday, August 15, 2001

The party's over The party's over (August 15, 2001)

Former dot-com employees succumbing to 'pink-slip blues'

by Adam Levermore-Rich

Change and uncertainty permeates everything in the lives of the valley's tech workers these days. On a single day last month, two Silicon Valley companies -- Hewlett-Packard and JDS Uniphase -- announced a combined 13,000 layoffs. Several weeks earlier, online grocer Webvan filed for bankruptcy, leaving thousands jobless.

And as the once booming high-tech economy has declined, so too has the industry's playful culture -- a shift in attitude that has reached the employees who once flocked to Silicon Valley.

Many who were laid off the past few months have enjoyed their time off. They've been more grasshopper than ant, taking a respite from the 80-hour Silicon Valley workweek while living off their savings. Many are reluctant to relinquish the glory days of beer-busts and IPO windfalls, turning their loss of employment into opportunities to socialize.

But more and more, they are getting a taste of reality, and a realization the glory days are past.

"I don't want to do something that I'm not passionate about. I'd like to have the luxury to take my time and find that," said Michael Feldman, the former CEO of the now-defunct Tools, Inc., a Palo Alto-based company that provided online support for businesses.

"One of my friends took a job, which was in her line of work, but she's not crazy about it," he added. "But she needed a job, and she was fortunate to get a job offer. She's still continuing her search for something she thinks will be longer term.

"It's tough. People have to make compromises."

It's been said that dot-commers do everything with flair, and the process of looking for work is no exception.

Over the past several months -- borrowing from a trend that began in New York -- the valley's high tech jobless have flocked to "pink-slip parties," where laid-off workers exchange resumes with prospective employers while downing cheap drinks and dancing to club music.

Susan Hemmenway, the Bay Area manager for Palo Alto's ArtSource -- a staffing company for artists and designers -- represented her company at a pink-slip party at Palo Alto's Blue Chalk CafÈ in March.

"It was a mob scene," she said. "There seemed to be a hopefulness in the air."

By 5 p.m., the line stretched out the door at the Blue Chalk and wound its way down Ramona Street. More than 1,000 people packed into the restaurant and bar, each wearing a name tag emblazoned with either a red dot (for people seeking jobs) or a green dot (for companies recruiting employees). What began as an opportunity to network became an out-and-out party, as wine and beer flowed and music blared throughout the evening.

Today's pink-slip parties are completely different creatures.

A recent party held at the BackBeat nightclub in Santa Clara had all the requisite features: a "wall of opportunity" where job-seekers posted resumes and pink slips of paper detailing why employers should hire them ("behind every great executive!"); techies wearing dot-com T-shirts ("I worked for a failed dot-com and all I got was this lousy T-shirt"); and an endless supply of $2 cosmopolitans.

Cracks of anxiety, however, marred the frivolity., the parties' organizers, said the Santa Clara event would be the last one for awhile. Attendance was down -- though still respectable -- and no one ventured onto the dance floor all night. Cozy booths that welcomed amorous couples at previous events were used for job interviews.

Two years ago, such networking was unnecessary. Hemmenway says talent was in such demand that it was a struggle to keep up with her clients' requests for workers.

"We could not keep on top of all the jobs companies were asking us to fill. Anybody who had a little bit of experience was being brought on by companies," she said. "It was insanity, really."

Most of the companies who came to ArtSource were dot-coms, startups with lots of cash and a pressing need for designers to help create a presence on the Web and in the minds of consumers.

Then, as quickly and as forcefully as it began, the growth of the Internet economy came to a halt.

"We really noticed it at the end of last year," Hemmenway said. "One designer comes in and wants to interview, then they tell all their friends...and we get five to 10 people at a time from one company looking for work.

"It was obvious that something was going on."

That "something" has translated into a rough year for high-tech companies, especially in Silicon Valley.

A report from Challenger, Gray & Christmas, a Chicago-based company that tracks layoffs, stated the country experienced nearly 800,000 layoffs by the end of June -- almost 200,000 more than in all of 2000. Of those job losses, more than 130,000 were in the telecommunication industry, a jump of more than 70,000 from the same period last year.

The layoffs hit close to home in the Bay Area. July saw more than 15,000 job cuts or announced layoffs in the valley, from 2000 at the now-defunct Webvan to 6,000 at Palo Alto-based Hewlett Packard.

The one bright spot, the Challenger report stated, was that dot-com job cuts in June were at their lowest level since November 2000, falling 31 percent from May.

But John Challenger, CEO of Challenger, Gray & Christmas, said there is still plenty to be worried about.

"We have the new economy tech sector in recession," he said. "It is the service economy, which is the bulk of our economy, holding this economy together."

Challenger added there are signs the service industry is also beginning to deteriorate. "As those companies begin to cut back, we are going to see increasing unemployment."

Such losses have taken a toll on once-happy dot-commers. Mitchell Marks, a San Francisco-based organizational psychologist, said layoffs have life-changing magnitude.

"The type of psychological reaction is one of shock," he said. "It's been related to the reaction that people have when they've been told they have a catastrophic illness."

That can lead to depression, Marks said.

"It's quite debilitating, especially for people who thought they were good workers," he said. "They think, 'If I did something wrong on the job, I could rationalize getting laid off.' But if they were good workers, it's very confusing."

Hemmenway agreed. She has seen a difference in the attitudes of those who come to her for a job, and hears more panic in their voices when they call.

"There are some incredibly talented people that we would think, 'Oh, OK, we'll be able to place them anywhere,' and three months later they're still looking even for contract work," she said. "I think the longer a person is out of work, the more they get depressed about it."

Last year, she said, employees were calling the shots, refusing offers that meant a long commute or holding out for higher salaries.

"They had their criteria of what they wanted, and now it's, 'I'll take anything. I'm an art director, I was making $150K last year, I have a mortgage to pay, I'll do production work.'"

The insecurity of the job market has also influenced the types of companies individuals seek. Last year, people were eager to work at startups and pre-IPO companies, Hemmenway said. Huge corporations like Microsoft and Cisco were harder sells.

"But now it's completely the opposite," she said. "And it's really these larger companies that are still hiring, while many of the dot-coms have gone by the wayside. People want that kind of stability now."

The layoffs hurt more than those who lost their jobs. The lucky ones who kept their positions are now feeling the hit in their wallets and psyches. Before announcing last month that it would cut 6,000 jobs, H-P asked its employees to either take eight vacation days by October or take a pay cut of up to 10 percent so the corporation could cut costs without resorting to further layoffs.

Marks confirmed there are psychological land mines for the workers who remain after a layoff.

"In companies where there have been multiple waves of layoffs, there is a syndrome we see where survivors are actually envious of victims," said Marks, who explained the survivors are left with the feeling that the victims can at least move on with their lives.

For many once-thriving dot-commers, that's precisely what they're trying to do. They're no longer looking for the next best thing, they're searching for anything that will pay the bills.

Enjoying it is optional.

E-mail Adam Levermore-Rich at [email protected]


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