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The Worst Of Times
I've read one-too-many tech boom-to-bust sob stories lately and now I have the urge to just summarize them all as follows:
I got my ticket on the tech boom gravy train back in 1997 when a stranger I had shared a taxi with pitched me a leading technical position at his new start-up company, Yellow River. The next day I was interviewing for the job in his top-floor mid-town office suite overlooking the Bay. I was asked who invented the dumbwaiter (luckily I knew it was Thomas Jefferson) and how to best move a flock of sheep between two moving icebergs, and before I could answer I was hired.
Rick, our CEO, and his college drinking buddies had a revolutionary idea that was going to change the world. All they needed was more investors, 300 programmers, 200 administrative staffers, a mile of warehousing space, a fleet of private jets, and a few international trade treaties to be rewritten. Our software afterall would forever change the way people adjust the brightness and contrast of their computer screens. I was an area of computing that was wide open and untouched: the monitor, the screen itself. People adjust brightness and contrast on their screens all the time manually pushing big old fashioned buttons and twisting knobs and dials, and they have to be in front of the monitor to do it. This is where Rick saw the opportunity: Why not let people adjust their screen settings from anywhere in the world over the web? At the time we could barely comprehend how profound of a concept that was, and I was excited to be part of it.
In no time we had investors beating down our office door. Because of our tight non-disclosure agreements we couldn't even explain to our investors what exactly we were working on, we could only tell them it was going to be "big and yellow." Thus the project code name "Big Yellow" which we later had to hire lawyers to wrestle that trademark away from the Yellow Pages, but it was worth the battle because we liked the color yellow, it meant something to us, and for our investors it was all they had from us so far.
I was charged with hiring our entire technical staff of programmers, tech support reps, internal support, networking, and field technicians. Although I didn't see the harm in it at the time I immeditaely hired all of my friends from the local role-players' gaming club to fill out the top technical positions in the company. Some of them had actual computer experience and others were just really cool people to hang out with. We worked long hours together, only it didn't feel like work because we turned our management process into a role-playing game, another revolutionary idea that we were very proud of.
The trouble started when we missed our first ship date. Little did we realize it at the time but most computer monitors settings can not be controlled through software, a major setback. It also didn't help that most of my staff had been put on the "Bigger and Bright Yellow" project which Rick's cousin Nell was personally managing. Soon there were a clash of personalities and unexpected failures in our role-playing-modeled management process. Investors were also starting to demand some kind of description of what our product was supposed to do and our lawyers couldn't hold them back much longer. After Rick came back from his new time-share in the Italian Riveria, we had the talk I was dreading all along. I was being replaced. Rick's brother-in-law Jed had just been certified to repair PCs and other electronic devices and now his wife wanted Rick to make Jed as our new CTO. Jed was a smart kid in his own way, but he clearly did not know anything about role-playing games. That made it difficult for us to respect him as our boss.
But we worked hard and the money didn't mean anything to us. As long as my stock options were still worth more than $20 million, and my salary was twice the market rate, the money didn't mean anything. These were the fun times. Our office was a playpen of ideas and creativity, we had really smart people and free soda, as much as you could drink all day and night.
By 1999 it was all over. None of us saw it coming. Our executives were dragged out of the office in handcuffs; apparently the investors decided to play dirty and called the FBI on us. I couldn't believe they would accuse us of fraud -- we had a product, we just hadn't finished thinking about how to make it yet. The saddest part came when I had to fire my friends. They felt betrayed, the week before we were shopping for luxury yachts and now they were wondering how they would make rent next month. All I had left from my years at Porkius was the twelve-sided die we used to cast our most important executive decisions.
Still I am ambivalent about the outcome. After all, I have learned some valuable lessons: never trust guys named Rick -- Rick is an asshole, Rick lied to me; never trust investors; hire only the friends who play the same games you do; and wait until the computer monitor market matures before stepping back out there.
Of course, I'm biased, but I think it's interesting. I wanted to post it to A) give some meaning to 18 months of personal hell, and B) allow for the discussion and study of failure. I spent a little time pursuing an MBA, and nobody ever studied failure.
Those immune to failure, feel free to criticize the story, my business and my struggles with it.
Me, too. Another Rick has owed me $0.75 since the second grade! Hey maybe it's the same one! (Once a dead-beat, always...)
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CUR ALLOC 20195.....5804M
LNUX isn't totally worthless.
Yet.
Nor will you see Larry being led away in handcuffs any time soon. They need the cell space for someone else.
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E_NOSIG
The problem with the tech boom of the late 90's was that people didn't buckly down and release useless products, they took their sweet time about it.
If people would just get off their asses, and get those terrible websites out a bit faster then they can go out of business with much more authority and confidence, versus this current crop of companies who can't even handle their bankruptcies emotionally.
These lessons have been learned by the current crop of startups, and they have become tightly focused on synergies around expenditures. Meaning, they will blow money at a faster rate, and bring products to a market that doesn't want them that much faster.
Get ready for the new, really new, economy!
Yes, people were foolish. But just like everyone was all hyped up about dot-coms and e-commerce and new economy, people are also now all hyped up about the failure of these. It's *all* out of proportion.
Do you have any idea how many car makers have existed? Over 15000! How many exist now? 20? 30? Does that mean that cars aren't one of the most revolutionary inventions ever or that it's a bad business idea? Should we laugh at Ford, Honda and Audi?
What's idiotic is getting into extremes, using terms like "e-revolution", "new economy", "cyberspace" etc. Just because something is revolutionary doesn't mean we have to use it in every single aspect of our lives. After all, we still drive on "roads" - as opposed to "automobile space".
It's easy to make fun of it all now, when we know how it all turned out. But just because boo.com went bankrupt and just because Nasdaq was/is about 10x overvalued doesn't mean that we're not talking about a revolution - it is a revolution for sure. I consider it revolutionary enough that I can read my email on the subway, that I can buy movie tickets with a cell phone from a café using a web / wap browser etc. There's no need to hype it, but there's also no need to ridicule it.
Failing that you can melt the sheep however I have not been able to reconstitute liquid sheep as yet.
Please be aware that in the UK you must add a generouse slosh of disinfectant to either the sheep or the icebergs while liquid to prevent contamination by foot and mouth disease.
Matt Thompson - Actuality - Insert product here.
Truly you were ahead of your time. Every iMac made uses software to control its monitor settings (as do Apple's flat-panel screens). If only you could have held out another year, the installed base might have grown enough to show your investors a potential market.... alas, now we will never know. :-]
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I use Macs for work, Linux for education, and Windows for cardplaying.
Anyone ever seen the movie boiler room? The story was funny and somewhat similar, but whats scary is, it happens in the real world although its rare when tech based, however whats ironic IMHO is that most VC firms who invested in companies that went under for lack of having products never attempted to seek injuctions against those companies. Also noteworthy to me is the mentioning of hiring friends, and lack of management due to age constraints.
I worked at a content provider like Yahoo that catered to Latin America, except 90% of the staff weren't Latin (get worse). Well no one was ever allowed input during weekly meetings (where much money was spent on catering) into what the company should look to for future revenue, or methods to cut costs (e.g. option for cheaper servers, etc.) not because no one had a clue, but because management between the departments were mostly 20 something'ers.
I remember a few people had ordered (no bullshit) Sun E450's for personal mp3 storage servers, the company brought just about everyone top of the line IBM Thinkpads, Motorola i1000 pagers, Nextel phones, you name it they brought it.
Now the management team used to all work together in prior companies, some were college buddies, and when they had disagreements with each other, they would act out like brats who didn't get their way and disrupt the company by not allowing needed change, not because it was or wasn't good, but simply because they didn't like each other. Weird place I ended up leaving after about 6 months.
I barely trust companies where management is some skateboarder looking reject who thinks its hip to interview me with a little dog running around the office. Sure one would like to go to their jobs and enjoy the environment they work in, but management (although most times are hated) is a very important part of any company, and not many 20something'ers have that edge yet in my opinion, mind you I'm in my upper 20's.
Want Root?
Perhaps the most amusing/saddening aspect of the dot.com crash is that so many Slashdot posters would read the story above and think it was real. As many others have pointed out, the real stories aren't all that different (and some are worse).
Though it's easy to say (and hard to prove), I saw the dot.com crash coming. (One piece of evidence: I got out of the stock market completely in February of 2000.) I've been involved in two different startups and have helped bring half a dozen commercial software products to market. I know how tough and unforgiving the market can be, even with good intentions, a decent product, and competent management. Been there, done that, wrote a book about it.
Here, by contrast, were these dot.coms blowing through more venture capital in a month than the last startup I was with used in five years, with no product, no business plan, and no experience in winning and maintaining a customer base. Even under normal circumstance, two out of three VC investments fold--and the VCs still make money, lots of it. The dot.com mania suckered both entreprenuers and investors; the resulting death rate is more like nine out of ten, and many VC firms are hurting in a way they never have before.
I'm not thrilled about the subsequent crash, since it's having an impact all over the economy. My own employer is 'retrenching'; since my current practice isn't sufficiently profitable for their needs, I'm going to be 'spinning off' to run it as an independent. I'll do fine. It's not the first time I've been through this, and it's not the first time that we've been through a tech-related boom-and-bust cycle. But I was hoping to build up a pension over the next dozen years or so. Now I have to do it the hard way, while paying my own employment tax, benefits, legal and accounting services, infrastructure, etc.
I _am_ amused by how every time the stock market rallies a bit, commentators jump in to speculate whether things are going to turn upwards again. To borrow an earlier poster's phrase, I fear we are going scrape along the bottom for some time. I'd love to be wrong about that, but I fear the worse (in the tech sector and possibly in the economy) may stil be yet to come. ..bruce..
Bruce F. Webster (brucefwebster.com)
During one of my parttime contract weekends the current CTO disappeared, just left. Took a company phone, laptop, keys. No word. My friend was left holding the bag and turned to me to fill in. I still wasn't sure about the job but this was a very close friend, someone I trusted and they needed me. I couldn't let them down just on principle. I reworked everything the former CTO had done, (much of the network had been setup rather sloppily so I had to redo it), and kept everything on track. Still, I was uneasy so I agreed to come on board fulltime for 6 months, to get the company started, but that was it. I might stay longer after that but could not guarantee it. This way, I could feel satisfied with myself that I wasn't leaving my friend in a bind while at the same time not living with the regret that I had let a good opportunity pass me by.
After relocating myself to the area and working fulltime for a couple of weeks, I still hadn't been signed on as a fulltime employee. I was living off of my own savings for a bit of time. I was just going to rent a car but went ahead and bought a new car at my friend's urging as they wanted to wrap the company logo on it promising that the company would buy the car from me once I left. I finally received a pay check so I felt more secure about the situation and continued to trust my friend and take them at their word, especially after they agreed to sit down with me the next day to get everything settled and in writing as I had been requesting since day one.
By the end of the month, there was very little in writing, my friend always had meetings or was too busy to meet, and a new business plan was being written. The entire mission and product goals of the company were being changed, including my job description. I was suddenly "promoted" to CTO which meant "do everything tecnical to make it all happen, whatever it happens to be." Of course, I'm not qualified to be a CTO and barely qualified to be an IT Director which is what I was doing on contract, still not a fulltime employee.
I was pulled into VC meetings to answer technical questions about a new business plan with which I wasn't familiar which made me uncomfortable. My staff was anxious. I started to hear rumors about why the former CTO had left, how my friend had been changing the direction of the company at will in order to get VC money and was fixated on making $20 million dollars. When I questioned my friend about anything, I was accused of being naive and/or disloyal followed by how comforted they were that I was there to help them, how they couldn't do it without me.
I then realized that my friend had no idea as to what they were doing. They seemed to have a junkie addiction, only concerned with money and making lots of it and would tell anyone anything if it would help them get it. I resigned from my contract and told my friend that it wasn't going to work out. The company and job had not turned out be what it had been presented to me as and I didn't like being baited and switched. My friend felt bad and we agreed on a compensation package for all the time and money I had spent to accommodate the company. We split on good terms. That happened last summer 2000.
Currently, "my friend" is no longer my friend. Promise after promise that was made to me was broken time and time again. I still have not been paid all that was owed to me and am only now getting out of the debt I incurred from helping my former friend. In spite of it, I am still doing okay. My former friend's company is, of course, not going to make it. Many people have left or been layed off and my former friend is being sued. I am relieved that I got out when I did and don't want to have anything to do with my former friend ever again.
I don't regret taking a gamble by working for a dot-com. I should have paid closer attention to the inconsistencies but the biggest error in judgment I made was trusting a close friend who took advantage of my faith in them. I will never make that mistake in business again. I've learned my lesson.
- tokengeekgrrl
Can you hear it? That's the collective ignorant outcry of a hundred thousand geeks who can make a Linux box fly but can't recognize satire when they read it.
This is not a real dot-com people...It's half tongue-in-cheek, half satire. You must chill.
Now if anyone who doesn't believe me wants to invest in my plan to turn the volume up on your computer from the internet, email me the money.
RB
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ah honey, we're all resplendent - Bill Mallonee
This was a very good peice of satire.. and not far off from the actual truth on the market. Most companies did very little research if an idea was marketable.. For example, my previous job was working for a company called InterAct Accessories, (GameShark.com, interact-acc.com).. I worked on many projects that were just not researched.. My boss at the time's outlook was, "If its internet enabled or does something on the internet, it will sell millions." And thus a product called SharkWire was born. SharkWire was a modem for your Nintendo 64 that allowed you to get Gaming information straight from Sharkwire.com for only 9.95$ a month! The best part you ask? You can't browse anywhere else on the Web, and Sharkwire.com was always down! I know, I know first thing I said was where can I sign up to get one of these devices... Well instead of even just testing the water before investing a lot of money, they put approximately 2 million into it, produced 80,000 units, setup a huge sharkwire.com hosting deal with Genuity (approximately 90,000 a month for Solaris machines, Radius servers, mail, etc..), then released the product LATE.. Missing its target date before christmas.. But alas, it was the technology era, it would sell anyway right? Well InterAct sold approximately 500 units over a period of 5 months.. of those only 100 actually called to subscribe to the service.. The rest were eventually returned.. Needless to say after about 8 months the project was shut down... with still 80,000 of these units in a warehouse.. Fortunately I wasn't directly involved with this particular project, but my job was eliminated anyway thanks to the huge loss involved..
..There's a-dooin's a-transpirin'
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J, Pixel Pimp
Twenty-something managers definitely deserve a lot of blame, but to be honest, good managers of any kind are hard to find.
I was involved in a dot-com startup. We raised 4.5 million in the first round. We decided to hire a 40-something CEO, figuring that he very successfully ran a multi-thousand person corporation that went public, so he must have done something right.
What a disappointment. The biggest problem was that he was extremely intimidated by "the New Economy" and bought into every dot-com cliche you could imagine. Spend money as fast possible. It doesn't matter what you do as long as you grow. I was the CTO, and tried to bring some sanity to the process, but was overruled. I eventually left the company.
Later, they raised another $15 million. The guy hired to replace me was, quite frankly, one of the stupidest, most irritating people I have ever met. However, he could butt kiss like you wouldn't believe. He would spew techno-babble that would never fail to impress my "grayhair" CEO. Eventually, only an uprising by the programmers got rid of him (they threatened to walk out, en masse, if they didn't get rid of him). One catty comment: the ugliness of his personality was exceeded only by the ugliness of his appearance. He was truly offensive in every possible way. There aren't many people that I truly hate (even people that have screwed me in the past), but this guy I truly despised.
Anyway, the irony is that it really was a great idea, but it would take careful execution to make it happen.
There were SO many other stupid things they did. Long term office space lease (although, they at least didn't get the most expensive they could get). HUGE Oracle/Exodus contract that was 10 times more power than what they needed. On and on.
This was late 1999. They have pissed away 17 million of the 19.5 million they raised in about 2 years. They finally fired the CEO. However, the VCs hired another guy for, I believe, $350K/year. My partner (who was still there at the time) absolutely hated the guy, and thought he was completely useless. My partner was fired.
My lessons? NEVER use other people's money. You very, very rarely need it. Trust your instincts. Be frugal, and slow steady growth wins the race.
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Sometimes it's best to just let stupid people be stupid.
Where are all these fantasy stories of "mismanaged" dot-coms coming from? Why is it so vogue now to ridicule dot-coms?
When the Internet exploded - it caused massive cultural change. The kind of things Katz is famous for ranting about *are* possibilities, broad flat publishing, heightened communication, empowerment in various ways, re-invigorating communities of all kinds - DO and DID occur because of the Internet. The Internet has been the single greatest Cultural Revolution to happen in the last 15-20 years.
But its success is something very unique - it did not translate into massive, powerful profitable businesses? Why? Because not everything that is culturally significant is economically significant. So when VCs flocked to the Internet (a whopping 4-8 years ago) they expected to become rich by riding the economic saddle of this explosion. Well that did not happen. The Internet is proving to be a very hostile to their economics.
So - what is my point? It is a sad commentary that we will ridicule and malign what is a significant cultural event. I understand that trying to run a 'business' as is described in the article is a funny. What is very funny (in the Strange sense not the "ha ha" sense) is that there is no mechanism or ability for people to participate in our world in this way. In all the world there is no opportunity for people to manage via Role-Playing - why the fuck not? I think there should be.
Every day millions of us goto our places of work and participate in the inhuman charade that robs us of our Life. Most of us probably would rather being doing something Else with our time. It is truly sad that there are NO OPPORUNITIES in the world to do something different. Why does everything in the world need to participate in the un-reality that is the business world. For a very short time people were equipped and empowered to build something they found interesting. Allot people will downplay the Katz description of the Internet as being insignificant - while i agree it is not the most important thing in existence - it is profound and exciting in many ways.
It is really troubling to think of the other 'significant' things that humanity could enjoy, what strange and different ideas could be explored - in a large way - that may prove to be significant in our lives - but *ARENT* pursued or built or conceived or developed or explained or discussed or shared or whatever simply because it does not participate in the world in an *Economically* significant way.
Where is humanity going? What are goals? Is it to consume and work and conceive of nothing else if it doesn't work in our broken 'economic' reality?
This is a very difficult thing to express - im ranting a bit (and definitely running on) but I hope everyone 'gets my point'. Most will read this as a simple anit-capitalist tie-raid(sp?) - which pragmatically it is - I mean it to be a whole lot more than that.
One clever .tragedy in salon was fun. One more in cnet, red herring, upside or nytimes.com was tolerable. And this was in January 2001.
For cryin' out loud, we are in May of 2001. And we are still laughing at these dot coms or shedding tears for them??? Havent we passed that point where parodies fail to amuse us and elegies fail to make us cry? /. should go back to talking about technology, rather than focusing on the business of technology coz its writers do *not* have the insight to write about management and business.
I have to confess -- I read the story a couple of times before concluding it was a joke. Not because I can't recognize satire, or notice the humor icon on the story, but because there's little here that's obviously unrealistic.
The deranged business plan, the interview questions, the godawful management, executives landing in jail -- this sounds exactly like one of those sob-stories Salon is always running. Actually, if you combine Eazel and Ximian's business models, LinuxCare's management and the Red Hat and VA IPO's, you'd have a similar story.
Now, if the interview question had used goats instead of sheep, and the word "goat" had been linked, I'd have caught on quicker. ;-)
Unsettling MOTD at my ISP.
"Why not let people adjust their screen settings from anywhere in the world over the web? At the time we could barely comprehend how profound of a concept that was, and I was excited to be part of it."
I bet he was coding this for Windows. Since Mac OS's contrast/brightness/ColorSync settings are all done in software (and hardware) (for color calibration purposes), I'm willing to bet this could be coded for MacOS by one person in one day.
Does this mean I could be the next .com millionaire?
Burn Hollywood Burn
You assumed a position suggested by some stranger in a cab, and wonder how you got screwed? Sheesh....
+5:offtopic,but anti-American
Sad part is, some of the real-life stories I have heard are worse than this story. Bad business ideas, bad hirings, bad money spending. I can't wait for the next computer/network revalation to hit so I can 1) put my money in early and get the (inflated) earnings out early 2) watch and laugh as the same mistakes are made again.
At the time I wondered if I should make the dotcom leap into the "big money." Decided that it wasn't stable enough, stayed where I was, and got a 19% raise in Dec. '99 from my current employer for a job well done, but mostly because they were scared to lose me! With a little patience and insight (or luck?) I still have a job with benefits and seniority, and a kick ass raise to boot (no pun intended).
Vote monkeys into Congress. They are cheaper and more trustworthy.
I love this kind of article. It brings out all those that believe that irony is a kind of metal.
Does a Christian soccer team even need a goalkeeper?