Viant (where I worked from March 1999 to November 2000) has just announced another round of layoffs. This time it's 211 people, which is 38% of staff. They are closing the San Francisco office where I worked. Lots and lots of people I know pretty well are now jobless, although probably not for very long. One of the soon-to-be-jobless is my roommate Jason, who is on a project in LA and so isn't laid off until that's over.
Speaking of roommates, we have a new one who moves in soon: Rob. More on him later.
A bunch of us went skiing this past weekend, including Tero. It was a great time. We went to Alpine on Saturday, and Squaw Valley on Sunday. Squaw is huge. It seems 5 times bigger than Alpine, but in fact it's only twice as big (4000 acres vs. 2000 acres). I think a lot of those acres for Alpine are on the back side where few people go, so it seems like Alpine is much smaller. Also, it's a very wide-open resort; check out the aerial photos and look at how few trees there are. It's just a big bowl. You ski wherever you feel like it, and hope that you don't run into anything too difficult. Other resorts mark trails thru the woods with difficulty, this one just marks the lift since there are no trails.
I installed Oracle8i on Linux recently. For some reason, it still doesn't include the standard rc script used to start and stop the server. Also, the dbstart script they do provide doesn't actually work (it fails to identify the database version correctly, and silently fails to do anything). That's right, Oracle shipped a very expensive and sophisticated product which, if installed according to instructions, doesn't run. Fortunately it is a 1-line-of-code bug fix. I have links to working versions of both on my Oracle page.
Today, I have worked for Sapient for 7 weeks without being assigned to a project.
The NASDAQ continued to drop today following lots of companies' reports of reduced earnings, losses, and layoffs. Since the peak last March (at the height of the New Economy / Dot-Com investing bubble) it has dropped over 61%. That's the largest drop ever.
I'm not sure if people outside of San Francisco are aware of how bad things are here. First, try reading some of the articles on FuckedCompany and note how many "fucks" (listings) per day there are. These are not public companies (they wish!) but most of them are located in San Francisco, and they are spiraling downward in huge numbers. Everybody knows several people who have been laid off in the last 6 months. Many (but not all) have found new jobs. Some people have decided not to look for another job in the extremely expensive city of SF, now that the get-rich-quick incentive is gone, and have moved somewhere cheap (Portland) or back to the East Coast. Folks who haven't been laid off are digging in where they are, happy to have a steady paycheck. Some people are still fooling themselves into thinking that their dot-com is the one that was "built for the long haul", because the CEO who has never run the same company for more than 3 years keeps quoting Built to Last, and that when things get better and the company IPOs their options will finally be worth something. Everybody is worried, and is hoping for signs of things turning around.
The local job market has changed. Basically, senior level technology people (including me and most of my geeky friends) are still OK for now, although we are worried. As it happens, I have saved all of the unsolicited recruiter emails I have recieved over the past year or so. Let's plot the number of unsolicited recruiter emails I got per month, against the NASDAQ index (close value for each month):
I dunno what happened in July 2000 to make that number so low... I counted the emails twice. The March 2001 number of emails is to-date, so that looks good; the NASDAQ number is today's close.
For those not following this story from the beginning in '96 or so, here's my armchair economic analysis.
Folks saw Yahoo and Amazon and eBay get huge through the law of increasing returns, a.k.a. Metcalfe's Law, a.k.a. the network effect. Everybody decided that the New Economy (leveraging the efficiencies of internet technology) held great promise, so they invested in the stock market. This got Silicon Valley venture capitalists interested in funding New Economy companies, so they could sell their share of the company at high prices after the company's IPO. People decided that capitalizing on the network effect was key; being the early leader guaranteed hugeness later, so forget about making money for now, and just focus on getting big as fast as possible. This meant that the VCs were willing to fund companies with no clear plan for being profitable. Once you're the 800 pound gorilla, you can figure out how to leverage your market dominance into a way to get enough money to turn a profit from all those customers. To get big and to be percieved as the leader, companies decided that winning "mindshare" and partnering to get customer referrals was the way to get new customers, so lots of money went to branding and advertising. This helped fund some of the companies which had weak business models - online advertisements for other companies would pay for them to exist where no direct source of payment from the customer. VCs funded this kind of company too. Because rapid growth is expensive and so is advertising, the investments were huge - in the tens of millions of dollars to (sometimes) over $100 million. In order to grow (gotta be BIG, hire more people, do more stuff to attract non-paying customers) these companies hired grossly underqualified (or just plain incompetent) people at astronomical salaries - anything to get "butts in seats" and working on projects. Nepotism and cronyism affected executive level recruiting. Huge numbers of people moved out to San Francisco for this second gold rush: a very high salary and the chance to become a dot-com millionaire. Some good people (and some great people) got hired as well.
Then in late March and early April 2000, when technology stocks tanked, the decline began. Lots of individual investors lost money, possibly selling to cut their losses, possibly hanging on optimistically. Companies planning to IPO delayed these plans and turned to their VCs to ask for another round of funding (typically larger than the previous investments) to tide them over until the market got better. VCs, no longer seeing the opportunity to sell their investments in these companies at ultra-high prices on the stock market, declined, except as necessary to protect their earlier investments. Suddenly these dot-coms were desperate: they were BIG but had no profits and no investments to keep them going. Some unusual investors stepped forward with ugly deals that dot-com CEOs had to accept to stay in business. And then the layoffs started, because being BIG was too expensive. Sales and marketing folks got axed. People on projects not directly related to winning the next round of funding got axed. Some companies simply went out of business altogether. The second-order effect on Fortune 1000 businesses was felt next. Suddenly the Old Economy companies weren't so scared of being replaced by a dot-com, so they cut back their spending on IT projects, particularly internet related ones. Then the third-order effect was felt. Consulting companies who were making tens to hundreds of millions of dollars per fiscal quarter off of all of their dot-com and Fortune 1000 clients (on multimillion-dolar individual projects) suddenly had no new projects to work on. Having preached the gospel of the 9 month, 6 month, and 3 month project, they found that around September and October 2000, the old projects were wrapping up and clients didn't want to start new ones right now. They reported losses and laid off employees by the hundreds, especially in San Francisco. The fourth-order effect started last fall and is still being felt now; infrastructure companies making software and hardware are reporting decreased revenue, because the dot-coms are gone and the Fortune 1000s are taking a break from their spending sprees. Lots of semi-skilled and skilled people have been laid off, particularly in San Francisco where the dot-com gold rush was centered. Salaries are decreasing and individuals (both investors who lost money and folks who were laid off and have less or no income now) are spending less. The fifth-order effect is upon us now: a recession, caused by the decreased individual spending.
Let's follow the money a bit. Individual investors became excited because of Yahoo, Amazon, and eBay's rapid growth and invest in internet stocks. Venture capitalists throw money at dot-coms. Advertising revenue provides additional funding. Fortune 1000s invest money in their own internet projects in defense against dot-coms. Companies specializing in branding and advertising get lots of work. Companies specializing in new-economy business strategy, web design, and internet technology get lots of work. Companies offering hardware, software, and hosting for internet sites sell lots of their product. Landlords in San Francisco sell and rent lots of buildings at premium prices. Everybody is in a big hurry and cost is less important than speed. Employees of these companies and investors who made money on IPOs spend money on new and high-end consumer products to celebrate their success, and on new luxury items to show off. Lots of companies make a bit of money off the internet yuppies. Some of the wealth being celebrated is paper wealth, in the future, when stock options vest or companies IPO or stock prices keep going up, so people take out loans to finance these items. Then the future money goes away. Companies go bankrupt and sell their assets at a discount, and value just disappears because what was once urgently needed is unwanted now. There is still some value there but not nearly as much as before. People sell what they've financed or mortgaged and the value of those items falls as well. Widespread investments in growth made across the economy turn out to be unnecessary, and their value decreases. This is where the money went: part of it moved around and dissipated into the general economy, leaving nice items behind with the internet yuppies and making things a bit nicer for the general populace. Some of it just went into a black hole called "I'll give you money so I don't have to wait" and it is gone forever. Some of it is trapped in rapidly depreciating Dell PCs, Sun Enterprise servers, and luxury sport cars and sport utility vehicles. Some of it is tied up in stuff which depreciates more slowly and which is being auctioned off, cheap. In summary, a lot of the cash that people put into the new economy went down the drain, but some of it is still hanging around in wierd places.
I'm sick (I have a cold), and I stayed home today. Final Fantasy IX is excellent. :)
Sapient (my employer) laid off 720 people today. Fortunately I was not one of them. I'm still employed. However, four friends of mine who I met a month ago at the orientation in Cambridge were laid off today, as were a number of people I have met in SF since I started. I've never actually been at a company that laid people off (I left Viant a few weeks before the layoffs there). They are being graceful about handling this, but it's still really ugly. I'm not shocked (everybody else in this business has already laid people off) but it's still very un-fun to walk around the office while this is taking place.
(In case you haven't been paying attention, everybody in the e-business consulting biz has been having a terrible last few quarters, and everybody has laid off 10-25% of their staff in the last 6 months. Folks were wondering if Sapient was going to be the only company that made it through unscathed.)