June 1, 2002







The Internet Economy

Remember the dot-bomb?

illustration by Daniel Carter

Cody Oliver has nuclear missiles on his mind. But he's not thinking about homeland defense or threats from the "axis of evil." The 23-year-old is negotiating to buy a 47,000-square-foot Titan I nuclear missile facility outside of Denver, Colorado. Since he was laid off by Sun Microsystems in October, he has spent his spare time trying to purchase the underground facility.

"It's a giant industrial playground," said Oliver. "I was going to try to clean it up and (resell) it as a data center or secure document storage so I could make a little money and buy a boat. Plus I'd have a cool story to tell - that I'd lived in a nuclear missile facility." It may sound like an outlandish plan, but what else is an idea man like Oliver supposed to do these days?

According to outplacement firm Challenger, Gray & Christmas, as of February 2002, more than 400,000 people in the Internet industry have lost their jobs. Like Oliver, many of them are looking for their next big project. The number of job losses may be trivial compared to the number of retail and travel industry workers laid off after September 11, but the effects of the dot-com collapse have rippled out to the telecommunications sector. During the boom, companies like Oracle, Sun Microsystems and Cisco ramped up production to capitalize on Internet hysteria. Much of their increased business was a result of the rapid growth of Internet companies, and when the bubble burst, the overwhelming demand for their products and services went with it.

Many observers, including journalists, gleefully cheered the from the sidelines as the Nasdaq plunged and the nouveau riche Internet kids saw their dot-com Shangri-la of foosball breaks and free bagel Fridays evaporate. Never mind that the same critics had hailed the enterprising spirit of the new generation only one year earlier.

But Stephen Levy, a Palo Alto economist at the Center for the Continuing Study of the California Economy, says the tech kids shouldn't be counted out yet. "Tech will come back," he said. "Not every company, not every stock price, but all the jobs will come back."

But this time around, the flashy offices, sky-high salaries and devil-may-care attitudes that characterized the Internet boom will be replaced by carefully scrutinized business plans, bare-bones expense accounts and CEOs with proven track records. "Initially people are going to be pretty cautious," said economist Brad Williams. "Whether lessons learned will be remembered forever remains to be seen."

- Alisa Weinstein

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