(This is chapter 36 of my ongoing memoir of the Internet industry.)
I was just hitting my stride in my new role as Director of Community Services at iVillage when the dot-com stock market began to fall. It happened quietly, imperceptibly. Some trace the start of the crash to a March 2000 article in Barron’s magazine naming several Internet companies that were spending money too quickly and likely to go out of business soon.
Given the intensity of new media vs. old media competition during the Internet’s early years, it’s ironic that a magazine article brought the dot-com economy down.
Today the “dot-com bubble” is remembered as a joke, but those of us inside took it quite seriously at the time. We knew there were too many startups, too many IPOs, too many business plans, too many companies like Pets.com and Gazoontite.com spending all their money buying ads on the Super Bowl instead of figuring out who their potential customers were and how they could bring in revenue. I wasn’t surprised that the bubble burst, but I was surprised that iVillage went down with the rest of the field. Unlike most of these other terrible companies, we actually had hundreds of thousands of loyal, engaged readers. We earned millions of dollars every year selling ads. Sure, we spent much more money than we earned, but at least we were doing business. This counted for nothing, though, when the Internet stock market began to slide. My company was near the top of the pyramid, but that didn’t turn out to be a safe position when the whole thing came crashing down.
Our stock had been at $100, but then it fell to $80, then two weeks later to $70, then another two weeks later to $60. It had dipped before, but had always come quickly back up. The official word from top management was to keep doing what we were doing. I was putting together a plan to replace our message board software. It was easy to ignore the bad financial news and focus on my deliverable, even as the price fell further down, to $50 a share. Now my $800,000 in unvested stock options were worth $400,000. That still seemed like a whole lot of money, except two weeks later the price sank to $40 a share, and it didn’t look like it would stop falling anytime soon.
Optimism was still in the air, though, and it was easy to get distracted. Silicon Alley was a nice place to work. Springtime flowers were blooming on the tree-lined Chelsea sidewalks. Al Gore was running for President, and one day I heard that iVillage had donated a lot of money to the Democratic party and thus been given a table at a political “gala” featuring Al Gore, Tipper Gore, Bill Clinton and Hillary Clinton. Since I was one of the iVillage employees most likely to shoot my mouth off arguing about politics around the coffee machine or in the elevators, some nice person arranged for me to get a seat at this table. I put on my best suit (okay, my only suit) and shoes for the event at the Sheraton Hotel in midtown.
I was troubled, though, by the vibe of the event. Bill Clinton had been a popular President (despite his unfortunate sex scandal) and many people took it for granted that Vice-President Al Gore would be elected in November. Who else could win — George W. Bush? Nobody took that idea seriously. I respected Al Gore, but I was surprised when he delivered an absolutely dull, banal and empty speech to this excited crowd. The speeches by Tipper Gore, Bill Clinton and Hillary Clinton were all more inspiring than Al’s. I don’t know if he was just having an off night, but several of us shuffled out of the Sheraton Hotel that evening saying the same thing: “he better fight a little harder, or somebody like George W. Bush could end up our next President.”
Then the stock was selling at $30 a share. Two weeks later it was $20 a share.
By the middle of the summer, mass layoffs had become common events around the industry. I was lucky to be busy with the message boards, or else I might not have survived the first couple of rounds at iVillage. We laid off a lot of the young entry-level people, the recent college graduates who’d been cluttering up our hallways and not doing much useful work anyway. We also lost most of our top management team in a mysterious coup in the early summer, including the two executives who’d hired me, Allison Abraham and Craig Monaghan. I never found out why they suddenly left, but I heard they’d had a showdown with Candice Carpenter over whether or not to accept a buyout deal at a desperation price. Candice won the showdown, but we lost our hands-on management team.
At this point, I started seriously wondering about my financial future. It also hurt to watch the Internet industry fall apart, because I’d been involved for seven years, watching it grow, watching it exceed expectations. These had been glittering, dizzying years, and I was proud of the work I was doing, and I didn’t want the party to end.
The only good news for me in this crash was that it reduced a lot of the tension between me and Meg — or, rather, between my lawyer and Meg’s lawyer — as we negotiated our divorce settlement. Suddenly there wasn’t so much to fight over, and it was surprising how much easier everything became after our “fortune” was gone.
Even as the web industry was crashing, some sectors like the music industry only began discovering the Internet’s business potential around the summer of 2000. The technology to enable digital music was rapidly improving, and publicists were discovering the possibilities of Internet marketing. My BobDylan.com partner Dan Levy called me up one day with some exciting news: Paul Simon wanted to build PaulSimon.com, and he wanted to hire the guys who built Bob Dylan’s website. Was I available?
I knew I was too busy to take on another project, but I couldn’t turn down a chance to meet with Eddie Simon, Paul’s brother and business manager, in the legendary Brill Building in the Broadway theater district. The Brill Building had been the famous home of the “Tin Pan Alley” music scene of the late 50s and early 60s, featuring songwriters like Carole King, Neil Sedaka, Jeff Barry, Ellie Greenwich, Barry Mann, Cynthia Weil, Neil Diamond. I was excited to go to a meeting inside this building, and I considered making a grand statement to Eddie Simon about “Silicon Alley meets Tin Pan Alley” (though, when the moment came, I kept my mouth shut instead).
We had a nice meeting with Eddie Simon (who looked a lot like his brother, and could have easily fooled us and pretended to be Paul), but in the end Dan and I both realized we didn’t have time to take on this project. Dan had always extolled the virtues of self-employment, but even he had now been sucked into working full-time for an Internet consulting firm, Scient. Both of us were fully consumed by our regular jobs, and we agreed to pass on the opportunity. PaulSimon.com launched nine months later — a bland, corporate treatment — and we both felt bad because we knew we could have done a better job.
Then the stock was down to $10 a share. Now other Internet companies were shutting their doors completely. Pets.com with its sock puppet was one of the first to go. We had another round of layoffs at iVillage, and I survived again.
Soon the stock was at $5 a share.
Then it was $2 a share.
Then it fell to $1 a share, and then seventy-five cents. It stayed around there for a long time.
Jay McInerney’s 1984 novel Bright Lights, Big City opens with a quote from Ernest Hemingway’s The Sun Also Rises:
“How did you go bankrupt?”
“Two ways. Gradually, and then suddenly.”
But that wasn’t how the dot-com crash of 2000 went down. There was never a moment of “suddenly”. It fell apart steadily, calmly, with a solemn and dispiriting certainty, as if it had all been a silly dream to begin with. By late 2000, anyone still working for a dot-com had to feel embarrassed about it. Wasn’t that last year’s business model? The game was up. It was all over.
But, unlike a lot of the young people in the industry who’d rushed in because the pay was good, who now went back to their original plans of being lawyers or accountants or journalists or whatever they wanted to be, I had nowhere else to go.
Even though my stock options were now worth less than a used car, I had no choice but to stick with the Internet industry as long as I could. Where else could I possibly go? This was the only skill I had, the only work I knew how to do.