The dot-com
boom is over. The bust is old news. Legions of dot-commers now
are getting on with their lives, changed forever by a moment
in time dubbed the Internet Revolution.
The Atlanta Journal-Constitution covered the revolution
here since its inception in the early '90s. During the past
three months, a team of reporters asked: How is life after the
bust? The answers we found are anything but simple.
We found people who are sticking with their dot-com dreams
despite a downturn that shows few signs of ending soon.
We found a few winners, entrepreneurs and investors who
actually made money, who cashed out before the bust.
We interviewed dozens of Indian immigrants who came to
Atlanta for high-tech jobs, but left after the jobs never
materialized.
And we saw more evidence of the toll exacted on more than
8,000 high-tech workers who have lost their jobs statewide
since 1999 -- employees at obscure start-ups as well as
companies that had become household names.
The good news is the aftershocks here were milder than in
Silicon Valley. The city still is best known for mainstream
companies such as Home Depot, Coca-Cola and Delta Air Lines.
"The good and bad thing about Atlanta is that we were never
that high on technology. So, we didn't fall that far," said
Rajeev Dhawan, director of Georgia State University's economic
forecasting center. "We didn't put all our eggs in one basket
like Silicon Valley. We were a lot more diverse."
Though less painful than in other tech cities, ripples from
the bust did touch other parts of the economy.
Office occupancy rates fell as dot-coms folded, abandoning
their pricey digs in renovated warehouses downtown and at
"cube farms" that sprang up in suburban office parks.
Newspapers and magazines that gorged on dot-com advertising
during the boom also went begging. Atlanta-based Digitalsouth
magazine closed June 1.
Public relations firms that beefed up their staffs to
handle the dot-com hype cut jobs, too, as their clients went
belly up.
Even the OK Cafe, a restaurant that had become a dot-com
breakfast and networking spot, has seen early morning business
slow.
Back in the day, everyone who was anyone in Atlanta's
high-tech economy would "do breakfast" at the West Paces Ferry
diner.
They fired up laptops and punched tiny keys on their Palm
Pilots and Blackberries.
Over plates of grits, eggs and bacon, they talked about how
the Internet would change the world -- and make them rich.
But, these days, the diner's red vinyl benches, where
patrons wait for tables, are mostly empty at 7:30 a.m.
"We used to have a line going out the door," said waitress
Jane Sappel, standing over one of her tables, coffeepot at the
ready. "Now, it's kind of stagnant."
Several of Atlanta's flagship tech companies whose CEOs had
become media darlings have faded into merger obscurity.
WebMD moved to New Jersey after its founder, wunderkind
Jeff Arnold, resigned from the company.
IXL, a Web consulting firm whose mammoth sign towered over
I-75-85, began layoffs a year ago. In July, it said it plans
to merge with Scient, another struggling Internet consultancy,
taking its name and moving its headquarters to New York.
Most of the city's much-hyped private companies have also
disappeared.
Idapta, a software company for online exchanges, raised $35
million and shut down operations in July.
Online billing company Derivion raised $53 million but sold
out to Metavante in April.
ETour, an online advertising company, raised $45 million,
closed in May and sold its assets later that month to Ask
Jeeves.
Jim Lanzone, a co-founder at eTour, said he feels "gypped."
The company was doing well, he said, but the stock market, the
market for venture capital and the market for Internet
advertising all went south, dragging eTour along.
"We had counted on additional financing," he said. "At one
point, we had counted on going public."
Venture capital, the mother's milk of start-up companies,
has dropped 60 percent since its peak in the first quarter of
2000, when 55 Georgia companies raised $838.6 million,
according to the National Venture Capital Association and
Venture Economics.
In the most recent quarter, which ended in June, 32 Georgia
companies raised $338.5 million.
"Venture capital swings much more violently than the public
equity markets, and the public equity markets have swung
pretty violently," said Alan Taetle, a venture capitalist at
Noro-Moseley Partners in Atlanta.
In a sign of lowered expectations, folks at the Advanced
Technology Development Center, a state-funded incubator,
presented TogetherWeb chief executive Rick Hargett with a cake
and champagne at a gathering this summer.
The congratulations came despite the fact that TogetherWeb
raised a sliver of its $3 million to $5 million goal. Just
getting enough cash to stay alive is an accomplishment these
days.
"We are very pleased we got money in this market," Hargett
said later, adding that the capital will get his software
company close to profitability.
Without venture capital, building a company is not nearly
as easy -- or fun -- and fewer people are trying it.
Applications are down 50 percent at the ATDC, the incubator
that houses and helps companies like TogetherWeb.
"Before, people were starting companies just for the sake
of starting companies," said Tony Antoniades, who is running
Fizzion, a joint incubator between Coca-Cola and the ATDC.
Back then, dot-com life was adrenaline-fueled late nights,
big-dollar negotiations, swank parties, networking events and
breakfasts.
Greg Foster, vice president of SilverPOP, a communications
software company, still meets at the OK Cafe with clients and
potential business partners -- but less often than he once
did. Though SilverPOP raised $29 million last fall as other
dot-coms were starving for cash, the company also has laid off
some of its staff.
Looking around the diner, Foster said it's clear much has
changed.
"The whole dot-com population used to be in here and there
was a much higher velocity of deal-making," Foster said. "The
few people who still come are talking about boring stuff, like
running a business."
It may be harder to get funding for a high-tech company
these days, said Foster, but at least it's easier to get a
table.
ON THE WEB: For more information about this topic:
www.upside.com/texis/
www.thestandard.com/trackers/flop/
www.webmergers.com
www.bizbuysell.com/dotcom/
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