@LARGEShifting sands
By Scott KirsnerWe gathered around a steaming pit on the beach and watched our host, wearing insulated gloves, pull back a canvas tarp and pluck 60 bright red lobsters, one by one, from a bed of seaweed.
Plates in hand, the assemblage of Internet entrepreneurs, marketing staffers, and business development executives waited for the feast to begin. It was a warm mid-August day in Cape Porpoise, Maine, and our friend had invited us up for his annual clambake.
After we'd filled our plates, we settled down on our friend's lawn, which sloped down to the Atlantic. We cracked open lobster claws and talked about what had happened to the Internet economy. It was the week the Industry Standard had declared it was ceasing publication. The Standard had been the magazine that everyone at the party had once hoped to be featured in; appearing in its pages meant you had arrived.
"Remember last year's clambake?" one entrepreneur asked. "We thought we'd seen the worst of things then."
We joked about saving some leftover lobsters for next year. Each of us had chipped in $20 to cover the cost of the lobsters, clams, corn, potatoes, and salad we were feasting on.
"Let's freeze them," one woman said. "We may not be able to afford 20 bucks next summer."
Several of the twenty- and thirty-somethings arrayed in circles on the lawn were collecting unemployment, but no one seemed too anxious about being jobless. They were treating the summer of 2001 as an unexpected but not entirely unpleasant vacation. People mused idly about their next moves -- becoming a teacher, going to grad school, moving to Vermont to have kids -- but no one seemed overly concerned.
One fellow, who had launched a publicly traded company, was no longer involved in its day-to-day operations. He was spending the summer playing golf and hanging out on Martha's Vineyard, with no plans to start another business until October, or maybe November. He had taken his company public and then watched his stock plummet from nearly $50 to $1. And that wasn't even one of the most gruesome crashes. He was in no hurry to start another venture, at least as long as the tech carnage continued.
The Internet generation is in turnaround. This was the summer when everything screeched to a halt. The world has largely dismissed the contributions of the creative and motivated minions who helped make the Web a mass medium, and a practical business tool, in six short years. The market has demolished their companies. It shouldn't be a surprise that they're hesitating before making their next move.
I'd known many of these people since the dawn of the dot-com era, in 1995, when I took a job building the Boston Globe's Web site. In the beginning, we'd get together informally, around pizza boxes in each others' office conference rooms, to talk about the sites we liked and new technologies coming down the pike, like RealAudio or Java or Shockwave. Once the rest of the world realized how significant the Web was, we marveled at how smart we'd been to situate ourselves at the exact right place at the exact right time.
It seemed like we were remaking the business world in our own images. Everything had to get done fast, but not without sporadic breaks for air hockey games or Nerf dart-gun battles. Attracting eyeballs and acquiring customers at any cost were the overarching goals. The dress code was whatever you wanted it to be. At conferences, we sat on panels with each other, tweaking the big companies in the audience for their slowness and stupidity.
Now, swatting at mosquitoes as the sun sank behind us, it felt like the end of summer camp. The fun and games were over.
It was time to go back to school, buckle down, get serious.
The following weekend, I ran into two founders of Internet companies. One of them seemed delighted at having been ousted from the management team of the company he'd started; he'd received a hefty buyout. That meant he wouldn't have to stick around for 10 years in order to cash out, he explained.
The other worried that he might not have it so good. A deal to acquire his start-up seemed to be unraveling: What if he had to stay there and actually plug away to make the thing profitable? Showing up to sit at the same desk every day for the rest of the decade was almost inconceivable to him.
We're still in the midst of a massive sorting process. Those who can't bear committing themselves to an industry that has valleys as well as peaks, and those who can't conceive of building companies one brick at a time, are falling out. The industry will be left with the patient ones, the true believers -- not the so-called "serial entrepreneurs" who started one shaky company after other, or the compulsive job-hoppers constantly looking for the employer with the best benefits.
That's OK. The Internet needed plenty of manic promoters in the early going; now that it is being assimilated into every "old economy" enterprise, they'll move onto something else. (Stephan Paternot, a founder of the now-defunct theglobe.com, reveals in his new book "A Very Public Offering" that his next stop will be Hollywood, to pursue an acting career.)
The diehards who decide to stay in the technology sector will be responsible for the next round of growth. They'll have internalized the new old rules. Brands are meaningless if there's nothing to back them up. Logging real sales must take precedence over Barney deals (the "I love you, you love me" partnerships between two companies with no real financial benefit to either one).
Time horizons will shift. One month was an eon in Internet time. Now, it's apparent that carving out a valuable market position takes years. The minute-to-minute twitching of stock prices and day-to-day PR blitzes will seem much less earth-shattering.
People have been saying for months now that we're back to the basics, that what's important is building solid, profitable companies. The people at the clambake understood that intellectually, if not in their guts. Some were still trying to figure out how (and whether) they'd fit in, where their next jobs would be. But others were already in the process of starting a new generation of leaner and meaner start-ups.
The rest of the business world is still trying to understand where Internet investments make the most sense. Is it in servicing customers, managing suppliers, getting rid of excess inventory, all of the above?
As they determine which Internet initiatives pay off, they'll scoop up some of the people who brought you the dot-com era, now smarter, more dedicated, and humbler. They'll even resuscitate some of the applications, approaches, and business ideas of the past six years, albeit with stronger business models behind them.
This was a real nice clambake, to quote the old Rodgers and Hammerstein lyric. But now it's time to get off the beach, fold up the blankets, and get back to the grind.
LOSING A LEADER
Every time I interviewed Michael Dertouzos, the director of MIT's Lab for Computer Science, he surprised me. Dertouzos always had a counter-intuitive take on technology, and he argued endlessly that computers could and should be designed to better serve humans.
He made the lab a hospitable place for some of the brightest tech innovators around, which led to breakthroughs like the spreadsheet, the Ethernet networking protocol, public-key data encryption, X Windows, and radical improvements in the Web and voice recognition. And Dertouzos was generous with his own time: Last fall, he stepped in at the very last minute to replace one of the lab's researchers at a Globe-sponsored panel on wireless computing. The audience consensus was that he was the evening's star.
Dertouzos died last Monday, after suffering from health problems for several months. I'll miss his dynamic presence in the Boston technology community, and I know many others will, too.
Scott Kirsner is a Boston freelance writer and a contributing editor at Wired and Fast Company magazines.