The Herman Trend Alert|
August 1, 2000
Pink Slips in Paradise
150 Days until January 1, 2001
The bloom is off of the dot-com rose. A number of the start-ups that held so much promise are floundering on the beach of the real world. What this means is while we may be experiencing a Brave New World of enterprise, not ALL the rules have changed. Companies still need to make a profit, and those that are not profitable will NOT remain.
Upon inception, many of the young up-starts were cash rich and they spent like drunken sailors. They splurged large sums on traditional advertising, lavish parties, and other inappropriate expenses - without regard to ROI. They rode the crest of the dot-com wave for all it was worth.
Unfortunately for many, that wave did not carry them into the safety of shore. Instead, they became trapped in a whirlpool of unfulfilled expectations. Somewhere along the way, the sea calmed enough for more rational minds to prevail. Venture capitalists and sponsoring corporate entities became less tolerant of delayed gratification. When these newbies did not have rational explanations for their funders, these upstarts found themselves with their boogie boards pulled away.
These developments have even greater implications for the labor market. Seduced away by the potential of a life of ease, of millionaire status, and an opportunity to be part of the IT revolution, some of the brightest stars in corporate firmament eschewed conventional career pathing. Expecting to work hard and be rewarded accordingly, they jumped into to the new dot-com sea and started swimming to catch the wave.
However, after months of 16 to 20-hour days with little end in sight and promises that were not kept, they began to feel disillusioned. Many left of their own volition, choosing to retreat into the waiting arms of the traditional corporations. Others received the inevitable pink slips. The party was over.
However, we maintain this development is not bad news: The labor market can surely use the relief and will absorb these refugees without even a blink. Equally important, we forecast a return to emphasis on profitability as a more valid measure of success than stock price.
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