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Managers & Managing:
Dot-Com Hires Get Cautious
Amid New Economy Slowdown
Stock Options Aren't a Quick Fix Anymore

By Philana Patterson
The Wall Street Journal Europe
Page 28
(Copyright (c) 2000, Dow Jones & Company, Inc.)

NEW YORK -- When Jennifer Filipowski began recruiting employees for her Chicago-based meeting-planning electronic-commerce site,, last year, it was pretty easy to get people to take low salaries.

The promise at Meethead Inc., as with most Internet start-ups, was the possibility of fortune in the form of stock options that, with a lot hard work, could be worth a ton of money someday.

"They would do anything that needed to be done," Ms. Filipowski said. "They came in for reduced salaries -- making up the rest in options."

But after high Internet stock valuations tumbled this spring, the landscape changed. The Nasdaq Composite Index, where most public Web companies are traded, is down sharply since it hit an all-time high March 10. A number of e-commerce sites have gone dark or laid off workers. Venture capitalists have become less likely to continue funding start-ups that can't project when they'll actually earn money. It's become clear that the Internet isn't always a golden path and potential dot-com hires have become less likely to leap to an Internet job with little thought.

It's not that people aren't still trying to make the dot-com jump. Headhunters and company recruiters alike say they still see a steady stream of resumes from people eager to move to the online world. However, job-hoppers are doing more research before they make a move to a dot-com job. Sometimes, it's taking longer for headhunters to find candidates. Meanwhile, traditional firms that now have Web operations and some other Internet-related firms are having an easier time.

"Five months ago, when a guy or a gal said `I accept,' you were pretty much able to say it was a complete assignment," said Robert Kenzer, Chairman of Kenzer Corp., a New York executive search firm. "Today, you really have to have backups."

These days, job-seekers want more security. Some want more cash, as opposed to the stock-option-heavy deals that had been in vogue. Back then, according to Mr. Kenzer, traditional retailing executives making $300,000 (318,800 euros) a year were willing to accept a $200,000 base salary and a big equity stake at an e-commerce start-up.

"Now if they're making $300,000 they want $300,000 and they aren't flexible on taking cuts on their base," Mr. Kenzer said.

But a candidate's desire for more cash doesn't always mesh with reality. In the early stages of e-commerce, companies paid low cash packages and promoted high equity stakes. Then private equity money flooded the market and companies lifted the cash portion, according to Lori von Kapff, a recruiter with Egon Zehnder International in Chicago, which places senior level executives. However, since the market began looking at the sector less favorably and venture capitalists became more conservative with funding, Internet companies have become less likely to offer the cash-rich packages some candidates now seek, Ms. von Kapff said.

"We've seen it come full circle -- from the company perspective," Ms. von Kapff said. In this environment, candidates work to arm themselves with information to help make the right choice.

"What we see a lot of candidates doing is spending more time with (venture capitalists), getting more detailed information and getting more comfortable with the business model," Ms. von Kapff said.

Candidates are less likely to jump to a company that doesn't have a sound plan in place. Companies that have what a candidate perceives as a weaker foundation have a harder time recruiting.

"People are looking at it more rationally," said Laurence Stybel , President of Stybel Peabody Lincolnshire, a Boston firm that helps companies manage senior-level executive and board transitions. A year earlier, many new Internet hires figured that the market was so crazy that the value of their options would multiply. Now people see things differently, he said.

"It's become clear that just because you call yourself a dot-com company, you aren't destined for success," Mr. Stybel said.

Meethead's Ms. Filipowski, whose Web site officially launches Saturday, said her company began seeing the attitude shift in late May and in early June, as it began considering candidates for several positions to be filled this summer.

When the company first began recruiting last year, it didn't matter to potential hires whether or not the company had funding, Ms. Filipowski said.

"Now they're very concerned about the commission structure and are asking what is my job description, what is your funding and what are your plans," said Ms. Filipowski, whose title is Head Meethead -- the company's spin on the chief executive moniker.

All this is making the so-called bricks-and-clicks world -- traditional companies that start Internet operations -- more attractive to many people who want to venture into cyberspace jobs. Some established companies, such as retailers and auto makers, waited on the sidelines watching Internet-only enterprises fumble.