What used to be the hottest industry in the world is now cooling down faster than a jogger in winter. After the huge Wall Street shakeout that caused many dot-com start-ups around the world to go bankrupt, many IT consultants are understandably leery about accepting a seemingly lucrative dot-com job offer.
To properly evaluate a dot-com offer, educate yourself about the stability of the company and its management to ensure you’re aligning yourself with a solid company. In this article, I’ll talk about some important factors to consider and what questions you need to ask yourself and the company to make sure the dot-com life is the right career move for you.
A shaky industry
Although many dot coms have failed, there are still huge opportunities in the Internet industry. Technology research consultancy Hambrecht & Quist estimates that by 2001, the top 18 consulting firms will nearly double their ranks—expanding from their 18,000 present employees to more than 35,000—just to keep up with the e-business boom. To cash in without getting burnt, consultants must learn how to differentiate between companies with promise and companies that only promise.
Given the rapid obsolescence of many fledgling online ventures, the stability of the company is a factor you should consider. “Dot coms work from week to week and quarter to quarter. Every day could be your last,” warns Nahil Khan, a Walnut Creek, CA-based consultant who was recently a victim of a dot-com layoff. “The uncertainty makes you very insecure. You could be laid off for reasons not related to performance—reasons beyond your control.”
When the axe does fall, it can be sudden and painful. Jerry Yee (name changed per his request) says the dot com he worked for collapsed “without warning.” “Everything seemed to be going fine,” he said, “when one afternoon, the president called a general meeting and announced the company's shutdown. He said that the financier had stopped financing, and the company could not continue. It was a huge shock to everybody. Some people broke down—their flow of income stopped right then.”
Do your homework
With any job offer, you should, of course, investigate the company before you consider taking a position with them. But given the recent instability in the technology industry, this is especially important when thinking about making the move to a dot com.
Check out the business plan and its potential to succeed in the market. Experts recommend evaluating the company from the perspective of a venture capitalist (VC). The due-diligence process followed by VCs allows them to separate companies with a strong business model from those lacking one.
“A deep understanding of the business model is paramount,” said Swapneel Kshetramade, a consultant at Ascent Computing Group, a firm based in White Plains, NY. “No job should even be considered without first understanding the model, the projected income, target audience, and the projected demand for the product or service within that audience. Equally important is believing in that plan once you have understood it.”
Next, evaluate the background of the company or its promoters. Check to see whether the company has an established track record of success. If the company is newly incorporated, check the background of the promoters or investors. A company promoted by Warren Buffet is likely to be more stable than one backed by the owner of your local supermarket.
Tips for evaluating dot coms
The key players will be those that have a credible background, a strong business model, and a clearly defined growth strategy. Kshetramade has a few other tips for consultants considering working for a dot com:
- Evaluate each company on the sum of its merits. Don’t base your decision solely on either the industry's past, current, or future performance. Any investor would tell you that it’s foolish to generalize just because there's been a crash. Strong Internet companies with experienced management teams, solid business models, and adequate funding are still excellent places to work.
- Make sure the company has experienced management and talent and that those individuals know what they’re doing.
- Look for companies with a balanced management team. A lot of dot coms have a “cult of personality,” where one or two central personalities drive and motivate the business's direction and focus. This can be good or bad, depending on the personality involved. A more balanced management team is definitely preferable.
- Make sure the company is adequately staffed. Long hours and high burnout levels are usually due to a few dozen staffers trying to accomplish the work of a hundred. Find out how many staff members will be allocated to a project.
- Investigate the company’s funding. Determine how well the company is funded, how long that funding is guaranteed, when profits are expected, and what happens to the funding in the event the projected profits come later than expected or not at all.
- If a company is offering stock options as part of the compensation package, negotiate an anti-dilution clause. Or, negotiate for a percentage of the company instead of a fixed number of options. This way, if the company offers more options to other parties such as venture capitalists, your shares are not diluted. Although this usually works best for executive-level hires, it never hurts to ask.
A question of time
Once you’ve investigated the company and everything looks okay to you, take a moment to remember what you’re getting into. Deciding to move to a dot com often means a drastic change in lifestyle. Before making the leap, you should first consider whether you can—or even want to—withstand the stresses and pressures of the dot-com fast lane.
If you accept an offer, don’t expect to get much free time, warns Khan. “Working for a dot com means the site has to be up 24/7,” Khan said. “This involves around-the-clock maintenance of databases from home and office and over the weekends by remote dial-up and using pagers. This applies to both system administrators and DBAs. Performance bonuses are based on the uptime of the site, and suitable uptime statistics are taken from third-party services.”
Kshetramade echoes this warning. “If you are a married person, the wild working hours in a dot com might put you off. Also, the day-to-day challenges and deadlines and the varying responsibilities might not be appealing to a person with an ordered mind.”
Have you moved from independent consulting to a dot-com company? How did you come to the decision? Any regrets? Post a comment below or send us a note.