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A couple of years ago senior executives, managers and other employees of dot-com companies seemed to have it all, enjoying heady, fast-track careers in growing industries where it seemed the only place to go was up.
Today, however, America's New Economy is the home of not-so-new stories of failure and disappointment as dot-com jobs evaporate by the thousands and people who once toiled in cyberspace find themselves pounding real pavements in search of work.
How difficult will it be for these people, especially those in top management positions, to find new jobs? Will their dot-com experience count for or against them? If they worked for traditional companies before jumping ship to dot-coms, will Old Economy employers be willing to hire them back?
Wharton management professors and executives in the recruitment and outplacement industries say the answers will largely hinge on the individual experiences and talents of the job seekers. But overall, they say, the slowdown in the broader economy and a rising tide of general unemployment is not helping matters for anyone.
Most out-of-work dot-commers are unknown and unheralded. But some, like George Shaheen, are prominent executives whose arrival and departure from Internet start-ups can be seen as emblematic of a once high-flying sector that has fallen to earth. Shaheen, 56, left the top post at Andersen Consulting, now Accenture, in 1999 to become chairman and CEO of Webvan, an online grocer. But Shaheen resigned from Webvan in April, saying the company needed "a different kind of executive" to lead it through tough times. Webvan's stock, which traded as high as $25.44 in December 1999, traded recently for less than 15 cents a share.
Shaheen was not the first high-profile CEO to leave a dot-com, and he will not be the last. On May 7, Priceline.com, an online travel service, announced that it had dismissed its CEO, Daniel Schulman.
Since August 1999, outplacement firm Challenger, Gray & Christmas has recorded the departures of 1,701 CEOs from dot-coms, 389 of them this year. The reasons for the departures ranged from retirement and resignation to being replaced and finding new positions.
In its most recent monthly survey, Challenger also reported that weak earnings reports appear to be taking an increasingly heavy toll on the chief financial officers of dot-coms. The firm says 71 CFOs left dot-coms in April, eight more than the number of CEOs who left. The reason: Companies may be putting greater emphasis on how money is managed as opposed to how the company is managed.
The survey also noted that the number of departing CEOs in April was 63, the lowest figure in 12 months. The decline in the number of CEO departures may signal that companies will retain some stability during a turbulent period. But Challenger also said that the number of total cuts in U.S. Internet jobs jumped 84 percent in April, to 17,554. That beat the previous record month for job losses--12,828 in January--and brought to 54,564 the number of dot-com jobs lost so far this year.
Twelve or 18 months ago, it would have been relatively easy for these people to find work, says James Citrin, managing director of SpencerStuart, an executive recruitment firm based in Stamford, Conn.
When the U.S. economy as a whole was still going strong, employers recognized the value of a person who had entrepreneurial experience, whether the company was successful or not. The assumption was that a successful executive in a traditional company who got experience in the New Economy would be so much more attractive than one without such experience, he says.
"The problem now is that with the economy grinding to a halt, companies not only are not hiring but are in layoff mode. The actual number of openings and opportunities ranges from limited to shrinking, so it is very difficult for people who left Old Economy companies to try to come back now," said Citrin. "As a result, a lot of hiring companies are saying, 'Well, I guess all that New Economy experience wasn't as important as we thought it would be.'"
It is possible that people who left very senior positions at traditional corporations to take executive posts at dot-coms will have a tougher time than less senior people in returning to traditional companies. For example, Robert E. Mittelstaedt Jr., vice dean and director of Wharton executive education, cites Shaheen as an example. "I think he's damaged goods," says Mittelstaedt. "If you look at Shaheen, you have to say, how could a guy that smart think that overnight he's going to change the buying habits of Americans, especially in a low-margin industry that depends on high volume?"
Mittelstaedt, a former entrepreneur who has long believed that the emergence of e-commerce is significant but has been skeptical of how fast it would transform the face of business, says Webvan is based on a "crazy business model" and that Shaheen suffered from a case of "hubris."
"There's no other way to look at it. In the history of business, there are very few times when people change an industry overnight." He suggests Shaheen will have trouble convincing a new employer that "he's an operational genius."
John Challenger, CEO of Challenger, Gray and Christmas, says neither Shaheen nor other senior people who bolted from brick-and-mortar jobs for the Internet can be faulted for a willingness to take risks, although Shaheen might have fared better had he joined Webvan earlier. Still, Challenger notes, Shaheen's judgment could be called into question because he gave up such a premier job at Accenture. "He's damaged goods from the standpoint that what he did leave was one of the pinnacle jobs in the country."
In general, Challenger says, "for the high-profile, Fortune 500-type executives who left very senior jobs to go to dot-coms, that was probably too big a jump, and there may be a (question) as to whether they will ever achieve the positions they had before."
Shaheen--a veteran CEO who was brought in to nurture a young start-up--is just one kind of e-commerce executive who may try to re-enter the work force at a traditional company, Challenger adds. Another type consists of the founders who launched start-ups, some of whom will have a tough time selling themselves if they are seen as part of the freewheeling, free-spending culture often associated with e-commerce.
Traditional companies "will be concerned that these ex-presidents will be unhappy in any other role but the top job," says Challenger. This is especially true of young dot-com presidents who are not seasoned enough to run established companies but are unable or unwilling to serve as subordinates, even as subordinates in senior positions. What is more, some founders may simply price themselves out of the running by demanding too much.
Then there are the dot-com executives who have a lot of money and can bide their time looking for new opportunities, as well as people who used to have money but lost it and are urgently looking for work. Indeed, says Challenger, some well-heeled executives are considered gurus in their fields and for years have had teams of managers follow them from one dot-com to another. These teams "may be waiting for the guru to land in the next venture, but we don't know whether there's going to be another tech surge" and whether these people can wait for it, he adds.
Finally, Challenger says, there are two other types of job seekers. First there are the people who live and breathe the e-commerce ethos to such an extent that they cannot see themselves being happy in any other kind of organization. Then there are those optimistic individuals who will chalk up the dot-com fiasco as a lesson to be learned and cheerfully look for new jobs in any sector of the economy.
Challenger and Wharton management professor Nancy Rothbard say that any negative baggage a former executive may carry over from an e-commerce failure will be tempered by the respect a prospective employer is likely to have for the person's willingness to assume risk and learn from a difficult experience.
The relative ease with which dot-com managers will find new jobs in the e-commerce sector, Rothbard adds, depends largely on how tight the labor market is, since being let go by a bankrupt or struggling dot-com is unlikely to be held against anyone. "The no-risk, no-reward attitude is still prevalent among venture capitalists, start-ups and entrepreneurs in general. It's not specific to dot-coms."
Whether dot-com managers can land jobs in traditional companies depends on their level of previous corporate experience. "For those who have never worked in a corporate setting and have had freedom and autonomy, they may not even want to go into a corporation," Rothbard says. In fact, she says, such people may lack the experience needed to thrive in a large organization.
Raphael Amit, professor of entrepreneurship and management at Wharton, suggests that any hand-wringing over the issue of whether executives who left the corporate world for an e-commerce post can readily rejoin the world of traditional business is misplaced. If people are talented, he says, brick-and-mortar companies will be glad to get them.
"Many extremely competent senior executives have left (traditional) companies to explore dot-com companies," Amit says. "The very good ones, in my experience, have found a welcoming home in major corporations." He cites one senior executive who left General Motors to take an e-commerce position and then recently joined Ford Motor. "She managed her transition back quite well."
And what about the potential employability of those maverick dot-com founders? Says Amit: "Major corporations would welcome the experience these folks bring to the table. In the old days, they couldn't lay their hands on people with experience like that. One way to grow a business is internally. Who is better able to create new businesses than a person who has actually done it?"
To read more articles like this one, visit Knowledge@Wharton.
All materials copyright © 2001 of the Wharton School of the University of Pennsylvania.
-- Cherri (firstname.lastname@example.org), May 14, 2001
LARRY KLAYMAN, THE GOP, AND "BLOWBACK."
by Jason Zengerle
This week, Larry Klayman wasn't in Washington, the city where he made a name for himself and his conservative legal watchdog group by filing scores of lawsuits against the Clinton administration.
Instead, the Judicial Watch chairman was catching rays on the deck of the MS Masdaam as she toured the Caribbean. On the trip, billed as the "Cruise to Clean Up Corruption," Klayman, along with special guests like Gennifer Flowers and Donato Dalrymple, regaled about 30 Judicial Watch supporters--who paid between $2,000 and $5,000 apiece for the ride--with tales of Clinton administration corruption.
Before embarking on his cruise, which included a port of call at Grand Cayman, the Judicial Watch chairman had predicted, "By the time we're done, we will have renamed this tropical island the `Grand Klayman Island.'"
A growing number of Republicans would be happy if Klayman stayed on his island. That's because ever since Bill Clinton left the White House, Klayman has been turning his fire on the GOP.
In recent months, Judicial Watch has lambasted President Bush and other "gutless Republicans" for not carrying on the Clinton inquisition.
The group has launched an investigation into the circumstances surrounding China's return of the American spy plane's crew to "find out if any secret promises were made to the `Butchers of Beijing' behind closed doors." And, most ominously, Judicial Watch has initiated legal action against House Majority Whip Tom DeLay and the National Republican Congressional Committee (nrcc) for their fund-raising practices. "It can now be understood why the Republicans and the Bush administration have used the mantra `Move on,'" Klayman declared at an April press conference. "But, ironically, we'll move on--we'll move on to the illegal activities of the Republican Party ... and Tom DeLay."
The standard view of Klayman's recent strafing of his fellow conservatives is that it represents a cynical, calculated bid to stay relevant. Klayman has realized, the theory goes, that without Clinton to kick around anymore, he needs a new high-profile target to keep himself in the news and the donations pouring in. But there's a problem with this view: It assumes Klayman is acting rationally. When he says Ron Brown did not die in a plane crash but was murdered because he was about to air the Clintons' dirty laundry ("[T]hey found a bullet hole in Ron Brown's head"), he's not doing it for effect; he really believes it. Klayman's rantings aren't careerist or partisan; they stem from an overwhelming urge to believe the worst about those in power. And, unfortunately for Republicans, that now means them.
There's no arguing with the fact that Klayman built himself on the back of Bill Clinton. Before founding Judicial Watch in 1994, Klayman was an obscure trade lawyer. But thanks to the Clinton scandals, he became a fixture on talk shows like "Crossfire" and "Rivera Live," and his exposure turned Judicial Watch into a cash cow.
In 1996 the group took in a mere $67,620 in donations; two years later its annual haul had shot up to $12.4 million and, two years after that, to $17.6 million--most from direct-mail donations and grants from Clinton haters like Richard Mellon Scaife.
But while the end of the Clinton presidency represents a blow to business for Klayman, it isn't necessarily crippling. After all, with Hillary Clinton in the Senate and Terry McAuliffe at the Democratic National Committee, there are still plenty of Clinton-related scandals for Klayman to monger--and lots of lingering anti-Clinton sentiment to mine for contributions. Indeed, Judicial Watch has already filed complaints with the Senate Ethics Committee and the Federal Election Commission against Hillary Clinton over her role in Pardongate. And the group still has about 80 cases ("I don't count on a daily basis," Klayman says) pending against Bill Clinton. Just last week Klayman deposed Doris Matsui, the wife of California Representative Bob Matsui and former Clinton White House deputy liaison, as part of his ongoing Chinagate litigation.
But Klayman's outrage has spread way beyond the Clintons. Judicial Watch now has branch offices in Dallas, Houston, Miami, and San Marino, California, and is delving into state and local matters. Klayman even has global ambitions: He hopes to open a European office in the future. (Closer to home, Judicial Watch is currently representing Paul Weyrich in a defamation suit against The New Republic.) The group inserted itself into the Florida recount, inspecting ballots in six counties; in California, it recently sued Governor Gray Davis for access to documents that, the group alleges, show Davis and other pols have taken "political payoffs" from utility companies; and last month in Texas Ross Perot's former right-hand man Russ Verney left his Reform Party post to head Judicial Watch's new Southwest regional office. "We're becoming the ACLU of government corruption," Klayman crows.
And Klayman sees government corruption everywhere, as his complaint against DeLay and the NRCC makes clear. On behalf of the NRCC, DeLay invited small-business owners to Washington earlier this month to take part in something called the Business Advisory Council, made up of smallbusiness owners who give money to the nrcc. "As an honorary member [of the council]," DeLay said in a recorded telephone solicitation, "you will be invited to meetings with top Bush administration officials, where your opinions on issues like tax reform will be heard." DeLay's solicitation was no different from thousands of other fund-raising schemes. While carefully avoiding an explicit quid pro quo, he promised access to those who gave money. That's how fund-raising works. But, according to Klayman, this run-of-the-mill solicitation runs afoul of federal anti-bribery statutes, federal election law, and House ethics rules. By Klayman's logic, then, practically all political fund-raising is illegal.
Given that view, it's no surprise Judicial Watch is going after Republicans on other fund-raising fronts. The group hounded House Speaker Dennis Hastert for his involvement in the nrcc fund-raising event--he was a scheduled participant, and a fax promoting the event had been sent out under his name--so ferociously that he ended up skipping it altogether. Judicial Watch has threatened to sue the National Republican Senatorial Committee for setting up similar meetings between donors and Bush administration officials. It recently initiated litigation over the Bush administration's awarding of diplomatic posts to campaign contributors. It's investigating the possibility that Trent Lott is using the Trent Lott Leadership Institute at the University of Mississippi as a conduit for political contributions. It's looking into a New York Times report that Health and Human Services Secretary Tommy Thompson met with political donors in his government office. Judicial Watch is even dredging up a decade-old charge that Dick Cheney, as secretary of defense in the first Bush administration, held fund-raisers at the Pentagon. "The Pentagon claims they have no records," huffs Klayman, "so we brought a lawsuit."
Naturally, all this isn't sitting so well with some of Klayman's old supporters. Although Judicial Watch has occasionally gone after Republicans in the past--it once called on Newt Gingrich to resign, and it has lobbed criticisms at Rudy Giuliani and Orrin Hatch--the group's bread and butter was always Clinton, and, now that it isn't, some in the GOP are worried. According to a recent report in Roll Call, congressional Republicans are pressuring one long-standing Klayman ally, Georgia Representative Bob Barr, who has publicly promoted Judicial Watch (and who is being represented by the group in a violation-of-privacy suit against Clinton), to end the association. And David Keene, chairman of the American Conservative Union, recently penned an op-ed in The Hill castigating Klayman for behaving more as "a super litigious Common Cause type than as a conservative" and raising the question of "whether he can get conservatives or others to write checks to his operation while he attacks DeLay rather than Clinton." (Klayman calls the article "defamatory" and, according to Keene, has made noises about suing.) "The people who gave money to Judicial Watch gave money because it was a way to go after Bill Clinton," Keene elaborated to me. "They weren't interested in creating another good-government, Common Cause-type group."
But that, in a loonier version, is what they've gotten. While Klayman's bipartisan scandal-mongering may eventually hurt his bottom line, for the time being he has enough money to wreak some serious havoc. In this sense, his recent turn against the GOP is a political form of blowback.
Much as the CIA suppressed its qualms about arming Islamic radicals to drive the Soviets out of Afghanistan, Republicans ignored their doubts about funding a serial suer like Klayman, so long as he was suing Clinton. But, just as some of those Islamic radicals now visit their terror upon the United States, Klayman, with Clinton gone, has trained his sights on the GOP. For years, Klayman has insisted that "Judicial Watch is nonpartisan." Who knew he meant it?
JASON ZENGERLE is an associate editor of TNR.
-- Cherri (email@example.com), May 24, 2001.
Comedian Jon Stewart once joked that watching President George W. Bush pick his White House staff was like watching "the old band get back together." It’s true that many of Bush’s choices for the cabinet and top White House posts come from former Republican administrations, going all the way back to Gerald Ford. But what’s notable about this administration is not only the bona fide government credentials that the staff sports—it’s also the corporate connections they bring into the White House.
George Bush, of course, is a Texas oilman, although not a very successful one. His company, Arbusto, merged with Spectrum 7 in 1984 as it was on the verge of bankruptcy. Spectrum was bought out by Harken Energy in 1986, giving Bush a seat on Harken’s board, some stock options and a $120,000 consulting contract. As the first president to have an MBA, Bush has surrounded himself with people with similar (and more successful) corporate backgrounds. Vice President Dick Cheney was, until last year, the CEO of Halliburton, the world’s largest oil field services company. Halliburton, through its European subsidiaries, sold spare parts to Iraq’s oil industry, despite U.N. sanctions. The Bush administration is already considering whether or not it should alter the sanctions policy against Iraq, hinting that it might allow for more normalized trade with the country.
Of course, everyone knows that the U.S. oil industry has a secure foothold in the White House. But when he handed out cabinet posts and picked his top advisors, Bush left no industry out in the cold. From old school automobile manufacturers to fledgling biotech companies, just about every sector was covered. Below is a list of the corporations represented in the Bush White House. You won’t find every cabinet member or senior adviser listed here. Education Secretary Rod Paige, for example, was a school superintendent in Houston before coming to Washington. Senior adviser Karl Rove and counselor to the president, Karen Hughes, have political backgrounds. Environmental Protection Agency head Christine Todd Whitman, the former New Jersey governor, raised most of her campaign money within the state. But those on Bush’s staff who don’t have extensive corporate connections are the exception, not the rule:
President Bush's Cabinet Cabinet Position Cabinet Official Corporate Connections* Agriculture Secretary Ann Veneman ® ® Attorney General John Ashcroft ® ® ® Commerce Secretary Don Evans ® Defense Secretary Donald Rumsfeld ® ® ® Energy Secretary Spencer Abraham ® ® ® Health and Human Services Secretary Tommy Thompson ® ® ® Interior Secretary Gale Norton ® ® ® Labor Secretary Elaine Chao ® ® ® Secretary of State Colin Powell ® ® Transportation Secretary Norman Mineta ® ® ® Treasury Secretary Paul O'Neill ® ® ® Veterans Affairs Secretary Anthony Principi ® ® ®
face="Arial" size="4">President Bush's Advisors
Corporate Connections* White House Chief of Staff Andrew Card ® Director of the Office of Management and Budget Mitch Daniels ® ® ® National Security Advisor Condoleezza Rice ® ® ®
*Click on individuals' names for a complete list of their corporate connections. All trademarks in this chart are registered trademarks of their respective owners. The Center for Responsive Politics is in no way affiliated with any of the companies listed in this chart. This chart is not intended to convey that the listed companies in any way endorse the Center for Responsive Politics or its work.
Feel free to distribute or cite this material, but please credit the Center for Responsive Politics.
-- Cherri (firstname.lastname@example.org), May 25, 2001.
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