December 16, 2000|By Shawn Hubler | Shawn Hubler,LOS ANGELES TIMES
SAN FRANCISCO - The limousines were as backed up as ever south of Market last weekend. Festive techies spilled from the nightclubs, apple martinis clutched in their fingertips. If you weren't here last year at this time, the locals kept saying, you might never guess that this is a city in the throes of a tanking Nasdaq, a city where creditors are running from start-up to start-up, repossessing foosball machines and office cubicles.
But appearances can be deceiving. Last winter, tech companies were renting whole islands for parties and dancing to the B-52s and hiring Dana Carvey as master of ceremonies. Last winter, the party favors were, for example, free bottles of French champagne. Last winter, a Silicon Valley kid in his 20s who had sold his company to Microsoft celebrated by renting San Francisco's historic Regency Building and staging a re-creation of the Venetian orgy scene from "Eyes Wide Shut," with women in leather fetish gear.
Last winter, even the greenest dot-com staffs were getting nice holiday buffets. There is Petopia, for example. Last winter, according to co-founder David Fraze, the online pet food company rented a hall for a laid-back dinner dance. This winter, there'll be no Petopia holiday party because there's no Petopia. The company was recently taken over by Petco after laying off 60 percent of its staff.
A soft economy and hardened ranks of venture capitalists have ended - at least for now - the tech sector's manic phase.
"Those days of start-ups spending tons of money just to get noticed? Those days are over," says Margit Wennmachers of OutCast Communications, a San Francisco public relations firm specializing in start-ups. "The tone has completely changed."
Shareholders and investors, she says, "don't want to hear about" flashy parties. They want to know how the company's going to make money. "It's all about P-to-P, path to profitability." (Or, as the less promising dot-coms have come to term it, "prepare to pray.")
The rocky stock market has necessitated a balancing act for companies whose skilled workers might bolt if the firm's prospects appear to be flagging. On one hand, companies want to keep costs down; on the other, they need to keep morale up through the current shakeout.
Appearing to cut back too far on the holiday festivities might lead employees - and backers - to conclude that a company's financial straits are more desperate than they actually are.
In California's Orange County, for instance, Vinny Smith of Quest Software has made it a holiday tradition to fly his whole staff to some fancy resort - the Bellagio in Las Vegas, the Rancho Mirage Ritz-Carlton - for a two-day company blowout.
This year, despite hard work and major sales growth, Quest's stock dropped to about $35 a share from $98. Smith, nonetheless, flew 1,500 employees and guests to Las Vegas for a black-tie bash at the Venetian last week.
"I probably shouldn't even be talking about this - I'm not sure I want my shareholders [complaining] about million-dollar parties," the chief executive says. "But when you're trying to take over a market, you have to create a great culture. You pay later if you don't pay now."
The Bay Area's Quokka Sports Inc., which teamed with NBC to put the 2000 Olympics on the Web, recently laid off a fifth of its payroll, but its company party at Bimbo's 365 Club, a North Beach techie haunt, was to go on as scheduled this week, the company's publicist says.
In the same vein, Rick Herns, a Silicon Valley party planner, says that one of his clients - a big tech company whose stock, like that of most tech companies', is struggling - turned the San Jose Convention Center into a 3,000-seat speak-easy for its company fete this month.
Most companies, however, are choosing to err on the side of moderation. If there's going to be a party, the thinking now goes, it had better be to generate business or retain talent. No more bashes just to ease the anxiety of sudden influxes of great wads of money, or just because everyone else is throwing bashes.
Thus, when Cisco Systems Inc. was asked about one of its marketing groups' plans to take over the San Jose Tech Mart conference center for a Mardi Gras-theme celebration - with a voodoo lounge and a dessert-wielding drag queen named Lady Bon Bon - Cisco's corporate events staffer wanted to stress one thing: "Last year, there were 3,500 people at that party," she says. "There are going to be, like, 600 this time."
Some tech companies, caterers report, have pushed their holiday celebrations into January, when restaurant and hall rentals are cheaper and the cost can be shifted to a new fiscal year. Some have thrown up their hands and settled for holiday lunches instead of holiday balls for employees.
"The whole industry is licking its wounds now," says Darian Heyman of Beyond Interactive, a digital ad agency.
Aimee Rosewall, a veteran of several start-ups, says: "People just aren't that anxious to get together and say, `So, um, when are you losing your job?'"
