To Fred, who has seen a bit more of life than most VCs and dot-commers, this is all just part of the business process. Businesses go along; businesses get in trouble. In some sense, his point of view is not different from the brand-building theories of the past few years -- it's just the opposite. "If you've spent your money," Fred says, "on national advertising before you had a customer base to support national advertising, you won't be able to survive." Fred believes in consolidation. The cult of the entrepreneur gives way to the new reality, which is that most companies "cannot exist independently." Chances are, in fact, if you can name the company -- that is, if it has spent enough on its advertising to make an impression on you -- it may well not be around, at least not under the ownership of its present shareholders or the management of its current executives, for too much longer.
"Have most dot-com companies," I say, asking the obvious, "hired people such as yourself?"
"Well, sure," says Fred, as though a bit confused. Like, duh.
"Some kind of transaction will happen in every case, except if it doesn't, which would not be good," Fred says dryly.
What people say most frequently in an effort to impose logic on the fact that companies they took seriously five weeks ago are now going to be sold for scrap or, at best, scrap-plus, and to set themselves inside a larger context of economic rationality and historical economic processes, is that the automobile industry went from hundreds of companies down to four.
That, it would seem to me, is a horrible fate. Could there be a worse or more pitiably ironic outcome than for the cyber business to end up as Detroit? To become the people you most deplore? From golden entrepreneur to middle-manager bureaucrat inside of 36 months.
This is, I fear, not so much some inevitable corporate-industrial selection process but punishment. This is the punitive phase. This is what the Internet industry gets for iVillage. Consolidation represents a kind of receivership. On your entrepreneurial own, you fucked up. Now try this: oppressive, constraining, thrown-in-with-the-assholes consolidation.
But that's me. I understand that if you're running these companies, chances are you have a hair-trigger mechanism that allows you to adjust to new realities, or some other strange gene that makes you believe that when all is said and done, you will be the last man standing.
Out in Phoenix last week, dozens of executives from companies that went public at $10 or $20 or $30 a share but are now trading at $2 or $3 a share -- that is to say, 90 percent off their high, catastrophe by any other name -- were smoking what were rumored to be pre-'59 Cuban cigars at the Yahoo! Storming the Desert Executive Internet Summit.
Still in upbeat humor, many among them, I have it on good authority, were talking about calling Fred.
What are the alternatives?
There's the denial thing. You can squeeze and cut back and lay off employees, hoping against hope you won't run out of money. Indeed, there's already been a fair amount of this. As you're reading, the world is shifting from a place where everyone wanted to work for a dot-com enterprise to a world in which there are employees who have been burned more than once by dot-coms and who wouldn't do it again for, well, money.
Or let's say you've recently been funded. You're one of the last guys to draw down $30 million or $40 million or $50 million in first- or second-round capital. You can look at your cash supply and calculate that you can make it till the next time the market comes around and gets "effusive," in Fred's word. Still, the problem is that the market may never again -- never, ever -- open up to inky-dinky $2 million, or $3 million, or $4 million, or $10 million revenue companies. That was then. This is now.
Or let's say you're a public company that can stabilize itself, even squeeze a profit. You can hang on. Sure, you'll have no float, no liquidity, and a marginal market cap. You'll get de-listed. Find yourself on the OTC bulletin board. But you won't be the only one. Coma isn't death.
Or you can call Fred.
If you call Fred in time (before boo.com called a Fred equivalent, for instance), with a little luck and an old-economy Rolodex he'll be able to find you a buyer, a merger partner, a salvage situation. Fred and I play this game for a little while, knocking down company after company. Every company that has ever seemed iffy, questionable, too optimistic. "Silicon Valley is a big casualty," says Fred matter-of-factly. "And anybody in the content category."
But then, the easy part of Fred's job is to identify the sellers. The harder part is to identify the buyers.
In a plausible vision of the Internet world, of that world as the next Detroit, the only new-media companies that are left are Amazon, Priceline, eBay, Yahoo!, AOL.
"If," Fred says, "no accounting problems are discovered."
When I suggest that at some share price, which we might be approaching sooner rather than later, Wal-Mart is an Amazon buyer, Fred says, obviously pleased, that Wal-Mart is a client, so he cannot comment on that. But you know what he's thinking.
Then he suggests the deal he'd like to see is Yahoo! buying Priceline.
Many people feel this couldn't happen to a bunch of more deserving guys. That this is fair retribution. What happens to wax wings on obnoxious fellows.
But it's grim too. I mean, it -- the Internet, or electronic distribution, or technology-enabled transactions, or whatever -- won't go away. It just becomes vast, layered, corporatized. AOL-Time Warner.
The New Economy, in other words, is about to become a punch line. The idea that there is a marketplace free from conventional business rules -- not only in the Darwinian, cutthroat sense but in the boring-guy sense -- is something that, soon, you'll hear about only from aging hipsters.
The world is as it is . . .
If my employees were leaving, if the tension in my board meetings were getting to danger levels, and if, when all was said and done, what I really wanted were the same thing that everyone else wants, a job, a stable future, a little respectability, I guess I'd call Fred, too.
No, actually, I would just go home.