The 200 or so soldiers at the Silicon Alley Reporter's annual Rising Tide Summit -- a New York Web establishment confab -- had just weathered what should have been the spring of their discontent. Since mid-March, the Internet industry has experienced its greatest thrashing ever, with most Net stocks sinking by at least 50 percent. Amid company closings, fire-sale share prices and Wall Street profit warnings (non-profit warnings, really), new media no longer looks like a sure thing. And many a paper fortune in attendance at last year's gathering had vaporized.
But rather than commiserating in wound-licking mutual consolation, the crowd seemed utterly relaxed: almost perversely confident in their industry's future, and by extension, their own destiny. The Alley's first-generation true believers pride themselves on having gotten into the business before the money flooded in. And now that the tidal surf appears to be at least temporarily receding, many of them are glad to have their turf back to themselves.
"This period has made my life so much easier," says Jason McCabe Calacanis, conference organizer and Silicon Alley Reporter's CEO, referring to the time "after the crash" -- a phrase on few lips here, but on the tips of many a tongue.
At 29, the self-made duke of the Alley has made it his business to know everything going on in New York's Net industry. "I don't have so many idiots banging down my door to tell me why they're the next Yahoo," Calacanis says. "I have serious businesspeople explaining how to own and run effective growth businesses."
Such a spiel would sound like pure spin if the attitude weren't so pervasive. Attendees spoke of 2000 being "another '97" -- the last time money got tight in the Alley, but before the Internet-IPO craze. The difference with this round of consolidation is that this time the world is watching: unshaken optimism mixed with gallows humor. One woman introduced herself at a seminar as a former employee of the famously demised Boo.com. "So did you cash in your stock?" jibed someone in the room. Big laugh.
"No, I framed it," she shot back. Huge laugh. And no wonder. Here's a woman who endured the worst the industry has to offer -- bankruptcy, a highly public closing, worthless options -- and survived. With style, even -- she had the darkest tan in the room.
The failures, near-failures and impending failures have been ... well, choose your rejuvenating metaphor: a tonic, needed pruning, brush fire or coffee enema. One Alley headhunter reports that entry-level salaries have already begun to descend -- no more $50,000 gigs for B.A.-holding 22-year-olds. She predicts mid-level executive compensation also will level off in months to come. Senior talent, however, should remain in tight demand. Great news for a group of long-standing industry veterans: They'll still get top dollar although they'll pay their staffs less, making it easier to run a business in directions other than into the ground.
"No one's getting funded right now, so everyone's reengineering their companies to make them work before the cash burns down," says one e-tailing company chief, a seven-year new media veteran who's moving his now-$1-a-share company out of retail and into direct marketing. His worst-case scenario? He runs out of money, sells some software assets, spends a few months in his Hamptons house and brainstorms the next idea. By that time the money will be flowing again.
And David Bennahum's ready to supply it. A journalist-turned-VC at a firm called New Things, Bennahum claims it's a much better time to have a venture fund than six months ago. "I'm getting better deals." He says the unspoken crash "separates the really committed people from the bandwagoners who used to be in the garment business and will be in whatever else tomorrow."
Taking a breather before the second night's cocktail party, Calacanis sat at a patio table and surveyed the grounds at the suburban mansion where the Alley decampment took place: rolling hills, lush trees, a pool and a big white tent with open bar. "Nothing that happened in the last five years is even going to matter," he says. "It's only going to get bigger -- soon we won't even talk about the Internet industry, it'll just be everywhere. I'm feeling more inspired than ever."