A tale of liquidating the corporate Frisbees
Failed dotcoms auction off foosball sets and bubble lamps, a ritual now common in high-tech corridors.
SAN MATEO, CALIF. — The hot dog stand is already busy on a Thursday morning, just minutes before the show inside is set to begin.
A cavernous warehouse in this Silicon Valley suburb is playing host to a ritual that is growing throughout this once booming technology region.
It is in places like this that dotcoms are laid to rest, where their goods are auctioned off in a cultural hybrid of down-home haggling over New Economy artifacts.
As the crowd mingles and grows to over 1,000, a Ricky Martin video is blasting from a big-screen television, which is for sale. The atmosphere is festive, the attire casual.
Rob, our short-sleeved auctioneer for the day, ascends a foot stool, a microphone hung from his neck. His trusty assistant stands nearby. He, too, is wired, though with headphones rather than a microphone. His job is to hear simultaneous bids coming in from a colleague who is monitoring the Internet and bark out competing offers to what Rob is getting from the floor.
Technology helping liquidate technology.
"Okwho'llgiveme50forthislovelybubblelamp,doIhear50,50,40,35,25," the auctioneer barks, seeking a starting bid, his words cascading with only the hint of a Canadian accent.
Did he say "bubble lamp?"
Right. We're talking about a dotcom here. In fact, judging from the sales items - air hockey and ping-pong tables, big-screen TVs, a honky-tonk piano - the now defunct Managize.com must have been a fun place to work.
But first, some context:
The US jobless rate hit 4.5 percent in April, a number that used to be considered near full employment in this country. In Santa Clara County, the heart of Silicon Valley, last month's jobless rate was just 2.2 percent.
Yet here in Silicon Valley, it seems everyone knows someone who has recently been laid off. The titans of the technology industry - HP, Cisco, Intel, Sun Microsystems - are all shedding employees, usually by the thousands. The valley's official unemployment rate is expected to begin rising shortly.
The Chicago-based outplacement firm Challenger, Gray & Christmas reports that announced layoffs reached an eight-year high in April. The job cuts totaled 165,000, and leading the way were cuts in the manufacturing, technology, and telecommunications sectors.
Serious as those numbers are, the mood here in Silicon Valley, though unsettled, still seems optimistic. Most in the tech sector remain convinced that this downturn will be short-lived and may even provide a welcome respite for some. Technology workers seem confident their skills still ensure a bright future.
"I don't really feel all that negative," says Deva Needels, fired from her software-testing job a week ago and happy to have the time to attend an auction. She's even looking forward to taking some classes to further her technology skills, something she says was not possible while working.
Ms. Needels is seated in a luxurious leather boardroom chair, one of many that will be sold later in the afternoon. She's here "just to check things out" and to find a bargain her shrinking budget can handle.
The technology downturn, particularly the dotcom implosion, has been a windfall for auction manager Brett Johnston. "It's been great for our business," he says. Mr. Johnston works for Ableauctions.com, host of a number of dotcom liquidation sales in recent months, but experienced in auctioning off all kinds of equipment. "The big difference with this stuff is the quality. It's like new."
Indeed, many of the items here are less than two years old. Some chairs still have their wrapping. Some boxes of office materials have never been opened. There are boxes of pristine Frisbees with emblazoned logos that auctioneer Rob insists are destined to become collectors' items.
Managize.com was relatively fortunate, as dotcoms go. The company didn't go legally bankrupt; it simply ran out of money. It had no loans or outstanding debt to contend with when the day of reckoning arrived, just disappointed investors.
Experts say a good auctioneer can move about 250 items per hour, and this auction takes up the better part of an afternoon.
The total haul here is about $250,000, according to Johnston, a mere fraction of the merchandise's retail value. Some are astonished at the prices.
"I can't believe this. Some of this stuff is selling for more than what you could get it for new," says Ido Lirom, who is here to equip a home office, but seems mainly on hand for the entertainment value.
In the warehouse, some are intent on making a purchase, and some seem to be here just for the show. Bargain hunters clutch the catalog of merchandise for sale and follow along, making notations of selling prices, as if keeping box scores at a baseball game.
It's the prices for the computer scanners, processors, and monitors that astonish Mr. Lirom. He figures many people just assume the price is going to be great, jump into the bidding, and get caught in the updraft.
While business failures are costly and damaging, many dotcom busts have a different flavor. Johnston says in negotiating auction deals with failed businesses, he's found dotcom entrepreneurs to be young, well-off financially, and eager to move on.
"One guy in a dotcom we were auctioning said he had to have his check by the end of the week," recalls Johnston. Desperate for cash? "Nah," says Johnston, "he was leaving on a backpacking trip around the world."
(c) Copyright 2001. The Christian Science Monitor