Markets' ride sends many would-be e-billionaires back to real world

Good things come to those who wait. That's the new motto of some Internet workers whose stock-option portfolios have been rendered virtually worthless by Wall Street.<br><br>Many of these "new economy"

Monday, April 24th 2000, 12:00 am

By: News On 6

Good things come to those who wait. That's the new motto of some Internet workers whose stock-option portfolios have been rendered virtually worthless by Wall Street.

Many of these "new economy" mavericks - who have anticipated becoming millionaires just for having an idea - now say they are firm believers in building a successful business over the long haul.

Others with thinner skins and deeper scars are returning to established corporations and a regular paycheck.

"Many of them are in a significant state of shock, if not outright depression," said Joe Gallagher, a consultant with Watson Wyatt Worldwide in Dallas. "This is a time for people to re-examine their career interests and priorities and recommit to what is important to them."

For Brendan Coughlin, that means staying put at his job as vice president of sales and business development at ServiceLane.com, a Dallas-based online referral network.

Mr. Coughlin, who drew no paycheck the first six months he was with ServiceLane.com, said he remains a strong believer in its business plan and has too much invested to leave now.

"It [the market] forces you to ask questions," said Mr. Coughlin, who left PageNet to take the ServiceLane.com job. "I am prepared to ride it out for the long term."

ServiceLane.com has not issued any stock yet, but it intends to. Mr. Coughlin, 34, has a stake in the company that someday, he hopes, may be worth millions.

Unlike many of his counterparts, who are in their 20s and single, Mr. Coughlin has a wife and two young children and had to consider their futures when he made the move.

"You must be prepared mentally to modify your lifestyle," he said. "In the vast majority of cases you will suffer financially, but there is a great upside potential."

It's that prospect that has attracted thousands to leave jobs in established firms for start-ups. Many took pay cuts to join new ventures in the hope that they would strike it rich with stock options.

The benefit lets employees buy shares at a preset price - usually the market value at the time they join the firm.

Options have become worthless for many Internet workers because the firm's stock has fallen below the price at which they can purchase shares.

The Bloomberg Initial Public Offering Index, which includes firms that have gone public in the last 12 months, is down 39 percent from March 1. The tech-heavy Nasdaq index is down 23.8 percent.

Many stocks have seen a more precipitous decline. Data Return Corp., an Irving-based Web-hosting firm, closed at $24.38 last week, down 72.3 percent from its all-time high recorded March 7.

Sunny Vanderbeck, Data Return's chairman and chief executive, said the drop in price is "interesting" but not very important. He says his employees aren't panicking and haven't headed for the exits.

"The people that work here aren't here for the options," he said. "If you came for the options, you don't last very long. The people that are here are here because they want to be part of something great."

Technology start-ups are suddenly having to sell themselves to their employees. Executives are holding roundtable discussions with workers and sending out e-mail messages that read like calls to arms.

At ASD Systems, a Garland firm that handles the back end of e-commerce sites, senior executives have raised the issue of stock price and company performance during weekly lunches with employees, said Paul Streiber, director of investor relations.

The tactic seems to be working.

"It's actually been kind of a rallying point," he said. "The parking lot is fuller earlier and empties later."

Mr. Gallagher said firms have some options in shoring up employee benefits. They can sweeten the pot by repricing stock options, but that can take six months to execute and may result in a charge to their nascent earnings. The move also may infuriate shareholders who have lost money on the stock.

Market volatility also hurts recruiting efforts because dot.coms won't be able to use the stock option card as a lure.

But smart professionals who realized what they were getting into will stay in the industry for the foreseeable future, experts say. Those who entered the market seeking the big bucks will be weeded out.

"If you tell me you are going to Vegas to get rich, I would think you hadn't thought through the equation very well," said Gregg Wetterman, president of the Dallas Internet Society.

"If someone was chasing riches, they were probably jumping in for the wrong reasons."

Recruiters and head hunters say they are taking advantage of disillusioned dot.com employees.

"Individuals that jumped out [to Internet companies] six months ago are disappointed and frustrated with the direction that their companies are going," said Jim Bethmann, global practice leader for software and emerging technology practice for Korn/Ferry International in Dallas.

Mr. Bethmann said his recruiters will be targeting executives and professionals at companies whose stock prices have declined substantially. "Timing is everything in this business."

Some start-up employees who have gone back to established companies say they prefer the stability of those firms to the tenuous prospects of a new company.

Some, such as Sean Wiley of EDS, are "boomerang" workers who have returned to their old companies.

Mr. Wiley left the Plano-based company in the early 1990s to join a start-up software firm that was backed by big investors but never really took off.

"They essentially went bankrupt," he said. "We had all been promised millions one of these days."

So Mr. Wiley returned to EDS, where he is a senior e-commerce consultant. In his new job at his old company, Mr. Wiley said, he has been able to engage in new businesses and exciting technology, two of the main attractions of a technology start-up.

And as a manager, he is now hiring other people who left EDS only to be disappointed in those "greener pastures."
"I would offer them a job in a second to come back," he said. "I have open positions and am looking for good people, and I don't care where they come from."

Many dot.com professionals are taking solace in the fact that the strong labor market will protect them if they have to find a new job, Mr. Gallagher said.

"Perhaps the most important thing you want to say to yourself is you didn't regret not trying something," he said. "This is a time to fail. This is a time to go forth and relish it."