• poor and overly glitzy design that ignored the reasons people came to the Web site in the first place, whiz-bang too often overruled usability;
  
  
• lack of any kind of business model, since venture capital (VC) money was flowing like wine, many Internet companies started on just a seat-of-the-pants idea that could pitched like a Hollywood movie and;
  
  
• the idea that the product of the company was Other People's Money to be taken and run through as rapidly as possible, then on to a new round of flowing VC money, more vapor dreams and perhaps an IPO.

Then came the "soft" buying season of Holidays 2000. It was not as bad as some pundits had predicted, but sales of hardware were definitely down and it was obvious that the American public, at least, was jittery about the economic future.

Every major player in the technology sector, even those who did not report poor fourth quarter (Q4) earnings results for the year 2000, downplayed their guidances for investors. E-commerce sites continued to tank, Pets.com, eToys, Disney's Go.com have closed or are closing their doors, Nearly all of the majors --- Yahoo!, Amazon, CNN, Barnes and Noble, CNet Networks, the New York Times on the Web, Juno, Excite@Home, Warner Brothers Online --- were talking what had always been the strategy of the Old Economy companies: restructuring, reorganizing, downsizing --- whatever you chose to call it, it translated into announcements that tens of thousands of dot-commies were getting pink slips this year. The Standard now puts total layoffs in the New Economy at over 54,000 people.

While downsizing has been standard practice among most major corporations for decades, this year marked the first time (welcome to Phase Two of the devolution) that the New Economy has experienced it in such large numbers.

Only last year the US Congress was convinced by these same New Economy enterprises that there was a need to extend and expand the H1B visa program that allowed for more foreign workers to be brought into the United States to fill the shortage of IT workers. This year, there's bound to be a glut of workers, casualties of Phase Two "adjustments" from the e-commerce and high tech sectors. And tech stocks are still in the toilet. It's just a market "correction."

But for a young generation of workers, many of whom had gotten their first jobs in the high-flying "Internet Economy," and who were used to be wooed with on-site foosball games, Friday night pizza parties, and dreams of soaring market values for their stock options, this has been a year of very rude awakening. Many of them learned that

• stock options can be the New Economy equivalent of Monopoly (the board game) money, and
• the New Economy is no more reliable than the old --- in many cases less so.

So, now its the Slash-and-Burn Economy. Dot-commies feel like auto-workers during the 1980s as the rumors continue to fly about even more failures and downsizings to come.

How The Mighty Are Falling

Those companies who mean to be survivors are in heavy re-thinking mode. Yahoo! the putative flagship of the Internet economy, has spent most of its existence depending on 90% of its revenues from advertising. Not any more. Yahoo! is now rushing to diversify by adding services and seeking new revenue streams:

1. Buidling corporate portals
2. FinanceVision, providing financial reporting
3. ShoppingVision, to get more directly hooked into the e-commerce arena
4. More paid listings in its search engine cadre

The people at Yahoo! are bright and they see the 800 pound advertising gorilla that has entered the fray, finally, this year: AOL Time Warner. Both in terms of cross-promotional advertising activity within the properties of the combined companies and being able to offer a BIG Media Buy for outside advertisers, AOL Time Warner is going to be very, very, very tough to beat. Any company dependent on advertising will have to face that fact as the initiatives of the new behemoth begin to role out this year.

Yahoo! has earmarked $100 million to finance new initiatives to remain competitive.

"That's like asking if there will ever be another IBM," I responded. "Of course there will. The company could be out there right now."

"Do you really believe that?" the guy asked me, incredulous.

"Yup," I said. "Don't be fooled by what appears to be the end of history. It never happens. Microsoft was not the world's largest company last year, Cisco was. There will always be an IBM, a Microsoft, a Ford Motor company. But The Buzz will move on.

"The next big company will be a pharmaceutical or a biotech firm."

In my view, it's a good thing for some of our technology companies and our notions of a New Economy to be drained of hype and hubris.