Is This The

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Mark W. Richards for Time

THE SURVIVOR: Janice Crotty, a Web consultant at InMomentum Group in San Francisco, worked at two now defunct dotcoms last year, including her own

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"Before the last market tank [April's NASDAQ collapse], I could have retired, bought three houses and my dream boat, and had $150,000 a year in interest to live on. Now I'm back where I started," says a senior engineer at a West Coast Web-services company, whose stock was briefly worth $9 million and is currently underwater. That means it has sunk beneath the price at which he originally bought it.

Even more cruel, of course, is when the paycheck stops too. Just ask the 140 former employees at , a Wall Street- based crime-reporting website that hired reporters for a salary in the low $40,000s--very low for a New York City dotcom--plus a meager 500 to 1,000 options. Once again, they turned out to be worthless when the site ran out of cash. As with most dotcom firings, the end was as swift as it was ignominious. News editor Jim Edwards returned from a vacation in Amsterdam to find his company had collapsed.

While Edwards is still looking for a job, a dozen rehired employees are keeping the site alive as its owners make one last bid to stave off bankruptcy. It's hard for even the most radical revolutionary to keep the faith under such circumstances. "I would go to a dotcom again," says reporter Joe Beaird, "but once you see your company go under overnight, you know how it really is. And it screws you up."

The e-commerce struggle has also produced plenty of grizzled, cynical veterans. Take Janice Crotty, a San Francisco Web consultant. In the space of a single year, she helped give birth to two online ventures--and watched both of them pass away. In early 1999 Crotty quit her job and went without pay for five months to found a Web portal called . That failed to attract venture funding, so she joined health site , which, in turn, was recently rescued by, and merged with, rival site .

Now Crotty is back in the consulting business with no regrets. Her only beef is with venture capitalists, the moneymen who she believes are responsible for most dotcom failures. She thinks they push sites into an early grave by forcing them to become too big, too fast. "I've been burned by the culture of stupid growth that VCs have fostered," she says. "Some businesses ought to grow organically. You can't just add water and expect to compete in the mass market."

The VCs say they're simply reacting to the demands of the market, which has become far more cautious and skeptical in the past three months. The game used to be about building a virtual Roman Empire, all glorious acquisitions and land-grabs. Now it's about building a Monaco, a tiny but incredibly profitable niche nation. Companies that don't understand the need to change direction--in geekspeak, the phrase is "turn and burn"--are doomed.

"The great thing is that people aren't throwing in the towel," says Quincy Smith, partner at the Barksdale Group, a VC firm founded by former Netscape supremo James Barksdale. "They're saying this is a fact of life. Let's get back to work."

It's fair to say the dotcom hubris of a few years ago has gone, replaced by an almost paranoid fear of being the next company to go under. Cautionary tales circulate like computer viruses. Most often cited is , the European fashion website that collapsed last month under the weight of poor design, lousy customer service and clueless founders who threw excessively lavish parties. "Everyone's afraid of what happened to Boo," says San Francisco Web designer Kathleen Craig.

Guessing who's going to be next has become a kind of morbid party game. It has given rise to the dotcom dead pool, a highly popular website run by 24-year-old New Yorker Philip Kaplan (found at the X-rated address Launched on Memorial Day, it has already received more than 80,000 sign-ups. Kaplan's secret: besides running sweepstakes on the big losers, his site has quickly become the central rumor mill of the Internet economy. Human-resources departments scour it for tips on where to send the headhunters next, and analysts check it before recommending a company to investors.

It's partly to avoid ending up in Kaplan's extensive archives that the digital workforce has started to act in a new and strangely sensible manner. When he got bored in his last job, software engineer Jason Fisher went to a headhunter and arranged interviews with 10 small, good-looking pre-IPO companies. Each made him a higher offer than the one before, and yet Fisher chose the company--, which copies and stores your CDs online--that made him the lowest offer. In fact, it was a pay cut. Why? "I didn't want to go anywhere that I didn't feel was going to succeed," he explains. It was a wise decision. The man Fisher interviewed with at his second-choice company is currently looking for a job himself.

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