A sharply dressed Mike Manser sits at his desk and clicks through digital images on his computer.
One shot is of a distinctly new-wave office space: red walls, print rugs, funky workstations complete with aerodynamic chairs. The decor, as Manser says, is “very dot-comy.” The observation is right on as Manser is looking at the lavish set-up of a now-defunct Internet company. The failed dot-com’s method of operation is now all too familiar: spend big, die young. The office, with the exception of furniture, is barren. A gloomy scene? For some. But the image gives Manser, president of Mansers Office Interiors, a Santa Ana business that buys, sells and installs new and used office furniture, a comforting vision: money. “It’s all in the eye of the beholder,” Manser says chuckling. Each day, Manser fields calls from struggling dot-coms (and other tech companies) hoping to resell barely-used modern furniture they purchased a year or two ago,in some cases even from his store. One of his latest clients: eToys Inc. in Los Angeles. Manser takes digital images of the inventories and uses them to lure prospective clients, including other dot-coms and traditional businesses, which are gobbling up the brand name furniture at cut-rate prices. This side of Manser’s business surged a year ago and hasn’t stopped. In fact, Manser said he’s struggling just to put “his arms around the whole thing” and sometimes even has to turn companies away. Both his warehouses,a 25,000-square-foot spot in Santa Ana and another 20,000-square-foot building in Westminster,are jammed with inventory, which has quadrupled since last year. The burst of the dot-com bubble has sent similar waves through OC’s business community. Some folks like Manser are capitalizing from the fall. Others are cleaning up the mess. Everybody continues to watch the aftermath,especially remaining dot-coms, many of which have dramatically downshifted to stay alive. Name an industry and it has likely seen fallout. The local real estate market saw a surge of sublease space about three or four months ago as struggling dot-coms shed leases. Some advertising agencies have scrambled to win new business to counter the loss of Internet clients, many of which flashed fat ad budgets but didn’t spend a dime. Employment agencies and recruiters once hard-pressed to get their pick of workers (most of whom were lured to dot-coms with staggering stock options and dreamy compensation packages) say recent layoffs have filled the market with qualified,and more humble,candidates. And then there’s ManagEASE Inc. in Santa Ana. The human resources consulting firm swooped in and gave dot-coms structure,at least in their HR departments. Now ManagEASE is being recalled to restructure after dot-com downsizing. “It’s sad to see them die,” said Leslie Hollis, vice president of the benefits division of ManagEASE. “You feel like someone in your family has passed away.” ManagEASE has worked,and in some cases still does,with several Internet-related companies in Los Angeles, San Diego and OC, including electronic retailers, Internet service providers, medical industry service providers and software developers.
Last summer “it was impossible” to fill human resources positions, Hollis said. Now she said it’s relatively easy since “the market is flooded with qualified people coming from now-defunct dot-coms.” But there’s a catch: no more riding scooters down the hall or sitting on giant plastic balls in lieu of chairs in the reception area,two things Hollis observed at former clients’ digs. “They were living in an unrealistic world,” she said. “They’re going to get some culture shock when they come into what’s now the remainder of the dot-coms as far as compensation structure, benefits, etc.” Already, however, there’s been a change in mindsets. Aliso Viejo-based Leaders Online, an Internet-based search firm filling middle management positions, is seeing more top-notch businesspeople with realistic goals, according to Chief Executive Jim Quandt. “We’re seeing quality candidates that fit a more traditional compensation world. They don’t expect to get rich over night,” he said. Sylvia Fitzgerald, office manager at Newport Beach-based Creative Focus, a placement agency specializing in the advertising and marketing industries, agreed. She said people want stability because they “have taken risks with the dot-coms and it didn’t quite work out as planned.” The fallout has created increased opportunity for Huntington Beach-based PR Talent, which places public relations professionals in both freelance and full-time work. President Jim Delulio said there are an increased number of qualified freelance publicists available as a result of the “dot-com meltdown” and slowing economy. And, he said, demand for them is big since budget-conscious companies can pay up to 50% less per hour for a free agent vs. a full-time employee. “In this slowed economy, companies still need to market themselves, but will be looking for more cost-effective solutions,” Delulio said. Speaking of watching cash, OC’s ad shops have tightened standards and become a little more selective about which dot-coms they work with. Craig Holland, president of NineDots Corp. in Irvine, said he’s requiring dot-coms to pay bills up front since in the past some clients pulled their ad dollars, luckily before projects were started. W. B. Doner & Co.’s OC office also is going to be “much more careful about technology stocks” without abandoning the sector, said Billy Fried, the shop’s senior vice president, group manager and director of new accounts. Doner lost at least three dot-coms last year, including Fountain Valley-based PingPong.com, Newport Beach-based Winfire Inc.,both now dead,and San Diego-based RealAge Inc. But it reportedly made up losses with new wins, including Jenny Craig Inc.’s $25 million account. And ad agencies aren’t alone when it comes to tightening standards for dot-coms. Insignia/ESG Inc. and Parker Properties LP say they’ve been stringent in their reviews of dot-coms wanting space, often requiring additional security deposits and letters of credit. As a result, Michael Bennett, a managing director of Insignia/ESG, said the dot-com impact on his firm has been limited. Currently, Internet companies such as Buyproduce.com and Anyloan.com, both in Irvine, are in Insignia-managed properties. “It hasn’t been a huge hit in this area because OC has a more diversified cluster of industry types,” Bennett said. Russell Parker, a principal at Parker Properties, said less than 2% of the office space in OC is occupied by dot-coms, according to a study his brokers conducted about two months ago. He said the impact hasn’t been as pronounced in OC as, say, the Westside of Los Angeles, which saw as much as 2 million square feet of office space come available as a result of the dot-com meltdown. Ted Snell, a senior vice president at CB Richard Ellis Services Inc., said much of what dot-coms did take in OC has been in new buildings, which still are in demand. “In the case of the Summit Office Campus, for any dot-com company that would give up space,none of them have yet,we have two or three tenants that would fill the space,” Snell said. But there has been some churn. Over the past six months, five or six dot-coms in Aliso Viejo either went out or downsized, putting about 120,000 square feet of office space up for sublease. “I would say 70% of that dot-com sublease space was absorbed,” Parker said. “That means demand is up for users wanting space.” Struggling buy.com Inc., which leases about 54,000 square feet in the Summit in Aliso Viejo, is one tenant reportedly looking to sublease space. In 2000, the company signed a five-year, $8.3 million lease and is responsible for subleasing. Though Parker said he didn’t know exact details of buy.com’s sublease situation, he said brokers report a healthy interest from traditional companies. Parker’s tenants include mainstay technology companies such as QLogic Corp. and dot-coms such as ThinkTank.com.In the meantime, Manser and others plan to keep looking for opportunities the dot-com fallout brings. The last ad he ran to promote his business sums him up best: “Dotgone? Take advantage of the opportunity.” n
In the meantime, Manser and others plan to keep looking for opportunities the dot-com fallout brings. The last ad he ran to promote his business sums him up best: “Dotgone? Take advantage of the opportunity.” n
