Sun, Aug 11, 2002 page12

• Dotcom victimes rekindle the entrepreneurial flame

  Having lost their positions and six-figure salaries after the bubble burst, many young people are trying again, but this time by starting their own businesses

  • By Warren St. John / NY TIMES NEWS SERVICE
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  On a cold weekday afternoon last January, 34-year-old Brian Benavidez plopped down with his girlfriend on a big white shabby-chic sofa in his loft in Williamsburg, Brooklyn, to watch a documentary about hot dogs. Benavidez, an M.B.A. and former investment banker, had been out of work since October, when he was laid off from his six-figure job at Bolt, a Manhattan Internet company.

  After a couple months of reading and sleeping until noon, he had begun to interview for jobs, but things weren't looking so good. Benavidez described himself as "just professionally depressed."

  

  Some unemployed Internet refugees have taken whatever jobs they could find. Others have held out for something like their old jobs but a few are refusing to let go of the dream of self-made riches. These entrepreneurs are opening concession stands, bakeries and other businesses. Brian Benavidez, 34, an unemployed MBA and former investment banker, is investing his time into a hot dog stand called Sparky's American Food. Benavidez holds a giant hot dog in Brooklyn in August.

  PHOTO: NY TIMES NEWS SERVICE

  But something about that hot dog documentary caught his attention.

  "I noticed that everybody who was being interviewed was happy," Benavidez said. "The people who worked behind the counters, the owners, the customers, they were all smiling. I told my girlfriend, `I want to make people that happy.'"

  A few hours later, Benavidez said, he had an epiphany: "I'll do hot dogs."

  Selling hot dogs and cheese fries was hardly the career Benavidez imagined for himself when he earned his degree from Columbia Business School in 1996, in the early days of the Internet boom.

  Back then, everyone had a business plan in his knapsack and venture capital flowed like Evian on a corporate charge card. But these are times of adjusted -- if not diminished -- expectations, especially for those young ambitious professionals who were swept up in the technology bubble of the late 1990s only to be unceremoniously disgorged a few years later.

  A few like Benavidez are refusing to let go of the entrepreneurial spirit and the dream of self-made riches that fueled start-up mania.

  Instead of spending billions to build a global brand, these recalibrated entrepreneurs are spending a few thousand dollars to make it big, or at least medium, in their own neighborhoods. They are opening concession stands, spas and bakeries, many with a post-millennial twist. Benavidez, for example, spent weeks searching for the perfect hot dog before settling on a hormone-free beef frank from grass-fed cattle on a California ranch.

  If the Internet economy was built on vapor, these new ventures are all too real. "I buy eggs, flour and cheese and turn it into things people like and will pay more for than I did," said Assaf Tarnopolsky, 31, a Wharton School of Business graduate who is now the proud owner of two crepe stands in San Francisco, under the self-bestowed title of the West Coast Crepe King. Tarnopolsky lost his US$125,000-a-year job last September when his employer went bankrupt, so he turned to an earlier love.

  He had grown up eating crepes in Geneva, and as a hobby slopped batter on a hot iron at a San Francisco farmer's market on weekends. After a couple of "miserable" interviews, he said, "I decided, if it works on Saturday and Sunday, why not Monday through Friday?"

  The lifestyle change has not been easy. "Despite what people think," he said, "it's more stressful and more work than my corporate job." Tarnopolsky frequently wakes up at night worrying about crepes, and he and his wife now live with "a Depression-era mentality."

  "We're pinching pennies, cooking at home and not going to weddings we'd love to go to because they're too expensive."

  Ari Ginsberg, director of the entrepreneurship program at New York University's Stern School of Business, says that's what it takes. Ginsberg said that in every generation of professionals there are some who seek the stability of corporate jobs and others who are driven to go it alone.

  The current wave of scaled-down start-ups, Ginsberg said, is being run by "a breed of people who came of entrepreneurial age when there was a gold rush."

  "They were in a fantasy world. Now we're in a back-to-basics mode," he said. "Hot dog stands are about handling real merchandise and interacting with real customers. It takes hard work and time to see results when you build a business the old-fashioned way."

  Alas, few choose the old-fashioned way voluntarily. Most are like Andrew Reback, a 32-year-old MBA. from Boston University who was a director of product management at Excite@Home until he was laid off last September.

  Reback said he had received no severance pay and his final paycheck bounced. He liked baking, so as he looked for a job in technology, he started selling desserts like chocolate mousse cake. The technology job never materialized -- Reback said everyone in his six-unit Burlingame, California, apartment building is unemployed -- so he kept on baking.

  Technology was all entree and no dessert, Reback said. With mousse cake, he said, "You get a sense of `It tastes good, and I like it.' I never got that at Excite."

  Reback grosses only "hundreds of dollars a week," he said, not exactly New Economy wages. But he said it did not bother him.

  "In the brief period of time I've been in business," he said, "I've already been more profitable than Excite@Home ever was."

  And while life in technology seemed like one long strategy meeting, his current job is much simpler. "I don't need a team of MBA's to tell me what to do next," he said. "The strategy is: make more desserts."

  For H. Joseph Ehrmann, a Thunderbird Business School graduate, it's soup. Ehrmann was laid off from his job at a California software company in July last year. Like many dot-com refugees, he took a monthlong soul-searching trip, to Indonesia. When he got back to San Francisco, he said, "There was a longer line at Starbucks than at any time in the boom."

  Ehrmann got the picture. He needed income, he said, so he joined a friend who had recently started an organic soup business called Heartland Soups.

  Where once a sales call meant driving to a mirrored glass building in Silicon Valley to pitch clients on US$250,000 software packages, Ehrmann's pitches now involve handing out little plastic cups of soup to people on the street.

  "People love soup," Ehrmann said. "I say I'm building a soup company and people say, `Soup -- that's cool.' It's satisfying. You're giving people something that affects them right away."

  After quitting their jobs at a rapidly failing technology company in Vancouver, British Columbia, Chris Scott, 31, and Jamie McKeough, 33, spent some time in local spas and noticed "this overriding seriousness, like, `We're going to save your soul,'" Scott said. Their idea: a laid-back spa with no New Age pretense. As for music, Scott said, "No Enya."

  For all the touchy-feely talk about life on five figures, there is one thing about these young professionals that has not changed. They still want to get rich.

  "The way to be really successful is through ownership, not through being the 5,000th hire at a company," Tarnopolsky, the crepe maker, said.

  In the middle of the dot-com boom, Tarnopolsky said he aspired to be like Sky Dayton, the prototypical dot-com whiz kid and founder of EarthLink, the second-largest Internet provider in the US. His new heroes? Debbi Fields, who started Fields Cookies from a counter in Palo Alto, California, and Howard Schultz, chairman of Starbucks.

  "He successfully marketed and branded something that's been around for a long time," Tarnopolsky said. "I think the same thing can happen with crepes."

  According to Po Bronson, an author who chronicled the technology boom and who profiled 75 people contemplating their careers for his upcoming book, What Should I Do With My Life? (Random House), for all the talk of scaling back, today's entrepreneurs have not given up entirely on the dot-com ethos.

  "They come to it with the notion that the Internet may be dead but a lot of the values they believe in are the same," Bronson said.

  "They believe they can become an expert in something quickly, that brains might be better than experience, that most companies don't push hard enough. But the biggest is, `Life had meaning, and I was juiced when I took risk.'

  "I've seen a lot people say, `I'm going to find that same thing somewhere else, maybe not in the Internet but with a hot dog stand.'"

  If there's a thrill to be found in staring failure in the face, then small-business owners will have no shortage of excitement. According to the Small Business Administration, less than half of new businesses survive more than four years.

  For this reason, perhaps, the budding capitalists have encountered plenty of skepticism from family and friends. Benavidez approached several business school classmates about investing in his hot dog stand, for example, and was turned down by all of them.

  "They'd said they got so burned investing in their friends' tech companies that they were tapped out or just too hesitant," he said.

  And the new business owners aren't past having their own doubts.

  "I've vacillated between thinking I was an absolute genius and the village idiot," Tarnopolsky said. "I feel a lot of pressure to succeed. This business is all wrapped up in me and my identity."

  When that pressure builds, new entrepreneurs seem to fall back on the same MBA training they used to fuel growth in the dot-com sector. After a few days of feeling good about his hot dog epiphany, Benavidez "went into business-school mode," he said.

  He researched the margins of the hot dog market and analyzed neighborhood foot-traffic patterns, going so far as to count the number of customers going into local restaurants at certain hours.

  He used unwitting friends as market testers, serving them homemade relishes and mustards at a Super Bowl party and noting their preferences.

  And he dashed off a four-page business plan -- about 75 pages shorter than the average business plan he toted around during the boom -- that led to a US$50,000 investment by family and friends.

  Benavidez added US$40,000 of his own money ("Everything I have," he said) and early next month he will open his stand on North Fifth Street and Bedford Avenue in Williamsburg. He named the place after his dog: "Sparky's American Food."

  "I'm going to be the one slopping chili on hot dogs and cooking burgers," Benavidez said. "The sky's the limit if we do things right. But my main goal, is, Please make this little shop work."
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