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EDITIONS
Monday, 11 December, 2000, 16:51 GMT
Where did the millionaires go?
Whatever happened to those bright young things who became overnight dot.com millionaires? Did they crash with the market? Maggie Shiels in Silicon Valley reports that the good times are still rolling.

  • Dot-Com Millionaire Pays $5.6million Cash For Author Steinbeck's Former Home

  • Internet Launch Party Tops A Million Bucks

  • Nasdaq skyrockets To 5000

    All these headlines are from stories in the last ten months. Today the landscape is very different.

  • Is The Dot Com Dream Dead?

  • Tech Stocks Plummet

  • Nasdaq In Freefall

    Such a turnaround might suggest that Silicon Valley, which made its fortune in high tech, was on the slide.

    But this is far from the case, as illustrated in a newly published survey from Gallup. That study shows that in the Valley, more people here than anywhere in the world, own stock options and generally command a six figure salary.

    Santa Clara county is home to some of the world's biggest names in high tech - Cisco, Hewlett Packard, Apple, and Yahoo. There one in three households have stock options.

    No good news is news: Tales of doom and gloom
    In San Mateo, further up the Peninsula, the figure is 23% and in San Francisco it's 21%.

    The non-profit National Center for Employee Ownership puts the national figure at between 3 and 5%. Its head, Corey Rosen says these statistics are food for thought.

    "The people who were given capital in the last generation were the people who got wealthy and the people who just worked for a living didn't.

    So it's quite rational to say 'I want some ownership because I am contributing to the real asset of this corporation and this is how I am going to develop wealth'."

    Wealth of evidence

    Despite the market nosedive, the evidence of wealth is still all too obvious in Silicon Valley where the median house price is more than $500,000 and people drive $40,000 sports utility vehicles.

    For 30-year-old New Zealander Victoria Davies, owning a piece of the action is compensation for working in the turbulent dot.com industry.

    Kiwi Victoria Davies: Fortunes are made and lost
    "It's a critical part of the package. Originally Silicon Valley gave you a piece of the company because one, they weren't going to pay you as much as the big corporations and two to incentivise you to make sure the company succeeds."

    It's a philosophy Corey Rosen applauds. "These companies are essentially saying everybody here counts."

    In March the Nasdaq topped out at over 5000 sending the value of most internet and high tech companies into the stratosphere. And anyone with a dot.com idea had money thrust at them by eager venture capitalists trying to discover the next big thing.

    Today with the Nasdaq under 3000, reality has bitten good and hard. This year alone 130 firms have gone to the wall and 8000 employees have been given pink slips.


    The money I made out of those options I lost on the market

    Victoria Davies
    In October Victoria Davies was one of them. Her company was forced to change business plans mid stride. Silicon Valley speak for cutback or go bust.

    She left with 40,000 shares at five cents each. They aren't worth the paper they're written on, but if the company goes public they could make her a small fortune.

    "I know people who've made a significant amount of money out of their options but that's been to do with timing. For every one story you hear of someone who makes a lot of money, there's another ten who never made any."

    Easy money?

    And that includes Victoria herself who cashed in 15,000 shares from her first internet job. While being coy about her profit, she admits the vagaries of the market got her in the end.

    "The money I made out of those options, I lost on the market. I found that incredibly ironic."

    Silicon Valley - the "haves"
    85% own stock
    $103,000 - median household income
    83% have retirement plan
    95% have internet access
    Today Victoria is the director of service delivery for SlamDunk Networks.com, which deals with secure business to business commerce transactions.

    On top of her $100,000-plus salary and health benefits, she has 20,000 shares. And with it, a new-found realism born of experience.

    "I don't look at it as my ticket to being a millionaire because I really don't think it's that easy."

    Silicon Valley - the "have nots"
    35% own stock
    $51,000 - median household income
    33% have retirement plan
    65% have internet access
    Source: 2000 Gallup Poll of Media Use and Consumer Behaviour
    The company's recruitment manger Lotti Marie Lawlis agrees that while more people own options, few regard regard them as a get rich quick guarantee.

    "Stock doesn't have as much influence as it did a year ago because of all the dot.com failures, so some people prefer a higher salary in lieu of options."

    That attitude shift is impacting on leading e-tailer, Amazon.com which is fiercely resisting moves among employees to unionize.

    Amazon's Jeff Bezos: Everyone's an owner
    Previous efforts failed largely because workers were delighted with their high value stock options. In today's market, that paper profit has disappeared along with workers' confidence.

    And with Amazon yet to make a profit, employees are more worried about their jobs after the Christmas rush and following layoffs last January. Owner Jeff Bezos claims "everyone in this company is an owner. We don't need unions in Amazon.com."

    But customer-service worker Kirk Sheldon sees it differently. "Our ownership feels hollow," he says.

  •  WATCH/LISTEN
     ON THIS STORY
    Corey Rosen
    It makes people feel like they matter
    Victoria Davies
    It's not going to earn you your first million
    View market data
    Launch marketwatch
    The Markets: 9:29 UK
    FTSE 100 5760.40 -151.7
    Dow Jones 11380.99 -119.7
    Nasdaq 2243.78 -28.9
    FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins
    See also:

    17 Nov 00 | Business
    08 Oct 00 | Business
    16 Oct 00 | Business
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