JULY 2001

This is not so much a recession as an extended vacation for many of the people I know in Silicon Valley.

Take Nigel, venture capitalist at a fund that is being wound up, planning to manage his diminishing portfolio from a lodge on a New Zealand fjord. Or Dan, who has sold his company to one of the internet giants and is negotiating a long holiday before joining the acquiring firm. Or Lev, Harvard Business School graduate and internet dealmaker, who left his job last summer and has spent the past 10 months travelling and interviewing at endless VC firms, none of which is hiring.

These people are the privileged part of the technology industry, people who have made enough money – six or low seven figures – to take time off without jeopardizing their financial security. For many others who sacrificed salaries, paid exorbitant San Francisco rents and failed to cash in stock while the internet bubble was still inflated, this downturn is already a source of financial anxiety. Unemployment in San Francisco has risen above 4% for the first time since 1998, and it has further to go.

But one of the most remarkable manifestations of the economic slowdown has been just that: people slowing down and taking time off.

The first sign, for me, came last autumn, when I sent out invitations for one of the Eurotrash networking events we periodically hold for European expats in Silicon Valley. Besides the growing number of messages that were bounced back ‘recipient unknown’ was an e-mail from

a German entrepreneur. Sorry, he wrote, he could not come because his company had gone out of business, and he was busy hiking in Nepal.

Now at least a quarter of the people I know are not so much between jobs as on vacation. San Francisco’s many cafés seem fuller in the daytime than usual. At Moreover, the information management company I co-founded and brought out to the Bay Area from London, we have been doing a search for a career chief executive. One of our lead candidates says he wants to take three months off before he takes a new position.

Some of this extended vacation is just unemployment dressed up to sound more a matter of choice. Others have decided that 2001 is not much fun and they would rather just come back into the employment market when times are better.

And a few of the vacationers are just compensating for their lack of leisure time in the late 1990s. Then, there were people known as sleep camels, who slept all weekend to store up energy for the coming week. Some of these have decided to hibernate for the whole of 2001.

I remember Warren Adams, founder of PlanetAll, a dot.com rescued by Amazon.com, boasting how he did not take a single day off for two years, nor did he even take an evening off to watch a movie. These people are rediscovering their lives, even if some of them now have no-one to play with.

But the most interesting group of people taking time off are those whose expectations are still adjusting. These are recent graduates who slipped into glamorous ‘business development’ jobs paying $100,000 per year on the fluency of their presentation and their understanding of the internet. It’s hard for them to acknowledge that they are expert at conjuring lightning partnerships designed to create buzz or ‘traction’. Now companies want revenues, and hire salespeople. I think many of these bizdev professionals are going on holiday rather than reconciling themselves to a career as salespeople.

The career expectations of the VCs are just as inflated. Many of them are former technology executives who, like most of us, would far rather tell others what they should do or ought to have done from the sidelines. Now that the VC industry is shrinking, they are being pushed back into the working world. That is a notoriously difficult re-entry.

Dreams of becoming a celebrity VC like John Doerr or Mike Moritz – musing about the future of the internet on conference panels, being interviewed respectfully, dispensing advice from the elevation of a high-powered board, accumulating the ‘carry’ on giant investment gains – are hard to give up.

I remember how, after university, the stars of student journalism, drama or debating were often those who found it hardest to adjust to the real world of employment. So it is again, as the graduates of the internet era begin to realize that business success usually comes only after long apprenticeship. Or even that it may never come again. No wonder, then, that to postpone the moment of reckoning, they are all heading off on holiday.