was a sure sign of the coming apocalypse when I was at two launch parties
in one month, on different coasts, and Run-DMC played at both of them.
Aftershocks from the spectacular collapse of the dot-coms continue to
rattle the nations economy, but the smoke is finally dissipating,
and one thing is clear: There were few survivors. From highly-touted ventures
to lesser-known startups, one company after another crumbled under the
harsh pressures of fiscal reality. But a few hardy entrepreneurs remain:
among them, a digital media firm co-founded by Pomona alumnus Glenn Thomas
Thomas, who started the Seattle firm Smashing Ideas with Ben Yenter and
Evan Clarrissimeaux in 1996, wasnt taken by surprise by the dot-com
bust. It was a sure sign of the coming apocalypse when I was at
two launch parties in one month, on different coasts, and Run-DMC played
at both of them, Thomas recalled with a laugh.
A history major at Pomona, he compared the height of the frenzy over Internet
startups with the tulip craze in 17th-century Holland, when a single tulip
bulb would fetch the price of an entire house.
There was a lot of money floating around, he said. You
would go to parties where it was pretty obvious they had spent a quarter
of a million to a million dollars on the partyfree sushi, free booze,
bands, three levels, several thousand people. Microsoft had one party
that had Cirque du Soleil performing.
and his colleagues at Smashing Ideas were well-positioned during the boom.
In 1996, the software program Flash, distributed by Macromedia, had hit
the Web, providing animation and interactive content that completely transformed
the Internet surfing experience. We were lucky in that we were some
of the first people to really pick up Flash who knew animation in particular,
Thomas had met Yenter and Clarrissimeaux at a traditional animation class
in a guys basement. After working together on a pro
bono animated TV commercial for a non-profit center for abused and neglected
children, the three decided to form a company to provide rich mediaFlash
and other animationfor the Web.
They started out small. In the very beginning, we were in one of
my business partners dads basements, Thomas laughed.
He would make us waffles and coffee while he sat up there in his
bathrobe and pink slippers.
Thomas learned about computers and software on his own and at various
jobs, but he credits Pomona with giving him the wherewithal to pick up
new skills: The education allows you to go into those situations
where you might not know everything, but you feel like you can learn anything.
In fact, it was a struggle for Thomas to decide whether to continue with
his new business or to go back to school. I actually applied to
graduate school to get a Ph.D. in history after the company was already
going, he recalls. I received a fellowship, accepted it and
then decided not to go a month and a half before classes started. The
Web seemed like a lot more fun.
The company Smashing Ideas (the name stemmed from an early cartoon of
an anvil dropping on a lightbulb) quickly built a reputation for TV-quality
animation. Macromedia itself was one of the firms first clients,
hiring it to create programming for Shockrave.com, a marketing site to
showcase Flash (a plug-in that allows users to download self-running programs
onto their computers) and Shockwave entertainment, mostly games and animations.
Thomas other projects included bringing comics such as Peanuts
and Dilbert to the Web, and creating short Web episodes of
the South Park cartoon series.
Times were flush, and jobs were plentiful. We just sat around and
the phone rang and people said, Will you work for us?
recalled Thomas. In early 1998, the company moved to offices in a former
candy factory by Lake Union in Seattle.
The success of Smashing Ideas didnt go unnoticed during a time when
acquisitions seemed to be many companies main product line. We
would have people just call up and say, OK, we want to buy you,
One of the groups that showed an interest in taking over the company was
Pop.com, a business venture involving director Stephen Spielberg and his
Dreamworks associates, as well as director Ron Howard and Microsoft co-founder
Paul Allen. Thomas recalled the experience as being a surreal chapter
in the history of Internet mania.
Up here in Seattle, were pretty much outside the Los Angeles
entertainment vibe, he explained. These guys fly out, and
it was pure Hollywood. The whole thingthe T-shirts, the one guy
being the good guy, the one guy being the bad guy.
Because the Pop.com representatives were not offering cash, but stock
in the new venture, Thomas asked to see a business plan. He was told that
the plan was in a safe somewhere, and that the people who matteredSpielberg,
Allen, Katzenberg and Howardhad all signed off on it. Its
gonna be huge, the representatives assured him.
These guyshaving met with them, I could see they had no idea
what they were doing. They had already spent $10 million and had nothing
to show for it. So I think they were a little bit desperate. They just
kept saying, Mr. Spielberg. Youd be working with
Mr. Spielberg. Mr. Spielberg this, Mr. Spielberg that,
Eventually they started saying, We do big deals. We usually
dont even talk to little people like you. Well be meeting
the CEO of a Fortune 100 company and we just do things on a handshake
deal, not this legal stuff.
Pop.com players received their comeuppance a few weeks later, when the
investors pulled the plug. I think Dreamworks, Ron Howard and Paul
Allen bailed out because they realized, Well, weve lost $10
million, but if we go for it with what we have here on the table, were
going to lose a hundred. So lets pull it at ten, Thomas
said. Which is too bad, because if theyd hired people who
really knew what they were doing, they could have done really well.
The excesses of the dot-com frenzy are already legendary: startups pouring
money into advertising, blowing $2 million on a 30-second Super Bowl commercial,
putting on a $10 million Las Vegas trade show party featuring David Spade
and The Who. Smashing Ideas remained aloof from such lavish expenditures,
partly because it never went public, but largely because Thomas and the
others kept their sense of perspective. We were fairly conservative
about it, Thomas said.
I never had money in the stock market and dot-com companies,
he continued. I could never quite logically make sense of most of
it. It was like, OK, youre hoping for revenue in the future, and
yet, theres nothing that shows youre going to get any.
The company resisted pressures to go out and raise more money. Everybody
around us was saying, You can go out and get $20 million and do
anything you want, The question was, Well, Id get $20
million, but what would we do with it so that we make money in the future?
It was never a clear situation, Thomas said.
Referring to his education at Pomona, Thomas continued, I had the
background to understand that maybe this wasnt as earth-shattering
and world-changing as everyone was saying it was.
As the year 2000 came and went, the high times of the Internet world came
to a crashing end. When the troubles hit, Thomas recalled, they hit fast
and hard. There were months when pretty much every week youd
have more friends getting laid off in San Francisco or New York. It was
a grim, grim eight months.
Despite its fiscal conservatism, Smashing Ideas still reeled from the
shock of the dot-coms collapse. It was a question of, Have
you signed up with people who might survive the fallout?
Thomas said. We thought we had. We hadnt. Nobody really did.
The first eight months of 2001 were rocky for the company. That
January, we had a quarter of a million to a half-million dollars
worth of work disappear in about four weeks, Thomas said. The loss
of revenue was mainly the animation side of the business, forcing the
company into its one and only set of layoffs, six members of its animation
team. Thomas and his colleagues tried many tactics to try to avert further
staff cuts, including switching to partial workweeks during the summer.
Nevertheless, the prospect of additional cutbacks loomed. He recalled
one morning when they had basically decided further layoffs were needed
and were about to meet to discuss them when a call came from a friend
on the East Coast. The friend had just gotten a contract and needed someone
to design the Coca-Cola Olympic torch relay site. So were
like, OK, guess we dont need this meeting, Thomas said.
By late last year, Smashing Ideas had begun to pull out if its slump.
But it did not emerge untransformed. The animation work has mostly fallen
by the wayside, and now the bulk of its projects are childrens games
developed for marketing and advertising purposes. It has switched from
using word-of-mouth advertising to taking a more active role: Late last
year, the company hired its first sales director. Its list of clients
is now mostly made up of larger, well-established companies such as Kraft
Foods and Nickelodeon.
Looking back, Thomas believes that a lot of what transpired during the
dot-com frenzy can be attributed to simple greed. There were some
guys in Silicon Valley who put up a million dollars and got a billion
for it. Thats a big deal in this country. And everybody wanted to
have a shot at it. And when you have that much money piling in, and youre
chasing too few good ideas, you get a lot of people who jump in without
a whole lot of thought.
Theres a lot of smart people who lost a lot of money,
he said. It happened so fast.
He added: There were also a lot of people who very cynically, knowing
it was a boom-bust situation, worked as quickly as they could to get in,
get out, and let somebody else take the fall.
Thomas himself has not neglected the value of diversification. In addition
to his work at Smashing Ideas, he gives lectures, has written two books
on Flash and last semester taught a class at Pomona with his former history
adviser, Professor Robert L. Woods 67. The class was called The
History of the Future, and dealt with transformational technologies,
such as, say, the Internet. But the limits of such transformations, Thomas
said, are clear.
Certainly [the Internet] didnt suspend all rules, everything
that had come before it. Which was the classic Web thing: This changes
everythingYou dont need to make money. Ive actually
heard people say that. And people believed it.
Lorraine Wang is an editor
at the Los Angeles Times
and a freelance contributor to PCM
Photos by Phil Channing; Photo illustration
by Mark Wood.