It could be said that hockey is a very Canadian sport. It embodies the Canadian values of humility, camaraderie, sportsmanship, egalitarianism, subtlety, respect for tradition, and conservatism. Inside the confines of the rink, hockey players are larger-than-life: aggressive, assertive, and spectacular. Outside the rink? Not so much.

This is one of the overriding problems that plague the NHL. The personalities of the players, still mostly Canadian, make the sport hard to market because the culture of hockey players eschews taking the spotlight, grandstanding, or boasting. Players tend to walk softly when not carrying their big sticks, and this League of Unextraordinary Gentlemen makes for a lack of players with true celebrity potential.

It is an understatement to suggest that the NHL has a marketing problem. And while this blog is awfully hard on Gary Bettman (justifiably so) it’s not all his fault. Consider the story of David Beckham vs. Wayne Gretzky.

When David Beckham was imported to Los Angeles he brought more than just a bendy shot to Major League Soccer. He and Victoria Becks were soon spotted among the elite, embraced by the celebrity culture that dominates Los Angeles. This made it much easier to market the LA Galaxy and Major League Soccer in general, as each appearance in People magazine, on Entertainment Tonight, or gracing the red carpet at premieres served as a stealth advertisement for the game. This drew fans from unlikely sources. Beckham built his fame in front of the global futbol audience, transcended sport and celebrity by marrying one of the Spice Girls, and managed to remain dignified while making himself into a global brand.

Canadians still love Wayne Gretzky. Arguably the greatest player to ever grace the arenas of the NHL, his jersey number is so hallowed it is verboten to wear it — officially retired throughout the league. No player bears comparison, and his infamous move from Edmonton to Los Angeles was heralded as a break-through for the game. In fact, it was. The Kings, a basement-dwelling team before his arrival, began building a dynasty which, though it never returned a cup to LA, remained competitive and entertaining throughout his stay there. They drew in new fans, and the spillover helped the league to add teams in San Jose and Anaheim.

But Wayne is as much an admirable personality as he is a uniquely modest, humble guy. He shuns the limelight. He doesn’t want to attend glitzy parties, isn’t a trendy dresser, avoids controversy. He married a modestly successful actress, not a megastar. And as Canada’s favoured son, he carries the hopes and limitations of a nation wherever he travels. It’s an enormous burden, one he clearly feels, and one which has ultimately kept him from becoming a global transcendent brand. In many ways this is an opportunity lost. Both for Wayne and for the game he so clearly loves.

What the league needs is a cadre of players that can move the puck like Wayne — casually chucking in 50 or 60 goals a year, let’s say — while simultaneously engaging the popular media.

Sean Avery is no Wayne Gretzky. His style of play is better suited to the beer leagues than the beautiful game. But Sean has engaged the popular media and celebrity culture in a way that no player in recent memory has — and he is poised to drive interest in the NHL because of it. Within the league he’s a constant source of news and controversy, both for on-ice antics and off the ice. Within the game a great source of controversy and intrigue, and a pattern that sees shades of Brett Hull, Claude Lemieux, Shanahan, and Roenick.

But outside the arena he’s raised his game to a whole other level. Avery has had relationships or been linked romantically to a growing list of celebutantes including an Olsen twin, Elisha Cuthbert and Rachel Hunter; has made People Magazine’s “Sexiest Man Alive” list; has appeared on MTV Cribs (bragging about your bling is very non-Canadian!); was weirdly an intern at Vogue Magazine this summer; is poised to star in a fashion reality TV show; can frequently be seen amongst the glitterati at fashion shows and premieres; and is even the subject of a movie presently under development at New Line. He’s even been profiled in the New Yorker. This among a growing list of exploits studiously documented in fan magazines like People and Us, and on TV on shows like TRL and Entertainment Tonight.

Avery recently arrived to a Hollywood party and asked a reporter if The Hills’ resident prick Spencer Pratt was there yet, because he wanted to “kick his ass.” All of this behaviour is very-much outside the norm for your cookie-cutter Canadian hockey player. And in many respects it’s preserving interest in his career as a grinder long after the pace of the game in the NHL has moved past players of his ilk. It’s even conceivable that (female) fans in Dallas this season, where he recently signed another one-year contract, might turn up just to see a glamourous NHL star — not Mike Modano, mind you, but Sean Avery.

In any event, if you believe that half of good marketing is just being seen, he engages the popular media with the NHL in a way that is hugely constructive to its image as a major sport with dynamic, cool, exciting players. The revelation here is that what makes a hockey player exciting in this multimedia world is not limited to what he does on the ice. What the die-hards among us will need to accept if we expect the league to grow and flourish is a lot more guys like Sean Avery.

September 10, 2003 A Letter to President Bush By  Tom Steinert-Threlkeld

Dear President Bush:

You probably don’t know Joel Phagoo. He is a 21-year-old college student who decided to go fishing in New York’s Jamaica Bay with his kid brother and a cousin. They ended up washing up just off Runway 4 Right at JFK International Airport, after the weather turned.

They wandered about the tarmac for an hour, then turned themselves in to the Port Authority of New York and New Jersey Police.

These were innocents. But their ability to move freely beneath the underbellies of jumbo jets just goes to show: Two years after the worst terror attacks on United States soil, repeat events are all too easy to envision.

An evildoer can still load explosives into a 20″ rolling travel case and ride into a major train station in any large metropolis—and blow it up. Shoulder-mounted missile launchers can, without much trouble, take down airplanes from the visitor center at the south end of the Dallas-Fort Worth International Airport or, as Joel Phagoo discovered, Runway 4 Right at JFK. A kayak could do the trick at the Port of Oakland, right beneath Ray Boyle, the man in charge of securing the fourth most-active seaport in the United States.

We’re all thankful that there hasn’t been a repeat of the twin towers tragedy. But is it understating the case to say not enough has been done in the 730 days that have passed to make our people feel safe again?

Creating a permanent solution starts at home.

First, there must be economic security. Unless this country continues to prosper, there won’t be the wealth necessary to finance safety anywhere inside our borders. Or to pick up the tab of occupying foreign nations.

That means applying the greatest fortune of this country, its intellectual assets, to the task at hand. Just like presidents before you, create a clear objective and mission for the smartest minds we call our own. World War II put them to work solving the mystery of atomic fission. The Cold War put them to work transporting humans to the moon. This war on terror should put them to work on not one but two projects that our core competency—the creation, deployment and operation of information systems and advanced technology—can solve.

Energy: There has not been a serious attempt to wean this country from its dependence on petroleum-based fuels since the Carter administration. Just think what could have been accomplished by now, if we had kept up research, testing and development of natural, renewable sources of energy such as solar, wind and water power, and if we had made up our minds and stuck with it? Or if a willing citizenry had just been called on to conserve? We would reduce the stress on our deteriorating electricity grid. And, if we could just reduce our dependency on oil by 20%, we wouldn’t need Saudi Arabia. Then you could really prosecute a war on terror.

Physical Security: We’ve made it possible to ride in airplanes at 600 mph and still talk on the fly to someone speeding down a highway at 70 mph—and we curse if the call breaks apart. We’ve made it possible to know exactly when every can of soup moves out of a Wal-Mart SuperCenter, but we can’t tell when a college student like Joel Phagoo docks at one of our busiest airports. Now, we better figure out how to create invisible fences—permeable and impermeable—that guard against unauthorized humans, at our borders, airport grounds and other open, but vital spaces.

Apply technology intelligently. A good first step would be to challenge and properly fund our scientists and information technologists to devise the analytical systems that finally figure out how photovoltaics, fuel cells and the air itself can effectively free us from the addiction to oil that colors all our military and economic policies. A second step would be to challenge software and hardware developers to figure out what combination of low-cost antennae, sensors, transmitters, repeaters and other systems are needed to provide real security at all public and private places, without taking away privacy.

If running Iraq as a 51st state is worth $4 billion a month, just imagine what a similar investment could produce if it brings both true economic and physical security to this remarkable nation, and keeps our greatest resource, our brains, at work, on our shores.

Mr. President, this is what we are fighting for.

http://www.nytimes.com/2003/07/05/business/worldbusiness/ 05VOIC.html?pagewanted=all

CCRA, Ghana, July 3 — The Internet bubble has long since popped in the United States, Europe and Asia. But in parts of Africa the Internet is serving as a powerful force for change, primarily by allowing companies and individuals to make international telephone calls far less expensively than through conventional channels.

Calls in and out of sub-Saharan Africa have long been among the world’s most costly, strangling business opportunities and burdening ordinary people. Services have been tightly controlled by government-owned telephone companies, many of which are rife with corruption and incompetence. Governments also imposed high tariffs on international calls, seeing it as a lucrative source of revenue.

But now, thanks to what is called voice-over-Internet, phone alternatives are flourishing, sharply lowering costs and expanding opportunities for business and consumers in some of the poorest places on earth — even as they pose a competitive threat to government-sanctioned telephone companies.

Sending telephone calls over the Internet is gaining ground in Africa because it makes possible a range of new services, linking the sub-Saharan to the world’s major industrial centers in ways unimaginable only a few years ago. And better digital connections, mostly via satellite, are raising the hope that Ghana — the most peaceful country in a West African region besieged by civil wars and ethnic strife — may become the regional hub for an information-technology industry.

“As Ghana improves its connectivity to the outside world, it has the potential to become for Africa what Bangalore became for India,” said Paul Maritz, a former senior executive at Microsoft who recently visited Accra to survey the nascent high-tech scene here.

Last Thursday, at a United Nations conference in New York, the secretary general, Kofi Annan, delivered a message that developing countries also need to include wireless access, known as Wi-Fi, in building an Internet system.

“It is precisely in places where no infrastructure exists that Wi-Fi can be particularly effective,” Mr. Annan said, “helping countries to leapfrog generations of telecommunications technology and empower their people.”

As the movement advances, though, many government-owned telephone companies, which dominate wired service in most African countries, are fighting a rear-guard action.

Internet telephony “is presented as the salvation for business and society in Africa,” said Oystein Bjorge, chief executive of Ghana’s national telephone carrier. “It is not.”

Mr. Bjorge, a Norwegian telecommunications consultant hired recently to do battle against the Internet telephone services, said it wreaks havoc with the economics of phone companies. Here in Ghana, the national phone company is waging a sporadic campaign against its own citizens who use the Internet to make or receive telephone calls from America and Europe, periodically turning off the lines of those suspected of doing so.

Three years ago, the government even jailed the heads of some of Ghana’s leading Internet providers. Though later exonerated by a court, the dissidents fear another crackdown. “Internet telephony is changing the whole power structure,” said Francis Quartey, chief technology officer of Intercom Data Network and one of those jailed. “The dangerous thing is that the power elite is responding out of fear and ignorance.”

Despite this opposition, American companies are experimenting with new ventures in Ghana, seeing if enthusiasm for Internet telephony can transform local technology entrepreneurs into a force for genuine economic advancement.

For example, Rising Data Solutions, which is based in Gaithersburg, Md., introduced a call center here last month, where a dozen Ghanaians — trained in American-style English — are trying to sign up customers in the northeastern United States on behalf of a wireless phone company. At least three other call centers are expected to open in Accra later this year, all relying on Internet telephony instead of telephone carriers.

Internet telephony also aids companies like Newmont Mining , which is searching for gold in Ghana, the second-largest gold producer on the continent, after South Africa. To help manage its operation, Newmont plans to link its operations within Ghana to the wider world through the Internet.

Acquiring reliable phone service is essential, foreign investors say, which is why they bypass the government-owned telephone company. Ghana Telecom has an order backlog of more than 300,000 lines; bribery is the fastest — indeed, usually the only — way to obtain new service. Even those with service suffer from frequent failures and inaccurate bills. Roughly every other call results in a busy signal, an indicator of what Ghana Telecom calls “network congestion.”

Under the circumstances, Internet telephony — which has failed so far to make serious inroads into the American telephone market because of lower voice quality — seems positively fabulous to many weaned on Africa’s creaky systems.

“Internet gives me control over my destiny,” said Sambou Makalou, chief executive of Rising Data. “My business needs to be up 24-7; we can’t get a busy signal.”

Busy signals are common in Ghana because the public phone networks are overloaded. As recently as four years ago, a dial tone was among the scarcest resources in the country, which had fewer than 200,000 phone lines in a nation of 19 million.

Few people realized how much demand for phone service was waiting to explode until Ghana’s most successful wireless company, Spacefon, was introduced in 1996. Before it started, executives thought the potential customer base was probably 3,000 people, at most 12,000. Seven years later, Spacefon has more than 300,000 subscribers.

The country’s total phone lines are now approaching 750,000, roughly two-thirds of them wireless. But completing a call is still difficult, especially between rival networks (there are five), and neither Ghana Telecom, nor the country’s legal wireless operators offer a reliable connection to the Internet.

In response to these limitations, private businesses have built scores of data networks, relying on satellite- and radio-based Internet-access systems.

But telephone service became appealing because of the high network costs: Companies typically pay from $2,000 to $5,000 a month for a robust connection to the Internet, an enormous sum when economic output per person is only about $400 a year.

“I’m paying $2,000 a month for Internet access, so I want to use the technology to the fullest,” said Austin Addo, chief information officer of Ghana Link Network Services.

Mr. Addo’s company, which began operations here early this year, helps the government calculate duties on goods imported into the country, relying on frequent updates, via the Internet, of product values. The company’s partner is based in Madrid, so Mr. Addo uses a standard device to make international calls over his computer network. He is not billed for the calls, which would otherwise cost him roughly 75 cents a minute, including the cost of line.

His telephone calls are not really free, since he pays $2,000 a month for Internet access. But he is still saving lots of money because he can speak as long as he wants without worrying about the cost. “Five years ago to get this level of communication,” he said, “I’d have to fly to Spain — several times a week.”

Such productivity gains have been a cause for celebration almost everywhere in the world. But official anxiety over Internet telephony is widespread throughout Africa and particularly rife in Ghana. At a public meeting in May, held at the largest Internet cafe in Accra, a regulator defended the government’s latest campaign against those who use the Internet to bypass authorized telephone providers. “The players have been apprehended or will be apprehended soon,” said Bernard Forson, deputy director of the National Communications Authority of Ghana.

The government is not opposed to any particular technology, Mr. Forson explained, but merely wants “regulated entities to provide telephone service,” not unlicensed and untaxed wildcatters.

Other African countries face a similar quandary, aware of the appeal of Internet voice service but fearful of its damage to the state-owned telephone company.

Neighboring Togo, for instance, allowed Internet telephony until the end of last year, when the government cracked down on behalf of Togo Telecom. So many foreign calls in tiny Togo were being routed over the Internet that a small “com” center — ubiquitous in Africa, offering calls for a fee — took in $10,000 a month from just two phones.

But some African countries have embraced Internet telephony as a way to end decades of frustration. In Nigeria, for example, the government has not officially approved telephoning over the Internet but looks the other way, partly to ease congestion on its authorized networks.

Still, the legal confusion surrounding Internet telephony has prompted some to avoid it. Affiliated Computer Services , which is based in Dallas, set up shop in Accra two years ago, relying on a private satellite connection to the Internet that supports both a data and a telephone network. Today, it is one of Ghana’s largest private employers, with 1,200 people and plans to hire another 700.

While the company runs call centers in Jamaica, Mexico and India, it does not intend to do such telephone work in Ghana. “We can’t use satellite lines” because of the brief delay in hearing a response, said Tom Blodgett, the executive who started the Ghana operation. And for now, he adds, “there is no suitable wired alternative.” A legal one, anyway.

But for all their efforts to restrain the movement, African telecom companies are probably fighting a losing battle.

“Periodically the police confiscate equipment or the telco turns off phone lines,” said Russell Southwood, a London-based consultant and publisher of a weekly newsletter on Africa’s telecom scene, Balancing Act’s News Update. “But it’s about as hopeless as Canute trying to turn

Google vs. Evil

The world’s biggest, best-loved search engine owes its success to supreme technology and a simple rule: Don’t be evil. Now the geek icon is finding that moral compromise is just the cost of doing big business.

By Josh McHugh

Life used to be so much easier for Sergey Brin. In the autumn of 1998, he and Larry Page unleashed Google with a clear mission: Help computer users find exactly what they want on the Internet. Newbies flocked to the site, grateful for a simple search engine that was both powerful and intuitive. More sophisticated techies came to appreciate Google’s computational elegance and its willingness to shun the “portal” model that crammed ecommerce down their throats. Within months, Google became one of the most popular sites on the Web – and not long after that, “Google” became a verb. Today, Internet users spend about 15 million hours a month on the site. Google.com logs more than 28 million visitors each month, nearly as many as Yahoo! and MSN. Nearly four out of five Internet searches happen on Google or on sites that license its technology.

Google owes its swelling popularity to deft algorithms that quickly divine what’s useful on the Web. But there’s more to it than that. At Google, purity matters. Over the years, Brin and Page have resisted pressure to run banners, opting instead for haiku-like text ads and unintrusive sponsored links. They’ve taken a stand against pop-ups and pop-unders and refused ads from sites they consider to be overly negative. All the while, they’ve stubbornly kept the Google homepage concise and pristine. On just a faint whisper of a marketing campaign, the company pulled in an estimated $70 million last year (a third from licensing fees and the rest from ads).

The Google strategy appeals to every engineer’s sense of The Way It Should Be. Build the best entry in the science fair. Do not tart it up. Do not make it more clever than it needs to be.

But a funny thing is happening on the way to Internet adulthood – Google’s awkward teen years. The company’s growth spurt has spawned a host of daunting questions that no data-retrieval system can easily answer. Should Google play ball with repressive foreign governments? Refuse to link users to “hate” sites? Punish marketers who artificially inflate site rankings? Fight the Church of Scientology’s attempts to silence critics? And what to do about the cache, Google’s archive of previously indexed pages? In April, the German national railroad threatened legal action to remove an obsolete site containing sabotage instructions.

Most major companies refer to a detailed code of corporate conduct when considering such policy decisions. General Electric devotes 15 pages on its Web site to an integrity policy. Nortel’s site has 34 pages of guidelines. Google’s code of conduct can be boiled down to a mere three words: Don’t be evil.

Very Star Wars. But what does it mean?

“Evil,” says Google CEO Eric Schmidt, “is what Sergey says is evil.”

Of the Google triumvirate, Schmidt makes sure the company stays on course financially and strategically; Page keeps busy in the R&D lab, cranking out new features; and the 29-year-old Brin, in his role as Google’s conscience and head policymaker, spends his days gripping the moral tiller – and in so doing, imposes his worldview on everyone else.

That puts Brin at the flashpoint of most of the major Internet-related controversies. He knows his decisions have far-reaching consequences. He feels the pressure that attends Google’s growing power. “I do get fairly stressed,” Brin says. “I’d like to feel a little less scrutinized.”

Google has succeeded by adhering to one, pure principle: Do good by users. Now, for the first time in its history, Google is facing rifts between what’s good for users and what’s good for Google. And Sergey Brin is finding that purity just doesn’t scale.

II.

Don’t be evil. Brin has had to refer back to those three words quite a bit over the past year. Governments, religious bodies, businesses, and individuals are all bearing down on the company, forcing Brin to make decisions that have an effect on the entire Internet. “Things that would normally be side issues for another company carry the weight of responsibility for us,” Brin says.

In March, lawyers representing the Church of Scientology requested that Google stop linking to a Norwegian anti-Scientology site called Operation Clambake. The church claimed the site, xenu.net, displayed copyrighted Scientology content and that by providing links to the information, Google was in violation of the Digital Millennium Copyright Act. Much to the dismay of many First Amendment fans, Google caved, removing the offending pages from its index.

In May, Anita Roddick, the outspoken British founder of the Body Shop, blasted Google in her blog for yanking a text ad for her site. Google’s explanation: Roddick had called actor John Malkovich a “vomitous worm” in her blog, violating a Google policy against accepting ads for sites that are “anti-” anything. After Roddick protested, Google offered to reinstate the ad in exchange for a promise from Roddick that she would remove the Malkovich reference from the first page of her site. When she refused, Brin had a decision to make: Should he give in and accept Roddick’s money, or stand by his principles? He chose his principles.

Three months later, Daniel Brandt, who runs google-watch.org, attacked PageRank, the algorithm at the heart of Google’s vaunted system, accusing the company of being unfair and undemocratic. Brandt urged the FTC to investigate Google and regulate it as a public utility – as a company that, in effect, controls access to the Internet’s natural resources. The mainstream press tended to dismiss Brandt as a webmaster spurned by a low Google ranking, but in the online forums and weblogs, many agreed with his assertion. As far as search engines go, Google has become the only game in town.

Then in the first week of September, Brin found himself pulled into matters of foreign policy. He received several emails from users telling him that the Chinese government, worried about political dissent in the weeks before the 16th Chinese Party Congress, had shut down access to the site. “Our Chinese traffic was down by a factor of five,” Brin says. “We were blocked.”

Brin was no expert on international diplomacy. So he ordered a half-dozen books about Chinese history, business, and politics on Amazon.com and splurged on overnight shipping. He consulted with Schmidt, Page, and David Drummond, Google’s general counsel and head of business development, then put in a call to tech industry doyenne Esther Dyson for advice and contacts. Google has no offices in China, so Brin enlisted go-betweens to get the message to Chinese authorities that Google would be very interested in working out a compromise to restore access. “We didn’t want to do anything rash,” Brin says. “The situation over there is more complex than I had imagined.”

Four days later, Chinese authorities restored access to the site. How did that happen? For starters, the Chinese government was deluged with outcries from the nation’s 46 million Internet users when access to Google was cut off. “Internet users in China are an apolitical crowd,” says Xiao Qiang, executive director of New York-based Human Rights In China. “They tend to be people who are doing well, and they don’t usually voice strong views. But this stepped into their digital freedom.”

The quick workaround: Chinese authorities tweaked the national firewall, making the new Google China different from the site that was turned off. Today, Chinese who use Google to search on terms like “falun gong” or “human rights in china” receive a standard-looking results page. But when they click on any of the results, either their browsers are redirected to a blank or government-approved page, or their computers are blocked from accessing Google for an hour or two. “They have a new mechanism that can block the results of certain searches,” Brin says. Did Google help China find or obtain the filtering technology? “We didn’t make changes to our servers” is all he’ll say.

In late October, a report by two Harvard researchers revealed that Google had begun filtering its own servers to block users in Germany, France, and Switzerland from accessing sites carrying material likely to be judged racist or inflammatory in each country. Neither Brin nor anyone else at Google will talk about about the preemptive self-censoring moves in Europe.

In the wake of these international incidents, members of Google’s loyal, tech-savvy constituency began to question the company’s motives. “I am a little on the fence about Google’s latest actions,” wrote Brian Osborne, a staff writer for Geek.com, a news site. “On one hand, I understand Google’s stance that it must remain in compliance with German and French laws. Nevertheless, Google is putting itself on a very slippery slope.”

III.

“What is this?” asks a visitor squinting at the form he must sign before proceeding to the cafeteria at Google’s Mountain View, California, headquarters. “An NDA? To have lunch?”

The receptionist shrugs. “This is Google,” she says. “They’re crazy that way.”

The Googleplex, contrary to almost every written account of the place, is hardly a haven of easygoing geek whimsy. The cafeteria is adorned with a tie-dyed banner, but the Google employees aren’t humming any Dead songs. Most of them appear deadly serious. Brin’s second-floor office overlooks a courtyard festooned with empty hammocks. A book about Enron rests on his coffee table.

Brin’s designation as Google’s policy maven is relatively new. He, the big thinker, and Page, the mad scientist, complemented each other and shared nearly every role in Google’s early years. “Larry was always the driver,” says Scott Hassan, who did much of the programming for the original Google. “A big part of his role was going around and yelling ‘Why can’t it do this? Why isn’t this working?'” Brin would sit next to Hassan and watch him write code, pointing out errors and taking an occasional turn at the keyboard.

The frenetic Page looked at all the popular engines at the time and decided they were going about search the wrong way. By relying on HTML code – meta tags as well as page text – they would bring back all sorts of irrelevant information and open themselves up to massive manipulation by webmasters looking to increase their own rankings. Brin took Page’s observation and ran with it. He figured the best way around the problem was to harness the vast repository of human judgments already preserved on the Internet in the form of hyperlinks. “Most people search for local maximums – like figuring out how to get the best car, the best immediate situation,” Hassan says. “Sergey is always searching for global maximums.”

By 2001, Google’s breakneck growth convinced Page and Brin it was time to establish a more rigid structure. Page handed over the CEO title to Schmidt and became copresident with Brin. The move freed up Page to focus on developing his knack for product development (as a child, he crafted a printer out of spare parts and Lego blocks). Brin’s passion for the big picture made him the natural choice to spend time on Google’s growing role in the world.

Which means Brin’s views on politics and policy matter quite a bit. Not that he’s willing to talk. He tells me he listens to NPR on his morning drive to work. I think Democrat and ask about his voter affiliation. He says he votes across party lines. Independent? He smiles and tells me there’s no easy shortcut toward figuring out how he comes to his decisions about good and evil. And even if there was, he wouldn’t let me in on it. If I succeed in figuring out exactly what he considers good and evil, people who don’t care about Google users might start gaming him the way they try to game his search engine.

Born in Moscow and raised in the suburbs of Washington, DC, Brin grew up listening in on conversations at the dinner parties thrown by his father, a math professor, and his mother, a NASA scientist. Talking about his decisions and the values he holds most dear, Brin chooses his language carefully, but one word he repeatedly comes back to is “useful.” And while Google’s policy decisions over the past year look a bit haphazard at first glance, they begin to make more sense in a worldview where usefulness is the paramount virtue.

Aside from the indisputable goodness of causing hard-line Communist Party officials to say the word “Google” to one another for a few days, it’s difficult to say on which side of the good-evil line the company’s China resolution falls. Brin seems at peace with how it all turned out. “Political searches are not that big a fraction of the searches coming out of China,” he says. “You want to look at the total value picture that a search engine like Google brings and think of all that it’s used for.”

But Xiao Qiang, the activist, thinks the company should have taken a firmer stand. “Ultimately, China’s state censorship mechanism will have to submit to this growing demand for freedom from Chinese netizens,” Xiao says. “It’s important to protect integrity, particularly for an Internet firm.”

On the same day that China blocked access to Google, it also flipped the switch on AltaVista. AltaVista issued a defiant statement to the media and went on to list several ways to access the site. Months later, AltaVista is still blocked. Brin figures that by meeting China halfway, Google remained available – and useful – to visitors and also preserved its advertising revenue there. “You have to look at the total value picture,” he says.

What about the Scientology mess? Didn’t Google give in too easily? Jennifer Urban, a fellow at Berkeley’s Boalt Hall School of Law and a member of Chilling Effects, an organization formed to document attempts to stifle speech on the Internet, says that from a legal standpoint, Google’s hands were tied. “To qualify for safe harbor protection from liability, they really have to err on the side of taking down the link,” Urban says.

In fact, Google didn’t fold entirely. After consulting with Brin, Kulpreet Rana, Google’s head of IP, found a way that Google could comply with the law without letting the Scientologists erase their critics from the Internet. The solution: When Google gets a request to remove a link under the safe harbor provisions of the DMCA Section 512, it substitutes a link to a form on the Chilling Effects’ site. The form contains the Web address of the page in question, and anyone still interested in the site can direct their browser to the address.

Does abiding by the letter of a bad and flimsy law absolve Google from charges that it squashed free expression? Cindy Cohn, legal director of the Electronic Frontier Foundation, is certain that a vigorous legal challenge would put an end to the steady flow of Section 512 filings Google receives but admits she doesn’t expect Google to devote its resources to such a broad fight. And while some cheered Google’s workaround as evidence of a rebellious bit of payback – a small point scored against the enemies of unfettered speech – the move is another instance of Brin choosing the path of usefulness over a righteous crusade.

IV.

If Brin’s code of good and evil permits the company to negotiate with sovereign governments and allows for some legal meddling from unpopular religions, there is no wiggle room – no gray area whatsoever – when it comes to those who attempt to subvert the power of Google to their own commercial ends. One thing Brin is sure of: On the side of evil lies trickery.

I ask Brin to imagine, for a moment, running his company’s evil twin, a sort of anti-Google. “We would be doing things like having advertising that wasn’t marked as being paid for. Stuff that violates the trust of the users,” he says, describing a site that sounds not unlike the pay-for-placement search site Overture. “Say someone came looking for breast cancer information and didn’t know that some listings were paid for with money from drug companies. We’d be endangering people’s health.”

The anti-Google might also be more amenable to the growing business of “optimization,” the altering of Web sites so that they rank higher in search engine results. For a fee, there’s help for a Dallas plumber who’s unhappy that his site is on the 17th page of results when someone types “Dallas plumber” into Google. An optimizer will tweak the site in such a way that boosts it to, say, the 3rd page of results.

To pull this off with Google, an optimizer needs to understand how the company’s search mechanism works. Google uses 100 or so closely guarded algorithms to determine its search results. The best known of the lot is called PageRank, which allocates relevancy to a page according to the number and importance of pages linked to it, the number and importance of pages linked to each of those pages, and so on. One ploy is to create “link farms,” in which an optimizer gets clients to link to one another, racking up relevancy points. In general, optimizers make a living by guessing what Google regards as important. The way Brin sees it, the optimizers are co-opting Google’s bond of trust with its users. He regards optimizers the way a mother grizzly might regard a hunter jabbing at her cub with a stick.

Every month, when Google updates its index and its mix of algorithms, it rakes a disruptive claw across the optimizers’ systems. In the industry, the monthly shuffle is known as the Google Dance, and Brin doesn’t mind letting on that if Google ends up dancing all over the optimizers, so much the better. “When we change and improve our technology, things get shuffled around,” Brin says, “and sometimes it has a disproportionate effect on optimization sites.”

Consider the case of Bob Massa, a former solid oak dining room furniture salesman who lives in Oklahoma City and runs SearchKing, an optimization company he started in 1997. Last summer, Massa received a rare gift from Google in the form of the Google Toolbar, a software program that lets users perform searches without going to Google.com. More important for Massa, the Toolbar shows the approximate PageRank, on a scale of one to ten, of whatever page a user is visiting. It was the first time since Brin and Page were in grad school that they’d shared so much technical information. After years of watching Google’s every move like an Etruscan high priest trying to augur divine intent from cloud formations, Massa had a piece of the goods. On August 9, Massa started selling optimization based on PageRank.

After the Google Dance of September 20, most of Massa’s customers suddenly found themselves in a heap at the very bottom of Google’s 3 billion site index. It seems that the improvements Google had made included a severe downgrade of sites with links to SearchKing. Massa’s customers, needless to say, were very, very unhappy. “Everyone thinks I’m the biggest idiot in the world for making Google mad,” Massa said in October.

He filed suit a few weeks later, charging that Google downgraded his customers’ scores in a deliberate attempt to put him out of business. The suit asks for an injunction forcing Google to restore the scores to pre-Dance levels, and seeks $75,000 in damages. “It’s a classic good versus evil thing,” says Massa, turning Brin’s framework back on Google itself. “I knew they wouldn’t like it. I didn’t think they’d go so far as to wipe out all these little people.”

The day Massa’s suit was filed, the reaction from the Slashdot crowd and most other forums was predictably vociferous, with posters stumbling over themselves to craft metaphors painting Massa as a criminal suing his victim. But gradually, a surprising number of people, while careful not to look as though they were defending Massa, began tagging the search engine as a Google-opoly. It’s hard to sympathize with a David as parasitic as Massa, but Slashdotters tend to be uneasy with Goliaths of any stripe, especially when their methods are kept secret.

And the real problem with Massa is that he’s simply the termite Brin is able to see. There are thousands more behind the wall, invisibly boring away at the very structure of Google’s house. “It’s easy to become overly obsessed with those kinds of things,” Brin admits.

It would make things a lot easier for Brin if the world’s webmasters would just act as though his site didn’t matter, but that’s not human nature. There’s no way around it – as long as Google remains the search engine of choice, the arms race between Google coders and the hordes of optimizers will go on.

V.

As proficient as Google is at revealing information, Brin is adept at keeping key morsels under wraps. In a way, that makes a lot of sense. Although the obvious image of Google is one of accumulation, the essence of data retrieval is just the opposite. Google is about division and subtraction, narrowing down billions of choices before revealing the most promising. Brin’s world isn’t as simple as visible equals good, hidden equals evil. Google’s effectiveness as a search tool depends largely on how well it’s able to shroud the site’s inner workings from the commercial interests that clutter so much of the Internet today.

But here’s the thing: If Brin thinks his job has become more difficult over the past year, it may soon become near impossible. In September, at the height of the China controversy, Google legal eagle Drummond spotted an article about the prospect of a Google IPO, which, the story said, might be the spark to ignite the dormant public offerings market. Drummond forwarded the story with some sardonic comments. In his office, Brin tries to find the email for me but can’t. He notes the irony in that, and goes on to paraphrase the note: “Oh, OK, now we’re going to reform the Chinese government – and on top of that, we’re going to fix Wall Street.”

Schmidt claims the company is in no rush to go public, but his appointment and the hiring of CFO George Rayes last August were unmistakable steps in that direction. When the IPO comes, it will bring riches – and more problems.

As a private company, Google has one master: users. As a public company, there are shareholders to worry about. And more than happy users, shareholders want ever-greater profits. Thus far, Brin and Page have succeeded in standing up to pressures that might compromise Google and the user experience. Google’s influential stand against pop-up ads extends beyond its own domain – the company rejects advertisers whose links take Google users to pages that feature pop-ups. (AOL followed suit in October, announcing its own pop-up moratorium.) But when Google becomes a public company, shareholders might force the site to take a more amenable position, if the price is right. After all, for several years, Yahoo! refused to accept anything but fast-loading banner ads, claiming that it was looking out for users. That policy lasted until right about the time that the company’s stock price began to cave.

Such pressure could cause Brin to rethink other policies, like his decision to refuse all alcohol and tobacco advertising. The fact that Google accepts advertising for adult content sites is an intriguing commentary on Brin’s morality: Cigarettes and booze are evil; porn is not. It’s a policy that would become progressively harder to defend were Google to go public. Then there’s the Google cache to consider. Today’s users love having access to a warehouse of information that was once published on the Internet but has since disappeared. Some information goes away for a reason, though. The cache could get Google in trouble, and Brin & Co. could soon find themselves facing all sorts of libel, defamation, or copyright lawsuits.

Increased competition may also cause Brin to do other things he’s loath to do. So far, Google has gotten by without much in the way of competition from the other Internet superpowers. But in May, Yusuf Mehdi, the head of MSN, said he views Google as “more of a competitor than a partner” in the effort to become the default homepage on millions of browsers. What if, as Google.com solidifies its position as the focal point of the Internet, Yahoo! and AOL begin to rethink the millions in licensing fees they pay to what has become a top competitor? Brin may be forced to make the kind of concessions that he’s thus far reserved for international governments.

The utilitarian manner in which Google has achieved its success has made it a sentimental favorite among the code-parsing set. Tech-community sites like Slashdot are almost uniformly pro-Google. Those with the temerity to bring lawsuits against Google ultimately feel the burn of online flames, watching their servers wither under the quasi-zealous wrath of thousands of engineers defending one of their own. But as Google is forced to make more concessions to realpolitik, its bonds with that idealistic constituency will inevitably continue to fray.

And without any sort of technological lock-in, it would be very easy for Google’s visitors to simply start using other search engines. Fast Search & Transfer, based in Norway, boasts a 2.1 billion-page index at www.alltheweb.com, and its search engine works as quickly as Google’s. What’s more, it does a complete crawl of the Internet every 7 to 11 days compared with Google’s 28 days. What if an influential group of politically active netizens makes a rousing case for boycotting Google on the grounds that it is anti-free speech and in cahoots with repressive governments? How long can a hugely powerful company that plays its decisions so close to the vest and refuses to justify itself publicly count on the devotion of the average information-hungry Web user?

It’s inevitable that a company of Google’s size and influence will have to compromise on purity. There’s a chance that, in five years, Google will end up looking like a slightly cleaner version of what Yahoo! has become. There’s also a chance that the site will be able to make a convincing case to investors that long-term user satisfaction trumps short-term profit. The leadership of the Internet is Sergey Brin’s to lose. For now, at least, in Google we trust.

Josh McHugh (josh [at] buzzkiller [dot] net) wrote about Wi-Fi campus life in Wired 10.10.

———–

Also, if you have no idea what I’m talking about, check this:

http://www.howstuffworks.com/stinger.htm

-Ian.

Begin forwarded message:

> From: Ian Andrew Bell
> Date: Fri Nov 29, 2002 2:49:47 PM US/Pacific
> To: fork [at] xent [dot] com
> Subject: Re: The air industry’s worst nightmare
>
> On Friday, November 29, 2002, at 08:42 AM, Tom wrote:
>
>> The question then is asked, are we thankfull for bad training or
>> faulty
>> equipment?
>
> Well, both.
>
> The Battery/Coolant Units (BCUs) on the guidance systems of Stinger
> shoulder-fired missiles only have a half-life of about 10 years. They
> contain liquid Argon, which super-cools the seeker head on the missile
> prior to launch in order to make it sensitive to heat (the Stinger is
> a heat-seeking missile which can approach a target at any aspect). As
> such, most of the original set that were provided by the CIA for the
> Afghan war have either been used, or have had the Argon contained
> inside the BCU go flat, like the can of spray paint in your garage.
>
> Even if you could find pure liquid Argon at the 7-11 in Peshawar you’d
> still have to disassemble the Stinger, including removing the missile
> from the sheath. None of this is easy to accomplish, of course,
> because General Dynamics designed the missile system and intends to
> make a lot of money performing maintenance on them. Among other
> things, if you pull the missile out from its protective sheath you’ll
> probably damage the seeker head, which makes the missile useless.
>
> The Stinger’s effect on Us is largely based on its mythology. Most
> historians acknowledge the Stinger as having been the single most
> effective technology in kicking the Soviets out from the Afghan
> conflict. And the arrival of these in the theatre of war definitely
> led to the turning point for the Afghan rebels, rendering Soviet
> aircraft (especially their helicopters) operationally ineffective.
>
> On a slow moving commercial airliner at a few hundred feet altitude,
> no Stinger with a functioning guidance system would ever miss.
>
> The reason the Stingers missed the El Al flight may be because the
> homing system was bypassed and the missile fired directly. The bad
> guys probably just pointed the rocket sheath at the plane, crossed the
> wires, and prayed. Or worse, they probably fired the missile with no
> Argon super-cooling the seeker head. You might as well take an RPG to
> the end of the runway and practice your deflection shooting. You can
> probably buy those in Dallas at the local gun shop.
>
> -Ian.
>
>

———–

Ten years ago grunge musicians and college-age Cassandras who had never held a day job preached that corporate America would crush their generation’s soul and leave them without a pension plan. Films like Singles and Reality Bites chronicled their transition from college graduate to Gap salesclerk.

A few years later the core of Generation X–the 40 million Americans born between 1966 and 1975–found themselves riding the wildest economic bull ever. Salesclerks became programmers; coffee slingers morphed into experts in Java (computerese, that is)–all flush with stock options and eye-popping salaries. Now that the thrill ride is over, Gen X’s plight seems particularly bruising. No generation since the Depression has been set up for failure like this. Everything the dot-com boom delivered has been taken away–and then some. Real wages are falling, wealth continues to shift from younger to older, and education costs are surging. Worse yet, for some Gen Xers, their peak earning years are behind them. Buried in college and credit card debt, a lot of them won’t be able to catch up as they approach their prime spending years.

FORTUNE recently encountered the bitter and (now) experienced voice of Generation X in a chain restaurant in suburban Dallas. Age 32 and piercing-free, Karen Doss has found out that the alternative rockers were right. To pay for college she worked full-time as a secretary at Pillsbury world headquarters. After graduation in 1993, she accepted her sole job offer as an advertising copywriter, even though she despised the industry. She finally quit last year to get her real estate license so that she could better support her husband while he fulfills his dream of owning a bar.

Halfway to pension age, she has just $5,000 in a 401(k) and $20,000 in home equity. Ideally, someone her age should have at least $100,000 stashed away. “I don’t have a corporate pension, and they aren’t what they were,” she says. “Social Security is obsolete and ineffective. And I already know that I’m going to have to have a private health-care plan. I’m angry that I can’t seem to get a break.”

Yes, yes, yes, we know what you’re thinking. The free-spending slackers have only themselves to blame, since the dot-com boom should have made them rich for life. On the surface that’s true. A 30-year-old today is 50% more likely to have a bachelor’s degree than his counterpart in 1974 and earns $5,000 more a year, adjusted for inflation. But that’s where the good news stops. He also has more in student loans and credit card debt, is less likely to own a home, and is just as likely to be unemployed. His salary probably topped out during the boom, whereas his predecessor’s rose throughout his career. Social Security will start to evaporate as he turns 50–or before, if the lockbox gets raided–so he’ll have to depend almost completely on his own savings for retirement. The comparison with a 30-year-old in 1984 isn’t any rosier.

Gen X “has done worse than their parents have done according to a number of dimensions, like net worth and home ownership,” says Edward Wolff, a New York University economist who studies trends in income and wealth. In a recent paper Wolff notes that young households lay claim to a smaller percentage of total U.S. wealth than they did in 1989.

Additionally, the inflation-adjusted median net worth of a Gen X household ($9,000) is lower than that of a comparable household in 1989, according to the Federal Reserve’s Survey of Consumer Finances.

Silicon Valley and Manhattan aren’t the only stomping grounds for disgruntled young professionals. FORTUNE interviewed more than 50 Gen Xers in Dallas, Louisville, and Seattle, with jobs ranging from construction manager to software engineer (see table). Battered by the economy and the bad luck of being born between Madonna and Britney Spears, they’re Generation Wrecked.

The kids who toted STAR WARS lunchboxes are the most highly educated generation in American history: Almost 60% of Gen Xers have some college education, and 6.6% have graduate school degrees. The Census Bureau calls their pursuit of higher education the “Big Payoff,” since historically a college-educated full-time worker earns 1.8 times more over his lifetime than a high school graduate.

When you can’t find a job or pay your student loans, though, college can seem like the Big Rip-Off. Today, the median student loan debt is at its highest level ever, $17,000, compared with $2,000 when the baby-boomers were in their 20s. According to educational lender Nellie Mae, graduating students average $20,402 in combined student loans and credit card debt. Those who have borrowed to pay for professional school, especially doctors and lawyers, are increasingly likely to have immense debt that is not reflected in proportionately higher salaries. Twenty-eight percent of those surveyed by Nellie Mae had combined undergraduate and graduate student debt of more than $30,000, and for 22%, their loan payments ate up more than one-fifth of their monthly income.

After midnight at a young professionals party in Louisville, Steve Flores, 31, and his wife, Jessica, 32, mingle, while the rest of the revelers line up for last call. Steve is a communications specialist for the party’s sponsor, Brown-Forman, the big distiller. While working full-time, he is also pursuing an MBA. Although Steve worked to help pay for college, five years after graduation he has $40,000 of undergraduate debt to pay off; Jessica, an art therapist and professional harpist, has $50,000 in student loans. “I haven’t started paying back my student loans for undergrad because they’re deferred. I’m not taking any student loans for grad school,” Steve says. He isn’t so jovial when he thinks about the total tab. “We’re dreading the day we actually have to start paying.”

Those Big Payoff estimates rely on what 50-year-old college graduates make today to guess what 50-year-olds will make 20 years from now. That’s not all that useful. “Whereas their parents experienced rising wages over their lifetime, Generation X may not. So college may have been a bad investment,” says Wolff, the NYU economist. Adds Bruce Tulgan, a Gen Xer and founder of RainmakerThinking, a consultancy that studies labor trends: “I had a college president say to me, ‘I don’t know how much longer I can pull this off because people will start to ask, Is it worth this much money to be that much smarter?’ ”

A common misconception is that Gen Xers left college to find work in the dot-com go-go years. Not so. In fact, the climate in which they began working–the late ’80s and early ’90s–was pretty similar to today’s: an economic downturn followed by a jobless recovery. Gen Xers managed to survive in that environment by denouncing long-held workplace tenets like corporate loyalty.

It would take a skilled cartographer to map 28-year-old David Li’s convoluted dash through org charts at both big and small companies. After college in 1996, Li started out as an analyst for Accenture, worked as a health-care IT consultant for two other firms, and then became CTO of Claimshop.com, a medical claims processor.

Now, unemployed for a year and living in Dallas, Li says, “I’m not really looking for an entry-level position. But I need to realize that the job market now is a lot tighter than it had been when I first graduated from school.” He’s looking at jobs that pay around $50,000, 40% below the salary he was collecting at Claimshop. “I’m just hoping for something more along the lines of what you would normally expect to see from someone who has been out of school for four to five years.”

Li will probably find a job–at 6%, the unemployment rate among Gen Xers is around the national average–but he and others are discovering that previous experience means next to nothing. Jenifer Garcia is temping as a bartender in Seattle after having worked as a hardware tester for Intel, a programmer for MSN, and a manager for Barnes & Noble’s online division. Now the 29-year-old is applying for a full-time file clerk position again. “I feel like I’m 18 again, and not in a good way. I’ve gone through all of my savings and moved back in with my mom.”

Even some of Seattle’s dot-com winners have been humbled. Across town in a tonier part of Seattle, Rachel Best-Campbell and Alex Campbell bought their $700,000 house with proceeds from Alex’s stock options. They sold most of their shares of Cache Flow, now known as Blue Coat Systems, at $96. (The company’s stock now trades at $3, after a recent reverse split.) The Campbells’ luck dried up in April, when Alex was laid off, rehired as a contractor without benefits, then rehired yet again as a full-time employee but at a lower level.

After months of wondering whether Alex would have a job, Rachel feels no guilt about getting rich during the boom. “Clearly someone out there had $96 to pay for that share of stock, and they wanted it, and they bought it. My dad likes to say, ‘My 25-year-old daughter–she’s retired now.'”

Those who didn’t fulfill their early-retirement dreams in the late ’90s are beginning to realize that they may be in the workforce longer than their parents. “You don’t find many 65-year-olds working in advertising, so at some point the money must get good enough for people to retire. I don’t know,” says Luke Blackburn, a 32-year-old senior manager at a Louisville advertising firm. Luke has a house–he used money he received as a gift for a down payment–but little in the way of retirement savings. (Total: $0. He should have $50,000. Although he and Doss are the same age, his savings estimate is less since his living expenses are lower.) “I don’t see much future return for investments, either stock or even Social Security benefits. I plan for the kids, but there’s not much room for extra.” Luke doesn’t have a financial planner either. “The brokers only call you if they think you have money,” he says. “They started calling me when they saw my job promotion announced in the newspaper.”

At least the brokers’ attempts aren’t laughable. At a recent Department of Labor summit, a group of the country’s top economists, politicians, and marketers decided that the best way to get Generation X to plan for retirement was through targeted advertising campaigns. Slogans included “It’s your money, it’s your choice, and it’s your future,” “Save for independence day,” and “Wazzup.” Whatever.

Instead of creating catch phrases, the government should focus on creating retirement options that give Gen Xers –and baby-boomers too, for that matter–the flexibility to withdraw money from their accounts if they’re temporarily unemployed, starting a business, or just taking time out, say financial planners. Most important, the retirement accounts need to be portable to match the winding job paths of Gen Xers.

A New York Life Investment Management survey of high-net-worth Gen Xers found that the respondents thought they needed $2 million to retire. Not even close, says Beverly Moore, who conducted the study. A Gen Xer who makes $100,000 and wants to retire at 59 needs $7.3 million net of taxes to sustain that lifestyle. (That means saving $2,600 a month and assumes an 8% return.) The truth of the matter is that very few Gen Xers are saving enough to reach even the $2 million benchmark.

And a return to economic good times doesn’t guarantee that most Gen Xers will reach that level. Remember that many of the problems that existed in the early ’90s including falling real wages and the slow disappearance of the middle class, weren’t erased by the boom. In the case of wages, they only inched up during the dot-com years. (Economists are still trying to figure out why they didn’t rise more. One possibility: the influx of skilled foreign labor.) And of the wealth the boom created, the richest households gobbled up a disproportionate amount.

Back in Dallas, Karen Doss says she’s angry that she hasn’t been able to rely on family, an employer, or the government to help with her future. “The biggest problem with Social Security is that we have no control,” she says. “Sure, you can put your money away, but Enron will not go away, and there is going to be another WorldCom. [Corporate America] will still lie and steal our money.”

So is Karen prepared? On this subject, she does her best slacker impression. “I can’t even tell you how much I have in my 401(k), and I have two of them floating out there with companies. I’m just going to hope it works out at this point. I just wanna die young so I don’t have to deal with it.”

———–

RICHARDSON, Texas — Two years ago, J. Michael Dugan spread the word to his fellow optical engineers in North Texas that he was starting a company that could make them all rich. The telecommunications business was hot, and optical engineers were the hottest commodities of them all, commanding big signing bonuses and six-figure salaries.

Mr. Dugan, a burly Texan with more than 20 years under his belt at the giant French equipment maker Alcatel SA, was persuasive. So many flocked to his annual summer party in July 2000 to learn more about Latus Lightworks that he ran out of food. The start-up took off quickly, hiring 120 employees as the engineers raced to devise ways to squeeze more data and voice traffic through a hair-thin strand of fiber-optic glass.

Then the bubble burst.

A few weeks ago, when all those engineers gathered again in Mr. Dugan’s backyard, it was to commiserate and swap job leads. Ken Maxham, a cheery 59-year-old who comes from a long line of engineers, was worried about his unemployment benefits running out as his savings dwindle. He had cut back expenses as much as possible, but basic health insurance costs $750 a month and his wife was putting off going to the dentist for a toothache.

David Wolf, who at 37 is one of the youngest optical engineers around, was counting the days until his second start-up was due to run out of money. The fresh-faced father of three young children was pruning expenses such as his daughter’s gymnastics lessons and worrying about the future. Mr. Dugan, whose work as a temporary consultant was about to end, was contemplating returning to school at age 50.

And the party was buzzing about a cruel twist of fate: Two of the former colleagues had just gone head-to-head for one of the few remaining telecom jobs out there. The one in the more precarious financial position didn’t get it.

“When I see someone I haven’t seen in a while, my first question is, ‘Do you have a job?’ ” said Bruce Raeside, a 46-year-old Michigan native who also worked as a Latus engineer. “It’s almost like Detroit in the ’70s.”

In many ways, it’s worse. Like the massive declines in the nation’s steel, oil and automobile industries in decades past, the disintegration of the telecom business is leaving deep wounds in the U.S. work force. But labor historians say telecom stands out for the unprecedented speed of the boom-and-bust cycle. After telecom was deregulated in 1996, it quickly expanded by some 331,000 jobs before peaking in late 2000. Since the downturn started, though, companies have announced layoffs that have wiped out all those new jobs and more — a total of well over 500,000 workers, according to a tally by The Wall Street Journal. By contrast, it took two decades for the ranks of the United Auto Workers to fall to 732,000 from 1.5 million, as the auto industry was forced to become much more efficient in the face of foreign competition.

The number of telecom jobs grew faster and has fallen much harder than the overall job market, according to James Glen, an economist with Economy.com, a West Chester, Pa., research firm. He says the 12% drop in telecom jobs is still gaining steam, especially as the rout claims bigger and bigger companies such as Global Crossing Ltd. and WorldCom Inc. And the economic and human cost of the telecom bust far exceeds that of the highly publicized Internet crash, which by and large involved smaller companies.

Telecom has turned into one of history’s biggest bubbles because so much money poured into the industry during the stock-market boom, creating some $470 billion in debt and a vast glut of capacity. Once a sleepy industry known for its modest growth, telecom took off like a rocket in the late ’90s as companies rushed to lace the world with ultra-fast fiber-optic networks to carry an expected onslaught of Internet traffic. But after a frenzy of spending and hiring, it suddenly became clear in mid-2001 that the Internet wasn’t growing nearly as fast as the 1,000-fold annual increases originally predicted. The huge run-up has now been replaced by a merciless ride down. Rumors of foreclosures and marital problems have replaced word of the latest IPO. Some laid-off telecom workers are even turning up in local homeless shelters.

So much money was spent buying telecom gear during the frenzy that there is now seven years’ worth of excess inventory, says Lonnie Martin, chief executive of White Rock Networks, a Richardson start-up that is trying to hang on. He values the excess supply at some $160 billion. “That is an awful lot of exuberance to get rid of,” he says.

There are few places where the hangover is more severe than here in the sun-blasted plains north of Dallas. Back during the boom years, developers couldn’t throw up office buildings fast enough to keep pace with the demand. Telecom jobs doubled to 90,000 between 1995 and the peak of the bubble as big names such as Cisco Systems Inc. stormed into town and companies such as Nortel Networks Corp. quadrupled their work forces. Money was flowing so freely that countless start-ups emerged from nowhere. Now, vacancy rates in the area known as the Telecom Corridor have shot up to 34%. The vast expanses of empty parking lots make the area look like a corporate ghost town.

And the layoffs keep coming. While the Latus workers left stable jobs to join the start-up, they know plenty of colleagues who stayed behind and lost their jobs anyway. Big suppliers such as Nortel and Alcatel had already shed half their work forces before WorldCom’s collapse. Xalted Networks Inc. just laid off most of its Texas engineers and issued a press release saying it’s moving its software development to Bangalore, India, where it plans to hire 70 engineers in a bid to conserve cash.

Change of Fortune

The change of fortune is especially jarring to telecom’s engineers, many of whom chose their profession because it promised a stable paycheck and seemingly limitless growth. Mr. Dugan, who has degrees in physics and electrical engineering, shifted into telecom after down-sizings in NASA’s space program and the Texas oil industry, where he built support electronics for the oil diggers. Mr. Raeside came on after surviving layoffs at semiconductor companies through the 1980s.

During the boom, no one was more in demand than the eclectic band of optical engineers who had worked for years in relative obscurity transmitting millions of calls a second through tiny hairs of glass by using lasers of light invisible to the human eye. Their value soared in a climate where any innovation could quickly become the next hot IPO. Suddenly, companies were paying salaries well over $100,000 to lure top talent.

As some of the early start-ups were purchased by bigger companies in deals that made their founders rich, the walls of the big companies started to feel a bit confining. Mr. Dugan left Alcatel in January 2000, contemplating a few offers. He was hanging around his house one February morning when he was contacted out of the blue by Michael Zadikian, who had sold his company, Monterey Networks, to Cisco Systems Inc. for $500 million in 1999.

Mr. Zadikian had a new plan to launch four start-ups at once to develop a single system that phone companies could use for all of their needs. He wanted Mr. Dugan to focus on the so-called long haul, the cross-country and undersea networks that companies were racing to build. Mr. Dugan signed on.

Latus was following in a rich tradition. The former MCI Communications Inc. started here in the late ’70s, using the microwave technology deployed by Collins Radio to challenge AT&T Corp.’s monopoly. But microwave towers couldn’t be placed more than 35 miles apart because of the curvature of the earth, leading MCI to push for advances in fiber-optic technology. In the early ’80s, MCI embraced a new technology that used light waves to transmit calls on one strand of fiber, a signal that was so strong MCI only needed to install equipment to boost it every 1,000 miles or so. Companies rushed into Richardson to help give MCI a competitive edge, a customer and supplier relationship that has flourished for years, but which is now in jeopardy with the collapse of MCI’s parent, WorldCom.

The goal of Latus was ambitious: to develop a system that could send data and voice traffic at higher speeds and longer distances than ever before. Optical networking was all abuzz about a technology called dense wave division multiplexing that could divide a single strand of fiber into dozens of channels by beaming different colors of light through it. The Latus system had 256 different channels, and was designed to go more than 1,200 miles before the signal needed to be boosted again so it could continue on.

The company didn’t have a name until March, when Mr. Dugan, flying home from a convention, bought a Latin-English dictionary at an airport and found the word, “latus,” meaning wide, open and expansive. Latus got $28 million in its first round of funding in July of 2000 from a group of investors eager to follow Mr. Zadikian’s success.

David Wolf knew he was at a turning point as he decided whether to follow his former boss to Latus. A friend of his late father told him to do it because it was a once-in-a-lifetime opportunity. His wife, Susan, advised making the leap as well. The couple had just purchased some property north of their home in Allen, Texas, to build a bigger house to accommodate their expanding family.

“Do it, as long as you get paid the same,” Susan told her husband. Even if it didn’t work out, the couple reasoned that Mr. Wolf could take advantage of one of several other job offers. In a matter of days, Mr. Wolf found himself plunking down $5,000 on his credit card to buy a laptop so he could start work at Latus on Monday. He remembers thinking with amusement that there were no expense forms to fill out to get the money back, but he trusted Mr. Dugan.

They found some office space to rent and began hiring workers. “At every board meeting, they said, ‘Spend the money. Spend the money,’ ” recalls Mr. Wolf. “The engineers were the hardest to find.” Latus had to pay at least $100,000 and as much as $120,000, plus bonuses, for the very senior engineers, who often were playing more than three job offers off each other. The start-up handed out 20% of its total shares to employees, and those who joined first were given the largest number of options. Another start-up raffled off a new BMW to employees who referred their colleagues to the company.

Money seemed to be everywhere — and in many senses, it was. Capital spending by telecom companies at the height of the boom soared to 106% of revenue, according to Mr. Glen at Economy.com. Historically, that figure had been just 38%.

At Latus, Ken Maxham jumped in as employee No. 11, Bruce Raeside as employee No. 16 and Amy Dugan as employee No. 47. Mrs. Dugan joined despite some nervousness about perceptions of nepotism. A respected engineer herself, she reasoned that joining her husband’s company meant the two could work day and night on Latus.

The scramble began to get the technology ready for viewing at Supercomm, a huge trade show in June of 2001. The engineers sometimes put in 20-hour days working out kinks in the product, which looked like a bunch of refrigerators full of wires. “Our entire existence was hinged on meeting our claims,” says Mr. Dugan. “I said there is no way we can go back and tell the board there appeared to be fundamental physics limitations.”

What they didn’t realize was that economic limitations would prove the bigger threat. Latus was launched precisely at the peak of the bubble, when money was flowing so freely in telecom that companies seemed willing to buy anything.

It was at Supercomm in Atlanta that the big buyers began showing signs of flagging demand. Mr. Dugan had to rush out to California in the middle of the show to give a funding pitch to one of the original investors. But the second round of financing for Latus became almost impossible as the spigot of capital shut off. An initial public offering became a distant dream.

Mr. Dugan was hoping the uncertainty was just a slight fluctuation in the market. That summer, the Dugans threw an even bigger party than before, and catered it for the first time, bringing in trays of Mexican food under a huge rented tent. Around that time, Susan Wolf started joking with Mr. Dugan about whether her husband would still be able to bring home a paycheck. An accountant, she works only during tax time to bring in a few thousand dollars. Mr. Dugan knew it was a joke, but he began feeling the responsibility on his shoulders.

The first layoffs hit the Richardson area in the middle of 2001. Susan Wolf began hearing stories in her neighborhood. “It is like the black plague. You hear it happening to someone your neighbor knows. Then her brother is laid off, and then it happens to you,” she told her husband over dinner recently with a guest. “It goes from the edges in — closer and closer — and finally gets here.”

The company was notified that it lost its funding the morning of Sept. 11. Mr. Dugan was waiting for a conference call among the Latus board when the second plane hit the World Trade Center, but the call went on as investors notified them that funding would be cut off. The founders were given only 10 days to find a new backer — an almost impossible feat because any potential bidders would have had to travel by bus to visit the company, since all flights were grounded for days by terrorism fears. “We got bombed twice,” says Mr. Dugan, who doesn’t blame the investors for their decision given the climate.

On Sept. 12, he called an all-hands meeting and told his fellow Latus employees to update their resumes and finish their projects. “It’s not over, but it doesn’t look good at all,” he told them.

On Sept. 23, Mr. Dugan invited them all to the local Omni Hotel, the place where all the deals were made during better times. He told them that Latus would be shut down, and its doors padlocked as the bank cleared out its equipment. Everyone would lose their jobs immediately. Mr. Dugan made arrangements to sign them up for unemployment benefits on the spot, and then the Dugans paid for drinks for all. “A lot of these people were my friends. They didn’t hold it against me,” says Mr. Dugan. “But I felt badly for them.”

When Latus shut down, the Wolf family cut down on spending as they could. They stopped hiring babysitters and going out to dinner, and cut back on groceries.

David Wolf stayed at home looking for a job, surprising his children the first time that he picked them up from school. To fill his time, to the slight irritation of his wife, he plunged into another start-up with Mr. Dugan and a few others to develop another optical product. They even paid out of their own pockets for Mr. Dugan to present the product at a show in California earlier this year. But with the downturn so pronounced, they received little interest. The fiber-optic amplifier is now sitting in a case in Mr. Dugan’s living room.

As he flung himself into a new start-up, Mr. Dugan and others held meetings at the local Starbucks, which had become the unofficial meeting place for the unemployed. He says it is a strange experience to run into people during the middle of the day. “It is like, ‘Oh, this happened to you, too,’ ” he says.

Mr. Maxham started looking for a job immediately. Even though he is 59, he was perhaps worst off financially because he had invested 30 years of retirement savings in tech stocks after leaving Alcatel. “I was a believer, but that was a bad decision,” says Mr. Maxham, who lost “hundreds of thousands” of dollars. Initially, he was mystified by the scarcity of jobs because he had turned down seven job offers before joining Latus. As he searched every day for jobs, unemployment benefits of about $300 a week kicked in.

To ease the tension, Mr. Maxham plays electric bass guitar in a band of engineers called Signal2Noise. But it wasn’t much of an escape: At one point, half of the band was out of work. He felt increasingly guilty about his precarious financial situation and apologized at one point to his wife, Penny. “I am not angry,” she told him. “I sort of know that we are going to be OK.” Still, it was rough recently when she had to accept money from her parents to travel back to Idaho to visit them.

For months now, the bottom has been getting deeper. Robert Shapiro, head of the local telecom branch of the national engineering association, thinks the cycle must be at the bottom. “How could it get any worse?” asks Mr. Shapiro, who is working a temporary job after months of unemployment. Attendance at the group’s monthly meetings at the local Holiday Inn has doubled since engineers now have extra time. Mr. Shapiro estimates that half of the association’s members have been laid off. Meetings now start with job-hunting tips.

Part of the problem is that there is no place for the highly specialized engineers to turn as the tech industry continues to slump. Krish Prabhu, the former chief operating officer of Alcatel who lives in the Dallas area, hears the desperation as companies ask for money and former colleagues call for job tips. A partner with Morgenthaler Ventures, a venture-capital firm, Mr. Prabhu says it will be tough for any start-up to survive. “There is a nervousness about whether this downturn is part of a cycle or a fundamental change that telecom has become a commodity like the computer industry,” says Mr. Prabhu.

The ripples are spreading. The city of Richardson is being hit by a drop of more than 20% of its sales tax and a coming hit to its property taxes from all the empty office buildings. Foreclosures in Collin County, where many telecom workers live, are up 79% over last year, especially for homes worth $250,000 or more. The process is brutally efficient in Texas: Once a house is posted for foreclosure, the owner has only 21 days to come up with the money before it is auctioned.

Howard Dahlka, executive director of the Samaritan Inn, a homeless shelter in nearby McKinney, is seeing the shell-shocked faces of telecom workers who have lost their homes. “It is a whole new breed, what we are seeing here,” he says.

People in Trouble

Just in the past week, Samaritan has received 15 calls from people who are expecting to lose their homes, and he worries whether his 58-bed shelter will have to turn people away. Bill Kewin, an engineer who was laid off from WorldCom six weeks ago, says many WorldCom workers are in very bad financial shape because their 401(k) plans are worth virtually nothing. Many have put their homes on the market and don’t know where they are going next. “There are a lot of people who are in trouble,” he says.

As November turned into December, Mr. Dugan had found no work. His wife, Amy, thankfully did land a job for $100,000 a year at a telecom manufacturer, giving them a degree of financial stability they are grateful for. But it isn’t easy for Mr. Dugan, who has 13 patents to his name. He eventually got a little work consulting for a start-up, but expects to lose that job in about a month. Something permanent feels pretty far off. He’s even thinking of going back to school to study medicine. “I don’t have a sense of accomplishment,” he says. “I still have more to do.”

Across town at the Wolf household, tension rose as Christmas approached and David still didn’t have a job. The couple fretted about Christmas, and how to contribute to the gift-giving rituals with their extended family. They didn’t want to ask for help but were happy to accept cash gifts to help ease the pinch. Susan Wolf was most worried about the $10,000 bill for private school for one of their children with some special needs. Her parents stepped in to help foot the bill late last year.

Finally, in January, David got a job at Yotta Networks, another local start-up that is focusing on long-haul networks. He makes about $100,000 a year, but Yotta has gone through two sets of layoffs and is set to run out of its funding in a matter of weeks. Company officials are negotiating with a promising new customer, but the start-up is burning through $1 million a month.

The Wolfs estimate they have only enough savings to last three months. “I’m getting nervous,” says Mr. Wolf. “I’ve got a lot of people who are telling me just to get out of telecom. I don’t want to end up on the street again.” Susan Wolf says that if she needs to, she will resort to anything to pay this year’s school tuition. “I’ll move into an apartment if I have to.”

In April, Mr. Maxham thought his prayers had been answered. A company called Celion Networks Inc. needed an engineer. He quickly called to arrange an interview. Then a friend tipped him off that Mr. Raeside, his old colleague from Latus, was also in the running for the job. After agonizing the day before the interview, he decided to deal with the competition head-on. “I put a good word in for him,” says Mr. Maxham.

He felt the interview went well. The job seemed like a perfect fit. They needed a systems engineer — a big-picture guy who supervises the hardware design of a new product. But while he was waiting to see if he’d get another interview, the phone rang with some disquieting news. It was Mr. Raeside, letting him know as a courtesy that he’d been asked back for a second interview. He called again when he got hired.

The two men remain friends, but Mr. Raeside seemed sheepish when he spotted him this year at Mr. Dugan’s party. “I was lucky,” he said softly. “I am really convinced that it came down to either one of us. We were both perfect for the job.”

The job only lasted four months. Mr. Raeside was laid off on Friday.

The party itself was much tamer this year. Guests were asked to bring potluck dishes, and the biggest attraction was a big tent Mr. Dugan designed himself to save money.

Mr. Maxham attends job workshops run by various churches in the area. As every week passes, he notices more and more of the unemployed coming. Lisa Miller, the executive director of Career/HiTech Connection, the biggest workshop in the area, makes it her mission to keep spirits high. “You will find a job,” Ms. Miller told the crowd packing the Preston Hollow Presbyterian Church one recent Tuesday night as she explained the importance of networking. But as the telecom crisis deepens, Mr. Maxham becomes less convinced there are even jobs to be had. He sat with a grim look one recent night as job openings were called off, none of them for engineers.

As Mr. Maxham’s savings account dwindles to under $10,000, things are getting very shaky. He now buys only food that is on sale, looks for the cheapest gas and has put off replacing his wife’s 10-year-old car. He won’t go to a food bank because he says they give away too much meat, which he doesn’t like. Repairs are going undone. Recently, Mr. Maxham set out with sealant to repair some leaks on his roof. If he doesn’t find any work by September, he says that money will “get very tight.”

It already has. Penny Maxham says that she is trying to ignore a toothache because the couple has no dental coverage. She quit her job a couple of years ago to fulfill a dream of getting a Ph.D. in neuroscience, but she is considering going back to work.

Once there was a time when Mr. Maxham vowed never to leave engineering. His father was an engineer, and his three grown children are engineers. But a month ago, Mr. Maxham’s unemployment benefits ran out, and he is reconsidering. He recently applied to teach physics at a community college. A friend recently asked him to help install some computers in cars. He is open to anything because he really needs the money.

“It’s frustrating,” says Mr. Maxham, who in his 30 years as an engineer earned seven patents. An eighth just arrived in the mail last week. “I just enjoyed being an engineer so much. I was born like that and I passed it along to my children. … But maybe I will become a teacher, just like my dad did in the Depression.”

Write to Rebecca Blumenstein at rebecca.blumenstein [at] wsj [dot] com1

Hyperlinks in this Article: (1) mailto:rebecca.blumenstein [at] wsj [dot] com (2) <http://online.”>http://online.wsj.com/article/0,,SB10281640071014240,00.html>http://online. wsj.com/article/0,,SB10281640071014240,00.html (4) <3887 https://ianbell.com/2002/02/26/clear-channels-concept-of-local-radio/ Tue, 26 Feb 2002 17:55:22 +0000 https://ianbell.com/2002/02/26/clear-channels-concept-of-local-radio/ —— Forwarded Message From: “earthquake” Date: Mon, 25 Feb 2002 20:06:15 -0500 To: “Ian Andrew Bell” Subject: FW: and this is why we got into radio to begin with-for the personal contact with our audience…

When they fired him they triggered a clause in his contract that stipulates that they have to pay him $32K per month FOR LIFE. Crazy.

So if he has the balls to show up, he’ll be in Bankruptcy court alongside all of Webvan’s legitimate suppliers, trying to stake a claim on some percentage of the process from the sale of WebVan’s assets.

Any guesses who might buy those assets? I’m betting on Safeway-TESCO.

-Ian.

———- http://dailynews.yahoo.com/htx/ap/20010709/tc/webvan_bankruptcy_6.html

Monday July 9 12:34 PM ET

Online Grocer Webvan Shuts Down

By MICHAEL LIEDTKE, AP Business Writer

SAN FRANCISCO (AP) – Online grocer Webvan Group Inc. (NasdaqNM:WBVN – news) closed Monday and said it would file for Chapter 11 bankruptcy protection from its creditors.

The decision will lay off 2,000 employees and terminate the Foster City-based company’s service to 750,000 active customers in seven markets – San Francisco, Los Angeles, Orange County, San Diego, Seattle, Chicago and Portland, Ore.

Launched in mid-1999, Webvan had been one of the Internet’s highest profile businesses. Promising to revolutionize the supermarket industry by taking orders online and delivering groceries to customers’ homes, Webvan had raised about $800 million from venture capitalists and Wall Street.

But the company never came close to making money, losing $830 million since its inception.

“We are very proud of what we accomplished,” Webvan spokesman Bud Grebey said in an interview Monday. “We do believe we had a brilliant concept. We were just ahead of our time.”

Webvan’s board voted to close the company Friday, Grebey said, but didn’t start closing its distribution centers until Sunday. Webvan also pulled the plug on its Web site Sunday.

Each of the company’s hourly workers will receive their earned wages, accrued vacation plus a $900 gift from an anonymous donor, Grebey said. Salaried workers will receive their bonuses for the first half of the year, as well as earned wages and accrued vacation.

Although Webvan had pledged to weather the dot-com downturn, the company’s collapse didn’t come as a surprise. The company has pulled out of three markets – Atlanta, Sacramento and the Dallas area – in an effort to conserve its dwindling cash reserves.

Webvan had warned that it needed an additional $25 million by March 2002 to stay open, but a downturn in customer orders during the past three months forced the company to burn through even more money than management anticipated.

As of June 30, Webvan estimates it had $38 million to $40 million in cash, down from roughly $100 million on March 31.

The company plans to file for bankruptcy in the next week or two, Grebey said. Under the supervision of a bankruptcy judge, Webvan will draw up a plan for repaying its creditors.

Webvan listed liabilities totaling $96.5 million as of March 31 in its most recent quarterly filing with the Securities and Exchange Commission. Webvan dealt with 75 distributors and 500 vendors, according to its SEC filings.

The company’s list of unsecured creditors will include Webvan’s former CEO George Shaheen, who resigned in April, triggering a clause in his contract that required the company to pay him $31,250 per month for the rest of his life. With the bankruptcy, Shaheen “will have to get in line with the rest of our creditors,” Grebey said.

To pay its creditors, Webvan plans to sell its remaining assets. The company had invested heavily in a network of huge distribution centers to support its delivery service. The largest centers, spanning roughly 350,000 square feet, are in Carol Stream, Ill., Suwanee, Ga. and Oakland, Calif.

The bankruptcy represents a final blow for Webvan’s devastated shareholders. The company’s market value has plunged by $7.2 billion since Webvan’s November 1999 initial public offering at $15 per share. The stock peaked at $34 shortly after the IPO, but has been stuck below $1 per share all of this year. The stock’s last trading price Monday was 6 cents per share.

In a sign of the company’s desperation, Webvan’s shareholders last month approved a 1-for-25 reverse stock split in a last-ditch effort to boost the shares above $1 and avoid being delisted from the Nasdaq Stock Market.