JOINING A DOT-COM was an act of faith in July, when technical writer Deborah McDaniel was job hunting. She wrote off the clueless startup full of rental equipment and no discernable business plan. And she couldn’t believe the arrogance of the interactive television venture (soon to go public) whose employees claimed exemption from needing a revenue stream because they were funded by Paul Allen.

She accepted an offer from Stamps.com, a company that planned not only to dominate the market for bar-coded postage but to broker most parcel-shipping business, as well. By that time, Stamps.com had already suffered a long decline in its stock price, plummeting from a high of $98 to $6.

The change in fortune didn’t deter McDaniel, who saw it as a correction from an outlandish overvalue. Stamps.com’s posh offices overlooking Bellevue took the entire fifth floor and impressed her. No cubicles—everyone had doors, good chairs, and nice computers on their desks. The technology was interesting. She was swayed by a 50 percent raise over her current salary, with thousands of stock options she could acquire through loyal service.

The brutal truth that the winds had shifted for dot-coms didn’t seem to have penetrated Sterling Plaza where the digi-grunts continued to put in their feverish working days. The stock plunge looked more like a buying opportunity. “I knew some people who were investing as heavily as they possibly could,” McDaniel says, noting their desire to buy even more through the company purchase plan than the SEC would allow. “You could always get a discount, and some people were socking every dime they could into it.”

Such was the endurance of the dot-com dream: the belief that everyone will want to live their entire life online, to purchase books, music, parsnips, Prozac, Barbie, and dog collars from little pictures on a computer screen. The inherent advantages of e-commerce seemed so certain that dot-com business plans invariably promised not just to carve out a profitable niche but to dominate their market segment. Dot-coms ruled the Nasdaq because they were expected to rule the world.

But the slide came rapidly at Stamps.com, as elsewhere. At the start of October, the chief financial officer left, then, a week later, the founding CEO was hurriedly replaced. Office gossip had it that the new boss, former Postmaster General Marvin Runyon, had previously earned the nickname “Carvin’ Marvin” for his job-cutting prowess. Ten days later, the ashen face of the hiring manager signaled the purpose of a mandatory all-hands meeting. Stamps.com axed 40 percent of its workforce. By the time McDaniel returned from the conference room to her desk, her computer was off the network. She had been there only 100 days.

Layoffs weren’t new to McDaniel. Her retraining for a high-tech job had been spurred by her layoff after 11 years as an associate buyer at REI. She took it in stride, but it wasn’t so easy for many others. “People who were younger were freaking out—this was their first big job,” she observed. She describes it as watching innocence broken in people who had been fending off headhunters and expected to jump nimbly from job to job. They had just finished an intense product effort and couldn’t reconcile this as their reward. “They looked like someone had just taken away their birthday.”

Worse, the savings they had sunk into the company they believed in continued to drop with the rest of the market—Stamps.com shares currently hover around $3. Its chief rival, E-Stamp, just announced the shutdown of its own postage business.

MCDANIEL TOOK a calculated risk, which she cautiously limited. The downdraft blew harder on Mark Donovan. After completing his PhD in political science at the University of Washington, he ran the UWired program for a few years. He watched an old friend from grad school, Tom Willard, make quite a pile as a tech executive for iCat and USWeb/CKS. Now Willard was preparing to launch his own B2B play, and Donovan decided in February to join the 10-employee startup, as a technical fielder and pinch hitter. “Worst case,” he expected, “we go out of business in a year.”

The new company, webStrategic, was to offer Web-based products and services to help coordinate business partnerships. Most of its potential customers, of course, were other Internet companies, where the complex frenzy of brand-building relationships often substitutes for profits.

The company offices were on the hardscrabble, unfinished fifth floor of the Maritime building on Western Avenue, which still houses many ambitious dot-coms. With expansion in mind, the firm leased a large space and subleased to another Web startup called ThinkView. Bhu Srinivasan, ThinkView’s blustery 24-year-old founder, displayed his Infospace wad by the Jaguar he parked out front. As the leaseholder, Willard received the property manager’s complaints and had to ask Bhu to stop playing soccer in the office.

“There was still a kind of manic sense that there was a lot of easy money from venture capital,” Donovan explains. WebStrategic executives spent months dancing with VC firms and honing their story, while Donovan worked without pay. Daily, he worked a full morning, broke for a midafternoon workout, then returned to put in another eight hours. It was vital to move fast. “There was a sense too that the bubble was about to burst. We had this very aggressive plan to get fully launched before that happened. We missed it by about a week.”

That week was the one that ended on April 14, when the Nasdaq dropped 1,124 points, losing 25 percent of its value. After that, the VC firm that was leading the company’s first funding round went quiet, and meetings with prospective clients and partners were cancelled. Finally, on the Thursday before Easter, Donovan surmised from watching Willard’s tense figure through the glass partition that things weren’t good.

Donovan was as worried about his friend as he was about the fate of the company. Privately, he asked, “Tom, things are bad, aren’t they?”

“Yeah.” Willard’s clipped answers weren’t comforting.

“How bad?”

“Bad.”

WebStrategic shut down one hour later, at 5pm, and the mood was like “there had just been an airplane crash.” The company had been so certain of its prospects that it had hired two people to start the following week. One person “had started two days before. For him, it was a surreal dream.”

The demoralized team gathered at J&M Saloon to commiserate. As they cried in their drinks, a pair of strangers pulled up chairs to their table. They worked for a dot-com that sold cars; smelling recruitment bonuses, they asked for r鳵m鳮 The clueless duo was met with cold stares.

Meanwhile, Bhu had come pounding on the door to ask for webStrategic’s office space. Matter-of-factly (“you gonna eat that?”), he asked for the company’s equipment, too.

WHAT EVER HAPPENED to the garage? DeepCanyon.com, where Steve Bieler started work in March as a senior editor, could afford fancy downtown digs as long as its parent, Hewlett-Packard, was paying the bills. DeepCanyon tried to resell other companies’ market research through the Web, charging a premium for the service.

Bieler was paid well, and he was beloved for having plenty of money to throw at writers, a big change from his experience with print. The company “brought out money like big bales of hay and set it right on fire,” Bieler grins.

In such an environment, it was easy to believe that there would eventually be a DeepCanyon IPO and the stock-optioned staff would hit the jackpot. Bieler, himself dismissive of the idea, found that many others, especially those under 25, were certain it would happen.

Before the April tsunami hit the Nasdaq, DeepCanyon had been rapidly hiring. Immediately after it, people who left weren’t being replaced. Assurances regularly came from senior management, but Bieler noticed they were cultivating a different group of customers or partners every few weeks. As an editor, he was privy to the numbers: The company wasn’t getting traffic, wasn’t generating revenue.

It didn’t take Hewlett-Packard long to deep-six DeepCanyon. The cutting-edge computers that once sat on every desk started to be collected. Small perks were withdrawn; even the water cooler was taken away a few days before the doors finally closed in October. Bieler is thankful that he never had to race to the bank to cash his paycheck, as have employees he’s known at other crash-and-burn companies. For him, the downdraft was more like a chill breeze.

THERE ARE ENOUGH disenchanted dot-communards to sustain psychotherapists like Janet Scarborough. Her practice, Bridgeway Career Development, specializes in counseling frustrated technology workers, from CEOs to recent college graduates. Her clients complain about the irritating “forced gaiety” at the office—pets at work or whiffle-ball tournaments—that masks the sacrifices of time and stress for the sake of elusive wealth. “There’s a lot of disappointed people,” Scarborough says.

Kelly Strand Anderson is one. She came to her Pioneer Square office one Monday to find that, along with the entire sales and marketing staff, she was being cut loose. A public relations/marketing manager for Workz.com, a resource site for small business, Anderson had been with the firm only since a little before Christmas. By Easter, the company’s next funding round fell through when the sinking market gave its investor cold feet. Profits suddenly mattered, and the staff cuts were needed to rebalance the scales.

Anderson’s shock was compounded by her antipathy toward the job she had just lost. Her role was to explain the company’s purpose to the press, but she was often stymied by the vagueness of what dot-coms do. “It’s not as if they make widgets. There are a lot of tag lines that are real common: ‘innovation,’ ‘interactive.’ You’re not sure what that means after a while.”

What had drawn her to the position—and kept her working at home every night after a full day—were the pre-IPO options that she accepted in exchange for a cut in pay. The prospect of riches was not an abstraction—she had seen it happen to friends. Her frustration and anger at having missed the boat are also directed at herself for her compromises: She hadn’t really been passionate about the product but had given all her energy to it anyway. “My kids were saying, ‘You’re always on the computer. Get off the computer!'”

She began seeking redemption. “I spent the summer trying different careers far from the high-tech industry. I started a fresh pasta company, making and selling fresh pasta to a local farmers’ market and to a local health-food store. I made and sold mosaic tile pieces. I started a novel. I even went to work for my husband’s construction company, installing floors and kitchen countertops and hauling construction scraps in the rain.”

She vows never to take a cut in pay for options again, and to make sure that she can quickly explain what her employer does.

ERIC TAYLOR (not his real name) believed in the promise of the Internet enough to set aside his recently earned medical degree. Instead of practicing as a doctor, in August 1999, he joined LiveBids.com, which had just been acquired by Amazon.com and aspired to put traditional, high-priced auction houses on the Web.

His new life was no easier than being a hospital intern: He spent three weeks of every month in airports and hotels, working sleep-deprived 18-hour days to help LiveBid’s customers with the new technology. Despite a grueling schedule, Taylor says he was excited to be building on an uncharted frontier, pioneering with a young, dynamic, and swelling company. And he acknowledges the motivational power of stock options.

He was out of town last January when his department was gutted from 36 people to five. With nothing left for him to do, he was reassigned to an overseas position with Amazon that was to start in April—when the market dove.

“I had moved out of my house, packed up everything I owned, done all the paperwork,” he says. “Then, when I was supposed to leave, almost to the day, instead of leaving, I was let go.” He had more to lament than unvested options: “I had no place to live.”

After crowding into his girlfriend’s small apartment, Taylor found a new job after six months, putting his MD and Web skills to use with a company that operates medical treatment centers. He’s left the dot-com world, insisting, “I just don’t want to be a part of any company that seeks to acquire money without earning it.”

Ed Lazowska, the chair of UW’s Computer Science department and a vigorous industry booster, dismisses the dot-carnage as a minor blip. He points out that there are still eight jobs for every computer science graduate and that plenty more startups are initiated every day.

Sure, B2C is dead, B2B is pass黠but tech entrepreneurs have already moved on to the next new, new thing. “They’re now called Internet enablers, technology enablers, wireless plays,” says headhunter Teresa Dahl, who specializes in staffing startups. The furious pace of her business hasn’t diminished, although she’s noticed greater caution.

Heather Johnston, IT Recruiter for Xypoint, an established wireless Internet services company, has noticed the difference. As recently as last March, she observes, companies like hers that didn’t have a dot-com after their name had a hard time attracting candidates. “Now it’s a complete 360; everybody has gotten so burned. I get a ton of r鳵m鳠all day long.”

Stubborn faith in technology keeps people chugging into the tech industry from a wide variety of professional tracks. Bieler’s experience hasn’t dampened his ardor. He cheerfully spouts well-worn platitudes about how “the Internet is going to be as common as anything in your house.” Donovan says he still believes in risk, that his was an empowering experience, despite the debts it left him with. Deborah McDaniel, for one, enjoys the thrill of working in the environment of new technologies and would readily do it again. “Maybe I’m crazy to be so optimistic,” she shrugs.