After the Gold Rush
Jessica Nelson didn't need a new car. Her Deep Ellum loft was a short walk from her job as studio manager at Broadcast.com, so she didn't need a car at all, really. Walking from her parking space would have taken longer than the trip from her front door. But she had money, more than she ever would have dreamed of. She'd already paid off her student loans, so why not? And if you have the money, you might as well get your dream car. So she did--a beautiful blue Jaguar.
Nelson didn't really need a new house either, but since she'd already bought the car, she needed a reason to drive it. And if you have a sweet Jag like that, you can't just park it in the driveway of any old house. So she bought her dream home, too, a $300,000 stunner.
The dream car and dream home turned out to be just that. Six years later, they're gone. So is the rest of the money. But Nelson isn't as bitter as you'd expect. In fact, she's not bitter at all. She never expected to be rich in the first place.
"Getting the money was just so ludicrous," Nelson says, on the phone from Denver, where she works in real estate development. Once again, she lives in a downtown apartment, not far from the office where she's employed. Things have come full circle. "How upside-down the market was and how inflated things were--it just didn't make any historical, financial sense."
It's not like Nelson took the job at Broadcast.com for the money. None of them did. It was enough for the company's young workforce, most of them just out of college, to have a job they actually liked and a boss they liked even more. Mark Cuban was the kind of guy who would tell his employees to knock off early and head over to The Bone, where he'd drop his credit card on the bar and buy everyone a few rounds. Broadcast.com was comfortable and cool, where business casual included purple hair and pierced noses.
Beyond that, all they signed on for were salaries that topped out below 30 grand and a stack of stock options, which was like getting an IOU for an IOU. It could have been Monopoly money for all they knew. Nelson and her friend Angela Swenson, who got her the job at Broadcast, were clueless about the stock market. This was before investors were throwing cash at any company whose name ended in "dot-com," a year or so before Broadcast's initial public offering (IPO) in July 1998 set market records and turned a bunch of low-wage kids into paper-thin millionaires.
"Everybody's screaming and freaking out," Swenson says. She ran the company's audio books department. "I mean, honestly, when they gave me the stocks, I had no idea what they were. I knew I had stock options, but I didn't know what they meant. So when everybody is screaming and freaking out, we were kind of like, 'Why is everybody screaming?' And they were like, 'We just became instant millionaires.'"
They didn't know then that when they said "instant," they meant "for an instant." But back then, no end was in sight. First, the stock split, doubling their money. Then, in April 1999, Yahoo! bought the company, padding their bank accounts even further. Why wouldn't the Broadcast.com employees think they were blessed? You hit a home run your first time at the plate, sure, you might chalk it up to a lucky pitch. Hit another one? That's when you start to think they'll all be home runs. That's what the dot-com boom--and bust--was all about.
Nelson and Swenson tried to be careful, socking away enough to pay their taxes. They didn't want the IRS crashing their party.
"If they can get rid of Al Capone, that's not who you wanna screw with," Swenson says.
"I was really conservative about things," Nelson says. "I was like, 'I don't want this to come back and bite me on the butt later, so I'm just going to take care of it now.'"
It bit anyway. After the first year, they'd already spent all the money they had set aside. Which started Nelson and Swenson on the same cycle most of the instant millionaires found themselves on a year later: selling stock to pay for the taxes on the stock they sold last year. Complicating matters was the fact that most of them had developed a taste for money and a latent talent to spend it. Swenson estimates at one point she was spending more than $20,000 a month. But what did it matter? They were all rich and getting richer.
"At the peak of the hysteria, it was easy to sit back and fantasize about cashing in all my options at such a high price," says Erik Courson, another Broadcast.com employee. "Because it certainly would have been a lot of money."
"Would have" being the key phrase. Soon enough, as if they had been cast in a predictable movie, the market crashed, and they weren't wearing seat belts. Even the people who were careful with their money had a lot less of it. And they all lost their jobs.
"For me, it was a great life lesson," says one of the careful ones, someone who was there from the beginning. He doesn't want to use his name; he's moved on. "To come out the backside of it now and still be OK. I did pretty well, but I know there were a lot of people there that didn't fare as well in how they handled their money. I think a lot of people down there were probably taken advantage of by people who were coming in and swooping in and seeing all these young millionaires, trying to tell them what to do with their money. I know a lot of people got really bad advice."
Nelson and Swenson know some of the people who were unlucky, the risk takers who spent too much imaginary money and ended up in very real debt. These are the people who've gone into hiding, who don't really want their story told. They're embarrassed. Nelson and Swenson don't have anything to be ashamed about. They don't have much, if any, of the money left, but they consider themselves fortunate to have made it in the first place. Luckier still that they don't owe anyone anything.
When Nelson sold her house last year and moved to Denver, she had just enough to settle her debt with the IRS. With Swenson's last round of stock, she was able to settle hers as well. Not only that, she had enough left over to keep her semi-retired after being laid off in 2001. She knows she won't be able to stay that way for long; her bank account, once flush with the success of the stock market, has enough for maybe one more year. She's starting to work again, dabbling in real estate and freelancing as a Web development consultant.
Courson may have come out on the other end better off than anyone else. He parlayed his stock into his own business, Good Records. "That's the lasting legacy of my Yahoo! stock options," he says. "I can't imagine any better way to have spent the money. Being your own boss, doing something you love--you can't beat it, really. The store has been open for four years now, and I'm looking forward to the next four."
Who knows? Maybe in another four years, they'll get another chance to be instant millionaires. Maybe this time it'll last. Whatever happens, they still won't be bitter about their short stay at the top. They're just glad they were there at all.
"I think some people there felt like we were promised a lot more," Swenson says. "I personally don't. I feel like I got everything I deserved. We were blessed. We were lucky. There was no way in hell we could have had that experience if we would have been born at any other time and the Internet had come around at some other date. We just got in on a good deal."
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