In dot.com valley, the 'pink slips' are falling like confetti

This is how the dot.coms die. First, the massage therapist is dropped. Then the free beer on Friday dries up. Juice and soda disappear from the office fridge. Overnight courier packages are banned. Employees are told they can take paid days off only on national holidays.

This is how the dot.coms die. First, the massage therapist is dropped. Then the free beer on Friday dries up. Juice and soda disappear from the office fridge. Overnight courier packages are banned. Employees are told they can take paid days off only on national holidays.

Then it gets really nasty: the rumours of lay-offs, the backbiting, last-ditch attempts to curry favour with management and dishing the dirt on the other guy.

"You know it's bad when senior management starts pulling people into their offices for one-on-one meetings," says Patty Beron, a flinty veteran of San Francisco's great internet adventures. "Then it's just a matter of time before you come into work to find your CD-Rom drive locked. Or maybe your access card won't open the door." She has a unique vantage point. Since leaving her hi-tech job and watching her friends get laid off by the dozen, she has organised monthly "pink-slip parties" - the slip being the American equivalent of the P45 - where the latest cull from the dot.com slaughter can meet, commiserate, socialise and try to find new jobs.

The scene is bizarre. In the nightclubs and trendy restaurants which a few months ago were hosting lavish corporate shindigs nightly, the same crowd of mostly young computer engineers, marketing executives, project managers and designers meet to face a different sort of music.

The recently unemployed, many clutching leather folders stuffed with carefully honed CVs for distribution, wear name tags with red dots, all the better to help them mingle with potential employers, who identify themselves with green dots and throw business cards around like sweeties.

A banner advertises the services of psychics and astrologers to help people divine where their next pay cheque is coming from. One enterprising soul has a sandwich board affair around her neck. Everywhere there is chatter, how recruitment firms are currently hiring, how engineers are still in demand, how business development experts might find their niche in three or four months once the shake-out begins to calm.

What makes the parties bizarre is that people genuinely seem to enjoy themselves. In fact, they are noticeably more buoyant than they were during the bashes thrown at the height of the boom, laughing louder, drinking more joyously, meeting far more people, almost the strange euphoria into which a mortally wounded casualty can float moments before death.

"It's trendy to be out of work now, because everyone is," says an older, more world-weary consultant, Debbie McGillis. "People have generally had good severance packages and the pain hasn't begun to bite. Give it another month and it'll all look a whole lot worse."

The figures certainly don't look good. An executive recruitment firm, Challenger, Gray and Christmas, calculates that 10,459 dot.commers in America lost their jobs in December, and a further 12,828 went in January. First the internet retailers and the advertising-driven "content" sites went under, now the backup companies, the consultants and design firms are crumbling.

Last week, Disney closed its online division and Amazon.com laid off 15 per cent of its workforce. This week, there were job cuts at Barnes & Noble's internet service, at the technology news site Cnet and at a internet support company called Infospace, where the lay-offs were sinisterly referred to as "realigned resources".

Etoys, the games retailer, announced its imminent closure, and there are rumours of big cuts in the offing at Yahoo!, hit, like everyone else, by the slump in advertising.

Cynicism is increasing. The internet was always a sector prone to a cocky sense of entitlement, to jobs, to stock options, to big-money windfalls, now some workers at troubled companies spend all day watching DVDs on their computers and visiting online chatrooms, biding their time and collecting their pay cheques until the inevitable lay-off notice arrives.

You sense the cynicism in the jokes on the web ("What comes after right-sizing and down-sizing? Answer: capsizing.") and in the near-glee with which the demise of much-hated management structures is often described.

Dot.com corporate-speak is widely mocked, "the wireless company that believes in self-expression, a company that provides strategic", "creative and technology solutions to some of the world's most successful digital businesses". That was the language that hoodwinked the venture capitalists in the first place. "Most of it was just branding and spin," says Debbie McGillis. "The venture capitalists bought it because none of them wanted to admit they didn't know what the hell it meant."

The cynicism extends to senior management, especially in companies where lay-offs are announced with 15 minutes' notice and bewildered employees are escorted to the door by security guards. Frequently, employees' computers are seized and their hard drives scoured for evidence of any indiscretion that could justify a firing without severance privileges.

"You can just imagine what morale is like around my place," said one still-employed dot.commer.

"One minute we were the cutting edge of the world. Now the Gestapo has arrived."