Dot-com party madness

There are some valid reasons for "the more, the merrier" corporate ethos. Recruiting hovers near the top of the list. "One factor that overrides all this [seemingly outrageous party spending] is that the labor market is so tight," says Paul Tiffany, a management professor who splits his time between the University of California at Berkeley and the Wharton School at University of Pennsylvania. "You could very easily see this as just another variation on running an ad in the paper, or holding a recruiting event."

Indeed, that was the logic of Luminant, which competes with Scient, Razorfish and other e-business consulting companies. The party at Club NV, adorned by 3-foot-tall blocks of cheese and make-your-own sundaes, was designed "to introduce Luminant to the community in a forceful way," says Guillermo Marmol, CEO of the Dallas company, but it was also a tool to woo job candidates. "We're hoping to hire about 60 more employees by the end of the year," Marmol says. "This is a way to let people get to know the company and what we're all about."

But it's not always just the host companies that are trolling the parties for fresh talent. At a party for music site WiredPlanet, (notable for its sparse offering: one drink ticket and no chow), I ran into Ralph Marx, founder and president of Acteva, a San Francisco activities-planning portal, who was on the lookout for "talented new employees."

Sitting on a furry couch in Club NV's VIP lounge, a boa draped over his blue sport coat, Luminant's Marmol, with his slight Texas drawl, pointed out that San Francisco's form of recruiting/networking didn't match the rest of the country's. "It's not representative of what we do in New York or Dallas," he says. Beenz.com and other companies disagree, having thrown parties in other cities. Marmol also distinguishes himself with his belief that a party's benefits could be concrete. "The real test of the party will be in the follow-up," he says, "whether or not we get at least 10 people to join the company."

Other host companies aren't as concerned with tangible results.

"Our party was a success in terms of who we got to come [reporters from prominent business publications] because it was very well done, but the key was that it was thematic," says Marc Benioff, CEO of Salesforce.com. "We wanted people to remember it was Salesforce.com and it was the end of software. And that's what we did."

Without extras like the faux protest and the B-52's, the party wouldn't have achieved its goal, he adds. "A party alone is probably a bad idea," he says. "There's a lot going on right now in terms of new companies getting started, and what every one of them needs to think of is a breakout strategy. Everybody needs to look for a way to get above the noise level. An event can help, but it can't just be an event, it has to be a whole strategy."

These days, party veterans like Sikes, the editor from PC World, say they don't always even visit the Web site of the company whose free drinks they've been sipping.

Companies need to "do something smart," says Newmark, of Craig's List. "They need to deliver a message briefly and creatively. Otherwise, they're wasting their money." Newmark says the parties need not be expensive to be successful, but spending more than $200,000 seems to be one of the more common permutations of "smart." That's what Acteva, iCAST, Salesforce.com and others have done, and it works, according to Benioff.

Marx, the president of Acteva -- which brought 2,000 people to Treasure Island in December for a $200,000 party to announce its new name -- agrees. More money, more people and more extravagant ideas are definitely the way to go. It's no longer enough to just "get a few hundred people together and give them a drink," he says, glancing around at the paltry WiredPlanet party.

Indeed, it's easy to get sucked into this line of thought, especially if you're part of a new company trying to also "get above the noise." But if you step away from the bar, the flashing logos, the DJ and the weird mix of young, old, geeky and hip, what you may realize is that buzz doesn't necessarily pay the bills. After all, if you go to enough of them, these parties become boring: the same people, drinking the same drinks at the same places. The only thing different is the company footing the bill.

"The general public is getting sick of the everyday launch party," Keenan says. "So companies are wanting something different" -- as long as it's big. Companies with 400 employees and companies with 40 employees all want to throw parties for 1,000 people, she adds. Instead of scaling back in response to party saturation, they're pushing forward.

But it's not clear that many of them are thinking about the impact that being different might have on their bottom line. A month after enjoying their food and drink, I asked Salesforce.com, Digital Island and Beenz.com for proof that I wasn't the only one who benefited: Were there partnership deals that formed at the party? Increased sales that followed? Did employee retention rates get better? What about new hires?

"We didn't really go out with goals like that in mind," said Kari Moe, director of corporate communications for Salesforce.com.

"These things are really hard to gauge," said Irwin Greenstein, Digital Island's director of public relations.

"The sense is that it's easier for us to get in the door [with potential partners] because of the parties, but it's very hard to measure these things," said Jasper at Beenz.com.

Tiffany, the management professor, says these companies view the parties as advertising. "There aren't methodologies to gauge their success," he says. And in the absence of figures, or an attempt to find them, the trend is riding high on its own fuel; parties spawning parties. After the Salesforce.com party, for example, In-Vision Communications, the Walnut Creek company that put it on, received calls from three other companies wanting something similar. In-Vision produces events, video and new media; the company is not in the party planning business, having done the party for a former client. But other companies wanted them anyway.

Can this exuberance last? If you listen to party planners like Keenan, or folks new to the party circuit and not yet jaded by the standard-issue $50,000 evening, the answer is yes. But even those who've been around for just a few months of dot-com partygoing seem to know better, often viewing these parties as snapshots of a peculiar moment in time, when dot-com money grew on venture-capital trees.

"It doesn't feel grounded or real," says Crolick of all this excess just before going to the WiredPlanet party two weeks ago. "I kind of have this feeling that I'll talk about it later in life. I go because these parties are such an example of our times: gluttonous, full high expectations, exciting and a lot of fun. But at the same time, it lacks some kind of meaning and responsibility."

Tiffany figures the party scene will get even more outlandish before it faces a correction like the one currently toying with the NASDAQ. "In America we do things until it's absolutely at the stupidest, most absurd level," he says. "You probably won't see these parties stop until you see a bunch of homeless drunks getting in and drinking alongside the regulars."

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