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By Melissa DePetris

Faced with interminable problem sets, reading assignments, and essay requirements, it wouldn’t be difficult for many Yalies to immerse themselves in Ivory Tower isolation, never emerging from the proverbial weenie bin. Yet the reality is a far cry from this example, for Yale students have not allowed the Internet revolution to pass by New Haven unnoticed or untapped. Current students, recent grads, and still others taking time off from their Yale studies, have managed to incorporate use of technology and entrepreneurship into their daily lives in a variety of manners.

This Catalyst ain’t a protein, but it does the company good

Catalyst Recruiting, the brainchild of Dave Millstone CC ‘99 and Eric Ries DC ‘00, is an internet startup business founded in the spring of 1999 that seeks to revolutionize the recruiting and job searching processes. The company maintains a web database with a twofold purpose: enabling students to find post-graduation job opportunities that may lie slightly off the beaten track, and helping smaller, startup, or non-profit employers lacking adequate funds or manpower recruit top students on a large scale. Catalyst employees are almost entirely Yalies—current students, students taking some time off, and recent grads—with the exception of the college representatives who attend one of the twelve or so colleges and universities with which Catalyst works.

Ries, who acts as Chief Information Officer, noticed as an undergraduate that many of his humanities major friends felt that their post-Yale opportunities could be found only in main-stream endeavors such as banking, consulting or professional school. “They felt it was either work for a major corporation or else wind up starving on the streets,” Ries said. He also found that many of his friends with technical backgrounds felt that their employment options were limited to working for Microsoft or other monolithic technology companies who spend fortunes on nation-wide recruiting but may not allow much creativity from their employees. He noticed that both groups felt disappointed with their choices, perhaps wishing to join smaller or fledgling businesses but without knowing how. The essential motivation for him and Millstone was their frustration at the information gap between students seeking jobs and employers wanting to hire top students.

“Two thirds of all Silicon Valley jobs are not technical in nature,” said Ries, “which is one of my favorite statistics.” He points out that many Internet based companies seek students with liberal arts degrees to write for them but that most humanities majors are unaware of these opportunities. Similarly, there also exist numerous tech positions with smaller business that can provide Group IV majors with more freedom than they would find working for a Microsoft. “Most startups begin as three people working out of a garage somewhere. Though these companies may be desperate for more manpower, it’s hard for interested students to find them. Catalyst’s job is to enable the two demographics to discover each other.”

Darby Saxbe, TC ‘99, graduated last May and began working for Catalyst earlier this month. She explained why the services Catalyst offers are different from competing web businesses. “There are a plethora of websites out there that cater to recruiting needs, but there are not many at all that offer benefits from the student side,” she said. Catalyst’s database requires each student user to fill out a personal profile that can contain much more information than an ordinary resume. Companies then do the searching instead of the students themselves, and students are informed about more opportunities than they might otherwise find. Finally, from the employer side, the database uses open source code, allowing searches to yield more accurate results than mere keyword searching.

Ries also noted that Catalyst’s profit model differs from that of the standard internet company. “We decided not to follow the ‘Yahoo! model,’ in which you gather lots of venture money and spend it as fast as you can, developing a big user base without knowing how or if you will ever make money,” he said. While he acknowledges that this strategy ultimately did turn profitable for Yahoo!, many other companies who also tried it are still operating at massive losses. “Our idea is to be an information company in which we build a revenue stream all along,” through the marketing of database subscriptions to employers. He estimated that they will begin earning more than they spend within a year or so.

Fee-fi-fo-fum, I smell the blood of startups, founded by James Gutierrez CC ’99, is another new startup business chartered and run by Yalies that hopes to reform the job market and company building processes. However, its specialized niche is the startup industry. “Our mission is to connect startups with the resources they need to grow, which includes teams, professionals, and students, and also to help students find positions with startups,” Gutierrez said. “As undergrads, we wanted to find jobs at startup companies, but we felt that it was a difficult process and that Yale did not have the proper resources to help us.”

Gutierrez said that MagicBeanStalk intends to be a community site for startups, which entails more than a standard recruiting site. The company maintains a student database for companies to search, providing information about them that is more directly tailored to the startup culture than a typical resume would permit. Gutierrez feels that understanding the startup culture, which can be very different from that of Wall Street or other communities, is essential to finding a suitable job in the industry. Indeed, one of MagicBeanStalk’s functions is to educate students about the industry’s culture, including how to evaluate being paid in stock options versus cash and other startup-specific topics. He also said that he understands that working for a startup can be much riskier than working for a long-established company, so he realizes his service must provide the student with very specific information about what benefits working for a startup can offer.

Gutierrez is adamant that his company is necessary both for startups to grow and for students interested in technology and the internet to find appropriate jobs. He feels that traditional recruiting services are of little use in this new industry. “Startup companies can grow from two people to eighty in less than a month—how can UCS [Yale’s Undergraduate Career Services] even be expected to keep up and inform their students about all their options?”

YES, I would like some money

But if you have turned to UCS, Catalyst, or and still can’t find the startup company you’d like to work for, why not build your own? That is precisely what Sean Glass, TD ‘01, and Miles Lasater, SY ‘00, co-founders of the Yale Entrepreneurial Society (YES) are prepared to help you do. Through the YES Y50K competition, you could win up to $30,000 to help you on your way.

YES. is an undergraduate organization that meets to help interested students launch their own businesses or learn more about the process. “It may seem like a broad goal, but we want to promote entrepreneurship at Yale and in the New Haven area,” said Glass. “Although Yale is moving in the right direction… the University currently does not have a lot of resources to offer budding entrepreneurs [the way Stanford, MIT, and Harvard do] and I was too lazy to transfer. So I approached Miles and, ironically, I decided instead to spend 30 to 40 hours a week starting our own entrepreneurial society here.”

The basic aims of YES are to help students gather business information, show them where to go for professional advice or funding, teach them how to write a business plan, and eventually to develop an online mentoring program. The organization also arranges for speakers with significant business experience to come to the Yale campus. YES can even help students find office spaces for themselves, as the Undergraduate Handbook prohibits operating a business out of one’s dorm room.

Though Glass and Lasater have seen business proposals pertaining to restaurant ideas or real estate development, for students, “the Internet is what is hot.” The Internet and accompanying technology have also greatly facilitated their end of the business. “The Internet has made it much easier to operate YES. We can help people build operating teams online, so that they are not restricted to services within their own geographic area. We can also get the best rates with respect to banking, accounting, and Internet service providers because we can choose from all over the country, too.”

Look who’s stocking

But if you’re looking to make a quick buck of this new economy, it may not be worth the hassle of trying to find a job or create a business. Why not just trade technology stocks? Especially in the case of highly-volatile IPOs and options, the opportunity exists to make a fortune, as countless casual traders across the country have demonstrated. With the online brokerages and concomitant real-time quotes, it becomes even easier. But, as those who have lost money online can tell you, the gains may be illusory.

Yale Economics Professor Robert Shiller recently wrote a book entitled Irrational Exuberance which deals with the phenomenon of Internet stock trading. He explained that the turnover rate, the total shares sold in a year divided by the total number of shares, has doubled between 1982 and 1999. Shiller suggested in his book that “the increased frequency of observed prices [due to the Internet] may tend to increase demand for stocks by attracting attention to them.”

In an interview he expanded on this idea that attention breeds demand. He pointed out that the Internet has been concurrent with record stock market levels. For example, the price/earnings ratio of the market, which shows the relationship between the cost of stocks and their real value, passed its previous 1929 record two years ago, just as the Internet was becoming popular. “I believe that the Internet has had an exaggerated influence on the stock market because our interactions with the Internet are so extensive and individual,” he said. “We are all learning to use the Internet, and spending a great deal of time with it. Owing to human psychology, the experience of working with the Internet ourselves causes this invention to occupy our minds much more than, say, the invention of nuclear reactors or of bioengineering ever could. The stock market boom in the past few years is probably partly due to the effects of the Internet on our thinking.”

Shiller was less certain about whether changes in the market really reflect changes in the economy. “The actual effect of the Internet on the profits of existing companies, that are priced by the stock market, is hard to pin down,” he said. “The effect could go either way, boosting profits or decreasing them. But, market price depends on investor expectations, not the truth about fundamental value, and investor expectations are very much stimulated by the Internet experience.”

Economics Professor William Nordhaus had a similarly cynical view. “The Internet stocks are the fin-de-siecle—and fin-de-millennium—investment infatuation. Most of these companies have no market niche other than novelty, and lack of familiarity breeds overvaluation. The odds on Internet stocks are probably better than those on the roulette wheel at Foxwoods, but my bet today would be on inflation-indexed bonds. The only real uncertainties are: one, how much longer the dizzy dance of speculative frenzy will continue and, two, what will bring speculators to their senses, or perhaps to their knees, but let's hope not to bankruptcy court.”

Shawn Bayern, SM ‘99, is a Senior Programmer at ITS, but he is not ready to jump into tech stocks. “I've just dabbled for the last month in online trading,” he said. “I'm doing very well so far—20% gain in a month, roughly—but it's traditional ‘technical analysis,’ and I haven't traded any Internet-related stocks.”

Bayern doesn’t think the Internet has made it any easier for entrepreneurship, which he considers “a value that's taught to some people irrespective of their abilities or interests...not right for everyone.” But he adds that this fact has not stopped people form trying their luck online. Bayern said, “I don't think it's any easier to be a good entrepreneur than it ever was; it may, however, be easier for people who are just looking for a quick buck to get it.”

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