Trying Times for iXL
Every new industry goes through a boom-and-bust cycle. Some companies never recover from a bust. Others come back stronger. Time will tell how iXL comes through.
The last time I talked to Bert Ellis, he was riding high.
Ellis was building iXL through acquisitions, buying small design shops for its employees, not its book of business. He was selling services faster than he could execute the orders, he said.
Within a year of my interview, Atlanta commuters would see a giant “iXL” on the side of the former Equifax building, located at the so-called Brookwood split, where I-85 and I-75 merge heading downtown. Equifax’s old headquarters building dated from the 1950s, and Equifax itself was founded in 1899. It seemed iXL was here to stay.
As they say, easy come, easy go. A few days ago, iXL announced 850 layoffs, meaning its total workforce will soon be half of what it was just a few months ago. Since the start of the year, the stock has lost 98 percent of its value. For its third quarter, the company actually lost more money, $88.1 million, than it had in sales, $87.8 million. You can get away with that if you’re growing, but quarterly revenues were actually down nearly one-fourth, from $119.2 million in the previous quarter.
Ellis talked about “focusing on business-to-business” clients, on large clients such as BellSouth that can pay their bills. Analysts applauded, which they usually do when dramatic layoffs are announced.
To be fair, the same sort of thing has been happening throughout the industry. Outfits such as AGENCY.COM and Modem Media that looked ready to replace the big ad agencies and big systems integration companies a year ago are all flat on their backs. Dot-com clients that signed big contracts for continuing services are hanging up “Going out of business” signs. Others are very slow to pay their bills. The survivors are cutting back drastically.
But something else is going on. Most of the web builders were entrepreneurial agglomerations thrown together with confederate money. Their corporate cultures were snapped on, not built. They weren’t the institutions they claimed to be. Putting a sign on an old building doesn’t make you an old company.
Every new industry goes through a boom-and-bust cycle. The boom can be fun, but the bust is when you prove your mettle.
This is true for Ellis, sure, but it’s also true for you and me. What’s happening at iXL is just one example of what’s going on all over. I’m not surprised because the first story I covered was a boom, the Houston oil boom of the 1970s, and so I know how these stories have to end.
But it’s news to you as it’s news to Ellis. Some people never recover from a bust. It scars them. Others come back stronger.
Let me tell you the one thing that helps: This too shall pass away. When I said it a year ago, it must have sounded like a warning or, worse, a cut.
Today, it should bring comfort because it’s as true now as it was then.
