DOT-COM LUSTER PROVES ILLUSORY FOR SOME.

Byline: Laura M. Holson and Katie Hafner Staff Writers

The recent tumble in technology stocks hasn't just unnerved investors, it has made some employees in the thick of the dot-com whirlwind look warily over their shoulders.

At a party Saturday in San Francisco, the room buzzed as a group of Stanford University business graduates, class of '99, commiserated about all the wealth they had lost in the market. Margie Backstrom, one partygoer, told of a party weeks earlier to celebrate the vesting of a friend's stock options. While such events usually have a festive air, Backstrom said, the woman bemoaned the fact her options amounted to far less than expected. Another friend has watched his company's stock plummet more than 60 percent since Jan. 1; his options are now worthless, his prospects unclear.

``People are questioning whether they made a mistake by giving up the security of a big salary for all those options that aren't worth much anymore,'' said Backstrom, who is immune to market gyrations so far because the Internet company she works for is still private. Her friends, she added, wonder ``whether it was such a good idea to not go to the Morgan Stanleys of the world.''

In the much-heralded exodus from old-line companies to dot-com start- ups in recent years, while some voyagers have found great wealth, others are finding the promised land does not offer the riches or satisfaction they had expected. Not everyone finds it easy to adjust to bosses who will not focus, workspaces that double as kennels and a culture in which self-conscious jollity comes at the expense of real work.

Others are recognizing that part of the challenge these days is turning traditional concerns into new-economy companies. Those who stay can help their employers think like dot-coms.

Some, in the end, decide the toll they were asked to pay for Internet riches is too high.

``The downdraft in the market, if it continues, will cause people to move away from the new economy to more stable companies,'' said James Citrin, a headhunter at Spencer Stuart, in Stamford, Conn. Severance packages have already become a hot topic, he said. Last week, with a prospective employer's pre-offering valuation down, one client requested more options before taking a job. ``The stock market and the talent market are inexorably linked,'' Citrin added.

Already anecdotal evidence suggests the dot-com luster is fading. Consider Tsan Merritt-Poree. She was general counsel for a new Web site but left in January after repeated problems with computers and fax machines. Or Allison Johnson, who stayed at Hewlett Packard because she thought she could have a bigger impact there.

Isaac Lasky, a 55-year-old consultant in Denver, was burned by a telecommunications start-up in December. This week, he said, ``I would much rather be unemployed than involved with a shaky dot-com.''

It's too soon to say there's a clear exodus from companies that have built the new economy. Investment banking firms can't seem to give employees enough casual-dress days and free cappuccinos to keep them at their desks. For many who have jumped to dot-coms already, it has become a way of life, said Daniel DiCaro, a veteran of many technology start-ups and now managing director of Gray Drake Partners, a consulting firm in Mount Prospect, Ill.

``Most people, when they get that fever, it's hard to shake,'' he said. ``It may burn people out, but you just can't get that when you're in a more traditional job.''

But if the Internet generation, whose rewards rise and fall on options, faces many more weeks like this, with the Nasdaq index plunging 17 percent in four days, all that could change. Many dot-com deserters are lured back to established companies, mainly in technology.

At Cisco Systems, which rivals Microsoft in size, resumes for certain marketing jobs from dot-com defectors are up 10 to 20 percent in the past three months, said Larry Lang, a vice president. Just two weeks ago, after a spate of new hires from a few volatile start-ups, Lang thought to himself, ``Aha, there is a pattern emerging here.''

In the end, it may have been the dogs that ended Carla De Luca's dot-com career.

A year ago, De Luca, a former CNN producer, moved from Atlanta to California and took a job at Beyond.com, an online software retailer in Santa Clara. She quickly put together an ambitious plan for hiring people to write about the site's wares. But she grew frustrated at the time it was taking to put it into action. ``It seemed indefinite to me when it would materialize,'' she said.

Top executives, she said, spent a lot of time spinning their wheels in endless meetings. But what really bothered her was the atmosphere of mandatory fun. Employees were told that if they wanted to have a meeting over a game of Ping-Pong, they should. A ``dogs welcome'' policy turned the office into a near-kennel.

De Luca lasted four months, leaving behind a pile of stock options when she quit in May.

``There was certainly an emphasis on camaraderie and fun and a lot of team building and bonding, which I'm all for,'' De Luca said. ``But often I felt that it was at the expense of some good work getting done.''

Many people do just fine in dot-com land, she said, but she prefers the stability and the ample resources at her new job. ``The corporate culture and the right fit for me is really important,'' she said.

A Beyond.com spokeswoman, Laura Fulda, would not address De Luca's comments but did say, ``When you go to an Internet start-up you can expect the unexpected, that's for sure.''

The company has gone through hard times. In January, the chief executive quit, and 20 percent of the staff were laid off in a restructuring. In the fall, the company moved and the dogs were banished.

A common argument among the dot-com cognoscenti is that employees can have a greater impact at a start-up.

But resources at small companies are slim, and this can wreak havoc for those used to an army of secretaries and support staff. Merritt-Poree, a 37-year-old lawyer, took a job late last year as general counsel with NetNoir.com. It did not take long to realize the fit was less than ideal. She complained the fax machine was always busy and, when she asked for her own printer, she did not get it. Instead she brought one from home and kept it on her desk to guard confidential faxes regarding company financings.

Her e-mail worked intermittently, so she got a private account. But the final straw was when her computer broke down in December and she couldn't get access to the Internet for nearly a week. She left the office, telling a colleague to keep tabs on the repair: ``Here's my cell phone number. Call me when it is done.''

Merritt-Poree talked to her old boss at Cooley Godward, a San Francisco law firm, and asked if she could come back. She did in January.

E. David Ellington, who founded NetNoir in January 1995, said the problems Merritt-Poree had have been resolved. ``It was a very bumpy two-month period over a five-year history,'' he said. ``I understand her frustrations, but they were frustrations expressed by others, too. The others have stayed.''

Merritt-Poree does not regret leaving, or giving up a generous options package. ``My resolve is strengthened that you should do this for love, not money,'' she said.

Some executives stay behind, comforted by the security of a large organization and attracted to helping it transform into a new-economy player.

In September, Allison Johnson, a 39-year-old Hewlett-Packard vice- president, was offered a rare opportunity: becoming a founding partner - employee No. 6 - at Loudcloud Inc., which helps speed the growth of Internet start-ups by managing all their computing needs.

Loudcloud is the brainchild of Marc Andreessen and a few others from Netscape. Johnson resigned from Hewlett-Packard within two weeks of being asked. But the day before she was to leave, Hewlett-Packard announced a major restructuring, and she had second thoughts.

While deciding, she said, she ``took the money issue off the table.'' Staying at Hewlett-Packard meant living comfortably, while going to Loudcloud could bring great riches.

But Johnson said it came down to this: ``Where do you have the opportunity to have a giant impact?'' The answer, she decided, was at Hewlett-Packard, which is strengthening its Internet presence.

Money was not the issue in talks with Hewlett-Packard, she said. ``It was more the sense that, look, this is what we're going to do, and we want you to be part of this team.''

Johnson said she has not regretted her decision for one minute, though she does wonder how she will feel the day Loudcloud goes public.