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[04/20/00]

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"I'm just here to see what goes on at these things," says Crolick, 25, an account executive at SFInteractive, an Internet marketing firm.

She's hardly alone. Dot-com valuations may have withered, but the enthusiasm for extravagant dot-com parties hasn't, and party budgets show no signs of being trimmed. In any given week, technology companies throw 15 to 20 parties in the San Francisco Bay Area. On average, each costs $30,000 to $50,000, according to party planners and venue owners, although the $250,000 blowout is hardly rare. In March, for example, Salesforce.com, an online sales automation service, and iCAST.com, which offers streaming media tools and content, each ran up tabs greater than $200,000, entertaining more than 1,000 guests each.

Add in a dozen more-modest soirees -- most all of them visited by people without an invite -- and what you've got is a $1 million monthly tab for booze, food and music, all of it paid for by the new economy. Never before, not during the textile, transportation or steel booms, have companies spent so much money on people who don't work for them, and who often have only a passing interest in the company, says Nancy Koehn, a business historian at Harvard Business School.

This week, Elvis Costello will play at a bash hosted by AskJeeves, while a collection of works by Picasso never before shown in the United States will be shown at a much more upscale Hewlett-Packard-sponsored party. Such decadent affairs are in keeping with current party expectations. A Respond.com party late last year featured performers from Cirque du Soleil, and in December, ETour flew the accordion-playing Net celeb Mahir in from Turkey to party with scantily clad Rouze.com models and San Francisco dot-commers.

Meanwhile, Salesforce.com, which provides Web-based sales management tools that it says will replace sales force automation software, threw a 1,500-person party in March, on the night of a competitor's convention. As if the party's headliner, the B-52's, were not enough, SalesForce.com arranged for a roomful of carnival games and a group of caged actors playing imprisoned software salesmen. To drive home the company's "the end of software" tag line, SalesForce.com had staged a "protest" outside a conference held that day by its rival Siebel Systems, maker of sales-force automation software. It filmed "anti-software protestors" shouting and holding software-damning placards, then aired the footage on TV screens at the party.

Extravagant parties thrown by technology companies show no sign of letting up, says Heather Keenan, president of Key Events, a San Francisco events planning company. "My conservative estimate is that it will go on for 10 more years," she says.

"It's simply become part of the way we do business," says Craig Newmark, founder of Craig's List, an online community serving Bay Area residents, and a regular on the tech party circuit.

Some might consider this cause for joy. Free booze? Free concerts? I sure don't mind knowing that companies are willing to foot my entertainment bills. But what do these companies really gain? Are they wasting their money? Do the benefits justify the cost?

"Yes, absolutely," says Glenn Jasper, vice president of communications for New York's Beenz.com, which "pays" people to visit its partners' sites using its own "currency," called "beenz," which can be redeemed for everything from CDs to hotel accommodations. All the party-hosting companies I talked to agreed, citing buzz as the primary benefit: guest lists that swelled (from 300 invites to 1,400 RSVPs in Digital Island's case), conversations with reporters and positive e-mails received the following day. (And yes, a mention in this story could count as evidence of a party's impact.)

Even venture capitalists who fund these companies seem to think lavish parties are a reasonable corporate expense. Alex Cohen, a consultant for the venture capital firm Kleiner, Perkins, Caufield and Byers, says parties are a "really important way to generate attention."

But Beenz.com and other companies that threw big parties a month ago can produce no evidence -- increased sales, new partnerships, new hires or better retention rates -- that the parties were a success. Meanwhile, veterans of the Silicon Valley scene say the parties have greatly diminished in their usefulness for networking. Some business does indeed still get done at these functions, but not nearly as much as in the past, says Oliver Muoto, co-founder of Epicentric, a portal infrastructure software company, who six years ago started a tech party list. Like the glut of dot-com television advertising, there is now too much similarity: too many parties at too many of the same places, all of them peopled in large part by the same crowd -- including many freeloaders and people like Crolick who are there to check out people, not products.

"Originally these events got the attention of decision makers -- the press, venture capitalists and other investors," Muoto says. "But the popularity of the Internet gold rush has led these parties to grow out of control. These companies spend a whole lot of money on marketing, but end up with people who just want to eat and drink for free."

Indeed, in the words of Declan Fox, director of business development for Sony Music, who estimated he's been to 30 parties in the past year: "No one cares who threw the party, as long as it's open bar ... They started out on a networking level, then they turned into PR machines," says Fox, holding a drink at a recent party hosted by WiredPlanet. Yelling over a tune from the Sugar Hill Gang, he adds: "Now it's freeloaders and all their friends. If you ask people the next day who this party's for, no one will know."

Next page | Forget prawns and elegant jazz trios, let's party!