Failure of Big Firms Creates Room for Small Developers

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Failure of Big Firms Creates Room for Small Developers

By CONOR DOUGHERTY

Staff Reporter

In a market once dominated by big, money-losing companies many of them publicly traded small Web development firms have outlasted the competition.

This year’s list of Web site developers ranges in size from 4 to 85 developers. Last year’s top firm had 140 local developers, the smallest company had 30. Of the seven companies returning this year, all reported a drop-off in staff.

The largest Web developer is Genex (last year’s No. 2), with 95 employees in L.A. and 110 company-wide. Last year, Chicago-based MarchFirst topped the list with 140 employees in Los Angeles, 7,600 worldwide. In April 2001 the company filed for Chapter 11 bankruptcy protection and was subsequently liquidated.

The downsizing was deep and broad. A third of the companies on last year’s list had more than 1,000 employees company-wide. On the current list, Razorfish, the largest firm operating in L.A., had fewer than 400 total employees.

“Two years ago, the big guys weren’t taking jobs under $1 million,” said Michael Weiss, chief executive of Imagistic Media Studios, No. 8 on this year’s list with six L.A. developers. “Those jobs don’t exist anymore.”

Shops like Imagistic are representative of the greater trend in Web development: small, private operations that are able to grow and contract at manageable rates. Faced with a downturn in business, Weiss said he’s cut staff from 28 to 10 full-time employees in the last year.

“We’re using freelancers and contractors a lot more, so if you came in any day it would look like we had more people,” he said. “But (having less full-time staff) allows us to control costs.”

In addition to having less work, Weiss said clients are hiring him for small, specific projects none of them frivolous. “It’s not about pretty pictures anymore,” he said. “It’s more about using (a company Web site) as a means to do business.”

Weiss said he is starting to see business pick up. “My feeling is this service is still needed and there is a lot of work out there,” he said. “But the idea is that it has gotten back to real business. Two years ago someone would come in and say, ‘We want our Web site up yesterday and we don’t care how much it costs.’ Now it’s more along the lines of ‘We have a fixed budget and we want to take our time.'”

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