Case Study: Recovering From a Ride On the Coattails of Y2K
THE PROBLEM: What happens when an expected tidal wave of business reveals itself to be a brief splash?</br></br>Mark Kolb, chief executive of Taratec Development Corp., of Bridgewater, N.J., is the first to admit he was unprepared for the spring of 2000. "Spending for our services just dried up," he says. "We were caught off guard."</br></br>Though he didn't realize it at the time, Taratec, an information-technology consultant to large pharmaceutical companies, had been an unwitting beneficiary of the Y2K computer crunch. Through the late 1990s, big corporations, including his clients, shoveled piles of cash at software and hardware consultants, anticipating computer snarl-ups when the digital calendar turned to the year '00.</br></br>Even though Taratec did little Y2K work, by 1999, Mr. Kolb employed 100 and was looking at record revenue of $17 million. He told his partners to prepare for a public offering in 2000. He was proud that a business launched from his living-room coffee table in 1984 had reached this grand juncture.</br></br>But in the first quarter of 2000, new business evaporated. The stock market tanked. Y2K was a nonevent. "We didn't realize how much of our 1999 revenue was driven by Y2K budgets," he says. For the first time ever, annual revenue fell.