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I think most high-tech companies had the same problem in the last few years. People were throwing money at them so they wanted to show how big their balls were by building the biggest offices, hiring the most employees, having the coolest video games and drink machines and so on. Once the bubble burst, all these companies can easily lay off huge numbers of staff and still function fine. Excit has been laying off hundreds of people over that past 6 months and just filed for chapter 11, excite.com still works.
On a side note, i never did understand why you needed thousands of employees to run a web site. oh well.
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