A VERY PUBLIC OFFERING A Rebel's Story of Business
Excess, Success, and Reckoning
By Stephan Paternot
Wiley -- 236pp -- $27.95
Talented storytellers weave good tales out of what isn't said as much as what is. It's unlikely that Stephan Paternot, founder of seminal boom-to-bust Net startup theglobe.com, was aiming for that kind of literary sophistication with A Very Public Offering. But in a roundabout way, the lack of depth in this 27-year-old's memoir unwittingly conveys the real story: why theglobe and many other dot-coms were flawed from the beginning. Paternot's book supports the notion that too many people were creating companies, raising money, and going public without much thought at the beginning, middle, or end of their Internet rides.
Born in 1994 as a muddled brainchild of Cornell University undergrads, theglobe morphed fashionably and opportunistically from a chat/community site into one focused on games and e-commerce over its seven-year rise and fall. It rocketed into the spotlight in November, 1998--inadvertently becoming the benchmark for Internet frenzy when its stock soared a then-record 606% on the day of its initial public offering. The heady debut was followed by an equally public decline: Theglobe shut down in August, after its stock was delisted and the company ran out of money.
The company's history, we learn, is riddled with copycat decisions. If XYZ company in Silicon Valley raises $20 million, that's what Paternot and co-founder Todd Krizelman decide they must aim for. They don't appear to know why they need this level of funding, or even whether XYZ is actually a viable proposition. When theglobe's shares hit $65, its executives decide to split the company's stock. Why do this, rather than wait to see whether the stock drops? Because other Net companies are splitting their stock. Why hurriedly snap up a Seattle e-tailer, only to learn later that the company has a low-margin business? Because e-commerce is the big trend in 1999, and theglobe must move fast. Why go from selling subscriptions, which are profitable, to dishing out services for free and depending on advertising? Because companies such as Yahoo! are growing at a phenomenal pace by offering free stuff.
Paternot blames investors, bankers, and the press for the vortex that eventually sucked the life out of his company. But theglobe wasn't the victim of outside forces: It fell apart because it didn't have a fundamental business plan or strong vision that could be defended. That lack of focus seems to stem from Paternot's fogginess about what he wanted to accomplish. The former engineering major often gets credit for having the guts to start a company and for grasping the Net's commercial potential early on. But from the evidence here, it's not clear that Paternot ever took time to consider what it was about the Net that interested consumers.
A Very Public Offering's shortcomings cannot be chalked up simply to Paternot's callowness. He might at least have absorbed some analysis of Net mania offered elsewhere. Both in building his company and in writing this book, Paternot had unique opportunities. But you get the sense he never knew why he wanted to do either.
By Heather Green
Get BusinessWeek directly on your desktop with our RSS feeds.
Add BusinessWeek news to your Web site with our headline feed.
Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.
To subscribe online to BusinessWeek magazine, please click here.
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
Printer-Friendly Version
