Let Him Without Sin Cast the First Stone
By Adam Lashinsky
Silicon Valley Columnist
10/9/00 12:10 AM ET
Nothing -- and no one -- is sacred anymore.
That's not to suggest that it's time for finger-pointing, although that delightful
pastime is already in full swing. Instead, it's a sober reminder. Even as companies,
sectors and whole business philosophies collapse around us, few are blameless
and it can only get worse.
Consider the dialogue Friday morning in RealMoney.com's Columnist Conversation
with two (apparently former) card-carrying Internet true believers, Herb Greenberg
and James J. Cramer, talking about how nothing works on the Web. It's
understandable why my two friends feel that way. They've invested real time and
money in this medium. And they're peeved.
Or take the fate of Kibu.com, a Web site in Silicon Valley devoted to providing
content for teenage girls. Kibu had some of the best names in the Valley on its
side, including Dave Roux of buyout firm Silver Lake Partners, Tom Jermoluk,
one-time CEO of AtHome and now a partner at Kleiner Perkins Caufield &
Byers, Netscape founder Jim Clark and Allen & Co., known as the savviest of
media banking advisers. The teenage demographic worked so well for Kibu that it
has decided to shut down and give back what is left of the $22 million Kleiner and
others invested in late February.
Guy Kawasaki, the CEO of Garage.com -- which most definitely is not going
public any time soon, despite having filed IPO documents with the Securities and
Exchange Commission in February -- shakes his head over such a young
start-up giving up without a fight.
"You'd think entrepreneurs would want to tweak the business plan, find a way to
redeploy the capital," Kawasaki says over breakfast at the downmarket diner where
he and I meet from time to time on the outskirts of Silicon Valley.
Ah, but that's the difference between entrepreneurs and investors. Investors decide
when enough is enough, and they don't care in October that, as Kibu bragged in a
February press release, according to Teen Research Unlimited, the "teen
consumer products market" would be $153 billion in 2000.
Kawasaki, by the way, notes that attendance is slackening at his firm's popular
start-up "boot camp" seminars. That's not surprising, but it is germane. According
to Garage.com's latest securities filing in June, the conferences accounted for
about the same amount of revenue -- $1.1 million -- in the first quarter as the firm's
putative business, placement fees for arranging financing for new companies.
Too much ink (and bytes) already have been spilled on priceline.com's (PCLN: -
news - boards) WebHouse Club name-your-price groceries and gasoline business
(I never got excited about priceline because I never used it, so that saved me from
ever writing exuberantly about it). But the most telling comment on the subject
came from priceline founder Jay Walker, who told The Wall Street Journal, "the
capital markets just aren't going to let us finish what we started."
That is so true. Jim Cramer wants to know who knew what when. Guess what?
Here's what Jay Walker knew last year: Until he heard otherwise, venture
capitalists would give him and other entrepreneurs as much money as they wanted
for as long as they wanted as long as they all told a good yarn. Well, Jay, you just
heard otherwise.
Next is word in Friday's VentureWire that a San Francisco site called Great
Entertaining, an "online marketplace for entertaining trends and ideas, quality
products, services and party supplies," is booting 40 of its 60 employees.
Why do we care? Several reasons. First, as the company's own breathless press
material boasts, its backers are "prominent Silicon Valley venture capital firms,"
including Benchmark Capital and Technology Crossover Ventures. Reading
further, I see that its board of advisers includes two of my pals, personal advisers
and all-around great guys, Intuit Chairman Bill Campbell and Randy Komisar, who
used to work for Campbell at Apple Computer and Go and now invests with him.
These guys are true business visionaries. Komisar literally wrote the book on
start-ups, The Monk and the Riddle: The Education of a Silicon Valley
Entrepreneur , a highly readable and entertaining yarn about a fictional would-be
mogul. And having them around is about as good it gets for entrepreneurs who
need advice. But their sage counsel didn't matter.
Oh, one more item of note about Great Entertaining, which otherwise will be yet
another company nobody remembers by the middle of next year at the latest.
According to VentureWire, it "severed [its] $10 million three-year partnership
agreement with America Online (AOL:NYSE - news - boards) for online and offline
promotional cooperation, which was announced in September, 1999."
Remember a quarter or so ago when AOL, Yahoo! (YHOO:Nasdaq - news -
boards) and consultants like Scient (SCNT:Nasdaq - news - boards) were bragging
how the demise of the dot-coms would have only a marginal impact on their
business? Don't count on it. These little blow-ups are everywhere. Varsity Group
(VSTY:Nasdaq - news - boards), which I pledged to myself never to mention again,
quietly and tersely announced Sept. 29 that it has mutually agreed to close out its
marketing relationship with AOL's ICQ unit. Varsity, which once wanted to be the
Amazon.com of college textbooks, didn't remind investors of the size of that deal.
It was for $9 million over three years, according to its securities filings.
To paraphrase a fellow Illinoisan, Everett McKinley Dirksen , $10 million here and
$9 million there, and soon you're talking real money, even to AOL.
And so to repeat, nothing is sacred. And no one's touch is so golden to keep from
being involved with debacles. Wish it weren't so. But it is.
Ending on an amusing note
Thanks to Don Snow, who picked up on my reminiscence about the days when
we used to talk about the Red Hot stocks. "Yes, the days of Red Hots seem far,
far away," writes Snow. "These days we are more in the galaxy of turkey dogs."
Ouch! |
