From the April 25 WSJI - my apologies if it's a repeat:
go2net's Purchase of Silicon Investor Makes techstocks.com a Tech Stock
By NICK WINGFIELD
THE WALL STREET JOURNAL INTERACTIVE EDITION
SAN FRANCISCO -- As co-founders of Silicon Investor, the acclaimed discussion site for technology investors, Jeff and Brad Dryer have presided over one of the Web's most raucous discussions of the bull market.
Now they're cashing in on it.
On Thursday, the Dryer brothers sold closely held Silicon Investor (www.techstocks.com) to go2net Inc., a little-known Seattle-based Internet firm, for about $33 million in stock, a whopping sum that gives them control of about 21% of the acquiring company. In addition to the site's 100,000 daily visitors, go2net will hire Jeff, 30 years old, and Brad, 28, as well as Silicon Investor's only other employee, advertising-sales manager Jill McKiney. All three will jettison the relative obscurity of Overland Park, Kansas, and move to the rainy Pacific Northwest, where one presumes they'll live happily ever after.
Of course, the deal is only as valuable for the Dryers as go2net's Nasdaq-listed stock, which raises an interesting question: The Dryers play host to thousands of would-be stock wizards on their Web site, but can these two Midwesterners pick a hot stock themselves?
go2net, which went public exactly one year before its Silicon Investor acquisition, has seen its shares climb into the high-20s after debuting at 8, but in the volatile world of Internet-stock valuations, that could change quickly.
Currently, go2net has a small stable of sites including MetaCrawler, an Internet search engine; PlaySite, an on-line video-game site; and StockSite, its own gathering place for investment advice. Although none of the sites have marquee names, analysts weren't shocked to see Silicon Investor, which arguably possesses a better-known brand than any of go2net's sites, sell out to a partner given the current climate for Internet issues.
And so what if no one's ever heard of go2net? The Dryers were never very conventional in their approach to financing their site anyway. They launched Silicon Investor in August 1995, just weeks before Netscape Communications Corp.'s IPO created a heroin-like addiction for Internet stocks. According to Jeff, Silicon Investor's first offices were located in the same building in Mountain View, Calif., that housed the computers that ran Yahoo! Inc. -- the stock that has since taken Netscape's highflier crown -- and the proximity was electrifying. "We felt we were at the center of the Web," says Jeff, who provides the business smarts while brother Brad provides the technical expertise. Staring at Yahoo's racks of blinking computers and comparing them to Silicon Investor's more modest operations, Jeff recalls, left him wondering "how long it would take to catch up."
According to the brothers, Silicon Investor fled Silicon Valley for Kansas at the end of 1997 after being hounded by venture capitalists. "It was debilitating," says Brad. "We spent weeks at a time rehashing our business plan." The brothers say that Excite Inc. even approached them at the end of 1996 with a $6 million acquisition offer.
But teaming up with a big, well-known partner or venture-capital money never appealed to the Dryers. "We felt the community would be in jeopardy if someone else funded us," says Jeff. "Money never comes with no strings attached." The brothers say one of their greatest fears in taking outside investment money was not knowing who the VCs would bring in as their CEO. So instead, the brothers bootstrapped Silicon Investor by sinking all of their own money into computer equipment and Internet connections.
Now, finally, the brothers are major investors in a public Internet firm -- go2net. By operating as separate subsidiary of the 47-person go2net, Brad and Jeff hope Silicon Investor will keep some of its independent spirit. Still, the brothers are looking forward to the camaraderie.
"It will be a breath of fresh air to get into an organization with people we can interact with in a personal sense," says Brad. "We're looking forward to that. We've been working in isolation from real people for years." |
