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To: Glenn D. Rudolph who wrote (112615)	12/9/2000 7:59:20 PM
From: H James Morris	Respond to of 164684

I remember Chemdex well. It was one of the first B2B IPO's and I couldn't resist it.:-) >Where to start? In February, I pooh-poohed the crass run-up in shares of Ventro (VNTR:Nasdaq - news), which changed its name from Chemdex and announced it was going to be in all sorts of new kinds of business. The stock, at $155, made the company worth $5 billion. Despite my ineluctable logic, shares of Ventro shot up as high as $243.50 a few weeks later. Wednesday, Ventro said it will ditch the Chemdex business and lay off 235 employees. The stock closed Wednesday at $2.21 and has fallen below the two-buck mark today. There are at least two lessons to be learned here. First, not even the presence of Kleiner Perkins Caufield & Byers as an investor guarantees that a "story" stock succeeds. Second, the investment bankers find a way to win when everyone else loses. Goldman Sachs, which didn't underwrite Chemdex's July 1999 IPO (at $15), managed to make a bundle anyway on Ventro. According to insider-transaction filings listed at Yahoo! Finance, Goldman Sachs sold 5.5 million shares of Ventro on March 30 for estimated proceeds of $41.7 million. Way to go, Goldman! Elsewhere, idealab-funded Carsdirect.com pulled its IPO, which had been in registration since May. You might recall Carsdirect.com as the Internet-sales auto company that achieved the feat of negative gross margins on its sales. That means it effectively was giving away cars for less money than it cost to acquire them from dealers. Dealers hated this stuff, even when they had a tie-in with an Internet sales organization. priceline.com (PCLN:Nasdaq - news) hasn't fared much better trying to make money on cars. One difference between Carsdirect.com and Ventro is that only the big boys got hurt on Carsdirect, at least as far as investors are concerned. A perusal of Carsdirect.com's propaganda reveals that among the investors who very likely will lose most or all of their grubstake are Goldman Sachs (win some, lose some), MSD Capital (the personal VC plaything of Michael Dell) and Morgan Stanley Dean Witter. (Neither Goldman nor Morgan were proposed underwriters of the Carsdirect.com non-IPO. That's OK, Chase H&Q and E*Offering, both of which have affiliates that were investors, were on the Merrill Lynch-led underwriting team.)