Cities without landmarks
Niagara Falls, U.S./Canada
By now there’s already been so much snickering at the fallen darlings of dot-com mania that Stephan Paternot’s Internet adventure story/mea culpa — “A Very Public Offering: A Rebel’s Story of Business Excess, Success and Reckoning” — is a rather tardy arrival at the post-meltdown party.
But if you’re still game for kicking the dethroned titans of new economy capitalism when they’re down for the count, the co-founder of the “community hosting” Web company theglobe.com provides ample fodder in his new memoir. Sharpen your knives, and let the cathartic bloodletting begin.
Stephan Paternot was one of those dot-com 20-something wonder boys that the other 99.99 percent of the population loved to envy during the boom. On the first day of theglobe.com’s ludicrous IPO, the Cornell grad with the chiseled good looks was worth $97 million. On the Friday the 13th in November 1998 that the company went public, its stock price recorded a one-day rise higher than any other market debut in history. (VA Linux has since stolen this dubious distinction.)
But you already know the punch line, don’t you?
Theglobe.com, now having closed its doors, has suffered the sorry fate of so many of its Net brethren, and the co-founder’s claim to be an Internet whiz kid and entrepreneurial prodigy has sunk out of sight along with the company, as has most of his tens of millions. As Paternot recently told SmartMoney.com: He may make more money on the book and the movie version of his personal story about the company than from the company itself.
While he was once in the amorphous “online community” business — meaning everything from chat and home pages to gaming and e-commerce — Stephan Paternot is now in the business of being Stephan Paternot, and this book is his first product. “After theglobe.com, I never want to be in another position where I build an asset only to have it taken away,” he writes. “I want to be the asset.”
In this case, the problem with being the asset is that the asset displays a sophomoric lack of insight into his own experiences that pencils him in as much younger than even the 27-year-old former dot-com co-CEO that he is. His book is peppered with “whatevers” that try to fliply explain away key decisions, such as whether or not the company should have gone public in the first place, and how things might have been different if it hadn’t. While the author frequently expresses annoyance at the condescending venture capitalists and institutional investors who treated him and co-founder Todd Krizelman like kids and their company like a cute college project, he frequently lapses into teeny-bopper-eze when he gives his own version of events. A sample of his prose style: “Public speaking was really our thing.” Or, “Even though Jennifer was a model, she was down-to-earth.”
But the problem with “A Very Public Offering” isn’t the author’s lack of depth. In that respect, Paternot is as much the perfect poster boy for the bust as he was for the boom. He’s the dot-com business man-child, with enough crazy-making experiences to carry a breezy tale.
The more basic problem with the book is that Paternot still thinks that the question everyone is dying to ask him is: “How does it feel to be worth $97 million?” when the new, meaner question is now “How does it feel to lose it?”
One question that “A Very Public Offering” never answers is how two 20-year-old college students in 1994 would have ever heard of venture capital, much less have sought it out for their fledgling Web project. (Maybe Paternot’s patrilineal entrepreneurial heritage had a hand in this — his great-grandfather founded Nestlé, which he never bothers to mention, and his father founded Adia, one of the largest temp agencies in the world, which he does bring up.) But Paternot’s not telling.
He is so loath to get into the details that we never really understand why he and Todd, instead of any of the other countless other bright, well-off kids their ages, managed to turn their college project into a funded company. Instead, he gets so hung up trying to cast himself as a Great Man who seizes a historic opportunity at the right moment that he doesn’t describe what outside influences played a role, as if doing so would somehow diminish his accomplishments. (The requisite eureka moment that leads to what will eventually become theglobe.com involves a chance reading of an issue of Vassar Quarterly, but I’ll spare you the details.)
The most trying passages of the book are precisely those in which Paternot tries vainly to find the seeds of his own greatness in his childhood. A case in point: In high school he starts dating “a very hot, very popular girl — Elayna.” He points out: “(Even her name was sexy.)” Paternot sees the fact that a self-described “computer geek” like himself could score such a hot babe as a girlfriend as a turning point for the budding entrepreneur: “It was the first sign that one could transcend the barriers of what one wanted to pursue, yet not be locked in as a one-track geeky engineer.”
The story improves when it eschews the painful-childhood two-bit psychologizing, and gets into the delicious anecdotes about the reality behind the scenes at theglobe.com. When the company was just getting going, the two co-founders advertised in their college paper for new talent: “Looking for seasoned management, must be at least Junior or Senior.” During the practice for the IPO road show — during which the two co-founders would make as many as seven presentations a day — the presentation coach admonishes Paternot for falling back on “the old genital clutch, in which your hands are clasped together, hanging right in front of your balls,” he writes: “‘What are you trying to tell people!’ the coach would yell at me.”
And when the stock began to plummet, Paternot would field frequent voice mails from a furious investor over the course of six months, screaming voice mails that said: “I hate you! I hate you! I hate you! I will kill you! I will kill you! I will kill you! Invested my money in you. I will sue you! Class action lawsuit!”
When he loses his power at theglobe.com, resigning as co-CEO, Paternot tells us that he hid away in a New York jazz coffee bar with “the entire volume of ‘Dune’” to help revive “my long-starved imagination.”
Along the way, Paternot does a fair amount of casting blame for the company’s twisted fortunes. He’s especially annoyed at the press that builds you up with one hand and tears you down with the other, as well as other sources of “negativity.”
As for how it feels to lose all that money, for the most part Paternot keeps a stiff upper lip, and he thinks that the rest of us should, too. He has no sympathy for the individual investors, i.e. “I hate you! I kill you!” who lost money when theglobe.com stock plummeted from that high of $97 a share to $2 a share when the book ends. After all, Paternot confides that he lost $1 million of his own that he’d borrowed against the value of his theglobe.com equity and invested in the ill-fated Kozmo copy-cat UrbanFetch.
“Individual trading is rarely nothing more than gambling, which is why I have no pity for those traders out there who lost money and blamed Todd and me,” writes Paternot. “Hey, I lost a million dollars, but I’m not blaming UrbanFetch.” It has all the makings of a new aphorism for skinned investors everywhere: At least you didn’t lose as much as Paternot!
The UrbanFetch tidbit pretty much sums up Paternot’s attitude toward the whole NASDAQ meltdown. We all lost money, so no one is stupid, or we all are, so it’s OK. “No longer were we the only idiots in town,” he writes. But he doesn’t extend the same logic to the boom — if losing your shirt when everyone else is also going bankrupt makes you less of a bozo on the way down, then doesn’t winning big when everyone else is raking in the cash make you less of a boy wonder?
When their company was growing, the consumer press ate up the Stephan and Todd show. Their story was the company’s best marketing strategy. But maybe Paternot was just a more valuable product when he had a crack P.R. team, whom he lovingly credits in the book, to shape and shill his story.
Or, maybe it’s just hard to write a memoir as if you were an individual actor on the great stage of business history, when there are clearly so many larger forces at work — as Paternot might write, you know, that whole Internet bubble thing.
Niagara Falls, U.S./Canada
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