At the beginning of the tech bubble — about a decade-and-a-half ago — investors from across the country placed high bets on what they believed was going to be the next ‘big’ thing.
For the next eight to nine years, the good times rolled on the World Wide Web. Wall Street and the valley were flooded in dotcom boom — everything from online grocery stores, candy bar deliveries, and pet services were available at the touch of a button for the first time. IPO’s were popping up by the minute; the faster you jumped on the e-train, the higher your stock rose.
By March of 2000 however, market conditions unexpectedly took a turn for the worst. Rising interest rates burst the tech bubble and those that didn’t get out fast enough were left to flounder. The tidal dotcom wave pushed many to bankruptcy by 2001.
Take a look at a few former high profile tech CEO’s in the list we compiled below.
Webvan most frequently serves in schools today as the cautionary tale of the dotcom bubble. The ambitious delivery service that launched in 1999 offered competitive pricing on quality grocery products (e.g., organic product and sushi), all at the convenience of your doorstep within an hour — 24 hours a day, seven days a week. While the company showed plenty of promise in its early stages, including plans to expand to 26 cities, it began to sink shortly after their IPO and officially filed for bankruptcy in 2001, incurring losses of over $1.5B. CNet named it the biggest flop in dotcom history.
At his exit, former Webvan CEO, George Shaheen told CNet in 2001: “I’m proud of my contributions, and I came in and worked hard on a business model that was difficult to execute…What am I going to do [next]? I don’t know. I may not do anything. I’ll make a decision and I don’t have any idea how long that will take.”
The Anderson Consulting, now Accenture, alum became CEO of Siebel Systems in 2005 and stayed with the company until it was sold to Oracle in January 2006. From December 2006 to 2009 Shaheen served as CEO and chairman of Entity Labs Ltd. Currently he is chairman on the Board of Korn Ferry International and serves on the boards for 24/7, Inc., PRA International, Inc. and Univita Health, Inc. He is also a member of the Advisory Board of the Marcus & Millichap Company.
Kozmo may not have earned blockbuster status, but the once upon a time online ordering service that delivered everything from video games, a chocolate bar, and even Starbucks within one hour to your doorstep, did make it to theatres. In 2001, the company’s ill fate became material for the movie e-Dreams. The film captured the story of the two Korean i-bankers (Yong Kong and Joseph Park) who founded their venture in a basement with a handful of employees, rapidly expanding to 3,000 employees in 11 cities and raising more than $250 million. Alas, the height of Kozmo success ended in 2001 with the stock market crash.
Although Joseph Park was not CEO until the end of Kozmo, he represented a majority of the company’s leadership before it was briefly passed on to Gerry Burdo in 2000. After the company flopped, Park worked with Microsoft before joining Amazon as head of product development in 2005. He co-founded and launched Askville — a question and answer forum — later acquired by Amazon. In 2009, the devout Christian became president of BibleGateway. When it was acquired by HarperCollins Park he stayed on as senior vice-president of digital business. In 2011, he switched gears into the fashion world, joining designer discount company Bluefly as COO and was promoted to CEO a year later. Park stepped down when Bluefly was acquired, and a few months later transitioned to Forever 21 where he currently is as vice-president of global eCommerce.
“Unless we raise $20 million by midnight, boo is dead.” It was May 2000, when Ernst Malmsten, one of the founders and co-CEOs of the first major online sports retailer, boo.com, shut down only a year after launching. Despite attracting investors LMVH, Goldman Sachs and JP Morgan, and raising more than $130-million to fund the venture, the company couldn’t make ends meet and its demise left stakeholders in financial shambles.
In 2002, Malmsten described his ambitious dotcom venture as “18 months ofconcept to catastrophe” in his co-authored book Boo Hoo: A Dotcom Story. For the next few years he kept a low profile, until 2005 when he decided try his hand once again with online clothing at Lara Bohinic, a luxury retailer based in London. He is currently CEO of the company and says, “This time we have done it by the book, step by step.”
Stephan Paternot (Dot-com bust: theglobe.com; 1998 – 2001)
On Nov. 13, 1999, 24-year-old Stephan Paternot, co-founder and co-CEO of Globe was worth more than $97 million after his dotcom went public. Stephan and co-founder Tim Kizelman were early pioneers of bringing a social element to the online world (MySpace and Facebook following later on).
The company became notorious for setting a new precedent with its IPO that spurred a same day stock price increase of 606 percent; the highest (at the time) for any company debut. Globe was worth close to $1 billion at first. Although it continued to raise capital following the IPO, and even turned a profit, it wasn’t enough to meet the demands of the business. By August 2000, stocks plummeted to almost zero and Paternot resigned.
Being a symbol of the dotcom bust became material for his book A Very Public Offering: A Rebel’s Story of Business Success, Excess and Reckoning written and published in 2001. A year later Paternot founded Actarus Funds, an angel investor fund for Internet start-ups. The ambitious entrepreneur also dabbled in the movie industry, founding PalmStar Entertainment in 2004, a financial firm service and production company. The challenges of Hollywood led him to his most recent start-up in 2009, Slated, a company aimed at establishing platforms for independent films. Some well-known movies have signed up with the company, including the producers from The Kids are Alright and Inconvenient Truth. In an interview with VentureBeat in January 2012, he said, “To me, finding more efficient ways of allocating capital is going to be the next big wave of successful Internet companies.”
With online companies fighting to keep their audiences interested, it’s hard to believe it was less than a decade and a half ago that tech startups were failing because there weren’t enough people online.
Moral of the story though, if your dotcom startup suffers a tumultuous demise from inability to keep up with the flood of Web competition, write a book about it and take it to Slated.