Balancing on the Internet bubble
With remarkable insight and honesty, Stephen Paternot has laid bare the wild ride of the Internet upstart that made him a millionaire and the even more spectacular fall as the stock market roof caved in. His candid memoir, A Very Public Offering, chronicles his six-year stint as CEO/co-founder of the- globe.com, an Internet company he and his partner Todd Krizelman started in their Cornell University dorm room.
His story starts with a bang as the globe's initial stock offering set Wall Street records, and the 24-year-old's share of the company was suddenly worth $97 million. But the heady days didn't last, and Paternot describes the intimate details as the young CEOs fought for funding, battled the media and took a crash course in corporate politics. As the stock dropped to less than $1 a share, pressure mounted from co-workers and shareholders, and Paternot was forced to relinquish control as his millions evaporated. BookPage recently asked Paternot about his experience on the Internet bubble.
You were 24 and worth millions (on paper, at least). What was it like to be the poster boy of Internet mania ?It was manageable at first as mostly business press came after us, but when all the pop culture/lifestyle press came after us, things became a bit more risky. I'd often be recognized on the subway with Hey, you're the guy from the globe, can I give you my resume? . . . Wow, you're like a rock star now. I often didn't know how to react [other than] be embarrassed and then duck and hide. It became much tougher as the year progressed and much of the media and investors wanted to place all the blame on us for the fall of our stock. At that point I had fought so many battles that I just wanted people to leave me alone and to crawl under a rock.
You and your partner Todd Krizelman were both very young when you started, with almost no business experience. Was that a help or a hindrance?At first our youth worked against us especially when trying to raise money. We had no experience, no prior money, no major contacts or track record to show, and we hadn't even graduated. And Todd and I looked young (Todd like he was 15 years old). On the other hand, it made us all the more determined to prove everyone wrong and to succeed.
What do you think are the most important qualities for an entrepreneur to have?Most important is a high EQ Emotional Quotient. Any entrepreneur will know that the idea alone is just 10 percent of the value. The other 90 percent comes from sheer pushing and not giving up along the way. There will always be a million pitfalls you have to navigate around, and he or she who can keep going will make it.
What lessons did you take away from the whole experience?It taught me that anything can be achieved if you put your mind to it. You may get a few curve balls thrown at you along the way, but getting to your end goal and beyond is possible. That is the greatest measure of success in my mind. The last thing you want to do is measure your success by your net worth, or you'll constantly have days of desperate misery.
It also taught me humility. You can be president of the United States one day, and a regular Joe the next, so don't forget to treat people well along the way. From everything that has happened, I feel a certain strength of character within me, a greater confidence, and greater prudence and awareness.
What's the status of the globe.com now?The company is still in business and it has now been seven years, something to be very proud of. I still own 90 percent of my stock and hope that the company will keep on surviving, even if it is as part of a bigger parent company.
What will it take for an Internet company to succeed in today's market?They'll need to prove that their business model can become profitable on a much smaller scale and smaller investment. No one wants to take huge financial risks right now. Otherwise, it needs to be such a powerful business model that has so much potential that everyone is ready to throw money at it (less likely).
Will you ever start another company? Ever want to go public again?I'm sure that something interesting will happen again, whether a film project or something else. I'm sure that if the timing is right, and there's a necessity for it, then we'll go public again. Perhaps this time I'll opt not to be the CEO though.