>> “Simply put, we were 10 years too early,”

Had they started 10 years later, they would have still failed, but perhaps by then they would have realized that there is no real way to monetize such an idea. Or not (MySpace, FaceBook, et al, I'm looking at you!)

-dZ.

The Well is still around as well.

http://en.wikipedia.org/wiki/The_WELL

The reason why all these sites failed is because, "the Idea and the millions" came long before the sites had any users in most cases not even a single user. Most large companies started as one store or as a few hobbyists in a garage. Many big sites today started as a hobby in one person's college dorm. You can not under most circumstances just announce that you have a website Idea and millions to pay for it and expect to succeed. the fact that many of these 7 figure sites lasted 6 months is comical.

David,

While your account of theGlobe.com is largely accurate and credit should be given to Step and Todd as community and integrated games property pioneers, it doesn't paint an entirely accurate picture before or after my joining in August 2000; nor does it depict my arrival correctly when the stock actually ticked up on the announcement, and inaccurately states the three major shareholders sold large portions of their stock then. I suggest you read Steph's book "A Very Public Offering," which describes Steph and Todd, with Michael Egan, actually were the ones that hired me when I was recruited as an SVP in a COO role running $156 million in revenue and over 300 employees at the AICPA, but by then the stock had already dropped below $2 a share months before my arrival.

We were burning millions monthly, largely because of the cost structure and bad retention of poor quality advertisers who were dot coms burning venture money rather than brand advertisers who could have given us the recurring revenue base we needed. It is commonly known that it costs 5-6 times as much to acquire new accounts than to retain existing ones, but the customers we had were not healthy ones to be retained on balance. We also had challenges in our free subscriber base with WebJump, a hosting service acquired to rapidly extend reach, as well as numerous lawsuits I needed to resolve. I also had to cut costs immediately, which we did , while changing our strategy to focus on our Games properties rather than our too costly community infrasturcture. The strategy was working while increasing high quality advertisers , but we simply ran out of runway because over $100 million had already been burned in net operating losses prior to my arrival largely on brand advertising without payback, urged by analysts, to establish a global brand which Step and Todd did well, but too much had been spent. Unwinding the cost structure of a $200 million company doing $30+ million simply took time and the burn simply didn't work. We cut costs, restructured our advertising sales group hiring to a regional sales structure, targeting agencies and brand advertisers with great creative support that landed us accounts like Coca Cola and Hewlett Packard, selling integrated online and print media, but it was too little too late and I couldn't predict weather our increasing run-rate was sustainable as I told the board. I must add, the staff at the time were highly competent and loyal and commited to our turnaround while being told every step of the way what our situation was.

The board was pleased with the progress, but it is true there was too much supply and not enough demand for internet advertising and technology costs were expensive and not cost-effective then, so advertising rates went from CPM(cost-per-thousand) to CPM(cost-per-click) to CPA(cost-per-action), where advertisers took the risk, in a heartbeat because it was a down buyers market. We invented a hybrid model at the time. While I had confidence that in time internet advertising and our model could have worked, it was simply unpredictable at the time, so while we had arranged debt financing as one alternative that the board didn't want to do, the direction we decided on was for me to lead a work-out which I did with a small staff, selling off three internet properties; Games Domain to British Telecom; Kids Domain to someone I can't remember; Happy Puppy to I Games. Myself and Gary Berstien, Controller, negotiated $27 million in liabilites, including 12.5 years left at $128K a month on a lease at 120 Broadway we didn't need for that kind of space, which we got out of a couple of weeks before 9/11 or we would have gone bankrupt. Instead, Computer Games Magazine and Chips and Bits, a Games distribution company had been brougt to break-even and kept. I had arranged an exit strategy with a major public Games company, but shortly before Michael Egan wanted to keep the company that we had saved from Bankruptcy, and go into the VOIP business. He invited me to Fort Lauderdale to do this with Ed Cespedes, one of our active board members and a Business Development champion. I declined. Mike became CEO and Ed President, continuing to run Computer Games Magazine and Chips and Bits while they launced GloPhone, and later acquired and sold an interactive agency at a hefty profit then went into the travel domain business, until recently selling where Ed runs this company that shows promise.

I think getting my point of view and Michael Egan's would have painted a more accurate picture of what happened to the Globe, as so much more went on afterwards. After the Globe, I went on as President of a private equity held technology company I merged with another and am currently doing strategy consulting work in the technology sector and looking for the right next CEO or President role, among which a few have surfaced.

Net, net TheGlobe.com was not only 10 years too early much like Lenny Bruce was as a comedian. However, they had overspent in hindsight, failed to be selective in acquiring brand advertisers to secure a recurring revenue stream as a going concern during turbulant dot com times, and could have opted out a few times in a sale to a couple of strategic buyers Michael Egan rejected in hopes of turning the Globe around. I have great admiration and respect for Todd, Steph and Michael and worked well with all of them. Please read Steph's book. I hope too that I've enlighted you that while we had achieved a turnaround in profitable sales and reduced costs, we simply ran out of cash, opted not to take on debt financing, and decided to do a workout to prevent bankruptcy which we did successfully in the second year that I was there, in spite of 9/11 occurring during that time.

Lots of lessons learned can be gleaned by theGlobe.com and so many others like them.

Regards,

Chuck Peck, former CEO of theGlobe.com
10 Serenite Lane
Muttontown, New York 11791
peckc10@optonline.net

I was the guy behind the advertising campaigns for theglobe.com. Steph & Todd and their director of marketing came to me in October '97 and said they needed to become a big brand because they wanted to go public the following summer. I was a managing partner at kirshenbaum bond & partners, bringing in and running all of the internet business (Netscape, uBid, theglobe, DLJDirect, Music Boulevard, others). I thought that they were a bit high considering the size of their business at the time...but little did we all know how crazy "going public" would get in the next couple of years--thanks largely to what we started with theglobe.

The work we produced and ran (for a pretty modest budget, spending less than $5 million if I remember correctly) did achieve the desired results, and they even had us brand the jacket of their offering document (very much in keeping with the design of the marketing and advertising materials). We designed a campaign that motivated their core user-base, which was 17-25 year old very active web users.

The IPO was more than a success, largely due to the hype around the brand.

Shortly after the company loaded its coffers with public cash I was told that the company had decided that the big opportunity was to expand what they were doing to a broader market, the "Good Housekeeping" 25-54 year-old female audience. I have no idea who came up with this bone-headed idea, but clearly someone looked at where most of the ad dollars (read P&G and their ilk) are spent in the US, and realized that this target was the recipient of the bulk of low-CPM advertising. I argued that they it was unwise to try to become something that they were not to a target group that most likely had no interest in what they were offering. I was informed that they were committed to this path.

I exited the relationship, unwilling to ride with them down a completely ridiculous path with nothing good at the end. I am certain that it was not Todd or Steph who came up with this bozo targeting decision--they had designed the site to cater to people like them, and were succeeding.

Now that Mr. Peck (whom I never met) has stepped in, I'd like to hear from him where this target change came from...though if I remember correctly he arrived after that decision had been made (and perhaps reversed for all I know...I was out-of-the-loop by then).

Stephen Klein
Entrepreneur
(current company: to launch in the fall)
(last company: Colloquis, Inc. sold to Microsoft)
(2nd to last company: iballs LLC, sold to Aquantive, which was sold to Microsoft)

the only thing theglobe.com ever did was have a super successful IPO.

to say this company was ever a "success" is a bit of a joke. the company deserves credit for lifting the IPO market out of asian financial crisis woes, and the fact that it was the highest IPO returner of all time (at that point) will always be this company's glorified footnote, which definitely paved the way for several other IPOs right around that time, all leading to huge first day gains, and the start of when the bubble really went into overdrive for the next several years.

but to say the site was 10 years too early? 10 years too early for what? the site never had the popularity of sites like facebook and myspace. it never had the traffic numbers of even its peers at the time. at the time, the "bible" was media metrix rankings, and theglobe.com never cracked the top 50. sites like xoom.com, geocities (before yahoo), and lots of other crap had much more users and much more popularity than theglobe with their chatrooms ever did.

their stock never came close to trading as high as it did on day 1, and in fact it was pretty much straight down, despite such underhanded tactics as announcing a split and a secondary on the same day (!) with the stock at around $50. can't believe no one ever called bs on this one, and that their still getting praise as some darling of the dot-com bubble solely because of their ipo. in my opinion, this company was never in the same league as the others you write about in this article. not even close. and if not for that ipo, this company would be largely forgotten by now. surely there is no one at facebook, myspace, hi5, or whatever saying their company was inspired by theglobe.com

My name is Matthew Cortellesi and I ran the Integrated Marketing Department from 1998 till August 2001.

I am not sure this article truly makes clear just how dedicated, motivated and loyal the entire staff was to our turnaround and how we remained by Chuck Peck's side till the very end.

Unfortunately...the wheels were set in motion long before Chuck's arrival.

And let me just add... no one in that office on that last day in August 2001 felt...in anyway...that our shutting down had anything to do with Chuck Peck.