My Days and Nights at an Internet Goliath
By J. David Kuo
by David Brake
28, 2002 | If you've ever wondered what was going on
in the heads of the people who started dotcoms that soared and tanked,
or you just enjoy tales of bitter boardroom battling and corporate
chaos, you will find this book a compelling read. It tells the tale
of Value America (VA) - a $2.5bn company at its IPO which died
less than two years later.
The author, J. David Kuo, was the company's director of corporate
communications for nine of those months and is perhaps the best-placed
person to produce this kind of book as he was close enough to get
to know some of the key decision makers but he doesn't have to worry
too much about defending his own record and, most importantly, he
is an experienced writer.
He doesn't make an appearance in person until a quarter of the
way through the book. The first seven chapters cover the creation
of the company from the point of view of its charismatic founder,
Craig Winn. It gives a brief history of Winn's life and explains
with admirable clarity how the business was created and grew. Kuo
does a very good job of reminding you how exciting the company's
vision seemed to be in the late '90s (though he can't resist editorialising
about investors in those early days needing "bowls under their chins
to catch the drool").
To this point, the account of the rise of Winn and his company
is fairly laudatory - unsurprisingly, perhaps, as Kuo seems to have
depended heavily on Winn's own account of his rise.
Once the author enters the scene himself, when he joins the company,
the portrait of VA darkens quickly. We learn that in 1999 despite
VA's Internet stock valuation 70% of its sales were made over the
telephone, that its front page took much longer than its competitors'
to download, its customer service was terrible (average wait times
on the phone were 45 minutes at one point) and that although the
company was notionally "inventory-less" it was starting to develop
serious amounts of un-accounted for inventory thanks to people returning
products to them instead of to the manufacturer. Later on it emerged
that a discount scheme gone awry that was giving many customers
50% off their purchases was actually a more cost-effective way of
gaining customers than their advertising was.
Most alarming, we learn that behind the scenes the founder's behaviour
could be dangerously erratic. Although Winn was not the CEO he couldn't
resist micromanaging parts of the business and changing the direction
of the company at whim (though it must be said that many Internet
companies at the time zigzagged frequently in the frantic search
for profitability). He wanted to run for president and while some
dotcom billionaires collected yachts or sports cars he built up
a large personal collection of tractors and other farm equipment.
When his sky-high predictions were challenged he could turn nasty
- alienating important potential partners like Saks, Citibank and
FedEx. He also had a penchant - not just embarrassing but downright
illegal - for announcing deals before they were signed and exaggerating
their scope and importance.
Inevitably as the venture capital funding and investor faith began
to run out, Winn's eccentric behaviour sparked a boardroom battle.
It is this battle rather than the collapse of the company itself
which dominates the last 40 pages of the book. Kuo left Value America
in February 2000 when the writing was on the wall but almost a year
before its eventual death.
Unfortunately this ending highlights what seems to me one of the
biggest weaknesses of the book - its focus on the high level corporate
shenanigans and on Winn himself instead of the story from the grass
roots. Hundreds of employees worked long hours, convinced that they
would become millionaires, only to end up out of a job. He convinced
his own wife to give up a good job at AOL and several of their friends
to quit their jobs and move to join Value America but this is mentioned
almost in passing.
Because of this boardroom-centric outlook, the story, which is
a human tragedy as well as a dotcom drama, is not as affecting as
it could be. Nonetheless it remains a fascinating memoir of the
dotcom glory days.
Brake is an Internet Consultant and Freelance Journalist and
has been closer to this story than he would like.