Me and Jeff and Shawn

Me and Jeff and Shawn

Geoff O’Keeffe

On Friday, April 14, 2000, I was attending a Goldman Sachs conference in Las Vegas at, if I recall, Paris, Paris. The other tacky theme hotels must have been booked. The topic of the conference was multi-channel retail, being the strategy for a big retailer to have a competitive presence in brick-and-mortar, e-commerce, catalog sales and perhaps other consumer connections.

The presenters were blue ribbon: Amazon, Target, Matt Hyde from REI who was way ahead of the curve, Martha Stewart and lots of consultants, digital marketers and investors. I was there because we were a dot.com startup funded by major venture capital and private equity groups who had connections.

I was decidedly not a major player nor connected. An investment for me was to buy an entire cord of wood.

I chatted with Martha briefly which had the effect of making me sit up straighter, hold in my gut and consider buying two cords next year.

Goldman put on a gold-plated event and, always most important to me, they fed us like royalty. Like Warren Beatty in his film Bulworth, they did in fact have those little crispy crab cakes. I indulged.

We sat through a series of presentations by the big retailers–which did not include our tiny Planetoutdoors.com, or me–with CEO’s, CTO’s, CMO’s and COO’s and founders laying out their strategies to the assembled and rapt devotees.

In the late nineties and up until that day, e-commerce and internet-based tools and technology start-ups were on fire. Investors shoveled money at start-ups. MBA’s from Wharton, Haas, Sloan, Chicago, Anderson and Harvard checked their B-school training at the door and drank the whole barrel of Kool-Aid. It was a modern-day land grab: heady, risky, electrified, unhinged. Nearly overnight, EBITDA was scuttled, along with the sidelined disciplines of ROI, inventory efficiency metrics and retained earnings. New Economy bafflegab spewed like water from a Bronx neighborhood fire hydrant in August. “Eyeballs, impressions, uniques.” and more. Internet lingo replaced business reason in the mad race for growth, scale, visibility and some eventual payday. “We don’t need profits! We’re going to monetize site visits!”

I was the operating VP responsible for inventory acquisition (at a time when vendors were suspicious and skeptical…” But you don’t have an actual store?”).  Our VC’s did not want to ever hear from me that money was a barrier to buying and offering every single item available in our space, in whatever quantities and at whatever price it took. They didn’t care to hear about liquidity, stock turn, IMU vs. maintained margins, obsolescence, seasonality or a curated product selection. “Everything! All of it! Got it? Get it!”. No overhead expense was too much. Hire everybody! Pay their movers! Pay their closing costs! Pay their nannies and masseuses and housekeepers and dry cleaner pickups! Buy them a damned ball to sit on.

In an e-commerce start-up of about 125 people, there were maybe six actual merchants, managers who had worked in commercially viable ventures who had been responsible to create a profit. Ours was a lonely corner. “Grey beards” we were, “dinosaurs”, so named by a 24-year-old marketer who’d never worked for a profitable company and had a lava lamp on his desk and rode a Razor scooter to work.

But the bell rang that day. Loudly.

But before it did, and after we had enjoyed a gourmet lunch, with, yes, those crispy crab cakes, we split up into break-out sessions lead by a variety of luminaries. While I had been to Amazon headquarters and had sold product into their system, Jeff Bezos had not yet become iconic. Yes, he was worth maybe $6.1 billion early on that Friday morning, but that was barely notable. Jeff was only the 55^th wealthiest person in the world then, behind many folks most of us had never heard of. But I chose Jeff’s break-out along with a dozen other attendees. We sat around in a circle of folding chairs and chatted comfortably. It was friendly, stimulating and open. Jeff offered answers to whatever we asked him about. It felt like he thought sharing all the learning they’d had would feed some global good. I left the breakout with his card. It was plain, like their offices, which were filled with used wooden doors laid atop file cabinets as desks. I liked him. I thought, “I’m going to call that guy someday.”

My next breakout was with Shawn Fanning of Napster notoriety. I barely understood his model, but I had a niggling feeling that somebody, and most likely the musicians and artists, was going to be left holding the bag. It all sounded too good to be true. Later, Metallica thought so as well. Fanning came across as a grifter. I did not take his card. My breakout colleagues were agog. I had never even owned a Walkman.

But indeed, the bell did ring. While a portly male executive from Victoria’s Secret was speaking, everyone left the ballroom and filed into the foyer where there were a half-dozen television sets on rolling carts, all tuned to a channel reporting business news as the markets tumbled, NASDAQ especially.  The Nasdaq Composite fell roughly 10 % that day, signaling the end of a remarkable speculative high-tech bubble that began in spring 1997. The closing of the Nasdaq Composite at 3,321 was an aggregated loss of over 35% since its all-time high of 5,133 on the 10th of March 2000, a mere thirty-five days earlier.

We crashed too. Acquired twice (that I recall). Filed for bankruptcy. Liquidated all the cool stuff we bought for nickels on the dollar. Had to sue for our severance.

Jeff took a bath that day. Soon, his net worth was less than two billion. Shawn lost battles over copyright, and later founded several other failed startups. He recently did a Volkswagen TV commercial.

Jeff is reportedly worth $200 billion today, Shawn $142 million. I still need to buy wood.

The following week, our board meeting had a markedly more reserved and sober tone. We actually dug deeply into our financials. Questions were offered about purchasing budgets and inventory velocity and, for the first time, maintained margins. It was like the hallucinogens had worn off, or like Cher slapping Nick Cage in Moonstruck, “Snap out of it!”. An entire industry woke up and returned to its senses.

Something tells me Jeff knew what was eventually going to happen, all along. Shawn, who knows. I surely had no idea.

But I got a story out of the deal and can now claim, “I was with Bezos on that day.”