theGlobe.com was the internet’s first social media platform. In 1994, founders Stephan Paternot and Todd Krizelman created the free access website that allowed people to communicate with one another, much like Facebook today. When individual investors heard of the concept, they invested $20m into the project. On the first day people were permitted to trade the company’s stock, the initial public offering (IPO) was the highest ever seen up to that date. The predicted IPO was less than $10, but trading started at $87. When the market closed for the day, the stock was worth $64, the company was worth $840m, and the creators of the company were worth close to $100m each.
The fatal flaw of the situation was that the company had not posted a profit yet, meaning that people were investing millions in a failing business. This scare led to the selling of Globe stock in great numbers and the decrease in value of the company from near $1b to just $4m one year later. Soon after, the company became a penny stock. In 2007, the website was shut down and the company’s founders were broke. The company was not the only failure of the dotcom era, but theGlobe.com is remembered as the largest failure of the period.
http://yhponline.com/wp-content/uploads/Todd-Krizelman-and-Stephan-Paternot-TheGlobe.png
http://www.theglobe.com/
 |
| Founders Stephan Paternot and Todd Krizelman |
The fatal flaw of the situation was that the company had not posted a profit yet, meaning that people were investing millions in a failing business. This scare led to the selling of Globe stock in great numbers and the decrease in value of the company from near $1b to just $4m one year later. Soon after, the company became a penny stock. In 2007, the website was shut down and the company’s founders were broke. The company was not the only failure of the dotcom era, but theGlobe.com is remembered as the largest failure of the period.
http://yhponline.com/wp-content/uploads/Todd-Krizelman-and-Stephan-Paternot-TheGlobe.png
http://www.theglobe.com/
Great Post! I find it funny that no one knows what theGolbe.com is anymore. I even asked my dad, who is an economist at Stanford, if he recognized the name and he said he didn't. I guess people remember success stories over stories of failure. I frequently hear people talking about how rich the early investors in google are in the present, yet theglobe.com is never mentioned even though it marks a historic failure in the dotcom boom.
ReplyDeleteIf you want to read about the other failures in the dotcom bust, go here:
http://money.cnn.com/galleries/2010/technology/1003/gallery.dot_com_busts/