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April 27, 2023
A long time ago in a galaxy far, far away I was a Dot-Com millionaire...
And then I wasn't.
It was a long, strange trip...
It all started back in 1998 when I spotted an ad in the Wall Street Journal offering to buy web sites.
The ad was placed by a guy named Avram (Avie) Glazer - yes, the same Avie Glazer whose family owns the Manchester United football/soccer club and the Tampa Bay Buccaneers football team of the NFL.
At the time, Glazer was the CEO of a company called Zapata Corporation.
The Zapata Corporation was founded back in 1953 by former president George H. W. Bush as an oil drilling company.
It came under control of the Glazer company in 1994 and Avie, the oldest son of the Glazer patriarch Malcolm, was given the top job as CEO.
Over the next several years, the company morphed from a petroleum company to a company that produced products from fish oils. Products like sausage casings.
In early 1998 Glazer decided that he would transform the company again by attempting to buy one of the leading Internet search engines at the time - a company named Excite.
He gained a bit of notoriety in the business press after he faxed an offer to buy Excite with newly issued shares of Zapata (ZAP) - even though Zapata was valued at about $250 million at the time, while Excite had a value of about $1.3-billion.
Not surprisingly, Excite said they had no interest in the offer.
Undaunted, Avie decided on another approach to get his slice of the booming Internet pie.
At the time, Zapata also owned the domain name "Zap.com".
So, a couple months after the Excite deal failed - as the Internet was really starting to take off and valuations for Internet related companies were soaring - Avie decided he was going to transform his "fish oil" company into an Internet giant buy acquiring a portfolio of existing Internet sites.
That is why he placed the ad in the Wall Street Journal.
Well, at the time I had a web site called TravelPage.com and it had become popular as a directory of travel sites on the Internet.
It was even recognized in a 1997 book as one of the top 500 business sites on the World Wide Web.
So, I followed the instructions in the ad, and I faxed (...he was big into faxing back then) a letter expressing interest to the fax number in the ad.
A few days later I got a fax in response asking for more details about the traffic to my site and any supporting documentation.
I pulled this information together - at the time we were we were generating revenue from advertising and airline ticket fees and getting around 100K users visiting the site per month - and returned it via fax
(...natch).
In response to one of his questions about how much I wanted for the site I decided to ask for between $1 and $2 million.
I know that sounds crazy now but back then this type of stuff was happening on a daily basis.
A few days later I got a response.
Avie's offer was coming in at the low end of my range.
He was offering me $1 million to buy my web site.
The offer was for a combination of cash and stock - but this was an offer from a company whose stock was publicly traded.
Compared to some of the other "deals" going down in those days when companies with only an idea were going public this seemed like something that might actually happen.
I thought about the offer for about 1 second and - then reminded myself to play it cool and take a day to respond just in case they might up their offer.
I did "finally" accept the offer the next day and signed and faxed back (...naturally) a signed Letter of Intent.
When news of the plan to became public, the price of Zap.com shares took off and more than doubled to $21.50.
Avie's plan was to buy up 20 or so web sites that targeted different markets and combine them to create a one-stop Internet Portal at Zap.com.
Glazer said the deal would make Zap.com "one of the ten largest Internet sites in the world."
When talking to investment analysts Avie was telling them that he was going to buy these sites for about $5 a user and sell the company to the public at $25 to $40 a user.
He hired the accounting firm of Price Waterhouse Coopers to conduct the due diligence on the sites he was acquiring, and they began asking questions about the business and how it could grow.
While all this was happening, I was still working full time for a software company.
When I mentioned the offer to one of the executives at the software company, he actually hooked me up with a lawyer at the firm who represented the company to take a look at any legal documents that were being exchanged.
They said not to worry about any fees until I actually got the money.
While some people still thought the idea of a Fish Oil company turning itself into an Internet powerhouse was a whacky idea, for a while enough investors bought into the idea the price of Zap stock continued to rise.
Glazer said the company would grow rich by selling shares in Zap.com, to the public at a price that would be far higher than it had paid for its parts.
As the summer progressed the communication between the due diligence guys at Price Waterhouse became fewer and fewer.
When questioned about when the deal might close, I was told not to worry and that it would probably happen by the end of the summer.
Finally, on October 15, Zapata said it was shelving its plans in the face of falling prices of technology stocks and an inhospitable environment for new stock offerings.
"The company observed that Internet stock prices have declined precipitously from their recent highs and that, in its opinion, valuations of smaller Internet companies have been especially hard-hit," a spokesperson for the company said.
While the about-face really impacted some of the 20 companies that had signed letters of intent to become part of Zap.com I had always continued to live as if it might not happen.
I had held off quitting my real job or buying a Ferrari - so when the $1 million offer turned to dust I just sighed and thought to myself that someday this would be a fun story to share with my friends.
It really was a long, strange trip...
