Spinning theglobe: The Net Bubble Through the Eyes of Callow Youth

The Internet business -- that split-second creator and pitiless destroyer of wealth over the past few years -- has made many people wise beyond their years.

Stephan Paternot doesn't appear to be one of them.

Paternot achieved fame in 1998 as a 24-year-old co-CEO of the Internet stock phenomenon known as theglobe.com. Ever so briefly, his holdings were worth $97 million on paper. For a timespan that has outlasted his theoretical fortune, he and former co-CEO Todd Krizelman have been poster boys for the concept of ephemeral Internet wealth -- first, the market caps that made these stocks intoxicating, then the plunge that provoked pity, scorn and glee.

To document this episode in American history, Paternot has just written a memoir, A Very Public Offering: A Rebel's Story of Business Excess, Success, and Reckoning, co-written with Andrew Essex and published by John Wiley & Sons.

On the one hand the book is a disappointment. For despite Paternot's I-was-there participation in the creation of one of the first pure-play Internet businesses, and despite his front-car ride on the Internet stock rollercoaster, he shows surprisingly little insight on the forces at work around him, and even the elements of his tale that he says are important.

On the other hand, Paternot does get points for volunteering information about his mistakes and shortcomings -- though his own understanding of them is muddled. And, in fact, the electron-thin depth of his analysis can make for some very funny reading.

Here's Paternot on how U.S.-Iraqi relations could have affected theglobe.com's initial public offering: "Todd and I knew that a declaration of war, among other things, could really disrupt the market."

And here is our introduction to the character of Paternot's parents: "My mom is a very liberated American woman. My dad is, you know, French."

Yes. I understand completely.

You can understand that one's judgment can be clouded by living in the middle of the Internet tornado. But one of the problems with -- and amusing aspects of -- Public Offering is that Paternot, despite the benefits of hindsight following his January 2000 resignation as co-CEO, doesn't seem to have any sense of the paradoxes and contradictions of the role he played. On the way down, he's angry that people are just looking at theglobe.com as a stock, not as a company in a groundbreaking business. "People simply knew us as a stock -- they barely even glanced at what theglobe.com was doing or how fast we were growing," he writes about early 2000, when the stock was somewhere on its slide down to the seven-and-a-half cents it's being quoted at now on the pink sheets. "It was so frustrating."

And yet, on the way up, he had been happy to confuse stock price with personal validation. Paternot tells an anecdote about the day of the theglobe.com's IPO, when an elderly trader tugs at his jacket and comments that in his 40 years on Wall Street, he's never seen anything like this before. "Today, those words mean a lot to me," writes Paternot.

Another example of Paternot's tenuous understanding of the times he lived through comes out in his tales of mistreatment by the press. (He devotes some ink to asserting that TheStreet.com co-founder/columnist Jim Cramer unfairly singled out theglobe.com for criticism, but I'll leave that for others to judge.)

In Public Offering, Paternot talks about how he and Krizelman endured a marathon of press interviews and photo sessions for the company in an effort to attract visitors to its site and in turn lead to more advertisers, higher revenues and happier shareholders. "The best part about the press was that it was all for free," he writes.

Yet Paternot, even today, seems shocked and hurt to learn that the press wouldn't always portray him or theglobe.com in the best light. Hasn't anyone told him that you get what you pay for?

Paternot is still smarting over his ill-thought-out decision to invite a CNN TV crew to videotape when he went out clubbing one night in a pair of plastic pants. But my favorite example of a devious sneak attack by the press is a photo shoot for Smart Money. "They shot Todd and me in our Globe T-shirts," Paternot writes, "running down a hallway and jumping in the air. They said they wanted a shot of us in-flight. Seemed cool enough."

It turns out the accompanying story was about Paternot and Krizelman "jumping for cash" -- "totally sensational," Paternot writes. What, he thought the photo caption would compare them to Warren Buffett? Maybe the shot was modeled on some photograph of the Oracle of Omaha jumping off a haystack wearing a Berkshire Hathaway T-shirt.

But I digress. In sum, you learn from reading Public Offering that reporters (and institutional investors and investment bankers) who treat theglobe.com well are good; those who treat it badly are bad. You don't learn much about the business, since despite Paternot's sadness that people didn't appreciate theglobe.com as a company instead of a stock, he spends precious little time describing what people did on the darn site. Yes, we do learn that it started out as a chat site, then branched out to personal Web page hosting and videogame sites. But unless I missed something, there's only a passing reference to what people are chatting about (surprise! -- it includes sex) and no talking about what's on those Web pages. Nor, for all of Paternot's references to theglobe.com's rising and falling revenues, is there a single word about who theglobe.com's customers are: who advertised with the company, and why.

At a publishing party for Public Offering in late August, not long after theglobe.com shut down its flagship community site, Paternot said he wrote the book to illustrate an era in which people took risks and pursued dreams. "Life is not about a stock price -- people have to understand that," he said.

From an investor's point of view, this is what I learned. If you invest with a 24-year-old CEO, you may lose your money. Of course, if you invest with a 60-year-old CEO, you may lose your money there, too. But at least you won't be watching him dance in plastic pants.