"People said, 'Didn't you know the stock was going to do so well?' " said Todd Krizelman, the online community company's co-chief. "And I'm telling them, '48 hours before we did it, we didn't even know there was going to be an IPO.' "
Speaking for the first time about theglobe.com (Nasdaq:TGLO) IPO, Krizelman and Stephan Paternot, who started the New York-based company from the proverbial dorm room in 1994 and now share the role of CEO, were able to tell the story behind the public offering that made them, at least briefly, superstars in the Internet business. theglobe.com initially filed for its offering in the summer, when technology stocks were booming. After a little-noticed delay, the stock finally went public -- soaring from $9 to about $97 in the first few minutes of trading, and posting the largest first-day gain of any IPO.
But even though the nearly 900 percent increase didn't last, the stock ended its first day at about $70. On Tuesday theglobe.com hovered around $30, three times its initial value.
Pizzas for employees
While this has all turned out rather nicely for Krizelman and Paternot, who used to pay employees with pizzas, they say they didn't exactly plan it that way.
In fact, back in the fall, they doubted they'd be able to go public at all. "We planned the IPO in the summer, when it was the best-ever time for Internet stocks, and by the time we were doing our road show, the Nasdaq was at a 12-year low," said Paternot.
"The worst thing was hearing people say, 'I really like the business plan, I like the management team, I'd like to buy the stock, but I just can't right now,' " Krizelman added.
They were encouraged, though, by the offering of EarthWeb (Nasdaq:EWBX), which tripled in its first day of trading Nov. 10. But by that time, the Security and Exchange Commission documents they had filed in order to go public were about to expire.
But it seemed like as good a time as any. "The day we went public, it was Friday the 13th, and on the news they said Clinton might be about to bomb Iraq to throw attention away from the Lewinsky scandal," Krizelman said. "It was one business day before the documents would have expired."
IPO raised $27.9 million
They plan to use the $27.9 million raised in the offering on advertising, business operations and acquisitions.
For now, that means grabbing new users by any means necessary, the two CEOs said.
Like GeoCities or Xoom, two other recent IPOs, theglobe.com offers so-called "community" services, such as discussion groups and free Web pages.
But it also offers news, free e-mail, classified advertising and other services associated with "portals" -- all-in-one sites such as Yahoo! and MSN.com, which are presently the most successful on the Net.
That's a lot of competition, but theglobe.com believes it can thrive by getting users' attention before they have a chance to find out about the competition.
"The game is just beginning here, 98 percent of the people out there haven't touched the Net yet, and they have no idea who the big players are," Krizelman said. "That's why new companies are going to be able to compete effectively."
Critics have their doubts about the company's future, however -- one of the reasons the high-flying IPO was so dramatic.
The chat and messaging services the company is built around are not considered a large potential revenue generator, and in the business of free home pages, theglobe.com lags behind such companies as Xoom.com and GeoCities.
The company is registering 100,000 new customers monthly, but more than one-quarter of its business comes from foreign markets that aren't considered big revenue sources.
theglobe.com reported sales of $2.7 million for the nine months ending Sept. 30, compared with $415,000 for the same period a year ago. Its net loss grew to $11.5 million for the nine-month period, from $2.6 million a year ago.