I
From the early days of the Mosaic browser, one of the most popular sites on the Web was “Jerry’s Guide to the World Wide Web,” a listings page maintained by David Filo and Jerry Yang, two graduate students in the Stanford computer science department. Filo and Yang, who were both in their mid-twenties, shared a trailer, where they were supposed to be writing a Ph.D. dissertation on computer-aided design, but they spent much of their time trawling the Web for sites they liked. Filo, a quiet and intense fellow, was born in Wisconsin and brought up in Louisiana; Yang, the more outgoing of the two, was born in Taiwan and arrived in San Jose at the age of ten. By late 1993, the list of favorite Web sites had grown to more than two hundred and was getting out of hand. The Mosaic browser included a primitive “bookmark” facility, but it didn’t allow much sorting. Filo and Yang wrote some simple software that allowed them to group the sites as they wished and posted it on the Web. Before long, they found themselves inundated with e-mails suggesting new sites to include. With their thesis supervisor overseas, they decided to cover the entire Web. Throughout 1994, they surfed obsessively, often visiting a thousand sites a day. They renamed their enhanced guide Yahoo!, a word chosen from the dictionary that was also Filo’s nickname growing up. (The exclamation point was “pure marketing hype,” according to Yang.)1
By the summer of 1994, Yahoo! had tens of thousands of regular users, many of whom called up a number of different pages. In the fall, the Yahoo! site had its first million-hit day, which translated into about 100,000 individual users, and Filo and Yang started to think about turning their hobby into a business. Early in 1995, they went to see some venture capitalists. Several of them showed interest in Yahoo!, but they also expressed concern about potential competition. While Filo and Yang were indexing the Web by hand, other scientists were writing software programs called “Web crawlers,” or “search engines” that did the job electronically, taking a phrase and scanning millions of Web pages to find every place it was mentioned. Michael “Fuzzy” Maudlin, a computer programmer at Carnegie-Mellon, had developed a search program he called Lycos. Steve Kirsch, a Silicon Valley entrepreneur, was backing a program called Infoseek. Christine and Isabel Maxwell, two daughters of the late British press baron Robert Maxwell, were behind the Magellan search engine. Kleiner Perkins was backing a firm called Architext, which soon changed its name to Excite. Kleiner Perkins encouraged Filo and Yang to merge with Architext. They refused, turning instead to Sequoia Capital, a venture capital firm that had financed Apple Computer, Atari, and Oracle.
In March 1995, Filo and Yang incorporated Yahoo! Soon after, Michael Moritz, an Englishman and former journalist who was a partner at Sequoia, visited them in their trailer. It struck him as “every mother’s idea of the bedroom that she wished her sons never had.”2 The blinds were down; it was noisy; and there were golf clubs, pizza cartons, and unwashed clothes strewn around. Yahoo!’s popularity impressed Moritz, nonetheless, and he particularly liked the name. He did worry about the site being free, but he convinced himself that it would be able to sell advertising if it kept growing at current rates. Moritz offered Filo and Yang $1 million for 25 percent of Yahoo! on two conditions: they keep the same name and allow him to hire an experienced chief executive. If it had been six months later, after the Netscape IPO, Filo and Yang would have been able to demand a much higher price. But in April 1995 $1 million was still considered a lot of money. They accepted Moritz’s offer.
Yahoo! rented an office in Mountain View, a short distance from Netscape. One of the first people the firm hired was Srinija “Ninj” Srinivasan, a friend of Yang’s from Stanford. Srinivasan reorganized the Yahoo! guide to make it more flexible, while maintaining its basic character. Yahoo! was popular because it made the Web seem human and manageable. Before any Web site could be listed it had to have been inspected and approved by a Yahoo! employee. The guide was organized in a hierarchical fashion. At the top of the hierarchy were a set of broad categories, such as entertainment, business, and health. Below these were smaller subcategories. A Yahoo! user who typed in “The Beatles” might receive a list of twenty Web sites under the heading: “Entertainment: Music: Artists: Rock: The Beatles.” Other search engines provided more extensive listings, but they were electronically generated and contained a lot of irrelevant entries. Yahoo! was more selective. “If you’ve got thirteen Madonna sites, then you probably don’t need a fourteenth,” Yang explained.3
The chief executive that Moritz insisted on hiring turned out to be Tim Koogle, an angular forty-three-year-old who had spent nine years at Motorola and three years as president of Intermec, a Seattle-based technology company. Koogle had long wavy hair, collected electric guitars, and drove fast cars, but he was meant to be the reassuring adult presence at Yahoo! During the early summer of 1995, he arrived in Mountain View. “The office was in the right-hand corner of a little industrial building,” he later recalled. “We had about a thousand square feet. Everybody was crammed in there with borrowed desks, and there was a hole in the roof that leaked every time it rained.”4
Koogle’s first task was to fire some management consultants that Moritz had hired, who were “charging too much money and getting too little done.”5 After doing that, he set about writing a business plan that would explain how Yahoo! could make money despite giving away its product. Filo and Yang had already ruled out charging people to use their site. With some justification, they believed Yahoo!’s popularity was due to the fact that it reflected the values of the Internet, including free access. “We really wanted to keep the service free—that was a fundamental goal,” Yang explained. “It was a process of saying, ‘How do we keep it free and develop a business model?’ ”6 This question would torment many Internet companies. Netscape’s answer had been to charge for ancillary products, but Yahoo! didn’t have any ancillary products. The only other option, as Moritz had realized, was to rely on advertising.
Advertising-sponsored media companies can be immensely profitable, as the television networks have shown, but turning Yahoo! into a successful media company would be a challenge. In 1995, the Internet was widely viewed as a technology industry, and Yahoo! was commonly seen as a technology product. Koogle set out to change this perspective. He hired Karen Edwards, a marketing executive formerly at Twentieth Century Fox, to seduce the media buyers that dominate the advertising industry. Edwards pitched Yahoo! as a cheap and effective vehicle for targeting specific groups. When General Motors places an ad on CBS, millions of people who aren’t interested in buying a new car see it. The Internet seemed to eliminate this wastage. In theory, Web sites like Yahoo! had three great advantages over traditional media companies. They could monitor precisely which Web pages a user called up; they could serve up different Web pages to different readers; and they could count how many people clicked on the ads. Advertisers could then compare click-through rates to gauge the appeal of different ads. If people were ignoring a certain ad, it could be replaced with a new one in days, or even hours. By the end of 1995, Yahoo! had attracted about $1 million in advertising revenues. This wasn’t a great sum, but it was a start, and Koogle believed there would be much more to come given that Yahoo! was already delivering about 3 million Web pages a day to users. “In spite of no real marketing spending and no infrastructure in the company, there was a lot of organic take-up,” Koogle recalled later. “That usually speaks volumes.”7
II
With the benefit of hindsight, the benefits of Internet advertising were grossly exaggerated. Even in the early days, there were studies showing that the average click-through rate was about 2 percent, which meant that 98 percent of people were ignoring the ads. When this mass boycott was taken into account, advertising on the Web, far from being cheap, was extremely expensive. The average cost of an Internet ad was about $4 per hundred page views, which meant that advertisers were paying about $2 for every person that clicked on their ad. Glossy magazines like Vogue charged about $50,000 for a full-page ad. Assuming that half of Vogue’s 2 million readers looked at the page, the advertiser was being charged about five cents per set of eyeballs.
In late 1995 and early 1996, few were willing to consider the possibility that Internet advertising might prove to be a bust. Kevin O’Connor, a Michigan-born engineer and entrepreneur, had recently started DoubleClick, the first Internet advertising agency, in New York’s Flatiron District, which was rapidly becoming known as Silicon Alley because of the large number of Internet-related companies that were springing up there. DoubleClick was a joint venture between O’Connor and his partner, Dwight Merriman, and the advertising agency Bozell, Jacobs, Kenyon & Eckhardt. Its software allowed ads to be targeted to specific groups, based on occupation, geographic origin, and several other characteristics. DoubleClick sold banner ads on most of the popular Web sites, including Netscape, America Online, and Yahoo! To begin with, Netscape’s home page, the default home page for anybody who had a Netscape Navigator browser, was the most popular ad buy. DoubleClick’s success prompted other agencies to set up Internet divisions. Disappointing results from the earliest online advertising were either ignored or reinterpreted in a positive manner. Forrester Research, a company that was making a name as a bullish interpreter of Internet trends, estimated that online advertising would increase from an estimated $37 million in 1995 to $700 million in 1998. (Later in 1996, Forrester would raise its 1998 forecast to $1 billion.)
The growth of service firms like DoubleClick and Forrester Research demonstrated how the growth of Internet industry was starting to feed on itself. Every new Internet venture employed a new group of people with a vested interest in boosting the online economy. The most powerful boosters were on Wall Street, where the Netscape IPO had legitimated a new business model—one in which earnings and balance sheets didn’t matter. In the new Internet era, the game was to raise money from investors, clamber aboard an exponential growth curve, and worry about revenues and profits later. Mary Meeker, a thirty-five-year-old stock analyst at Morgan Stanley, was one of this strategy’s strongest defenders. Meeker was supposed to provide Morgan Stanley’s clients with objective advice about the technology companies she covered and about the wider trends affecting the computer industry. Traditionally, stock analysts came pretty low down the Wall Street pecking order, since they didn’t bring in any money directly, but Meeker would help change that.
Like Marc Andreessen, Meeker grew up in a small farming town: Portland, Indiana. After attending DePauw University, she worked briefly for Merrill Lynch in Chicago, then did her MBA at Cornell. She arrived on Wall Street in 1986 and took a job at Salomon Brothers. In 1991, she moved to Morgan Stanley to cover the PC industry, where she became a protégée of Frank Quattrone. Through her work on companies like Microsoft and Compaq, Meeker was well placed to observe the development of online communication, and she saw parallels between the rise of the PC and the rise of the Internet. “If you looked at Microsoft and believed Bill Gates when he said, ‘A personal computer on every desktop. A personal computer in every home,’ it was easy to extrapolate and see that Microsoft was going to become a big company someday,” she explained. “The lesson I learned was to apply the same reasoning to America Online. Simple as it sounds, I believed in 1993 that everyone would use e-mail someday.”8
Meeker enjoyed an inside view of the Netscape IPO, and it got her thinking about how the online economy would fit together. In February 1996, she and one of her research associates, Chris DePuy, circulated The Internet Report, a three-hundred-page tome that included everything from a history of the ARPANET to a list of recommended Web sites. Meeker believed the Netscape IPO was a “world-changing event” that had created “a new way of financing companies.”9 The days were gone when start-up firms had to spend years building up a track record of profitability before going public. In the post-Netscape world, stock market investors were willing to play the role of venture capitalists, funding companies much earlier in their development in the hope of making high returns. Meeker and DePuy said the growth of the Internet was “still at the very early stages” and represented “a big market opportunity for lots of companies.” They went on: “Consider this report our puck on the ice at the beginning of a very long game.”10 Most Wall Street research reports are quickly and justly forgotten, but The Internet Report became a standard reference, and more than 100,000 copies were distributed. Marc Andreessen said the report “offers critical insight into both the Internet and the markets it will affect.”11 Steve Case described it as “a fabulous history, encyclopedia, reference guide and road map rolled together.” John Doerr called it the “definitive Internet report,” adding, “Burn all the others.”12 HarperCollins turned The Internet Report into a paperback book, which sold for $22. In an earlier era, the sight of a major book publisher rushing out what was essentially a Wall Street stock circular might have raised some eyebrows, but not in 1996. Instead, the HarperCollins editors were widely praised for being so clued in.
The Internet Report was important for two reasons: it made buying Internet stocks seem like a respectable activity; and it contained the genesis of a new valuation model for Internet stocks. Investors could read the report and tell themselves they were contributing to an industrial revolution, not just speculating wildly. Meeker and DePuy lamented the fact that “the number of pure-play investment vehicles related to the Internet is shockingly short.”13 Their recommended Internet portfolio consisted of just five companies: three equipment makers (Cisco Systems, Ascend Communications, and Cascade Communications); a software company (Intuit); and an online service (America Online). They omitted the Internet service providers because they faced too much competition, and they excluded Netscape because of the stock’s volatility and its strong performance since the IPO. (“Investors should hold off in the near term until it becomes more seasoned,” they warned.) The analysts acknowledged being “nervous about the valuation levels” of some Internet stocks, but they argued that traditional valuation methods could be misleading.14 Four of the five stocks they recommended had PE ratios greater than 50, and the other, Cisco Systems, had a PE of 25. The key to valuing Internet stocks was not current earnings, Meeker and DePuy argued, but earnings potential, which was vast. “For now, it’s important for companies to nab customers and keep improving product offerings: mind share and market share will be crucial. While skeptics like to say that America Online loses money on a cash flow basis (excluding subscriber acquisition costs), once it obtains 5–10 million subscribers, it will be able to harvest the cash flow. If a company can build subscribers in a small but rapidly growing market with a compelling economic model and maintain that market share when the market gets bigger, it should reap good profit margins.”15
This argument would soon be picked up elsewhere on Wall Street and used to justify the unprecedented prices being paid for Internet stocks. Instead of concentrating on earnings and revenues, many analysts would promote “mind share” and “market share” as key valuation indicators. The only way to quantify these concepts was to look at the traffic on a company’s Web site. If this appeared to be increasing dramatically, the company was worth more, even if its losses were also rising, as was often the case. The new valuation methodology provided the owners of Internet companies with a peculiar set of incentives. Instead of being rewarded for cutting costs and increasing revenues, like most managers are, they were rewarded for increasing the number of page views. Not surprisingly, many of them would end up spending as much money as possible on marketing and promoting their sites, regardless of the cost.
Meeker, having been involved in the Netscape IPO (she helped set up one of the first meetings between Quattrone and Clark), was hardly a neutral observer of the Internet industry. She knew many of the key players personally. “I remember that in 1995 I would speak with Marc Andreessen and we would try to count up how many people understood this stuff,” she recalled later. “We thought it was about four hundred.”16 In the following few years, the members of this informal network, some of whom referred to themselves as the “class of ’95,” would socialize together, attend each other’s conferences, and make pots of money together. Meeker’s access to the Silicon Valley inner circle was one of her great selling points. She would become the public voice of the Internet establishment—the person who helped to define and spread its collective wisdom. In doing so, she would turn herself into a media celebrity and also attract many lucrative IPOs and secondary stock offerings to Morgan Stanley. As one Silicon Valley figure, Roger McNamee, a partner at the investment firm Integral Capital, noted: “Morgan Stanley’s great insight was that the analyst could be used as a competitive weapon—not only to analyze IPOs but to cause them to happen. Mary’s thought leadership in the industry helped Morgan Stanley to line up many of the most exciting Internet deal.”17 What this meant, of course, was that Meeker would no longer be just a stock analyst. Her main role would be as an investment banker.
III
Morgan Stanley was just one of many investment banks trying to capitalize on the growth of the World Wide Web. Many of the ventures that they marketed were “concept” stocks—companies that seemed to encapsulate a big idea. In February 1996, Hambrecht & Quist and Robertson, Stephens, issued 2 million shares in a Silicon Valley company called CyberCash at $17 each. Within a week the shares were trading at more than $50. William Melton, the man behind CyberCash, had already made a fortune by cornering the market in the electronic terminals that stores use to verify credit card numbers. In August 1994, Melton came out of retirement and founded CyberCash, which developed software to protect the security of online credit card transactions. With its catchy name, CyberCash had no shortage of media attention, but it did have a shortage of customers. In the seventeen months between its incorporation and its decision to go public, the firm’s total revenues were zero—though it did manage to accumulate losses of more than $10 million. This record presented something of a challenge to stick-in-the-mud stock analysts that liked to go by the numbers. After Standard & Poor’s refused to recommend CyberCash’s stock, Mark Basham, an analyst at the ratings agency, explained apologetically: “The lack of any sales was a major negative in our rating.”18
Internet telephony was another concept that investors could relate to. By using the Internet, people on different continents would soon be able to talk to each other for the cost of a local call. That was the theory, anyway. In practice, the packet-switching technology that the Internet was built on was unsuitable for two-way conversation. But that didn’t prevent VocalTec, an Israeli company, from issuing stock in the same month that CyberCash went public, also through Hambrecht & Quist.
The most popular concept was the “search engine.” With about 200,000 Web sites already in existence, even the most devoted online surfer needed help in keeping up with all the new stuff that was appearing. By the spring of 1996, Yahoo! was serving up about six million Web pages a day, and it was being touted as a possible IPO candidate, along with Lycos, Excite, and Infoseek. The desire for a marketing coup, rather than the need for money, was the driving force behind the rush to Wall Street. Most of the big search engines had enough cash to fund their operations for a good while longer. CMG Information Services (CMGI), a Boston-based venture capital company, was backing Lycos. Excite’s investors included the Tribune Company, the owner of The Chicago Tribune. As for Yahoo!, it had just raised $100 million from Softbank, a Japanese financial company. But Netscape had demonstrated the publicity value of an early stock offering.
In January 1996, Montgomery Securities issued shares in a little-known search engine company called Open Text Corporation at $15 each. The Open Text IPO was small, but it demonstrated that investors were willing to buy into the search engine concept. In March, Lycos, Excite, and Yahoo! all announced plans to go public. Lycos went first. On April 2, with Hambrecht & Quist acting as the lead underwriter, it issued 3 million shares at $16. The shares opened at 29 1/4 before falling back to $21.94 at the close, valuing the company at close to $300 million. Two days later, Excite issued 2 million shares through Robertson, Stephens. The stock was priced at $17. It rose to 21 1/4, before falling back to 16 11/16. Despite closing below the issue price, Excite, whose total revenues in 1995 were $434,000, was valued at about $175 million.
Tim Koogle, Yahoo!’s CEO, hadn’t wanted to go public yet. He harbored old-fashioned ideas about firms making steady profits before issuing shares. “I really wanted a few more quarters,” he told Fortune. “I wanted to be sure we could deliver our numbers consistently and ahead of expectations.”19 The investment from Softbank meant that Koogle didn’t have to worry about financing Yahoo!’s growth. The firm was still adding features to its site, and it had just launched a television marketing campaign, which the Black Rock agency in San Francisco had created. One ad showed an angler calling up Yahoo! for baiting tips then landing one giant fish after another. It was a clever attempt to demonstrate Yahoo!’s usefulness without putting off technophobes. Still, Koogle knew that Yahoo! couldn’t afford to ignore the IPOs by Lycos and Excite. There was a strong belief on Wall Street that firms gained a big advantage by going public early, and these perceptions could easily become self-fulfilling. “We couldn’t afford to be boxed in,” Koogle said. “So we took the risk.”20
Koogle approached Morgan Stanley. To his surprise the firm proved reluctant to help. Mary Meeker argued that it was too soon for Yahoo! to go public. Privately, Meeker doubted that Yahoo! was a real business. “I was, like, Yahoo!, you know, just a search engine—a little hard to figure out,” she would later admit. “We’d just taken Netscape public and we felt like the next thing we would do had to be the next Netscape. So we didn’t take Yahoo! public, which in hindsight was a brain-dead mistake.”21 With Morgan Stanley out of the picture, Koogle turned to its biggest rival, Goldman Sachs, the last of the great Wall Street partnerships.
The very name Goldman Sachs had connotations of wealth and prestige. Acquiring a partnership at Goldman was one of the top prizes in American finance, and the firm’s top executives moved freely in the highest echelons of business and politics. Robert Rubin, the Treasury Secretary, had spent most of his career at Goldman, ending up as the firm’s co–senior partner. Goldman liked to maintain a low profile, but rivals knew it as a fierce competitor that often resorted to aggressive tactics in order to win business. During the late 1920s, the Goldman Sachs Trading Corporation organized two of the biggest and most speculative investment trusts, Shenandoah and Blue Ridge. When the stock market crashed in October 1929, many of the firm’s clients were ruined. In the late 1980s and early 1990s, Goldman did a lot of business with Robert Maxwell, the crooked British media baron who looted his employees’ pension funds.
Goldman was eager to catch up with Morgan Stanley in the technology business. It opened an office in Silicon Valley and promoted its own stars, Bradford Koenig and Michael Parekh, as rivals to Frank Quattrone and Meeker. When the opportunity to take Yahoo! public came along, Goldman seized it. At the end of March, Koogle and Yang, together with a number of people from Goldman, departed on an investor road show. Yang, who was now twenty-eight but still looked a lot younger, proved almost as popular with investors as Marc Andreessen had been the previous summer. The environment could hardly have been friendlier, with investors snapping up technology companies of all kinds. In early April, Lucent Technologies, the former equipment-making arm of AT&T, which supplied telecommunications gear of all kinds, raised $3 billion in the biggest IPO yet. A few weeks later, Lucent’s market value topped that of AT&T.
On the morning of April 12, 1996, 2.6 million Yahoo! shares started trading under the symbol “YHOO.” The stock was issued at $13. It opened at $25, rose to $43, and closed at $33, a first-day “pop” of more than 150 percent. This was bigger even than Netscape’s first-day gain, and it was the second biggest gain ever for an IPO on the Nasdaq. Despite having just sixty-eight employees, Yahoo! was now valued at about $850 million. Yang and Filo each owned shares worth more than $150 million. “The valuations are into the sphere of surrealism,” David Menlow, president of the IPO Financial Network, commented.22
IV
At this point, with investors’ appetite for Internet stocks apparently insatiable, Louis Rossetto, the founder of Wired, decided to cash in on the buoyant IPO market. His publication had proved a big editorial success, acquiring close to 300,000 subscribers and a National Magazine Award. But Rossetto’s ambitions ranged well beyond print. He had also launched a Web site called Hotwired.com, a search engine called HotBot, and a television division. In May 1996, Wired Ventures, Rossetto’s holding company, announced it was going public, with Goldman Sachs acting as the lead underwriter. The prospectus described Wired Ventures as “a new kind of global, diversified media company for the 21st century” and placed a provisional value on it of about $450 million.23 If all went well, Rossetto and his partner, Jane Metcalfe, would each end up with stakes worth about $70 million. Nicholas Negroponte’s stock would be worth about $30 million.
Things didn’t go well. A number of commentators pointed out that, despite Rossetto’s grandiose claims, Wired Ventures wasn’t really an Internet company at all: it was a publishing company. More than 90 percent of its revenues came from its print magazine. Publishing companies tend to sell for between one and three times their revenues. Applying this principle to Wired Ventures, the company was worth perhaps $75 million, and even this valuation was generous. Despite its growing popularity, Wired magazine appeared to have lost about $10 million in 1996. Allan Sloane, a financial columnist at Newsweek, said he “wouldn’t touch Wired at anything resembling” the asking price. The New York Observer’s Christopher Byron described the Wired offering as “a piece of junque du jour.”24 If Internet stocks had still been soaring, these comments could have been dismissed as the demented grumblings of jealous hacks. But just as Rossetto and his colleagues were preparing to set out on the pre-IPO road show, the stock market entered one of its periodic snits, and Internet stocks tumbled. Goldman was forced to postpone the stock offering.
The market’s downturn also hit other Internet companies that were planning to go public. A few of them, such as CNET, which operated a number of Web sites devoted to computers and the Internet, slipped through the IPO window before it closed. Others weren’t so lucky. Magellan, the search engine owned by the Maxwell sisters, Christine and Isabel, found itself desperate for cash. In Burn Rate, a deliciously honest memoir of his years as an Internet entrepreneur, Michael Wolff described the abortive merger negotiations between Magellan and his own similarly cash-strapped company, Wolff New Media. At one point during the talks, the chief executive of Magellan admitted that his firm desperately needed money to meet its next payroll. Wolff writes:
Mistake. Big mistake. I knew it. It was the utterance that would change everything.
You can’t say to investors, I have a problem, I have a big problem.
You can’t say, I need your money to feed the mouths I have to feed. I need your money to pour down the maw.
You can’t say, Hey, what did you think was going on? There’s a fire burning like crazy and we have to keep throwing the dollar bills on.
And that was, unmistakably, what (the Magellan chief executive) was saying.
And while that was true of his business and of every other business in the new Internet industry and while everybody knew it was true—that is, that cash was being consumed at a rate and with an illogic that no one could explain, much less justify—you must never, never admit it.25
Neither Magellan nor Wolff New Media survived 1996. The slump in Internet stocks lasted through the summer. As Labor Day arrived, Excite and Lycos were both trading at less than half their IPO prices; Yahoo! had fallen from its first-day close of $33 to less than $20. The IPO market was still virtually closed down. “The honeymoon is over,” Upside, a San Francisco–based technology magazine, declared in its October issue. “The window has closed for the ‘concept’ deals that brought frenzied hype like we’ve never seen before.”26
None of this prevented Goldman Sachs from trying once more to sell Wired Ventures to the public. In a revised prospectus, Goldman valued Rossetto’s company at $293 million—$157 million less than it had been valued at just a few months earlier.27 The discrepancy disturbed many people on Wall Street, and Rossetto received a lukewarm reception when he set out on the investor road show. Rumors began to spread that the IPO might have to be aborted. The sight of the mighty Goldman pulling an issue once was rare enough; for it to pull one twice was practically unheard of. Rossetto wrote an angry memo to his staff attacking the “clueless” mainstream media that had misrepresented the company. The memo was leaked, but it didn’t do any good. In late October, the day before the IPO was due to take place, Goldman canceled it. Rossetto tried to put a brave face on things, but he couldn’t avoid the embarrassment of his company being one of the first big Internet failures. If Wired Ventures had gone public in the spring of 1996, at a more modest price, Rossetto could easily have been worth $20 million or $30 million on paper. Now, his moment had passed. He managed to raise some more money from private investors, but not enough to finance the expansion he had planned. Wired Ventures went into decline. Within twelve months of the IPO’s collapse, Rossetto had stepped down as chief executive. In early 1998, Wired magazine was sold to Condé Nast.