I Remember Exodus

Note: This is a repost of a previous post I had on my older blog, I’m reposting it as it’s still relevant, and I’m migrating some of my older content to this blog.

Left: The “e” from the Exodus logo that formerly used to reside on the HQ building. It’s currently in my garage, and I look at it every time I park my car –because I want to remember

I started my career at Exodus Communications, and was there for three long years. If you know your internet history, Exodus was a flagship turned bloated startup that exploded, then died painfully into highway 101. (I didn’t do it, I swear!). We hosted pretty much everyone, massive data centers with great security, right on the backbone. If you were an internet company, it’s likely you were with Exodus at one time or another. We even bragged “we ARE the internet”.

I still half-jokingly apologize to friends that bought stock just out of guilt for a promise that never was. The Exodus (EXDS) Stock split FIVE times in just a little over 12 months…if I can recall corrently–then it went to pennies and we filed chapter 11 –Twice! 3 CEOs later, 10 rounds of layoffs, I was the final 33% (or was it 12%…I forget) and I left on to greener pastures. I wish someone would create a [Edit: I did create a] wikipedia history of Exodus, it’s worth remembering, and a good lesson.

F*cked Company (one of the original grass roots conversational aggregators) always had clever names for us at Exodus Communications.

“Exit Us” or “Mass Exodus” or “ExoDUHs” or “XX for-eyes-us”

I remember the people
I learned some powerful lessons at Exodus Communications, I saw a complete business cycle in 3 years, had countless reorgs, and figured out how to survive 10 rounds of layoffs. (The secret is “embrace change”, btw). Most importantly, I remember the people. I had a great manager, (John Perera) who became my mentor, even came to my wedding, and we have lunch whenever we can squeeze in the time. Waili was even my groomsmen, Can you believe that? A sales guy in my wedding party. (just kidding…us IT folks figured you hated us and that’s why we got shipped over to the otherside of the freeway)

I know many other Ex-Exodus Alumni read this blog, I think the greatest takeaway was the people that I met, there was a strong caliber of people, risk takers, movers–the enterprenurial spirit ran deep. I’ve noticed that almost everyone I keep in touch with has a day job AND a side business! (rock on!) We still keep in touch, and even had a BBQ a few years ago. I’m even having lunch with a few alumni today at Rivermark.

I remember the Ferrari we had parked outside of the front door at Exodus, which was used to motivate sales closes, eventually it was awarded to the top earner.

Yahoo and EMC now inhabits the Mission College Towers (left) I used to call home, I drive by there frequently on my way to work.

I remember the dot bomb parties. I went to many dot com launch parties in SF, San Jose, and Tahoe. I saw eStamps, Beenz, Pets.com, and a bunch of other silly companies spend thousands on parties for no particular reason –then reality set in, a business model is sorta-kinda needed.

I remember the sock puppets
, lime and purple logos, and a fleet of 3-Series BMWs on 101 in seemingly standstill traffic. I remember that having an Exodus badge got special treatment at luxury car dealers on the peninsula. I remember people doing silly things with big ice blocks and vodka, people dancing and bragging about ‘hittin the gold mine’, and C-level execs performing stunts to garner attention.

I’m sure if I watched carefully, I would have seen people jumping into pools to get attention/money/recognition. So although I was a dot bomber (many others fared way worse that me) I walked away with a lesson.

Now, today things are picking up again for web (called web 2.0). The new era of social software is coming around, and coming fast, really fast. But I’m with Loic, who questions if we’re headed back to the crazy bubble 1.0 again.

Let’s do it right this time, please remember.

Leave a comment, what was the dot bomb experience like for you during late 90s- early 2000s?

  • CUShopper.com alumn here (from TMP/ Monster and then to EarthLink). Didn’t make second round VC, but we had an awesome circus like paintjob on the empty warehouse complex! Very creatively inspiring I suppose when the day we moved in to the new office half the staff was cut.

    So many talented people, an actual good idea and business model for the time, but poor, poor timing and strategic decisions. I have no interest in seeing that happen again. Just say NO to Bubble 2.0!

    Oh, I remember F**k’d Company dot com as well… it was a daily (at moments hourly) visit 😉

  • I remember sitting in an office for a job interview around a Web Applications Programmer position around 95-ish….the estimated profit being told to me around this particular slice of the industry was 5-7 BILLION dollars 🙂 … free breakfast, lunch, drinks, snacks, beer, 50% salary increase.

    It lasted almost 13 months! Those were good times 🙂 but a lot of us know better now…that money has to come from SOMEWHERE, and it needs to be paid back.

  • I found out about F*ed Company the day of my first dot-com layoff. 🙂

  • I started up a sports e-shop – the first canadian one (geography still mattered a bit back then). I started with 65k in angel raised in 1999, built the site, loaded thousands of products, and made some sales with limited marketing. Next round was with VCs… they liked the plan, had two firms interested, it was up to me to pick the the right one.

    Not long after the pets.com collapse was on the front covers. The VCs took days to return my calls, they pushed signing meeting out a week. I showed up at the right time and place, i was stood up. They stopped returning calls. A week after, the numbers i had were canceled. A few more weeks and the offices cleaned out.

    I moved onto the telecom bubble in 2000 to 2001… I was handed stock options at a company that was worth more than GM and Ford combined but had 100 million in revenue. I laughed at my boss, shorted the stock, and a year later took the first package of layoffs. Closed my short position and started up another biz. Now that one is another story..

    Thanks for the memories!

  • Your post brings back memories. My dot-bomb experience was with marchFIRST. They (briefly) made headlines as the global agency that was going to change the world by merging marketing and technology. A sound idea, of course, but the company lacked sound business practices.

    I remember the opulent offices with concrete reception desks and Aeron chairs. I remember the designer schwag that convinced employees together we were on a glorious mission. And I remember a lot of good people in the Milwaukee office.

    I also remember the client who deserved better and more efficient work (but they were helping to pay the bills). I remember the rumors and F#cked Company posts. And I remember the box I kept on my desk because any day might’ve been my day to pack my personal belongings.

    I remember how sad we all felt when the first people got RIFed; of course, they turned out to be the lucky ones since they saw some of their severance pay.

    Toward the end, I remember the sweetheart deals for senior execs. I also remember members of the tech group taking boxes of Microsoft software out to the field next to the office to see who could Frisbee a CD farther.

    Thirteen months from inception to crash. And Jeremiah, like you I still have friends I apologize to for their investment in the stock–from a high of $52 to a penny in a few months.

    I wish I could say I advanced my knowledge of my profession, but I learned more about business than I did about marketing. My boss, who was shown the door right before the crash, used to joke he didn’t need to get his MBA because of everything he learned at marchFIRST.

    The important thing I learned was to appreciate good, caring, genuine, and collaborative leaders. And I believe my m1 experience has aided me as I grew into greater leadership roles since. Hope I never create new memories like those, again!

  • I worked on a 4 man team managing almost 3 billion dollars in mid 1998. I had spent the summer and fall of 1998 waiting for the perfect timing to buy Uniphase, which later turned into JDS Uniphase. George Gilder had some credibility at the time at was recommending the stock in his newsletter, and the story was exotic. Lasers…oooh…aaahhh.

    I finally turned in a 7 page JDSU research report in early November ’98 but the dinosaurs I worked with did not buy the stock. They thought is was too risky. I brought it up nearly every other day until I finally talked them into buying a small position in our mutual fund. It accounted for only perhaps 10,000 shares, but should have been 250,000 if we would have put it in the our other accounts.

    The stock went up 25x from my recommendation, but we only captured s small part of the move of the guy I was butting heads with sold the stock in July ’99 when I was on vacation. Of course it had many good months ahead of it.

    The day it was added to the S&P 500 I told a friend of mine to short it, he called his discount broker to short it and the phone rep talked him out of it. Crazy…that was pretty much the top and then it when down 98%.

    _________________

    Naveen Jain, the CEO of Infospace, presented to the Goldman Sachs Tech Conference at the NYC Grand Hyatt in March of 2000. I had never seen so many people packed into a room…in front of perhaps 700 money managers he told us he was going to make a “shitload” of money. I had never seen anyone full of such hubris, but those were the times. Of course the stock went up a bunch the next day…and then he got in a bunch of trouble and had to disgorge a bunch of that profits.

    ______________

    I know some people in Chicago that invested in EXDS during the early rounds of financing. It is a small boutique, they did not sell the stock well but still made a ton of money.

    At one time EXDS was the sexiest stock of them all.

    It was an insane time.

    That letter “E” from the logo is worth a lot of money I think. I will trade you the 1999 annual report from GO2Net, Inc signed by the CEO. He wrote me a personal note, to the effect, “this is just the beginning” or something like that.

    good times!

    SJ

  • Good post. You guys were one of our customers when I was at Sun Microsystems (we were on the other side of the road).

    The Dot Bomb era was a mixed bag. True, too many businesses were started (& remained!) on napkins. And I think “the media” hyped both the rise and the fall. Whether it’s tulips over 100 years ago, or “social media” today, hype plays to people’s hopes, making it that much more addictively engaging.

    But that time also kick-started a great period of passionate innovation (both technologically & business-wise) that continues today.

    I think that collectively, we all were ahead of “the market”. The hype aside, corporations & markets weren’t ready for it. Change agents can force things to happen, but companies, customers and people have to be ready to CONSUME the change as well. And if they’re not, you have to be able to help them and show them (this is where smart Corporations can leverage Web 2.0 tools for Web 1.0 or 3.0 technologies).

    I think we’re ready to belly up to the buffet again…and I’ve got Tums for anyone who needs ’em! 🙂

  • The funniest and saddest Exodus story I have concerns the co-founder of my first startup. He had made millions when he sold his first company, and invested a ton in Exodus. I believe it was one of two stocks that he owned.

    When Exodus began its decline, he started buying at $40 (I think $80 was the all-time high).

    “This is an $80 stock,” he would tell me. I told him that any stock could go to zero, and that the fundamentals would eventually prevail.

    He kept averaging down as Exodus declined. It irony was that around that time, we terminated our Exodus contract and yanked our servers, instantly reducing our datacenter costs from $20K/month to $600/month. So even as we were yanking servers, he was buying more stock.

    One day, I asked him, “So, are you going to sell?”

    “Don’t worry,” he said, “I’m not washed out until it hits $9/share.”

    “Wait a minute,” I said, “What do you mean washed out?”

    “Didn’t I tell you,” he replied, “I bought it all on margin.”

    In the end, Exodus ended up costing him about 95% of his net worth. He also ended up selling his two houses (which he had bought using reverse amortization mortgages). He’s since recovered, and makes a good living, but I always wish that he had just applied a little more common sense to his investments.

  • Chris Yeh

    Wow, that’s a very powerful lesson, these are the stories I’m glad to hear, so we don’t repeat them again.

    Fortunately, IPOs are few and far in between

  • At one of the first Internet World shows, this was back in fall 1994 I as I very vaguely recall, the event was practically a garage sale as compared to any one of the events going on now. (SES, Web 2.0, Community 2.0, etc.)

    Since this was 2.7 million years ago Internet time-wise, some memories are hazy. But I remember the basement where the show was held in a Sheraton in Washington, D.C. At the time, I was working at Prodigy Services Company, the first really mass market online consumer service. (Yes, yes, CompuServe and AOL were in existence, but at that time, it was Prodigy that had built the consumer acceptance of the space.)

    Anyway, there were few vendors. The ceilings were low and it’s just hilarious to think of what this show was compared to the monstrous growth that brought filled full exhibit halls at Javits and Marconi just a few years later. As the first person at Prodigy with the word “Internet” on a business card, I was clad in the trade show uniform of khakis and golf shirt, showing demos of Prodigy’s Internet browser. And several of us designed and launched an interface from Prodigy to USENET. As well as some web services when there were but a few tens of thousands of domains on the whole web. (And both myself and some former co-workers are perfectly well aware that if we hadn’t been such dorks so fully enamored of playing with the technology we would have realized we should have just been registering domains. But, we were product folks and builders, not business people.)

    Anyway, not long after, Prodigy compounded some earlier and arguably forgivable strategic mistakes and committed their final suicidal choices. They used full size railroad spikes to nail the coffin shut. Basically, some choices were made to go with proprietary stuff as opposed to the questionable future of this open standard stuff. At the time, I was Sr. Product Manager, and didn’t have the juice to make this not happen. In the end it worked out though. I quit. And not too long after joined some other former co-workers to found and and build About.com, which to this day remains a top property. To this day Prodigy alum will occasionally get together for re-unions to appreciate each other as former colleagues and friends, and the role the company played in early consumer online efforts.

    And we laugh a bit about some of the latest and greatest. Because some of it? Well, it was invented long ago. Just on an archaic platform. We’ve come a long way since that dark, low ceilinging first Internet World. But Prodigy? While it may still exist in some form as an ISP in Mexico, the service itself died about as fully as it could when the bubble burst.

    Scott

  • I was 22, President of a small web shop, 4 guys in a basement…we didn’t know what we were doing. It was May of 1995. We ended up being one of the ‘players’ in our Market (Montreal, Canada) with a little shy of 80 staff around 2000.

    My great idea at the time was, we’re cheaper and as smart as the guys south of the border. Let’s get into deals with the .com startups in NYC and get some equity in exchange for our work. At that time, not taking into consideration exchange rate (60 cents CA on a US buck), the cost of doing business was 4X more in NYC than in Montreal. So not only were we getting equity, but 100% value for our services, great deals and good times. We’re mid 1999, we start pitching and closing business, there was great buzz, and one of the largest funds in Quebec (That can’t invest outside of Quebec) thought, hey, here is a group that could work with us. They approached us and invested real cash…We were on top of the world!

    We started getting approached by the larger fish in the pond, offering us deals and wanting to buy us, but at 27 or 28 years of age you think you can do it, you should do it and nothing can or will stop you… Believe me, I know now that money in the bank, a good business model and profits are the backbone of a healthy business. I was a paper gazillionaire…My goal was 30 at 30 (30 million by the age of 30!)

    When the market crashed, our ‘client-partners’ (that’s how we use to refer to them) started to fall, one after the other, leaving us with debts in excess of 1.3M, cash NOT in the bank, that’s hard on the cash flow.

    I ended up merging the business with another agency that had a great cash position but no clients, in 2002. We saved our jobs that we had left, saved the traditional accounts (as we use to say) we were servicing. Even today, some of my original staff is still working at that agency; some of my key clients are still doing business with them! I look at today’s opportunities, the great new business out there, and I ask myself two questions: What’s the business model (monetization)? Are they turning a profit (soon)?

  • Mind if I share one more marchFIRST story that has been permanently branded into my brain? To me, it perfectly defines the hubris and fear of the dot-bomb period (at least in my non-Silicon Valley corner of the world).

    In December 2000, the Milwaukee m1 office gathered for an extravagant dinner at the Midwest Airlines Center. The stock had dropped more than 90% in the prior weeks, and other offices were canceling their holiday parties in order to save money. Ours had been prepaid, so we proceeded.

    marchFIRST employees and spouses gathered, wearing their best party outfits, but no one wanted to party. With hors d’oeuvres and drinks in hand, people whispered rumors and discussed resumes. Thoughts of options and riches had turned to fear about keeping jobs and paying bills.

    The highlight of the evening was a speech by an office leader who compared our situation to the game his kids played. The now infamous “Oregon Trail” speech included references to how the game involved death by starvation and Indian attack, but those who survived to the West coast lived happily ever after. If the speech was supposed to help lighten the mood, it failed.

    I still look back on that evening as one of the most surreal experiences of my life. In retrospect, I should’ve drank more!

  • My daughter (first kid) was born six weeks before my employer (iSharp, whose customers were primarily dot-bombing dot-coms) went chapter 7 in 2001. That was fun. We were told to go to a movie on Wednesday (on the clock) and then on Thursday, we were told to go home and not come back.

    Like the “go see a movie” instruction wasn’t a clue…

  • I worked for Exodus, but for two of the smaller divisions: Keylabs and Service metrics. I moved over from the medical device industry and couldn’t wait to get back.

    Those were some crazy times!

    The company was starting new initiatives right up until the end. Never (from my point of view) had a decent focus on revenue-producing projects.

    But I was in MarCom, what the heck did we know?

  • Ahh yes, the dot-com… When I had a corporate AmEx to make sure the president’s beer fridge and scotch cabinet were never empty. When they got rid of cubes in my dept. to put in the pool table (felt customized to match the walls). And in the winter our top execs would do doughnuts in the parking lot in their $100K cars.

    Life’s been so sucky and grown up since then. 🙂

  • One lesson I learned is to take the cash when it’s available. DoubleClick did a secondary offering, I think in 1999, and took around $700m in cash. A year later, the company was worth less than $800m (and still had nearly all of the $700m in the bank). The stock dropped from something like 225 to 12, but it didn’t go to pennies, and the company survived (and ultimately thrived) because of the cash position.

    -ts-

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  • This Chris Nolan answer pretty much sums up why there weren’t be a web 3.0 and why 3rd times a charm: http://www.spot-on.com/archives/no_more_bubbles.html

    I think if the numbers later this month show that we’ve been in recession, the government will probably put measures into place similar to SOX that will pretty much produce a tech economy of no more Netscapes. And for me that’s a good thing. After seeing my wealth go wildly up and down over the past decade, I’m all for stability.

  • EJ

    The real dotbomb party was the moment I was working for just half a year at BrightAlley, and these plains crashed in at the WTC. Really scattered some business…

  • I am holding in my hands (just happen to be cleaning my office) the official letter of “Dissolution” from one of the startups I worked for – I clearly remember our very first day when our CEO proclaimed that we’d one day be worth $70 a share – and that we were to be a world class customer service organization (still not sure where that one came from). So many lessons learned.. so much money and dreams wasted.

  • I lived the mid-90s working for TCI Technology Ventures, the VC arm of what was then the nation’s largest cable TV company. As an early investor in Netscape, I got to see the birth of Exodus, Excite, Pointcast, and so many others.

    I remember a distinct sense of unreality about the whole thing. Perhaps it was I had survived an earlier bust, the CD-ROM microbubble of the late 80s.

    We always tell ourselves that it’s going to be different the next time…but it seems that every wave is a much bigger, hits faster, or lasts longer than the prior one.

    If you’re a tech entrepreneur, you just get used to the cycles of exuberance and despair, and learn how to internalize it. You don’t take some things as seriously as you used to. You learn to go analog on other things. You find out the things that you must stay on top of and stop doing things that you feel are not essential. You learn that there are people you *love* to work with and there are others that you don’t want to have in your life.

    Me? I’m not as good of a coder as I once was. As a tradeoff, though, I still feel young…no burnout, no carpal tunnel, and I still get to feel the childlike excitement of watching and participating in something really interesting taking place.

    All of us have won the genetic lottery by being alive, active, NOW. It truly is a gift.

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  • One lesson I learned is to take the cash when it's available. DoubleClick did a secondary offering, I think in 1999, and took around $700m in cash. A year later, the company was worth less than $800m (and still had nearly all of the $700m in the bank). The stock dropped from something like 225 to 12, but it didn't go to pennies, and the company survived (and ultimately thrived) because of the cash position.

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