April 23, 2000
A Dot-Com That's, Like,
a Discussion on E-Commerce
By GARY KRISTN this time of dizzying volatility on
Wall Street, no company's fortunes have seesawed quite so
dramatically as those of PipeDream.com, since its
(imaginary) initial public offering in January.
The New York Times
|The Badge of the
PipeDream's stock zoomed from an initial price of $2 a
share to 468 5/8 in its first week of trading, making its
founder and chief executive, Ethan Proctor, the youngest
dot-com billionaire on record. During the recent sell-off in
technology stocks, however, PipeDream plummeted to 2 1/4. To
find out how the fledgling company was weathering the storm,
we arranged to meet Mr. Proctor at the Silicon Valley Video
Arcade in Mountain View, Calif., where the 17-year-old
visionary was leading his senior managers in a team-building
exercise involving the obliteration of slime creatures.
The New York Times: Mr. Procter, what has been
your greatest challenge in starting this company?
Ethan Proctor: Homework.
The Times: Homework?
E.P.: Well, yeah. I've got this English teacher?
And she's making us read Beowulf? It's sort of hard to
develop international marketing strategies when you know
you're getting quizzed on the genealogy of Hrothgar and
Unferth right after lunch period.
The Times: So it's been a struggle?
If it weren't for The Geekmeister here [Chief Financial
Officer Thomas Benson Jr.], we'd never have been able to get
granular on our business plan in time for the I.P.O.
The Times: Mr. Benson, is it true that you and Mr.
Proctor started PipeDream in the basement of your mother's
ranch house in suburban San Jose?
Thomas Benson: Totally.
The Times: Where is corporate headquarters now?
T.B.: In the garage, behind the broken sofa-bed.
The Times: It must have been a thrill to engineer
one of the most successful I.P.O.'s in Nasdaq history. How
do you explain your company's initial success?
E.P.: Obviously the market understood that
PipeDream's unique position -- straddling the B2B and
e-commerce sectors -- would allow us to really pancake the
value chain, injecting old economy revenue-growth models at
new economy valuations. Plus, a lot of people seemed to like
The Times: Nonetheless, PipeDream is an untested
company run by young, inexperienced executives, without even
the remotest expectation of a profit. What do you say to
people who claim that prices of companies like PipeDream
were ripe for a correction?
E.P.: All I can say is they sound like my mom
[vice president for commissary operations Helen Proctor]. We
gave her the chance to load up on stock options at the very
beginning, but she did a total self-toast. Told me that the
only thing she wanted in exchange for her services was that
I clean up my room.
The Times: And what does she say now?
E.P.: She stopped being mad at me when I bought
her a controlling interest in Mary Kay Cosmetics for her
birthday. But now, after the correction, she keeps going
"I told you so, I told you so." I
The Times: But doesn't she have a point? Given the
drop in your market capitalization, won't you have trouble
raising the money you need to achieve your growth targets?
E.P.: O.K., the V.C.'s have sort of
stopped returning my phone calls. But my management team and
I are exploring alternative funding sources.
The Times: Such as?
E.P.: Paper routes. And Dad's raising my
The Times: Some of your critics have complained
that PipeDream seems to lack focus. What is PipeDream's
mission in the marketplace?
E.P.: Well, like, we represent a new, you know,
paradigm, geared to the rapidly-changing realities of the
21st-century virtual marketplace.
The Times: But what kind of product or service do
E.P.: "Product" and "service"
are totally last millennium concepts. PipeDream is the
future, and so whatever the future turns out to be,
PipeDream's going to be right there. What more do investors
need to know?