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The Liquidator

Your burn rate's too high, and time is running out on your Internet dream. If you call Fred Seegal, you can salvage something -- but it may be the toughest call you make.


The website of the week is -- with a logo in hommage to Fast Company -- where you win points if you vote correctly for the next dot-com collapse.

In London, if you get a little cocky or full of yourself, people just say Boo! -- for, the lavishly funded start-up that just closed its doors.

In New York, APBnews closed its doors (although its laid-off staff, apparently unfamiliar with old-economy layoff protocols, kept showing up for work).

Salon, too, started to disgorge people.

Even CBS and NBC, no longer able to foresee an IPO for their Internet holdings, have begun to downsize their Internet staffs.

And Microsoft is kaput.

It certainly seems obvious to me that the Internet, or at least Internet culture, as it has helped shape the consciousness of our time -- anyone can be transformed through business and technology -- is over, done with, finis. And it seems to me that, considering what's in store, cyber people would not want to wait around for the final scene of crash and burn, and ought to just pack up. Get some rest. Think about tomorrow, another day. (Personally, I can't imagine why Gates himself doesn't just say, Okay, game over, good run.) Possibly, even, come to some kind of moral attention -- and try to dwell for a moment on the meaning of all this.

"If you've spent your money on national advertising before you had a customer base to support national advertising, you won't be able to survive."

But, very likely, that's just my world-weary literary-ish take, and a misapprehension about human nature -- people, oddly, don't seem to want rest or introspection -- and the business process (in an old economy or new). So, whereas I am most tempted to write the story of the end of the boom/mania/fun, with appropriate irony/bittersweetness/newfound maturity, I am instead going to recognize that in business, if not literary, terms, the game never stops. It morphs. Or starts over. Or, abruptly, reverses. From great catastrophe comes great opportunity is a popular business aphorism. Even at Microsoft, someone, somewhere, is undoubtedly starting to think that what the world is going to need is a new Gates -- or two. And, no doubt, all over the dot-com world, panicked entrepreneurs and CEO's are calculating new, audacious save-their-asses moves.

Which is why I'm sitting here with Fred Seegal.

It is true that at first blush, Fred Seegal does not seem like a new beginning. In fact, he seems like, and will be for many, the Grim Reaper, although without the grimness (the Grim Reaper probably doesn't reveal himself right away, either). Where once you thought you were going to get $20 million, now Fred is going to get you $200,000.

And you'll thank him for it.

Fred is a pleasant, middle-aged suburban-dad kind of guy. Cheerful, too. And yet, no denying it, he's the liquidator. Although I'm sure he would prefer to be called a facilitator or negotiator or banker or -- just -- deal-doer. He's going to try to put your traffic together with someone else's traffic and make a mountain of two molehills; he's going to introduce your No. 4 company to the No. 1 company in your category and get you guys talking; he's going to try to get two companies, each with cash in the bank and a searing burn rate, and reduce them to one company with double cash and, with cuts and efficiencies and other hard-hearted stuff, a single burn rate.

Those are some of the strategies he brings to the process of selling dot-com companies that cannot go on. There are nicer ways of saying this. He's selling companies that haven't reached critical mass and that, therefore, have to be combined. Or companies that have encountered capital constraints in a difficult financial environment.

But goners all the same.

Fred is about to move from New York (from the New York suburbs) out to San Francisco to be closer to the action and the process of -- say it -- selling the Internet. Auctioning your dreams. It is for him, perhaps, an advantage, in that, being just about the most un-Internet, non- New Economy guy I've seen in quite a number of years, he probably lacks a certain sentimentality about the business. In character, he makes a dressing-for-the-Internet joke.

It's as if he'd been transported here, perfectly intact, from the eighties. It's a measure of how far we came in the nineties, how overblown, inflated, unreal we have become, that the eighties seem kind of basic, even haimish. Fred is the No. 2 at Wasserstein Perella, a firm that advised some of the great raiders of the takeover junk-bond era but went into quiet, possibly ignominious, eclipse during the IPO-VC nineties.

In fact, Fred's basic eighties sort of middleman business is, in nineties terms, pretty low-return, low-margin. M&A advisory work, with its straight Lehman formula (5 percent on the first million, 4 percent on the second, 2 percent on the third . . .), is slim pickin's, a schleppers' game compared with 7 percent on an IPO, plus a ton of warrants, to 100 times your money (or 200 or 300 times) for a VC stake.

But somebody's got to do it.

The world is suddenly a harsh place: There is no more money available for Internet companies. No more IPOs. No more VC rounds.

It's not only harsh but existential. You're all alone. No one can save you but yourself. There is no God.

Although there are, of course, advisers.

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