I.P.O. Jackpot Dreams Fade for Dot-Com Scribes

Last May, as dot-com mania was blooming, Dave Kansas, the editor of TheStreet.com, became a rich guy when the financial news site went public. At the end of first day of trading, he owned $9 million worth of stock in the fledgling venture and had options to buy another $4.5 million worth for just $2,300.

That’s chump change in dot-com land, really, but other editors and writers around town took notice because Mr. Kansas wasn’t some downtown digerati kid they didn’t understand. Prior to joining TheStreet.com, Mr. Kansas was the senior financial markets reporter for The Wall Street Journal . Print business reporters and editors muttered to each other about that number: $9 million. That’s a private sector payday. Mr. Kansas is a financial markets journalist.

Then came Salon.com in June 1999. David Talbot, who, prior to founding Salon.com in 1995 had been the arts and features editor of the San Francisco Examiner , took the Web site public in a lackluster initial public offering, and shazam!–he had $4 million in his brokerage account.

But those easy-money days are over. At current prices, Mr. Kansas’ stock and options are worth $1.6 million, and Mr. Talbot’s stake is worth a hair over $1 million. Not bad, but, of course, back in the old-media world, Dave Eggers just sold the paperback rights to his debut novel for $1.4 million.

After a wrenching week in the stock market, if reasons remain for editors and writers to get together and create on-line publications, the I.P.O. jackpot does not appear to be one of them. Sure, the Nasdaq perked up on Monday and Tuesday, but the clear losers of the Great Internet Shake-Up of April 2000 are those companies lumped into the category of “content.”

The numbers are staggering. There’s Salon.com, which, after closing at $10 a share in June, is now trading at around $2.50. In May 1999, a share of TheStreet.com finished its first day of trading at $60, but is now worth just about $7. And CBS Marketwatch, which hit $117 on its I.P.O. day, is now trading at less than $17. Those aren’t the only ones: While the Bloomberg index of Internet companies is down 38 percent since the first of the year, the content companies it includes have lost 50 percent.

After Black Friday, April 14, Mr. Talbot still believes in his on-line publication Salon . It’s just not a stock thing anymore.

“I don’t have any visions of stratospheric stock prices,” Mr. Talbot told Off the Record a couple of days after Black Friday. “Salon’s business plan is a traditional one: We sell content and we sell advertising. We’re not a B2B company or any other flavor of the month.”

And as for selling a writing site as a hot Internet I.P.O., Mr. Talbot figures that’s over. “I think it would be virtually impossible for a content company like ours to go public this year.”

And Mr. Kansas said he’s not having any trouble attracting talent away from old-line newspapers, even with TheStreet.com shares slumping. “I think journalists are attracted to the chance to have an impact,” he said. “The chance to build stuff.”

Eventually, money will be made by pumping out words and pictures for the Net, just as money has long been made by putting words and pictures on paper. Kurt Andersen and his partner Michael Hirschorn, co-founders of Powerful Media, a media and entertainment news Web site, stand to make much more money running their new enterprise, which meticulously tracks book deals and the hiring and firing of studio executives, than they ever would have made as editors at New York or Spin magazine.

Still, after April 14, you can’t help but think that some of that dot-com mystique is gone. Hiring a bunch of writers and editors to produce a Web site is suddenly no longer the best way to get rich quick. And the business of filling computer screens with stuff people want to look at doesn’t seem all that different from the business of filling movie screens, TV screens or newspaper pages.

Jerry Colonna, a managing partner at Flatiron Partners, the venture capital firm that put up the money for Powerful Media, as well as for the magazine and Web site The Industry Standard and for TheStreet.com, said he’s confident his on-line media bets will pay off. “I structure my investments so that I can make money even if these companies don’t get an Internet premium,” Mr. Colonna said.

Breaking into venture capital jargon for measuring how many times an initial investment is multiplied, he added, “Instead of getting 15 times return, we’ll get three times our investment. Well, that’s not such a bad deal.”

Massaging stock prices upwards, or at least attempting to, will no doubt continue to occupy new-media executives. Scott Kurnit, the chief executive of About.com, which hit its all-time high of $105.81 on March 14 before sinking below $30 this month, was confident that his company’s stock would pick back up.

“I’ll have to go to investors and say, Now that the dust has settled, we’re different,” Mr. Kurnit said.

He argued that his company, which gives people a cut of the site’s ad revenue in exchange for running a home page dedicated to a specific topic like “cheese appetizers,” didn’t deserve the content label. “I don’t like to be included in the content group because it’s a misnomer; it means a lack of efficiency and not using the medium effectively. There are content companies and modified-content companies.”

Louis Kanganis, chief financial officer of Nerve.com, said he was different, too. “I think what is going to start happening is that people are going to start separating new economy companies by the strength of their business plans,” he said. Mr. Kanganis wouldn’t rule out an I.P.O. for his company, which, in addition to its sex-theme Web site, now publishes a magazine and hosts a personals site, although he said Nerve might have to take the company into German rather than American markets.

Larry Kramer, chief executive of CBS Marketwatch, called the fall of Internet stocks “bittersweet.” With the vision of blockbuster I.P.O.’s fading for those not yet in the on-line financial news game, he predicted venture capital funding would begin to dry up for his competitors. “I want to stop competing against people who are just throwing away money,” Mr. Kramer said. “The dark side is that a lot of employees are in the sobering position of being underwater.” In other words, all those journalists who signed on for the stock options are out of the money.

Of Mr. Kramer’s own stock, which was worth $7.8 million on I.P.O. day and now is worth about $1 million, he said, “It wasn’t real money, it was money to lose.”

Sic transit gloria mundi.com.

Former Daily News editor in chief Debby Krenek bade farewell to her staff on April 13 at a party at the Water Club. About 100 people showed up, including ghosts of the Daily News past, including Jim Willse, editor and publisher when Robert Maxwell owned the paper and before Mortimer Zuckerman bought it in 1993; former star mob-world reporter Jerry Capeci, now a spokesman for the John Jay College of Criminal Justice; and former business editor Ann Podd, now a spot news editor at The Wall Street Journal.

“It’s a pleasant group of people,” said a Daily News staff member who attended. “It’s sort of like a family that only gets together for a wake and says, ‘Gee, we need to get together more often.'”

Ms. Krenek had stopped coming into the offices around the end of March. Her office remains dark as her successor Ed Kosner prepares to take the helm at the tabloid.

Perhaps more Daily News editors and reporters would have shown up if they hadn’t had to pay $30 to get in. The gritty tabloid tends not to splurge for staff get-togethers; people who wanted to send off Mr. Capeci when he left the paper last October had to chip in for drinks and hors d’oeuvres, too. Also, perhaps they wouldn’t have had to spend $30 if Mr. Zuckerman had shown up, but the paper’s owner skipped the farewell ball for his “princess,” as did Ms. Krenek’s replacement, Mr. Kosner, who is close to wrapping up his six-week study of the paper before he starts making his mark at the News .

“I would say it was a bon voyage to somebody who is certainly going to be a big part of the news world,” said a staff member who attended Ms. Krenek’s party.

Oprah Winfrey’s new 318-page magazine, O: The Oprah Magazine , is a very reasonable $2.95. After all, Time , Newsweek and New York are each $3.50. Plus, each issue of O includes a “gift from O ” behind page 270: five “beautiful bookmarks” that can be cut out. But if you want to consider what you’ll get, here it is:

“This Month’s Mission,” an activity for Ms. Winfrey’s readers (page 20), is to start a “courage journal.” First, buy a notebook. Then, “on the first page, write down every brave, strong, surprising thing you’ve ever done.” Does starting a courage journal count?

For those who need inspiration, the Alaskan folk-singer Jewel shares what she writes in her own journal (page 96). In July 1999, she wrote, “My childhood was molded by the beauty of nature as well as the knowledge of how much people suffer. Even small indignities–dealing with stuff from petty bosses just to get a minimum-wage paycheck, answering intimate questions in the welfare offices (like whether you have a boyfriend who gives you money) just so you can get your children fed in the richest country in the world–they are the kinds of things that inspired my songwriting at 16. Does anyone believe in love?”

Of course, you don’t need to buy a notebook to get started. In a feature “Something to Think About” (page 100), you are given space to write down your thoughts right then and there.

“Find a quiet spot to consider the questions below, then use the space to write down your thoughts.” Questions include, “Am I satisfied with the life am living?” (four lines are provided for an answer); “How would I change my life if I had only one year to live? One month? One day?” (five lines); and “What’s my heart’s deepest desire?” (five lines).

Other activities include the “everyday pleasures” recommended by Katrina Kenison (beginning page 108): “Let your nose lead the way on a sensory walk. Take a friend with you and see what good sniffers you are. Can you tell which neighbor is barbecuing?” Also, “Look around the room you are in right now. What do you see that pleases your eyes and soothes the spirit?”

Whoa! I just saw Oprah’s placid and serene gaze meeting mine!

Correction

The picture of Angelina Jolie and James Haven that ran in the April 17 edition of this column was published with an incorrect credit line attributing it to Dave Allocca of DMI. As was noted in the text, Gilles Bensimon, the creative director of Elle , was the photographer who captured the siblings smooching. Off the Record regrets the error.