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Lessons from a technology pioneer

From the pages of In Business magazine.

Stephan Paternot could have written an updated version of his book, A Very Public Offering: The Story of theglobe.com and the First Internet Revolution, for several reasons. He could have done it to illustrate how theglobe.com, his promising young tech company, was being knifed in the back by Bear Stearns, the mercifully defunct investment bank that took it public and was later found to be sandbagging its stock price as part of an unethical scheme.

Paternot could have updated the book, first published in 2001, to note that the success of Facebook vindicated his original business premise that there was a strong desire for virtual communities, or he could have simply described the much happier place he’s found with Slated, his film finance venture that is attempting to transform a medium he’s always loved.

Taken alone, any of these would be perfectly valid reasons, but in truth Paternot, the youngest-ever CEO of a public company, wanted to set the record straight. The book retells the rise and fall of theglobe.com, which shattered records with a billion-dollar IPO in 1998 only to see its founders, Paternot and Todd Krizelman, forced to leave less than two years later. The book was reissued last fall on the 20th anniversary of the IPO — just in case the recounting of their departure was not fairly depicted in the National Geographic TV series Valley of the Boom. (It was).

Perhaps the most important lesson found in A Very Public Offering pertains to going public, which Paternot cautions against because, in theglobe.com’s case, it resulted in a short-term myopia rather than the relentless innovation that produces real value for an online community or customer base. Looking back, he probably had no choice but to go public, but when you’re forced to leave even after producing a record quarter, something is desperately wrong. “You trade forward-thinking innovation,” Paternot laments, “for making your quarterly earnings look good.”

Paternot found out about Bear Stearns’ shenanigans after the first edition came out, and after its double-dealing became public during the 2008-09 financial crisis, when it became the first bank to collapse and get sold for scraps. For Paternot, the revelations provided some closure; today, his contentment is enhanced by the possibilities of Slated, the potential of blockchain and other technologies to fix the Internet, and the affirmation of a business legacy. “We began to prove,” he notes, “that online communities have real value.”

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