Journey of a Child Entrepreneur: Scott Wainner (Part 3)

SM: How did the sellout craze affect you? Were people coming to you trying to buy your site?

SW: I had been in Portland for a couple of months when out of the blue I got an email from Andover, which is the company that bought SlashDot and was later acquired by VA Linux. They asked if they could partner with me. I returned their email asking what they wanted to do, and their answer was that they wanted to buy the site. Their response email included an offer which shocked me. I don’t remember what it was, but it was several hundred thousand in cash, plus stock and other benefits. I was doing well but had only saved about $30,000 at the time, so it was tempting.

SM: They wanted to buy SysOpt or ResellerRatings.com?

SW: They offered to buy both as a packaged deal. I was on cloud nine. I went out on my balcony and screamed because I was just 20 years old. I had my head down in the business operations so I was not completely aware of the bubble stuff going on. Then it dawned on me that there were some crazy valuations happening. I realized I needed to look into the offer in more detail. I did not have any business training and I had no other offer to compare it to, so I had no idea if that was even a good price.

I started reaching out to contacts trying to seek another bidder. If I could get another bidder, I could get into a bidding war. It did not take long at all. People recommended I contact EarthWeb, which was the company that I eventually sold to. They expressed interest right away and made me an offer that was 30-40% larger than the Andover offer. I then started playing them against each other in a very amateurish way. It worked, though. EarthWeb asked me to come out to the New York office and talk about the deal. Andover said if I was going to New York I should just stop by Massachusetts and talk to them as well.

I planned a trip and visited both companies. EarthWeb was spending cash like crazy; a lot of companies were. They had just gone public so they had a lot of cash. They had an entire floor of this 50-story Manhattan building –  the view was amazing. I was up there sitting with them in a conference room and they were mapping out the strategy of their earn-out proposal on the whiteboard. They said, “We will give you a $350,000 cash bonus if you sign our offer today, but if you walk out of the office that is it”. They had also offered me more money and more stock. I had planned to meet with Andover later in the day, and I was thinking I should call Andover to see if they would top it. I could not get in touch with the Andover people so I decided to just do it.

I also heard that some of their folks were going to fly on a Gulfstream jet they had chartered from New York to San Francisco for a road show. I joked that if they would let me ride back to California on their jet, I would sign the deal. They said sure, so I got to ride in the cockpit of this jet on a $20,000 flight. There were two takes-offs and landings, it was awesome. It was an amazing experience for a 20-year-old with no business training. My hobby paid well.

This segment is part 3 in the series : Journey of a Child Entrepreneur: Scott Wainner
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