News Feature

Acquire the Technology and the People

By Lauren Gibbons Paul

November 01, 2000 — CIO — Reader ROI
Read how dead and dying dot-coms are selling off pieces of their technical architecture—cheap
Learn why the technology is worth nothing without the people who built and maintained it

Opportunity often requires one to act first, think later. On a pleasant Thursday afternoon last spring—May 18, 2000 to be exact—executives at Bright Station consulting received a call from officials at KPMG. The Big Five company was beginning to liquidate the assets of high-profile fashion e-tailer Boo.com, which its founders had decided to shut down only the night before. Would Bright Station, a London-based e-commerce provider, be interested in acquiring Boo’s back-end e-commerce platform?

Bright Station executives had no idea. But since their office was just around the corner from Boo headquarters in tony Leicester Square, they figured they’d pop ’round to have a look. By Friday morning, May 19, with scarcely enough time to peel back the covers on the system, an offer was on the table. Soon afterward, Bright Station agreed to acquire Boo’s homegrown message-brokering architecture and package tracking system, which Bright Station planned to adopt as an e-commerce platform for its customers—companies that were looking to expand into the European market. The price was 250,000 pounds (just over $374,000 at today’s exchange rate)—less than 1 percent of the 35 million pounds (over $52 million) Boo spent to develop the system. A bargain indeed. (Fashionmall.com bought Boo’s brand and front-end user interface.)

But the glory of the moment soon evaporated. Back in their office later that Friday afternoon, Bright Station executives suddenly realized the technology would be worthless in the absence of the people who understood it. "We realized we were really after the people—a lot of what we wanted was in their heads," says Eric Goldstein, executive vice president of Bright Station. "We thought that if we got the technology and didn’t get the people, we’d be lost." Unfortunately, although Bright Station had asked KPMG to hold off on letting the 220 Boo employees go, all but 30 key personnel (who were kept on to ease the transition) had been "made redundant" by the end of the day. Going into the weekend, how would Bright Station reach Boo’s embattled technical team—44 people in all—before they departed on much-needed breaks or took other jobs? And if Bright Station was able to locate the critical personnel, would enough of them agree to come on board to keep the e-commerce system vital?

As the landscape becomes increasingly littered with the carcasses of e-tailers, more and more executives are likely to get a call like the one Bright Station received in May. In fact, it’s already de rigueur for viable retailers to purchase technology from their dead and merely moribund peers. For example, even as fiscal pressure mounts on eToys, last June the pure-play toy retailer purchased homegrown customization and personalization software from the eParties unit of eCompanies. (Though struggling, eParties was up and running at press time.) According to published reports, Jeanne Jackson, the new head of Wal-Mart.com, bought an e-commerce platform from now-defunct Homewarehouse.com. Former Toysmart.com CEO David Lord no doubt wishes he had sold off his company’s software, given the firestorm of disapproval that followed the announcement of his intention to sell the bankrupt retailer’s customer list. (Not surprisingly, many in Lord’s position, including Lord himself, declined to be interviewed for this story.) Some particularly survival-minded dotcoms decided from day one to license their technology to others. Mercata, for example, hosts its We-Commerce group-buying platform for the likes of Sun and Onvia.com.