IPO insanity

Have we lost our minds? Unprofitable Priceline.com went public last month and its shares were up more than 500 percent on their first day of trading, giving the startup a valuation of nearly $10 billion. Meaning the Web site is worth more than Northwest Airlines and Marriott combined.

William Shatner’s stake in the enterprise is worth about $8 million alone. Are Captain Kirk’s voice-overs worth that much? Only if there’s no intelligent life down here. The craziness isn’t limited to Wall Street. Travel.com.au, which bills itself as Australia’s first industry-specific Internet company, is selling 18.8 million shares, or 44 percent of the company, in an effort to raise $23.5 million. Who cares if it lost $300,000 last year?

Meanwhile, things take a turn for the worse at Biztravel.com. James D. Norrod, on the job for only three months as CEO, and company president John Williams are expelled by a horde of impatient venture capitalists. Despite its public relations firm’s attempt to obfuscate the corporate executions by issuing a press release about its largely meaningless Webby award, speculation about Biztravel’s imminent demise is irrepressible.

Tales of wasteful spending punctuate reports of a planned “restructuring” at the New York travel site. One unconfirmed report — unconfirmable because Biztravel doesn’t return calls — is that the company splurged on a server, sinking $1 million into computer hardware that may now be auctioned for pennies on the dollar.

Another unconfirmed story is that Trip.com came precariously close to buying Biztravel lock, stock and barrel. Perhaps Trip.com honcho Antoine Toffa realized at the last minute that — save for its brand name, a star columnist and a couple of neat programs — Biztravel is worthless. More likely, Biztravel’s shareholders, whose obstinance is surpassed only by their arrogance, were asking for the world in a desperate effort to recoup some of their investment.

All this insanity got me thinking, though: Interactive travel has become such a free-for-all, where conventional business models are routinely turned on their heads, that practically anyone could do it. In fact, inexperience — or the ability to think outside the box — is generally considered a plus. Made me wonder if I had what it took.

So for the past two months I’ve been busy putting together an interactive venture. It’s the main reason you haven’t seen “Inside Interactive Travel” lately. After writing about this business for the last three years, I figured maybe it’s time to get my hands dirty. A content-only Web site is arguably the riskiest of risks to take in this business. But then again, no one thought Malcolm Kaufman’s Ontheroad.com would last this long. And before that, the pundits said Business Week and The Wall Street Journal couldn’t sell subscriptions online. Neither could TheStreet.com go public with only a couple of thousand paying subscribers, they said. We’ll see about that.

Priceline’s rise and Biztravel’s fall suggest that none of us is thinking rationally in this industry, and I’m not about to let an opportunity like this pass by. Neither should you.

Am I crazy? Sure. We’re all a little crazy.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

Be the first to comment