If you missed it, here's what happened: Webvan's stock was trading at a mere eight cents, or 99% off its November 1999 peak. Since the NASDAQ habitually delists stocks that slip below a dollar, there seemed little chance this e-tailer would stay in the big boys' league. Then some bright (or desperate) spark at company HQ in Foster City came up with the idea of a 25 to 1 reverse stock split. In other words, for every 25 shares you owned before the split, you'd now only own one. The resulting drought should leave Webvan standing $2 tall. Above water, but at what cost? The one major precedent for a reverse stock split in the dotcom world is not encouraging. Now-defunct drugstore PlanetRx.com tried a 1 to 8 swap last November, which kept the angry hounds of NASDAQ at bay for just two months. It went into liquidation last March.
Webvan needs to beware the ides of next March; that's when it has said it'll need more cash to keep operating. Few analysts expect them to get it. Sand Hill Road — world capital of venture capitalists — is just a short drive down route 101 from Webvan, but the VCs are unlikely to open their doors again to a company that has already burned through $480 million; a dotcom that planned to serve 23 markets by now but is mired in just seven. Ironically, plenty of VCs are Webvan customers (San Francisco and Silicon Valley being one of the most lucrative arenas for a firm that delivers groceries to the horribly busy). But they're also a sanguine lot, and won't hesitate to avoid a bad investment even if it means making trips to Safeway again.
So what went wrong with Webvan? I can't personally say if it was anything to do with their delivery service being lousy, since I've never actually had a Webvan delivery. I would like to have one — it's not like I have a particular desire to waste precious minutes squeezing vegetables amidst harsh halogen lights and Muzak — but every time I made an order on the website, it told me delivery was not possible in the next 48 hours. What, they think I know I'm going to run out of milk three days ahead of time?
It's possible that I got burned at unusually busy moments. A good friend of mine does swear by Webvan, even though she lives right next door to a supermarket. It could just be that she has a crush on the delivery guy. Whatever the reason, Webvan's near-inevitable crash and burn is clearly going to be a great loss for many folks around here, just as the untimely passing of Urbanfetch and Kozmo.com — both of which delivered videos, ice cream and munchies to your door within an hour — made a lot of us feel like wearing black. I still can't get used to the new post-apocalypse reality of having to go to an actual real-world video store.
The business plan didn't work in either case. Such door-to-door dotcoms, it seems, either can't get enough customers, or get too many that spend too little (thus spending more on delivery costs than they make back on the sale of low-margin comestibles). If I have one clear vision of the future, it's of my slack-jawed grandchildren begging to hear again about what it was like to live in the height of the mythical door-to-door boom. Yes Virginia, you really could get a candy bar and a copy of Spartacus within minutes without stepping outside your front door. Of course, that was back before the piranhas — and their old-fashioned emphasis on profit — took over.