3c hapter - Index of

190 Locavesting
it soared as high as $97 a share before ending its fi rst day of
trading at around $63, seven times its initial offering price. The
dot- coms had the barest outlines of a business plan and lost tons
of money, but they made fortunes for venture capitalists and
well- connected investors who got in on the low offering price
that inevitably soared when the shares hit the NASDAQ. They
were built to fl ip.
Klein’s lofty vision of helping other small companies raise
capital soon morphed, for practical and opportunistic reasons,
into a platform for channeling a small portion of these coveted
pre- IPO shares to a clamoring investor public. There was an element
of the original idea: The fl edgling dot- coms often wanted
their Internet audience and customers to participate in their
initial offering, in which case Wit might be allocated a small
number of shares to offer to the masses of individual investors
at the initial offering price (usually by lottery, since demand far
outstripped supply). More often, the dot- coms simply wanted
their friends and family to get in on the action. Wit Capital
became that conduit, while the blue- chip investment banks kept
their lock on the underwriting, the fees, and the bulk of the
shares. The market had demonstrated, not for the last time, its
preference for fast and easy, if ephemeral, profi ts, and we were
happy to oblige.
Venture capitalists were throwing money at Internet startups
with no track record, and Wall Street was eager to take them public.
The companies that Wit might have helped raise capital,
however, operated in the real bricks- and- mortar world and were
bound by its limits. They would probably never deliver 400 percent
returns, overnight, like some dot- coms did at the height of
the bubble.
The DPO revolution would have to wait.
DPO Revival
Fast- forward 10 years. The dot- com crash is a distant memory,
replaced by a more recent and traumatizing lesson in bubble
economics. And there is once again fresh interest in direct, DIY