divine, inc.

» see divine.com as it lived, on the wayback machine

~ the obit ~

divine's entire life runs from 1999 to 2003, and those are the years when the internet in Turkey was still a thing you paid for by the minute. February 2001, the month divine reorganized its board and started calling itself a software company, was also the month the lira came apart at home. Nobody around me was reading about a Chicago incubator that year. The dot-com collapse arrived here as a story about other people's money, told after the fact.

Andrew Filipowski had earned the right to be listened to. He had built Platinum Technology from a 1987 startup into one of the largest software companies in the world. Computer Associates bought it in 1999 for $3.5 billion, and roughly $290 million of that was his. Then he founded divine interVentures in Chicago on the idea that an incubator could hold stakes in dozens of internet companies at once and let them buy from each other.

The IPO landed in july 2000, which was four months after the Nasdaq peak and every single person involved knew it. What came out the other side was a company with thirty-eight directors, including Michael Jordan, which is not a board so much as a guest list. On 3 february 2001 twenty-seven of them resigned at once. The incubator renamed itself divine, inc. that month and became something else entirely.

~ the rap sheet ~

~ the shopping list ~

The new plan was to buy software companies with divine stock while software companies were cheap, and in 2001 they were extremely cheap. In april divine paid $120 million for the assets of marchFIRST, the agency that had been Whittman-Hart and USWeb and was by then a bankruptcy estate. In may it took RoweCom for $14 million in stock. eShare followed in july at $71 million, and Open Market in august at $59 million.

The 2001 numbers say the rest. Revenue of $199 million against a net loss of $369 million, carried by 3,600 employees at a company whose currency for buying things was its own share price. You cannot roll up an industry with paper that is deflating faster than the assets you are pointing it at.

~ the bill came due ~

RoweCom was the one that ended it. It was a subscription agency: libraries paid it for journals, and it paid the publishers. In january 2003 creditors sued, saying $73.7 million that was owed to publishers had been moved out of the business before it was abandoned. Libraries across the United States had paid for a year of journals that were never going to arrive.

divine filed for Chapter 11 on 25 february 2003. The auction in april brought $54 million for everything, split between Saratoga Partners, Golden Gate, Little Bear Investment and Outtask. A company that had raised and spent something close to a billion dollars was worth less at the end than it had paid for marchFIRST's leftovers two years earlier.

~ the long tail ~

Open Market turned out to be the piece with an afterlife, and not a good one. Its Transact system from 1996 carried patents on the online shopping cart, and after divine collapsed those patents ended up with a firm called Soverain Software, which sued seven online retailers with them. Newegg refused to settle and fought it to the Federal Circuit, where in january 2013 the claims were held obvious in light of a CompuServe ordering system from before the web.

So the last working part of divine was a patent claim on the checkout button, killed by a mall that ran on a dial-up service older than the company holding it. Filipowski went back to Chicago and started building again. The board of thirty-eight is the detail that stays with me, because you only need that many directors when the point of the company is the list of names on it.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »