Cliff Sharples dot-com story doesnt exactly have a happy ending. After all, Garden.com, the online gardening retailer he founded in 1995 with wife, Lisa, and partner, Jamie ONeill, closed Dec. 1, a victim of the dot-com downturn that left many once-promising businesses without the capital needed to continue operations.
But, at a time when numerous high-flying dot-coms have imploded, leaving behind a trail of angry creditors, customers and shareholders, Sharples and company decided to do something novel: close down while they still had the cash to settle their debts and give employees severance pay.
“We felt like it would be a huge disservice to the dot-com industry, to e-commerce and to ourselves to take what we built and just trash the whole thing, having people remember it as yet another irresponsible dot-com that spent its cash and then went bankrupt,” says Sharples.
For Garden.com, the wake-up call came in November, two months after the company laid off 40 percent of its staff and hired investment bank Robertson Stephens to explore fund-raising choices. When it became apparent there werent going to be any new investors, merger partners or potential buyers to come in and save the day, Sharples says the executive team made a decision to go for as “clean” a shutdown as possible.
That included carefully liquidating the companys assets. While bankrupt dot-coms have been forced to liquidate their assets, earning only 10 to 20 cents on the dollar, Garden.com had a going-out-of-business sale, selling off its inventory at cost and recovering 100 cents on the dollar, says Sharples.
The Garden.com domain name and customer list were sold for $2.4 million to Burpee, a 125-year-old gardening business. There have been five public auctions to sell off Garden.coms furniture and computer equipment. In January, Sharples sold Garden.coms editorial content to Wal-Mart Stores. The combined asset sale totaled about $4.4 million.
Sharples expects to return some money to shareholders. “Unfortunately,” he admits, “it wont be nearly to the degree that our shareholders deserve.”