2000 Dot Com Crash with Davnet and NTT

Where were you when the Dot Com Boom 2000  was on ????

I was over at Marconi living what I have since found out, a relatively sheltered existence. While company’s share prices soared and people were out selling million dollar deals based on something that didn't exist, people were queuing to give 20 year old entrepreneur their money, money that they had saved for 20 years.  I was still doing infrastructure to conservative companies that wanted to see a ROI (return on investment) for anything purchased. On my return as most of you know I have joined NTT which was formed on the basis of one of these companies that reached to the Internet Sky and beyond, ending up in space, figuratively at least.

Once upon a time there was guy down in Melbourne whose dad ran an interior design company.  Steve, the son, had a great idea in 1994 to start wiring up buildings with Ethernet in order to provide fast Internet access to tenants.  He borrowed $100,000 from Dad and hit the Melbourne market, within one year his business was booming and he paid Dad back the $100,000 he had borrowed. For a way to gain more capital he listed on the stock exchange.  As he was a two bit cowboy without a horse, the ASX would not let him list, so to overcome this he took over a struggling mining company, for the purchase price of 2c per share, this allowed him to overcome those pesky laws associated with listing a company and go to the market for more capital, DAVNET    was born.

1996, the company refloated at 30 cents a share gaining 10 million dollars of new capital. With this money Steve decided that he would take his idea of "in-building Ethernet" and go to Sydney, where he started wiring up buildings there.  Along he went wiring up buildings, negotiating massive rental agreements with building managers so that he could put his equipment there. It was round this time that he decided that a small ISP, started by a guy  out of uni and servicing the Business market would be a good buy, so he bought it, giving Jason Ashton (the uni guy) a share in Dave Net .

Appearing on numerous business programs on TV, Sunday, Four Corners among others he managed to talk up his idea and keep the share price booming.  By 1998 the price had reached over $3.00 and was still rising.  One of the issues the company was encountering was that it wasn' t making any money , so to overcome this they would just issue more stock to the market.

In 1999 with the share price was still rising, a Japanese carrier called NTT was looking to buy a "strategic" ISP in Australia, as part of the quest for world domination. OzEmail looked good, but had been bought by WorldCom, Connect looked good but had been bought by NZ Telecom, but there she was DAVNET!!!, "that's who we will buy." So with cheque book in hand the Japanese came out to negotiate a price.  After minutes of negotiation a deal was struck.

NTT would buy 49% of DAVNET for $120 million, WHAT A BARGIN! !!!! But it did get better, as part of the deal DAVNET would use $98 million of the money to invest in an organisation called DAVTEL which would take in-building Ethernet to the world.   NTT would own none of this company as being the largest Telecommunications carrier in the world they did not need more of an overseas presence.

So with $98 million dollars and a share price that had now reached $6, Steve went to take on the world, Jason on the other hand thought this was all too good and took his money and bought some Ferrari' s.  With no plan Steve started sending out people to set up his global empire.          Many stories are still in circulation, but these are some of my favorites.

A 18 year old was sent to Hong Kong to set up the operation, there on arrival they realised he did not have a visa to work there, thus with three weeks to kill before the visa was ready, they decided to fly him to New York where he roughed it in a 5  star Hotel overlooking time square ....•all expenses paid ........of course.

Need to get from London to New York in a hurry for no particular reason, why not grab a couple of mates and book a last minute deal on the Concord....New York not doing it for you ......well  then fly back!!!

How would you like your commission cash or cocaine???

My personal favorite -

One Friday when the directors were sitting round, one piped up saying he felt like Chinese for lunch .......needless to say, they charted a plane and went to•..........China ........for lunch.

2000 was well in and the company was now down to $20Million in the bank, they needed more money and thus decided to go to the market for more.  As part of this they needed to have there books audited.  It was then that they discovered that a $7M Tax Credit was actually a $7M Tax Debit ...oops wrong column.  With now only $6M in the bank and huge operational costs {dinner, travel, Coc..) it was not long before they were facing bankruptcy.

Enter the Japanese, in order to save face and protect there "investment" NTT negotiated the purchase of the other 51% of the company.  They paid $16M for this , because they hadn' t been ripped of enough.

So here I am, its all pretty funny and all pretty amazing ...but I think I'm three years to late! !!!!

HAHAHA! !!!