I had lunch yesterday with an entrepreneur I first met in 1999, at the height of the dot-com era. James Chung was one of the people I profiled in a Globe Magazine piece in 1999, headlined, “Let’s do launch: So much venture capital, so little time.” It painted a picture of Boston’s venture capital and entrepreneurial scene at the height of the dot-com bubble, when Tom Crotty of Battery Ventures told me, “Our investors are just throwing money at us, and we need to find places to put it.”
Then, as now, the investors were all jazzed up about a few particular flavors of fast-growing company — anything related to e-commerce, telecom, and the web. (Today, it feels like it is mobile, life sciences, and the cloud.) I ended the piece by writing about two founders who were sharing an office in the Back Bay, Jay Wilkins and John Pepper. Wilkins had an e-commerce startup, Boatscape, that everyone was eager to put money into, and Pepper couldn’t get the time of day from anyone with a checkbook. He was starting a quick-service food chain called The Wrap. (The Wrap later changed its name to Boloco.)
Here’s the end of the story, which I’m sure is playing out again today for many non-mobile, non-biotech, non-cloud entrepreneurs…
The funding frenzy hasn’t…spilled over into non-technology sectors. While visiting a company called Boatscape, which operates an e-commerce site for the seafaring set, I met John Pepper. Pepper is a Harvard Business School graduate – and son of the chairman of Procter & Gamble – who started a chain of quick-service restaurants called The Wrap. He uses a spare office at Boatscape in exchange for feeding the company’s 14 employees, a barter deal he set up with Jay Wilkins, Boatscape’s founder and an old Dartmouth College buddy.
”Most investors are biased toward technology companies,” Pepper explains. ”With restaurants, you know what’s going to happen. They’re either going to go out of business or have really slow, steady growth. I was talking to one of the investors who funded Starbucks and Jamba Juice, and he sent me an e-mail that said, ‘John, we no longer invest in food-service concepts. We do strictly e-commerce companies.”’ Even Howard Schultz, the founder of Starbucks, is now putting his money into the Net; he owns 5 percent of Drugstore.com, the on-line pharmacy. The Wrap hasn’t yet received any venture funding.
Across the hall, in an office with windows that look out onto Boylston Street and the Hynes Convention Center, sits Wilkins. A former Army helicopter pilot, Wilkins regularly fields calls from venture capitalists snooping around Boatscape, which he founded last June.
”From [John Pepper's] perspective, it has been frustrating. The pace of the Internet is so much faster,” Wilkins says. Still, the two old friends are doing the same thing. Building something from nothing, as [Lotus founder Mitch] Kapor puts it – nothing but people, ideas, talent, and commitment.
On my way out, Wilkins points out a framed dollar bill that hangs on his office wall. ”This is the first dollar that my great-grandfather earned when he started his own company,” he says. ”He had a company in Buffalo, New York, called Consolidated Packaging Machinery Corporation. I turned 30 recently, and my grandmother, his daughter, gave this to me.”
The 1899 bill is more serious-looking – more ornate, a deeper green – than today’s currency. But there is a handwritten exhortation from his great-grandfather along the margin, the rallying cry of the entrepreneur, then and now: ”More where this came from. Go get it!”
Boloco is still around, with more than 20 locations on the East Coast. It didn’t raise its first significant outside capital for another eight years. Boatscape, which later in 1999 raised $5 million from Andover-based CMGI, is not.
And neither is CMGI.
Update: I pinged Pepper via e-mail to see what he remembered from that era, and he wrote, “1999 was tough, because we sat there watching companies like Boatscape raise $5 million with hardly any trouble at all, and then expend all of it in less than a year. At that time it cost us $250,000 per restaurant on average… we could have opened 20 restaurants with that money! :)”