Tim Stojka has spent the past year suffering the highs and lows of the Internet economy: His company stood at the threshold of a breakthrough initial public offering, then didn’t get out and was forced to reorganize. It’s been a long road for Stojka, who started Commerx (then called PlasticsNet.com) with his brother Nick in 1995. The company is in the final stages of a restructuring that will focus it on private e-procurement platforms rather than public e-marketplaces. Stojka passed along his war stories and thoughts on the future in a Q&A with BtoB.
BtoB: Can we talk about your decision to step out as CEO? What happened?
Stojka: Nick and I, from way back in 1995, viewed our job as entrepreneurs. We put in place the fundamentals for the company. The next step was to get the right capital and the right management. We spent a lot of time and effort doing that and we did well. We brought in capital; we raised $60 million in private equity. We brought the management team in and I started to relinquish day-to-day activities. That started a year ago. [Last month, Commerx named COO Jeff Garwood interim CEO; this month, the company promoted David O’Meara, VP-corporate development, to CEO.] In the past year, the capital markets and the business models changed, and the way we operate our business had to change as well.
BtoB: What went wrong?
Stojka: We had a ton of fun. We were a part of the growth years. What went wrong? The market got ahead of itself, chasing a new industry and technology that nobody really understood. There was too much money chasing too few good deals. I think … that’s what caused the problems. Entrepreneurs are used to building up businesses slowly, in line with costs. Now we were being told to start ramping up our infrastructure ahead of our revenue stream. It was a risky strategy. When the cost structure leads revenues, you have to hope revenues catch up.
I think another point here, a lesson learned, is that money does not solve all problems. It doesn’t correct basic problems. It takes time for good companies to get built. The market was selling companies that weren’t mature. People started betting on the wrong business models. The fundamentals don’t change, but the whole world thought all the fundamentals went out the window.
BtoB: Any other miscalculations?
Stojka: We didn’t have an appreciation for the power of the incumbents in retailing and in b-to-b. Everyone thought disintermediation would take place. Just the opposite happened—Net markets are failing and distributors are growing and doing well.
We all got caught up in the euphoria; we drank the Kool-Aid. The venture guys want you to go out and spend money. Good entrepreneurs know that is not the way to build a business. The venture guys throw the money out and say 'hire and hire.' But a lot of small companies hired people who had never built a small company before.
BtoB: What’s next for you? Are you looking for new opportunities?
Stojka: No. I’m still involved in Commerx, focusing on strategy. I’m minimizing my day-to-day responsibilities. I’m not participating in staff meetings. But there’s still a lot of work to do at Commerx.