HomeGrocer.com’s co-founder and president Terry Drayton took a leave of absence
last week. The top banana claims the 80-hour work weeks and emotional
brain-drain from the online grocer’s March 10th debut has him feeling punchy.
Drayton is headed for the hills until September, and at first blush, that
looks like plenty of time for this latest market correction to blow over.
I’ve known CEOs who get paranoid at falling stock prices; and to be sure,
HomeGrocer’s is a stinker. Five bucks to be exact.
Once upon a time, a CEO even relayed a bizarre story to me about how an
angry investor set fire to a wastepaper basket outside his office door. He
never saw the perp for himself, but to this day he swears by it.
Although, I don’t think Drayton is paranoid of disgruntled shareholders.
I’ve got another theory. Try this one on for size.
After a start-up taps the new issues market, there’s your customary 180-day
lock-up period before officers, directors, and lucky dogs on the friends
and family list can sell shares.
If you add the chairman’s four-month vacation to the two-plus months
HomeGrocer’s already been public, good ol’ Drayton should roll back into
town just in time to dump some shares after the lock-up. Almost to the day.
Not much of a coincidence there.
And dealing with reality in the meantime is such a drag. The company
hemorrhaged $43 million in its latest quarter and boasts about enough cash
to last through the end of 2000.
With Safeway’s latest land-grab of GroceryWorks.com in April, the
brick-and-mortar giant hits Dallas, Texas before HomeGrocer has even
established a toehold. Meanwhile, Royal Ahold
scooped up a controlling interest in Peapod , and
late last year, Albertson’s unveiled e-delivery in
Seattle. As if Webvan wasn’t enough.
Let’s see. I don’t want to leave anyone out here. Kroger , Streamline.com
, Quality Food, Kosmo, ShopLink.com and HomeRuns. Suddenly, five bucks looks
like a fair valuation on HomeGrocer. And the way these newcomers spend
money, the last milers are gonna run out of gas by the side of the road.
Earlier this month, HomeGrocer quietly took nearly three and half million
shares of common stock off the table, after underwriters snickered at the
over-allotment option. That means the war chest is about $35 million
lighter than it would be in a raging bull market. An entire quarter’s worth
of cash-burn up in smoke.
Now Drayton’s probably a little long in the tooth, ’cause he’s not destined
to become a newly minted gazillionaire. But for a guy who owns 5% of the
company he co-founded, I’d expect a little more. After all, he’s not
standing in the bread line.
After drawing a handsome $200,000 yearly cash salary, he owns over 6
million shares in HomeGrocer. If that doesn’t smooth things over a bit,
maybe Drayton ought to roll up his sleeves and try baggin’ groceries for a
while.
On a side note, when Drayton returns from sabbatical in September,
HomeGrocer has roughly 78 million shares coming off lock-up. And with an
already chubby 22 million share float, investors should be the ones headed
for the hills.
Any questions or comments, love letters or hate mail? As always, feel free
to forward them to kblack@internet.com.
HomeGrocer.com: Gone Fishing
