It's A Sad Way Down

Michael Donahue, founder of InterWorld Corporation in New York City, was elated when his company’s share price skyrocketed in a public stock offering in August 1999, earning him $448 million. So he splurged big-time.

He bought a $9.6 million second home in Palm Beach, spent $100,000 to help sponsor his polo team in Florida, and dropped a bundle renting a private jet so he could whisk off to Palm Beach on weekend jaunts with his wife. “It was a lifestyle thing,” he says.

Today Donahue is a member of another club — call it the 90 percent club — of executives whose companies’ stock prices have fallen that much or more from their peak. The value of Donahue’s InterWorld stake has plunged to $12.6 million; the share price falling 96.8 percent to $2.94 from a peak of $93.50 on December 31, 1999. Donahue was asked to repay part of a $14 million loan he took out with his InterWorld stock as collateral. And he had to put his Palm Beach house on the market for more than $13 million.

“Going up was easy,” Donahue says. “But when it starts going down, no one wants to talk to you. It’s been the most challenging personal experience of my career.”

 — Susan Pulliam and Scott Thurm, 
“Echelon of Ex-centimillionaires Sees Stakes 
Plunge as Net Craze Fades,” Wall Street Journal (October 20, 2000)