Revisting TheGlobe.com: The Dot-Com Bubble's Craziest IPO – And a Warning for Today's AI Boom

In November 1998, a little-known startup called TheGlobe.com made Wall Street history. It was a quirky social networking site run by two Cornell grads in their twenties, but when it went public, its stock price exploded by more than 600% in a single day. For a brief moment, Stephan Paternot and Todd Krizelman were worth over $100 million each on paper, and their company was valued near a billion dollars despite having barely any revenue. Now, I should note that today, a tech founder having a net worth of $100 million seems almost quaint. But at the time, Stephan and Todd's accomplishment was considered otherworldly. The frenzy was so wild that TheGlobe.com still holds the record for the largest first-day gain of any IPO.

But the glory didn't last. Within two years, the stock collapsed to pennies, the company imploded, and Paternot became a tabloid figure after a notorious nightclub clip earned him the mocking nickname "the CEO in plastic pants." TheGlobe.com went from Wall Street darling to dot-com cautionary tale faster than almost any company in history.

Looking back today, the story of TheGlobe.com is more than dot-com nostalgia. It's a case study in how hype, media frenzy, and investor fear-of-missing-out can inflate a startup far beyond its fundamentals. And it has eerie echoes in our own time. Just as the 1990s Internet boom minted paper billionaires and unsustainable companies, the current AI gold rush is producing sky-high valuations, overnight celebrity billionaire founders, and bold promises that may or may not survive contact with reality.

Todd Krizelman and Stephan Paternot (via Getty)

From Cornell Dorm Rooms to the First Social Network

The story of TheGlobe.com begins in the early 1990s at Cornell University, where Stephan Paternot and Todd Krizelman were undergraduates. Both were fascinated by the primitive chatrooms on the school's network, places where students could create screen names, hang out virtually, and form communities. While most treated it as a novelty, Paternot and Krizelman saw business potential in the idea of connecting people online.

In late 1994, during a Christmas break, the pair raised about $15,000 from friends and family. They used the money to purchase an Apple server and launch a small programming company they called WebGenesis. Over the following months, they coded a new site designed to scale the online community experience beyond campus chatrooms. On April 1, 1995, they launched TheGlobe.com.

The site was, in essence, an early version of what we'd later recognize as social networking. Users could create personal profiles, join communities of interest, and communicate in real time. The concept spread quickly: within the first month, more than 44,000 people had visited TheGlobe.com. By the end of the year, the company had 17 employees, most of them fellow Cornell grads. At a time when only about 10% of American households had internet access, TheGlobe.com was already showing the viral potential of online communities.

This early traction drew the attention of investors eager to bet on the Internet. In 1997, the company secured a $20 million investment from Dancing Bear Investments, led by Florida entrepreneur Michael Egan. That deal gave Paternot and Krizelman six-figure salaries and set them on the path toward Wall Street. For two college friends who had started with a server in a dorm room, it was a meteoric rise.

The Craziest IPO of the Dot-Com Era

By the late 1990s, Wall Street had caught full-blown Internet fever. Investors were desperate to get in on anything with a ".com" attached to its name, often with little regard for whether the companies had meaningful revenue or viable business models. The prevailing wisdom was that the Internet was going to change everything overnight, and any company planting a flag online would eventually strike gold.

Into this environment stepped TheGlobe.com. Backed by venture capital, rapidly growing its user base, and pitched as the future of online communities, it was a perfect candidate for an IPO. On Friday, November 13, 1998, TheGlobe.com debuted on the NASDAQ, underwritten by Bear Stearns. The shares were priced at $9.

What happened next was one of the wildest single-day stock runs in history. When trading opened, TheGlobe.com's stock immediately shot up to $87. Within hours, it touched $97, before closing the day at $63.50. That was a 606% increase from its offering price — the largest first-day gain for any IPO ever, a record that still stands decades later.

In a single day, TheGlobe.com's market capitalization rocketed to $840 million, despite the company having only about $5 million in total revenue. On paper, both Krizelman and Paternot became multimillionaires, each worth over $100 million at just 24 and 25 years old. Early investor Michael Egan, who had put in $20 million the year before, briefly saw his stake valued at nearly $400 million.

Plastic Pants and Media Scrutiny

For a brief window after the IPO, Stephan Paternot and Todd Krizelman were celebrated as the faces of the "new economy." They were young, ambitious, and suddenly worth tens of millions of dollars on paper. But that spotlight quickly turned harsh, especially on Paternot.

In 1999, CNN produced a segment on the new crop of twenty-something Internet millionaires. Cameras followed Paternot to a Manhattan nightclub, where he was filmed dancing on a table in shiny vinyl pants with his girlfriend, model Jennifer Medley. Looking directly into the camera, he declared:

"Got the girl. Got the money. Now I'm ready to live a disgusting, frivolous life."

The clip became infamous. In an era before YouTube, it was replayed on television news, passed around the burgeoning Silicon Alley scene, and cited in articles about the absurdity of dot-com wealth. Paternot was instantly branded "the CEO in plastic pants." What had been meant as a playful soundbite turned into a scarlet letter, reducing a pioneering founder to a caricature of dot-com hubris.

The timing couldn't have been worse. Investors were already beginning to question the fundamentals of Internet companies. Stories of lavish parties, sky-high burn rates, and irresponsible spending were undermining the market's confidence. Paternot's nightclub performance gave critics a perfect symbol of excess — the young CEO living it up while shareholders should have been asking tough questions about revenue and profitability.

From that point on, TheGlobe.com's public image began to sour. Instead of being seen as the future of online communities, it was increasingly mocked as an emblem of what was going wrong in Silicon Alley. And as the broader market began to wobble, the company would soon discover just how quickly hype could turn to humiliation.

Cracks in the Bubble

By late 1999, the mood on Wall Street was beginning to change. For years, investors had been willing to overlook the fact that most dot-com companies had little revenue and no profits, betting instead that the Internet's sheer potential would eventually justify the valuations. But as more of these companies went public, analysts began to notice the same pattern: high-flying IPOs, short-term buzz, and then mounting losses.

TheGlobe.com was particularly vulnerable. Despite its huge user base and brand recognition, it never found a reliable way to monetize. Online advertising was still in its infancy, e-commerce efforts were patchy, and its acquisitions — gaming magazines, niche websites, and retail sites like Chips & Bits — did not generate the cash needed to support a company valued at nearly a billion dollars. Behind the headlines, quarterly losses were piling up.

At the same time, the broader tech sector was becoming saturated with new IPOs. By 1999, investors had dozens of Internet stocks to choose from, and competition for capital was intense. Day traders who had made fortunes flipping stocks in 1998 were beginning to see that the music might stop. High-profile failures like eToys and Pets.com shook confidence, and the market's patience with unprofitable startups started to wear thin.

The Collapse

The decline of TheGlobe.com was breathtaking in its speed. After hitting a peak of nearly $100 a share in late 1998, the stock began sliding steadily throughout 1999. By the fall, it was trading in the $30–$40 range. Within months, it dropped into the teens, and by early 2000, as the dot-com crash gathered momentum, it was under a dollar. By 2001, TheGlobe.com's stock price bottomed out at less than 10 cents, erasing more than 99% of the company's market value.

The collapse was not just financial but also organizational. Investors and board members, spooked by the freefall, lost faith in the young founders. In 2000, both Stephan Paternot and Todd Krizelman were forced to resign from the company they had built. A veteran executive — a former vice president of the American Institute of Certified Public Accountants — was brought in to provide "adult supervision," but there was little anyone could do to salvage the business.

By the summer of 2001, TheGlobe.com shut down its flagship social networking site and laid off half its staff. A sparse message on the homepage announced the end of service. What had once been heralded as the future of online community had vanished in less than six years. TheGlobe.com became a shorthand punchline for the excesses of the dot-com bubble, remembered less for its innovation than for how spectacularly it flamed out.

The corporate shell of TheGlobe.com limped on for several more years. Management tried a series of pivots to keep the company alive. In 2003, they launched GloPhone, a voice-over-IP service pitched as a rival to Skype. Reviews were poor, adoption was almost nonexistent, and to make matters worse, Sprint Nextel sued TheGlobe.com for patent infringement. The service quietly shut down within a few years.

For a time, the company's gaming magazines provided a small lifeline. Computer Games Magazine remained one of the top PC gaming publications in the U.S., and TheGlobe also launched Now Playing and MMO Games in the mid-2000s. But even this modest success ended in disaster when the company resorted to promoting its products by sending unsolicited messages to MySpace users.

In 2006, MySpace (then owned by News Corp.) sued TheGlobe.com under the CAN-SPAM Act and California's anti-spam law. The court found nearly 400,000 unlawful emails had been sent from fake accounts, and damages were calculated at up to $120 million. TheGlobe.com ultimately settled for $2.55 million, but the lawsuit effectively wiped out what little was left of the company.

By 2008, TheGlobe.com was reduced to a hollow shell with no operations, no employees, and no revenue. Incredibly, the corporate entity continued to exist on the stock market for years, later repurposed in a reverse merger by an energy firm. But for all practical purposes, TheGlobe.com was dead. It had gone from a billion-dollar IPO to a spam lawsuit footnote in just a decade.

Second Acts

Although TheGlobe.com collapsed, its founders didn't disappear. Both Stephan Paternot and Todd Krizelman managed to reinvent themselves in very different ways, and their second acts are reminders that a dot-com bust doesn't have to be the end of an entrepreneurial career.

Stephan Paternot, once mocked as "the CEO in plastic pants," eventually carved out a successful career in film and venture investing. In 2001, he published "A Very Public Offering," a memoir reflecting on the rise and fall of TheGlobe.com. In 2004, he co-founded PalmStar Media, which financed and produced dozens of films, including "John Wick," "Collateral Beauty," and "Hereditary." He later launched Slated, an online marketplace for film financing and development, often described as an "AngelList for movies." Through his angel fund, Actarus Funds, Paternot also invested early in companies like Indiegogo, AngelList, and LendingClub. Far removed from his tabloid caricature of the 1990s, he is now seen as a steady investor and creative entrepreneur.

Todd Krizelman took a different path. After leaving TheGlobe, he earned an MBA at Harvard and worked at media giant Bertelsmann in Germany. In 2007, he co-founded MediaRadar, an advertising intelligence platform that tracks billions of dollars in ad spending and helps publishers and brands target prospects. Under his leadership, MediaRadar grew into a profitable, widely used service with clients ranging from The New York Times to The Wall Street Journal. In 2024, MediaRadar generated $20 million in revenue, roughly double the year before. MediaRadar's private valuation is almost certainly in the $50-100 million range. Unlike the rocket ride of TheGlobe.com, Krizelman's second act was slower, steadier, and built for the long term.

For Stephan Paternot and Todd Krizelman, TheGlobe.com was both a triumph and a trauma. They tasted unimaginable wealth and public scorn before age 30, and both had to rebuild their reputations from scratch. Their second acts — Paternot in film and venture investing, Krizelman in ad-tech — show that even after the most public of failures, reinvention is possible.

As history rhymes, the lesson is clear: hype may light the rocket, but only execution sustains the flight. TheGlobe.com's story is a warning from the past to today's AI dreamers. Because if the dot-com bubble proved anything, it's that what goes up on speculation can just as quickly come crashing down.