Smartness Deflation 

Louis Borders, who dreamed up the idea that became Webvan, has cut the final managerial link between himself and that company by resigning from its board of directors, citing the inevitable “personal reasons.” By now the online grocery service’s troubles are so well known it’s hardly worth rehashing them; noting that its stock is flopping around under $1 a share will suffice. It’s true that in an era of hype, little was more hyped than Webvan, and the story of its fall from such optimistic heights to such pessimistic depths is amazing—but it’s also incredibly familiar.

So instead, let’s take a look at the board members Borders leaves behind and contemplate another aspect of the collateral damage from the Net blowup. There’s George Shaheen, the former chief executive of Andersen Consulting whose defection was the high watermark of Old Economy titans switching to the New. There’s Jim Barksdale, from the heyday of Netscape. There’s Tim Koogle of Yahoo! There’s David Beirne of venture firm Benchmark Capital, and another VC, Michael Moritz of Sequoia Capital. Finally, there’s the CEO of E*Trade and the former CEO of HomeGrocer, which merged with Webvan a while back.

Twelve months ago that would have sounded like an incredibly impressive lineup. Sure, Webvan had its detractors and was already looking somewhat troubled a year ago, but come on, how much Net savvy can you get in one room, right? These people (throw in Borders, who built up of a successful bookstore chain) added up to one smart board. Seemed to, anyway.

Which brings us to the collateral damage phase: Webvan’s board is a victim of smartness deflation. It used to be you couldn’t hear enough about the outstanding smartness of everyone involved in the technology business generally. Venture capitalists praised smart entrepreneurs; the entrepreneurs praised their smart VCs; firms couldn’t stop lining up investments and forming strategic alliances with other smart firms; and those partners and investors were, of course, impressed by how smart were the folks running the company they were investing in or “partnering” with. The point of getting a smart VC or a smart investor wasn’t so much the money, y’know, it was the web of other smart people that the VC or investor or board member knew. Eventually everyone basked in the reflected smartness of everyone else; it was smartness by association, a smartness keiretsu.

And if you went digging around for the root of a particular web of smartness, what you found, usually, was a whopper stock price. A Benchmark guy must be smart because that firm had funded eBay, a quintessential market “ten bagger.” Barksdale and Koogle? Pioneers of Net paper wealth. Shaheen? Do you have any idea how rich the Webvan IPO (briefly) made him? And so on.

Anyway, here we are a year later, and the same people, somehow, don’t seem nearly as smart. This doesn’t mean they’re actually less smart, of course. But if you look at the Webvan board as a microcosm of the original smartness explosion, you can draw one of two conclusions. One is that some of these folks were never as smart as they seemed to be. The other is that they really are (and were) as smart as they seemed but that even smartness, sometimes, is not enough. Either way, in the particular case of Webvan, one of the issues its board is no doubt mulling over is the distinct possibility that WBVN, at below a buck a share for some weeks, is on the verge of being delisted from the Nasdaq altogether. And you know that smarts.