USWeb

USWeb was an Internet marketing company. The original USWeb was founded as a web design and site engineering company which expanded during the dot-com boom into online strategy consulting and online marketing. After several mergers with other companies (becoming USWeb/CKS in late 1998, then marchFIRST, officially on March 1, 1999, which was the date of legal closure of the merger with Whittman-Hart). Given the circumstances of the surrounding dot-com boom and resulting decline in industry sector revenue for Web consulting, engineering and design services, the original USWeb went bankrupt as part of marchFIRST and was dissolved. In 2003 the USWeb brand and digital assets were acquired out of bankruptcy by a small California marketing firm. The USWeb website and digital service offerings were re-packaged and launched in April 2004. USWeb currently operates out of Henderson, Nevada, with satellite offices located in California and Kentucky.

Founding and expansion

The company was founded in 1995 by a group of former Novell executives, Joe Firmage, Toby Corey, and Sheldon Laube along with Ken Campbell and Jim Heffernan from outside firms. USWeb initially set up a network of affiliated companies that provided website design, content development, and hosting services to clients. It began taking in venture capital in March 1996 with a round of financing led by Softbank. Firmage explained the initial approach as a form of franchising, but rather than create a series of consistently similar outposts under a unifying brand, USWeb took the approach of developing a diverse network in which affiliates would specialize in different areas. Upon realization of the difficulty of independently owned affiliates to raise sufficient capital to professionalize their operations, USWeb began to acquire some of its independently owned affiliates.

Using its venture capital resources, USWeb began consolidating the Web services sector by acquiring an increasing percentage of its affiliates and then ceased franchise licensing, with the intended result of achieving both operational and financial economies of scale. While extensive efforts were underway in developing and testing corporate integration strategies, USWeb went public with an initial public offering (IPO) in December 1997 at $10 a share.

The stock rose over the next few months, allowing the share price and stock options to fuel further acquisitions. USWeb ultimately bought up at least 31 other companies, including Ikonic Interactive. CKS had gone public earlier, but its stock had dropped sharply not long before the USWeb IPO. Firmage conceded that the situation reflected an internet bubble, predicting that growth in the internet consulting services sector was subject to growth in investment by both new and older companies and institutions in internet interfaces for their constituencies. Firmage contended that the company's knowledge base would help it scale as it integrated different units, and in October 1998, with the support of Microsoft, launched its USWeb Electronic Services division to utilize institutional knowledge across its professional staff to engineer sharable managed internet services, such as site hosting, email, sector-specific broad application components, and customized such functions on an ASP (Application Service Provider) basis. This later resulted in a formal alliance with Microsoft's DNA project,[1] which later contributed to Microsoft's .Net strategy.

Merger with CKS

On September 2, 1998, USWeb announced that it would merge[2] with CKS Group, a leading offline advertising firm. The merger was a stock transaction involving an exchange of 1.5 shares of USWeb stock for each share of CKS. At the time, USWeb was still losing money while CKS had managed to post a profit in its latest quarter. With an estimated value of the transaction approaching $350 million when the deal was announced, the combined market capitalization of the two companies was around $728 million. The news prompted a fall in USWeb's stock price while CKS stock, which had been trading near 52-week lows, rose initially but then fell again.

Among the benefits touted was joining USWeb's technical and Internet design skills with the traditional advertising and marketing savvy of CKS. The merged company was to be renamed Reinvent Communications, but the new name did not stick and the company was generally known as USWeb/CKS or simply USWeb. With the merger, the company had nearly 2,000 employees and important clients including Apple Computer, Levi Strauss, and Harley-Davidson. Since both companies had been busy making acquisitions, the deal prompted concerns about integrating these into a single organization and a potential culture clash. There was also a wide age gap between the younger USWeb employees and those of CKS.

Firmage initially was to become CEO of the combined company with Mark Kvamme, CEO of CKS, as chairman. Before the merger was complete, however, Firmage resigned in November to become chief strategist and was replaced by former Oracle executive Robert Shaw. Firmage then left the company entirely in January 1999, after his beliefs in the existence of extraterrestrial life visiting Earth were published online. The merger with CKS Group and formation of the USWeb Electronic Services division with Microsoft's support would be Firmage's last major acts as CEO of USWeb. Firmage revealed in late 1998 that he was working on a book about and supporting research into his appraisal that some UFOs represent extraterrestrial spacecraft, describing some of the implications of that scenario to modern interpretations of historical human anthropological, religious and social development, and the possibility that some modern technology was reverse-engineered from alien spacecraft recovered or otherwise obtained by the U.S. Government in the 1940s.

Merger to form marchFIRST

In December 1999, after buying boutique management consulting firm Mitchell Madison Group for over $300 million, USWeb merged with Whittman-Hart, another consulting firm based in Chicago. The combined company, a merger of equals, had over 10,000 employees with annual revenues exceeding $1B. This deal involved Whittman-Hart exchanging 0.865 shares of its stock for each share of USWeb, and another new name as marchFIRST Inc. The new company was headed by Whittman-Hart CEO Robert Bernard. Shaw was announced as chairman, but resigned prior to taking on that role.[3] Jean-Marc Pestoni took responsibility for the European Office in Zuerich as Managing Director and led the company through the toughest period of management buyouts and the dot-com bubble.

With the burst of the dot-com bubble, marchFIRST went into bankruptcy in April 2001 and its assets were both liquidated and sold to interactive agencies that have long since merged with others. While USWeb - marchFIRST's lifespan was only about four years, it was one of the pioneers of the industry and the largest in the world at over 10,000 employees.

2003 Acquisition

In May 2003 the California marketing firm ClickSquad acquired the USWeb brand and digital assets out of bankruptcy. In April 2004 the website and digital offerings were re-packaged and launched to the public. [4]

Notes

  1. ↑
  2. ↑
  3. ↑ http://www.sfgate.com/business/article/On-a-click-and-a-prayer-6-dot-com-CEOs-reflect-2926777.php
  4. ↑ https://web.archive.org/web/20040525235628/http://www.usweb.com/

References

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