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shmangasarian 07-22-2005 07:33 AM

sailnets demise
 
from the Charleston Post and Courier this morning:

SailNet appears to be on rocks
Customers who placed orders with dot-com report that it''s left them adrift

BY KYLE STOCK
Of The Post and Courier Staff

SailNet, an online retailer of boating goods that once employed about 200 people, has run into rough waters.

While it''s not clear if the North Charleston-based dot-com has sunk, the company has stopped taking orders and is not responding to phone calls or e-mails. Its Leeds Avenue offices are shut with a "closed" sign on the door.

Meanwhile, sailing message boards on the Internet are filling up with postings from irate customers who say they have been overcharged or have not received orders they placed.

The company now has an unsatisfactory record with the South Carolina Better Business Bureau, which received two complaints about SailNet this month. The unsatisfactory record reflects the company''s failure to respond to at least one of the complaints, according to the bureau.

James Reddington, a 47-year-old sailing buff in Connecticut, said he ordered $184 worth of goods from the company in mid-May. Reddington received a few of the items, but he is still waiting for a $100 halyard, and his attempts to contact the company have gone unanswered for three weeks. Now, he''s seeking restitution with his credit card company.

"I''m certainly not happy, but I guess this is what happens with businesses sometimes," Reddington said.

SailNet launched in 1994 with entrepreneurs Sam and Cheryl Boyle at the helm. Originally looking for a way to connect sailing buffs, the Boyles took a business tack with SailNet when they moved from Detroit to Charleston in 1999.

The next year, they sold a controlling stake in the company to IDG Ventures, a San Francisco-based venture capital firm that has more than $1 billion invested worldwide. They also drummed up funding from New Millennium Partners, another San Francisco-based venture capital firm, and private investors.

Flush with cash, SailNet bought Johnson Sales Inc., a Florida-based business that manufactured and sold sails, cushions and other boat accessories. SailNet also acquired Boatscape.com, a Boston-based competitor. At the same time, SailNet hired a crew of programmers, sales staff and craftsmen.

At its peak, the dot-com had about 60 employees in North Charleston and another 140 or so making and shipping boat gear from St. Petersburg, Fla.

SailNet became a much-celebrated local phenomenon in those heady days. The startup won Web site accolades from Forbes magazine, and Boyle spoke on a chamber of commerce panel about "the secrets of high-tech success."

But the fickle winds of commerce can fade quickly -- especially in the dot-com world -- and SailNet was soon struggling to make headway. Man- agement started jettisoningemployees.

"It was fast growth, race to the top and spend lots of money to get there," said Randy Draftz, who spent almost six years creating and managing SailNet''s online store. "But the bubble burst before it got there, and it''s been in survival mode ever since."

Bill Wright, who handled SailNet''s manufacturing from St. Petersburg, said the company simply tried to grow too fast.

Wright used to work at Johnson Sales, the company SailNet bought in 2000, and was later hired by the Boyles.

Wright said he left SailNet when it was struggling in 2002, buying a bunch of the outfit''s assets to launch a separate store.

"There were a lot of consultants involved and a lot of people who thought they were smarter than everybody here," Wright said. "There was just too much money floating around."

In December, Sam and Cheryl Boyle and the controlling investors came to a parting of the ways.

Reached at their Mount Pleasant home Thursday, the Boyles denied that the company had been mismanaged. They said SailNet was a victim of market forces.

"It was predicated on a market that totally evaporated," Sam Boyle said. "It''s easy to play Tuesday-morning quarterback, especially when you have a videotape of the game."

The couple declined to comment on the company''s finances. When asked if SailNet ever turned a profit, Sam Boyle said, "I think it''s safe to say that it''s a very tough business to be in."

IDG Ventures did not return phone calls or e-mails Thursday afternoon. John Rublaitus, who the Boyles said is now chief executive officer of the company, also did not return phone calls or e-mails. A woman who described herself as Rublaitus'' wife said SailNet "is kind of closed down these days" but declined to comment further.

The SailNet parking lot has been empty for about three weeks, according to Jillian Hollingsworth, who works at Hospice of Charleston next door.

She has seen several people pound on the door and peer in the windows, she said.

The Boyles incorporated a new company in November and launched SailJazz.com, a site that sells clothes and hosts message boards for sailing buffs.

"Sometimes you just have to move on," Sam Boyle said. "I don''t want to have the rest of my life tied up with this."

SailorMitch 07-22-2005 09:23 AM

sailnets demise
 
Thanks for posting the article, Twofer. Interesting reading.

But what I''d really like to know is why the servers for this BB and the email lists are still working. The servers at work seize up as soon as the techie types leave for the day.

The Sailjazz email lists work great and are the same as the ones here on Sailnet. Of course, Sam Boyle created both of them. Lots of folks have already made the transition. Sailjazz says it will have a BB up and running soon. Others have posted options for other sailing BBs. The one that intrigues me the most is Sailing Anarchy. That one has Denr written all over it!

GordMay 07-22-2005 10:49 AM

sailnets demise
 
The board is still up, because the bill has been paid.
We can expect it to dissappear at the end of the pre-paid billing period - perhaps month-end.

msl 07-22-2005 02:11 PM

sailnets demise
 
What becomes of the personal information, credit card info and so forth that is stored in their computers?

msl

GordMay 07-22-2005 03:13 PM

sailnets demise
 
IDG Ventures, the venture capital company owning Sailnet, will likely have already integrated all information (with potential commercially value) into their main data banks. They may use the information internally, or sell it, or both.

clubara 07-26-2005 10:35 PM

sailnets demise
 

You give the VC''s too much credit. They have no "data banks" but will sell anything of value to the highest bidder. We need to watch closely over the coming months. I''ll ping some VC buddies for insights...

allan

dman 07-28-2005 06:22 AM

sailnets demise
 
This is just a test........no new messages,just going to check mine out.

TrueBlue 07-28-2005 07:16 AM

sailnets demise
 
Radio check loud & clear, Narragansett Bay.

Steve

dman 07-28-2005 07:42 AM

sailnets demise
 
thanks Trueblue you are coming in loud and clear yourself. Keep that Nauticat cruisennn...

boater1 07-28-2005 10:18 AM

sailnets demise
 
Financial troubles sink SailNet
Dot-com has filed for bankruptcy, will liquidate business

SailNet, an online shopping site for boating enthusiasts that expanded
quickly during the dot-com boom, has declared bankruptcy and will be
sold off.
The North Charleston-based company and its affiliates, all operating
under the umbrella of MarineNet Inc., sought protection from creditors
earlier this week in Columbia.
The once-high-flying company, which recently ceased operations, will not
be reorganized. "Everything will be liquidated," said Ivan N.
Nossokoff, the company''s bankruptcy attorney.
SailNet listed nearly $1.4 million in debts and $211,000 in assets,
mostly office equipment, inventory and unpaid invoices.

The decision to close and liquidate the business "was simply a matter of
just not having enough money to continue to operate," Nossokoff said
Wednesday. "It''s just that plain and simple."
The bankruptcy filing shows that revenue at SailNet sank by $1.2 million
last year, or 20 percent, to $4.7 million. Sales to date this year have
totaled slightly more than $2 million.
The company listed its biggest creditor as Larry French, a Florida
resident who sold his St. Petersburg-based sail-making business to
SailNet about five years ago. He is owed about $420,000, according to a
court filing.
Other major creditors include National Bank of South Carolina, which is
owed $350,000, and the owners of SailNet''s former and current corporate
offices in Mount Pleasant and North Charleston, respectively. The
landlords are owed a combined $131,809.

The company is scheduled to meet with creditors Aug. 24 at a hearing in
Charleston.
SailNet sought bankruptcy protection several days after The Post and
Courier reported the online retailer had stopped taking orders and that
its Leeds Avenue offices had been closed for at least several weeks.
Customers who said they have been overcharged or have not received their
orders have been posting complaints about the company on Internet
message boards.
Nossokoff said it''s too early in the bankruptcy process to say how the
court will handle any unfilled orders or overcharges. He also was not
sure what will become of any personal information such as customers''
credit card numbers that might be stored in SailNet''s computer systems.

The liquidation plan spells the end of what had been a promising local
technology business.
SailNet was launched in 1994 in Detroit by Sam and Cheryl Boyle, who
moved the venture to the Charleston area in 1999. The next year, the
couple sold a controlling stake for an undisclosed sum to IDG Ventures,
a San Francisco-based venture capital firm.
Flush with cash, SailNet began to expand through acquisitions in 2000,
when it bought Johnson Sales Inc., a Florida business that manufactured
sails and other boat accessories. That same year it acquired
Boston-based competitor Boatscape.com.

At the same time, SailNet hired a crew of programmers, sales staff and
craftsmen. At its peak, the dot-com employed about 60 workers in the
Lowcountry and another 140 or so in Florida.
The Boyles last week told The Post and Courier that they parted ways
with the company''s majority owners in December. The bankruptcy filing
listed about 30 other businesses and individuals as shareholders, whose
investments in the company are wiped out.
SailNet said in its bankruptcy filing that John Rublaitus, who was named
president and chief executive officer in January, stepped down from
those positions Monday and is now serving as a consultant to the
company. Nossokoff said Rublaitus was traveling Wednesday and
unavailable for comment.




John P. McDermott can be reached at 937-5572 or
jmcdermott@postandcourier.com.


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