Computer.com took quite a few knocks in January for spending more than half its $6 million in first-round funding on Super Bowl advertising, but CEO Mike Zapolin may have the last laugh.
He said Computer.com would merge with a major e-tailer as soon as the end of the month, although he would not reveal the firm or give an acquisition price.
“I don't think we would have gotten the valuation we have gotten today, which we can only say is considerable, if we had done a bunch of banner ads,” he said.
Computer.com spent $2.75 million on three Super Bowl spots and $750,000 on production costs. One former employee, who asked not to be identified, said the company never attempted to create a sound business strategy.
“They got greedy, held out for more, and then the capital dried up. They didn't have a viable business plan,” the former employee said. “They spent all of that money on Super Bowl commercials and didn't have enough to put together a marketing plan. They didn't follow up with any continued marketing.”
Zapolin admitted that the company cut its staff from 18 employees to four or five while doing very little follow-up marketing since the Super Bowl ads. But the company was waiting for the right company to invest in its “oceanfront property,” Zapolin said. “We went into merger mode. We changed hats.”
Employees who were surprised by these actions did not look at Zapolin's modus operandi, he said. “We made it clear we were here to maximize shareholder value,” he said.
Zapolin clearly has developed an MO for such maneuvers. He owned Beer.com and Diamond.com, building them up before selling them to larger entities.
Interbrew, owner of Rolling Rock beer, was the lead investor in the purchase of Beer.com. The Steinmetz Group and Softbank were the key players in the purchase of Diamond.com.
The idea is “to create a site and enough critical mass to be able to recognize a certain amount of value that exists for the brand, and then be able to merge it together with a larger company that doesn't have the resources you might have,” he said.
Computer.com received interest from at least half a dozen companies in addition to the company involved in the pending merger.
Don't be surprised to see a sequel to the Super Bowl spots. “If conditions are right and we integrate quickly and efficiently, the Super Bowl still could be an effective medium for this company,” he said.
And what of the laid-off employees? “Twelve to 18 months from now, they'll be giddy about how much their stock is worth,” Zapolin said. Computer.com and its sister site, 1800Computer.com, are based in Maynard, MA.
