*** From the Archives ***

This article is from July 26, 2001, and is no longer current.

Under the Desktop: Deals Among the Ruins

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Content creators in today’s economy might look to Rafiki, the baboon mystic in Disney’s “Lion King” epic, for guidance on today’s Internet downturn. Rafiki tutored Simba, the young lion prince, about the cycle of life, though he spared the cub (and the audience) the gritty details of vultures and maggots. I gained a jungle-floor view of Internet ecology this month by attending several auctions of dead Internet startups.

After a company folds, its assets are sold off, usually by a bank or other large creditor. In the past, these sales only mildly piqued my interest; after all, most of their technology was ancient history, from the pre-Pentium era. But following the staggeringly fast boom-and-bust cycle of Internet startups, some of today’s auction finds are almost new. For someone starting an office or thinking upgrade, these events can be a bonanza, albeit with a wistful overtone. Buyers can find workstations, servers, monitors, printers, and software, as well as useful non-technical items, such as boxes of paper, and even household items like rubber gloves and dishwashing liquid. And dare we say: Aeron? On these dot-com icons, some of the seats were still warm with factory stickers stuck firmly to the sleek plastic.

I attended two very different auctions: First was Phoenix POP Productions, a once San Francisco-based Internet services company. The sale was held on its premises. The other was a much larger auction that combined the holdings of several companies including B2B e-commerce vendor Cohera and Eazel, the group that created a groovy user interface for the Linux OS.

For bargain hunters hoping to glean some benefit from the current techno-downturn, auctions hold their share of potential prizes and pitfalls. This column will cover the basics reflected in my tour of the Phoenix POP auction. Next time, I will offer a list of suggestions culled from the action at the larger, multi-company auction.

Bits and Pieces
Held in a renovated loft space in San Francisco’s SOMA district, Phoenix POP Productions’ auction was conducted by the Van Horn Rinella Auction Group of Brea, California. (Orange County appears to be a hotbed of auction houses.) The company handles all kinds of liquidations, such as a recent “very late model hog processing plant.”

If you’ve never been to an auction (eBay and television shows don’t count), here’s briefly how it works, whether you’re bidding on PCs or late model hogs:

The auctioneers let potential customers kick the tires on the goods for sale in what’s called a “preview,” which is often held in the hours before the event or the day before. At the door, bidders check in with the management and receive a large numbered card they will hold up to place a bid during the auction. The actual bidding is just as you’ve seen in movies and television: Bidders raise their numbers or signal the auctioneer of their bid with a wave or nod, and the winner’s number is recorded. At the end of the auction, the successful bidders settle up their account and take away the goods.

The devil is in the details as I discovered at the Phoenix POP auction. Nothing is simple.

First, cash is king at these auctions (or cash equivalents such as bank drafts and cashiers checks). The auction houses don’t accept personal or company checks, or even credit cards.

At the door, bidders were required to put down a cash deposit of $300. Auctioneer Scott Van Horn said the deposit is evidence of “good faith” and makes sure that bidders will come back and pay their entire bill. Happily, they don’t charge anything to look, which can also be a fun recreational activity.

Second, the auctioneers imposed strict time limits for both paying for and removing the items, something I hadn’t considered as an auction novice. At the Phoenix POP auction, the entire bill was due at the conclusion of the auction and purchases had to be removed from the premises by the next afternoon.

Worse, you can’t just bid on a few items and then cart them away immediately — it’s not a flea market, after all. The Phoenix POP auctioneers said that buyers could remove items after the auction was finished, late in the afternoon (it started at 11:00 in the morning and was still going strong when I left hours later). Buyers should plan on having to make another trip and should factor in traffic and parking. Also be sure to bring a dolly, if necessary. It’s a schlep-it-yourself affair.

Another potential inconvenience is the time of the auctions: The sales are usually held during the workweek. For example, the Phoenix POP auction was on a Tuesday, with the inspection on the morning of the sale. The multi-company auction was on a Thursday, and had a preview the whole day before the auction. Taking advantage of an auction will likely require large chunks of two consecutive days, by the time you account for inspection or for removing the items. So you really have to be serious about the chance of finding a bargain to attend these auctions.

I found it somewhat difficult to judge an auction from its advertisements or Web site. As expected, there are Wintel PCs of every description, but I also discovered Power Macs and iMacs at both sales, even though the platform was mentioned in only one ad.

Meanwhile, the Phoenix POP auction had no printed catalog of what would be sold. Instead, each item sported a label with a number and occasionally a description of what made up a lot. Usually the lot was a single item or a complete system, while others were made up of hundreds of pieces, such as one of three or four bookcases filled with books, magazines, and boxes of old business cards (with cool, four-color images on one side — perhaps that’s where their profits went). The bookcases were sold separately.

Do I hear $1,000? $500? $5?
Everything at the Phoenix POP site was for sale, from the long funky custom-built wood and metal table in what used to be the conference room to the icebox in the kitchen. Numerous white boards were available, still marked with drawings for a kiosk solution for some also-failed client. The snacks still in cupboards, a pair of bikes — nothing goes to waste in the dot-com mulch pit.

Along several walls, Windows PCs and Macs were lined up for inspection on long tables (see below). Here, the systems were sold complete with a monitor. There was another line of machines and monitors sold separately.


Computers and monitors are lined up for sale at the Phoenix POP auction.

Auctioneer Van Horn moved around the floor, selling each lot in order, using the traditional sing-song auction language that calls out the current bid and requests a higher price. Sometimes he climbed up on the table above the machines to better see the bidders in the crowd.


Auctioneer Scott Van Horn gets a bird’s-eye view of the bidding.

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  • anonymous says:

    The tips were helpful. Any ideas where I can locate auctions in the Chicago area?

  • anonymous says:

    Thanks for reading! More to follow.

    I would look in the Sunday papers for a page of auctions — business, agriculture, computers and collectibles are often on the same page. The SF Chronicle has a full page or more, including ads of auctions in the area, an appraisal story (what’s this weird thing worth?) and a calendar of auctions.

    With a search on “Chicago auctioneers” I found https://www.bakerauctioneers.com/ as a Chicago auction house for tech. I bet there are others.

    Of course, you can try these sites for a combo local and online flavor:

    https://pages.ebay.digitalcity.com/Chicago/index.html

    https://www.ubid.com

    daviD m.

  • anonymous says:

    And for the great article. Looking forward to the “more” you mentioned in the post you just placed. Hopefully, their loss is a small company haven. I’m also hoping that these sources help keep me from going down the same treacherous road. Thanks again!

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