Conversation Transcript

Bard: Isn’t that cool? It just pops right up there. Anyway, I didn’t really want to talk about the 80s as much—I’d like to maybe later—but what’s been on my mind lately doing research is the dot-com bubble. The first dot-com bubble. Do you remember that at all?

Mike: Oh boy, that was around 1999, 2000, wasn’t it?

Bard: Just about around then. Coincidentally, about the time my dad got laid off.

Mike: Ah, listen. Did he leave Donnelley voluntarily and go to Lucent, or did he get laid off from Donnelley and then go to Lucent?

Bard: The story I remember growing up was he got laid off twice. So he got laid off from Donnelley, went to Lucent for two years, and then got laid off from Lucent.

Mike: I definitely remember the layoff from Lucent. I just didn’t know if the Donnelley one was because he had found a job more to his liking at Lucent or not.

Bard: Well, then it might be lost to history because my mom remembers nothing. Ellen and Erica were too young. I very much remember the story about how he was basically laid off twice. Looking back at the time—I didn’t know it then—but all these big companies were freaking out because the economy was going in the toilet and they were restructuring everything.

Mike: So Donnelley was the opposite of a dot-com. Donnelley was a "value" company—physical printing, didn't grow much but solid, paid a nice dividend. Like a utility. It wasn't until after the dot-com bubble that people started looking at Donnelley and saying, "Printing? Oh, that’s that thing of the past."

Bard: But they were always kind of investing in the future, weren't they? Figuring out new ways to do stuff?

Mike: In 2004, after your dad was gone, they decided that entire tech center where your parents worked was too much cost and not enough return.

Bard: Because it wasn't actually Donnelley, right? It was a separate company, a subsidiary? What companies usually do with R&D is set up an SPE—a Special Purpose Entity. If you structure it like a separate entity and then eliminate it, you can write all the losses off. I'm an accountant, so I look at it that way.

Mike: I started in '80 and your dad and mom started around '81. At that time, we were just a department of R.R. Donnelley Corporate. I don’t believe it was ever spun off as a separate entity. Donnelley had subsidiaries, but I don’t recall that being one.

Bard: Interesting. Anyway, getting back to the dot-com... so you thought he left and went to Lucent, but then he left Lucent and went to Fermilab for nine months? He was basically a contractor organizing data. Particle physics throws off a lot of data. This was the early 2000s—there's no "cloud" yet. Everyone was into data mining.

Mike: I can absolutely believe Fermi would hire a contractor to see what they could find out.

Bard: I think he only took that as a bridge because he knew he wanted to go back to teaching. He was getting his credentials redone. In 8th grade, he started substitute teaching, and when I was a freshman, he got his job at Ignatius.

Mike: That echoes with my memories. In 2001, we came back to Chicago. Do you remember the bike rides? You were on the buddy bike, and your dad took it on the way out and I took it on the way back.

Bard: I have no memory of that, but it sounds like it happened all the time. I bought an e-bike immediately when we moved out here, but a couple of months later it got stolen. Since then, two more bikes have been stolen. Wealth inequality out here is unbelievable.

Mike: I haven't been out there in a long time, so I didn't understand that. It’s been a while.

Bard: Yeah, my father-in-law says, "Your bike didn't get stolen, it just got repurposed to a different owner." Anyway, back to the dot-com bubble. Donnelley was trying to figure out what made sense in that world while being stuck as a value stock that had to maintain a dividend. Every contract renewal was down in money.

Mike: Do you know what they call contract renewals now? Holly deals with this—it’s called ARR. Annual Recurring Revenue. That’s how you value these startups.

Bard: I’ll give you a dot-com story for Donnelley. Donnelley used to have a group called Cartographic Services. Their job was to put maps inside telephone books. When the company that would become MapQuest started out, they wanted access to that data. Back in the late 90s, Donnelley had a piece of MapQuest, but they didn't understand where it could go. They were a printing company. My memory is they sold it at a loss.

Mike: MapQuest! My dad was obsessed with MapQuest. He would print out so many pages. This was before phones. When did your mom start carrying a phone? We had a car phone in '96—the big brick.

Bard: No apps back then, but you could play Brick Breaker for hours. I played a lot of Minesweeper too.

Mike: MapQuest was cool because it gave you turn-by-turn directions. Pretty cool for the time.

Bard: How did software people work back then in your shop? Were they super siloed? Now it's more collaborative.

Mike: Super siloed. You had a project team and they worked on your project. Once a week there might be a code review where you’d bring in someone from another department for a different set of eyes, but otherwise, very siloed. And it was very "cube" based. The 80s and 90s were cubes.

Bard: Do you remember the patents we looked at? The first one was for the laser proofing system. My dad would have reported his hours, and when that project went into production, they would have capitalized his time. I used to do valuation for patents for closely held companies. There's a big conflict of interest because you're an auditor being paid by the company you're auditing, but no one really cares.

Mike: I’m an engineer, not an accountant, but Donnelley wanted to capitalize everything because it made their earnings look better for the dividend. They could only pay out of earnings. The dot-com bubble just kind of passed Donnelley by, both good and bad. Everyone wanted to throw money at the dot-coms, but you had to have a real product.

Bard: No one cares about making a profit anymore; they want to make revenue. You want to sell your company or borrow against it. I saw Uber's Series A round and thought, "These people are idiots." They charge people zero dollars to use the service just to get ingrained so they can eventually charge whatever they want. That's not how we learned to do business in school!

Mike: I’m "old days," so I’m just learning by listening here.

Bard: Anyway, I might actually have to jump off. Do you want to do this again in a week? I'll set up a Google appointment—wait, don't use that Comcast email, what's your Gmail?

Mike: Michael.Sittenger@gmail.com. That other one I don't even monitor.

Bard: Got it. Michael dot Sittenger. All right, Mike, this has been great. Enjoy!

Mike: You too. Have a good night. Bye.