DoveBid is that rare sort of company for which bad times can mean good business. The family-owned auction firm has built its success on the excesses associated with economic fads and stock-market bubbles. Back in the 1980s, DoveBid sold off the pieces of many bankrupt PC makers, starting with Osborne Computer. “We’d rent a truck from Avis, load it with computers, and drive to Holiday Inns in Portland or Sacramento,” recalls CEO Ross Dove. “We’d do the auction in the ballroom, and then we’d FedEx the money back to the office to make payroll.”
DoveBid has come a long way since then. In the early 1990s, it helped the FDIC sell $430 million worth of real estate from the savings-and-loan debacle. And over the past 18 months, the collapse of the Internet boom has meant more boom times for DoveBid. The company has run high-profile auctions for Webvan, the failed online grocer, and Excite@Home, the bankrupt Internet-service provider. It even auctioned off the contents of Enron’s European headquarters.
Indeed, there’s almost nothing that DoveBid hasn’t sold, from factories that make microchips to those that make meat pies. It sold a casino to Debbie Reynolds. It sold Michael Milken’s coat rack in front of one of the biggest auction audiences ever (nearly 10,000 people at New York’s Jacob Javits Convention Center). It sold all of the buildings in the town (read: “historic” tourist spot) of Winkelmann, Texas.
Ross Dove says that a big reason for the company’s success is that it has convinced clients that it can assemble the biggest and best audiences for their auctions and that it can therefore command the highest prices for whatever is being sold. At the Enron auction, held in London and online in late February, DoveBid got such high prices for Enron’s high-end plasma displays that a few days after the auction, a London electronics retailer ran advertisements in local newspapers saying that its prices were actually lower than those paid by winning bidders at the Enron bankruptcy sale.
“The reason that we can get such great prices is that our auctions reach a truly global audience,” explains Dove, whose younger brother, Kirk, serves as DoveBid’s president of auction services. “We’ve extended the back of the auction room in Philadelphia all the way to Singapore.”
Another reason that DoveBid has succeeded is that it has learned from the excesses that turned once healthy companies into its clients. Strolling the hallways at company headquarters in Foster City, California, Ross Dove challenges a visitor to try to spot two offices with similar furniture. “There are no two offices here that match,” he declares, “because we buy used furniture from our own auctions.” The building itself was a bargain: The company bought it when 3M decided to move out. “We got a pretty good deal on it,” Dove crows as he walks past posters on the wall that advertise auctions that DoveBid has done for Boeing, Levi’s, and a poultry breeder’s facility.
All of which makes DoveBid’s own brush with irrational exuberance deliciously ironic. During the dotcom mania of the late 1990s, with investors gripped by the feverish rise of online auctions in general and eBay in particular, DoveBid became something of a venture-capital darling. Could this become the corporate eBay? The company raised $125 million, acquired 17 companies in less than two years, filed for an IPO (which was later withdrawn), and started losing money in search of frenetic growth.
“We lost ourselves for a little bit,” Ross Dove concedes. “We allowed people to measure us by metrics that had nothing to do with the viability of our company. People said, ‘This is a great company because it’s losing so much money!’ “
Since DoveBid pulled its IPO filing in May 2001, Ross and Kirk Dove have been working hard to return the company to financial health — and return it to its roots as a family-oriented operation that prides itself on really knowing its customers. The company was founded in 1937 by the Dove brothers’ grandfather. It was based in San Francisco, and most of the auctions that it held involved used appliances, restaurant equipment, and scrap materials. Since 1937, every Dove family member involved in the business has learned how to wield the gavel. Kirk says that they do it for “the love of the business” and also to stay on top of market dynamics.
“You want to know what’s in demand and what’s not selling,” says Kirk Dove. “The fact that I just got off the podium at Webvan means that I can now go tell Excite@Home what their Sun servers are likely to sell for. You know what brands move, and that makes you a better evaluator when you look at inventory.”
These days, the Doves are unrepentant about being high touch. “Everyone told us that our high-touch approach wasn’t scalable,” Ross Dove recalls. “They said we couldn’t take advantage of the network effects of the Internet with trucks and forklifts. But if you’re closing 15 plants with $5 million in assets, you need a different kind of service.”
The company is currently pursuing two major strategies for growth. First, the Dove brothers are bringing the corporate-auction culture to parts of the world where it doesn’t have much history — places like Japan. Second, they are continuing the company’s decades-old campaign to convince businesses that auctions aren’t just for bankruptcy anymore.
“We’re just now getting to the point where it’s not embarrassing for successful companies to have an auction,” Ross Dove says. “We tell companies that it’s smart to do industrial garage sales one, two, or even three times a year, and to broadcast them to a worldwide audience over the Web. Every company has underperforming assets.” DoveBid’s auction calendar for 2002 includes such names as Fujitsu, Lockheed Martin, and Motorola.
The return to reality is paying off. DoveBid ended 2001 with a profitable quarter and set a new record for annual revenue, topping $100 million. The company plans to conduct about 350 auctions this year, and there’s new talk of an IPO. “We used to feel like we didn’t have the sizzle of the Internet-only marketplaces,” says Kirk Dove. “But we’ve realized that you can live without sizzle so long as you keep customers happy. That’s one thing that hasn’t changed at all since my grandfather ran the business.”
Learn more about DoveBid on the Web (www.dovebid.com). For a Web-exclusive article about the art of bidding smart, click here.