Minor mishaps: He built an Internet giant, so why is Halsey hurting?
Halsey Minor is the greatest character Charles Dickens never created. But if he had, the 19th century author with the penchant for giving characters descriptively accurate monikers might have given Minor a different last name.
Major was the ambition when Minor founded news company CNet in 1992 with the intent of becoming the top media mogul of the new medium called the Internet.
Major was his wealth when CNet became the go-to site for tech industry news and when advertising dollars began to pour into the company.
Major was his foresight in March of 2000 when he walked away from CNet with hundreds of millions at the peak of its success, just weeks before the dot-com bubble burst and scores of other young entrepreneurs lost their fortunes.
Now, less than a decade later, at age 43, major are Minor's losing gambles and unpaid bills.
Earlier this month when the loan money temporarily fell through for his Landmark Hotel, Minor claimed it was a bank defaulting amid a worldwide banking crisis.
"They flat-out did not pay," he said.
However, looking at the rest of his empire, some wonder if it isn't Minor himself who's running out of cash.
In March, Minor paid $3 million for a stallion that some considered a contender to win the Kentucky Derby.
That month at the Florida Derby, the horse pulled up lame, finished dead last, missed the Kentucky Derby, and has not raced since.
Also in March, Minor purchased three paintings at auction for $13 million. In September, New York-based Sotheby's auction house sued Minor because he had yet to pay for the paintings, and as of press time he still had not paid.
In June, Minor put his house in the posh Bel Air neighborhood of Los Angeles on the market, asking $12.9 million. Two years earlier, Minor paid $20 million for the property.
All this comes more than seven years after Minor pledged $25 million to the University of Virginia. To date, Minor confirms, he has yet to fulfill his pledge to his alma mater.
Minor spoke with the Hook and offered explanations for all of these issues. The question left unanswered is why a man who built a multi-billion dollar company from scratch and who was worth more than $500 million less than a decade ago is now having trouble finishing some of the projects he's started.
Halsey Minor could have played it safe. Had he decided to live his entire life as one of the leading members of Charlottesville's gentry, nobody would have blamed him.
The son of real estate broker Venable Minor, Halsey Minor is the great-great grandson of John B. Minor, a UVA law professor who, legend has it, saved the Rotunda when he rode across enemy lines during the Civil War to tell Union Major General George Custer not to burn Jefferson's architectural masterpiece. For these contributions and others, in 1911 the law school dedicated Minor Hall.
On Minor's mother's side of the family tree is Fleet Admiral William "Bull" Halsey. A UVA alumnus who looms large in U.S. military lore for commanding the South Pacific Theater during World War II, he returned in peacetime to raise money for an on-Grounds naval armory. When the building was complete in the mid-'50s, it was christened Halsey Hall.
The two buildings, located within a couple of hundred yards of each other on UVA's Central Grounds, continue to house classrooms and academic offices.
So when Halsey McLean Minor was born in 1964, the smart money had it that he, too, would follow the family line and prosper here in Virginia by building on the goodwill fostered locally by both sides of his family. For a while, it seemed, that's what he did, attending elite all-boys' boarding school Woodberry Forest in Orange County before matriculating at UVA, where he studied anthropology and joined the hard-partying but socially secure St. Elmo Hall Fraternity.
Yet when Minor graduated in 1987 from the university where his family roots run so deep, he was not long for Charlottesville.
Now you CNet, now you don't
Instead, he joined the investment banking program at Merrill Lynch in New York. There he met a fellow trainee named Jeff Bezos, and together they hatched an idea to use a new technology called the Internet to send customized news alerts to high-powered business executives. Before it ever got off the ground, Merrill Lynch terminated the project to save costs, but Minor and Bezos each eventually hatched bigger, more ambitious, and more lucrative plans.
In 1992, while Bezos was busy starting up a newfangled online store he called Amazon, Minor kept his sights on the Internet as a news medium, and hired UVA classmate Shelby Bonnie to help him found CNet. He envisioned CNet as a combined television network and website bringing viewers the latest in tech industry news.
While the television side of the business sputtered (although it did spawn the Sci-Fi Channel's The New Edge, which launched the career of American Idol host Ryan Seacrest), the website quickly became the go-to place in cyberspace for anyone and everyone wanting to know the latest about the booming dot-com business.
Six years after its founding, Minor told PBS interviewer Charlie Rose that CNet had become "the Bible for technology news" and was getting more web traffic than all the Disney Corporation's websites combined– which included ABCNews.com and ESPN.com (in addition to all things Mickey).
Minor also had the prescience to start up websites with such valuable web addresses as news.com, tv.com, search.com, and download.com, all of which are still owned and operated by CNet.
In 1996, Minor's company had become so successful that he was able to take it public. That same year he let his Internet winnings ride one more time when he decided to diversify CNet and create search engine Snap.com. Although pre-Google, the Internet already had its share of search engines like Yahoo and Lycos. Once again, the gamble paid off two years later when Minor sold a 60 percent interest in Snap to NBC for $63 million, a deal heralded by the New York Times under a one-word headline: "Validation."
But Minor wasn't finished.
On May 25, 1999, a month after CNet stock was trading at $70 per share, the company became part of its NASDAQ 100 index, joining America Online, Yahoo, and Amazon as the only Internet-based companies to gain admission into this exclusive club.
Such business acumen was rewarded with worldwide acclaim and a huge bank account. In 1999, when Fortune published its inaugural "40 Richest Americans under 40" issue, there was Minor at age 35 and #31, with an estimated net worth of $354.1 million.
Know when to fold 'em...
Like all good gamblers, Minor knew when to walk away from the table. On Thursday, March 9, 2000, just three days after CNet stock had its second-highest close ever at nearly $71, Minor announced he was resigning as chairman and CEO. He received a retirement package worth an estimated $200 million.
The timing appeared to be perfect. Over the weekend, the value of the NASDAQ dropped four percent, and CNet stock fell 13 percent. A little more than a month later on April 17, CNet was down to less than $25 per share, as the dot-com bubble had officially begun to burst.
By December 24, CNet had lost its coveted spot in the NASDAQ 100. And one year after Minor's retirement, CNet stock was worth just $9.44 per share, an 87 percent loss.
Yet, there was Minor on Fortune's "40 under 40" list for 2000, at #34 still worth $180.2 million. Minor's CNet co-founder Bonnie, who had been #24 on the 1999 list and who had stayed on with CNet, was nowhere to be found on the 2000 list.
Halsey comes home
On March 11 of this year, nearly eight years to the day after Minor left CNet, Charlottesville's prodigal son returned. But when he stood on the Downtown Mall to proudly proclaim that this would be the site of a nine-story, $31 million luxury hotel he called the Landmark, he looked different.
Gone was the pallid computer geek who parted his brown hair to one side and wore a necktie and round wire-rimmed glasses. The new Minor, now a tanned venture capitalist with shoulder-length salt and pepper hair brushed back, wearing a grey suit and white linen shirt– the top two buttons undone to reveal a bare chest– spoke in wistful oratory about his memory of buying his first baseball glove at Downtown Athletic. His new hotel would honor but not ape Charlottesville's heritage.
"There won't be any sappy busts of the three presidents in the lobby," he said. "We want to call attention to Charlottesville's history with humor and elegance."
The project had long been the vision of Charlottesville developer Lee Danielson, the man behind such downtown landmarks as the Charlottesville Ice Park and the Regal Cinema 6, who wore a sunny smile on that bright almost-spring day.
"You can't imagine how it feels to be starting this," Danielson said. "I was wondering if it was ever going to happen."
However, more than seven months later, after a public squabble between Minor and his lender, some are still wondering if it's ever going to happen.
On November 12, Minor cried foul, alleging that Georgia-based Silverton Bank had defaulted on $23.6 million of loan money for his Landmark Hotel on the Downtown Mall.
"They flat out did not pay," Minor said. "Halsey Minor paid. The bank didn't pay."
The bank begged to differ.
"We disagree with Mr. Minor's comments," said Silverton Bank in a statement. "The loan is proceeding per the terms specified clearly in the loan agreement between the borrower and Specialty Finance Group. Any assertion otherwise is inaccurate."
Danielson is having trouble believing Minor's story, saying Minor had "unfairly maligned" Silverton Bank. Danielson says the real problem was changes Minor made to the project after having reached an agreement with Silverton, including putting a bar on the roof of the building.
"The way construction lending works," says Danielson, "is you put in your equity, and the bank has its debt, and if there are changes in the scope of the project, and those change orders are not presented to the bank, the bank is under no obligation to continue to fund the project, unless they know where the money is coming from to fund those changes."
Where such a turn of events would put Minor is unclear, but Minor says that despite the public spat with his lender, he will remain the project's owner.
"I own it, and I'm not selling it," he says. "People have asked me to sell it to them, and I've said no. I'm going to deal with the issues at hand and find financing that's fair once the market improves, and we'll carry this project whole."
If Minor has his way, Danielson won't be along for the ride. Minor has begun calling Danielson the project's "former developer," although he declined to respond to the Hook's request for elaboration, and Danielson says he's not about to step aside.
"I can say with certainty," says Danielson, "that I will be in this project until the end."
Unfortunately for Minor, this isn't his only venture that isn't going as planned. It could be a result of bad investment decisions, poor management, or just plain bad luck, but the fact is that Minor has his fingers in many pies, and he's getting scalded.
Fresh prince of Bel Air?
Like many who bought real estate two years ago, Minor has seen the value of his house plummet. However, his is a palatial, glassed-in mansion in the Los Angeles gated community of Bel Air. This 1965 modernist wonder features 4,749 square feet, four bedrooms, eight bathrooms, a manicured courtyard, a full gym, and an unspoiled view of the city. So, when Minor found the house in March 2006, he paid attorney and Las Vegas real estate developer Reagan Silber $20 million to make it his own.
Soon, however, Minor discovered that this house that once glittered was not golden.
"It had something like 40 different leaks," Minor says. "It took hundreds of hours of painting and caulking to fix them all."
Not only did Minor put the house back on the market, but he sued Silber and won $5.2 million in damages (including $1.3 million in attorney's fees).
Still, Minor is taking a loss. On May 29, he listed the property on the market with the price tag of $11.4 million. Even adding the sum from his lawsuit, Minor is still out at least $3.4 million. Of course, that's if Minor gets the price he's asking. He admits the house is now worth only $10 million.
In addition to Bel Air, Minor's real estate holdings include a farm in Free Union, a Beaux Arts mansion in San Francisco, and the historic Carter's Grove plantation near Williamsburg [see sidebar], but houses aren't the only items Minor collects.
He has also been buying up expensive works of art, and his tastes are eclectic. On May 22, at Sotheby's, Minor purchased both a snowy impressionist cityscape by Childe Hassam and a day-glo painting of high-heel shoes by Andy Warhol.
However, "purchased" is a loose term. To date, Minor has still not paid for these two paintings along with a third, Edward Hicks' "Peaceable Kingdom with the Leopard of Serenity," for which he bid a combined $16.8 million.
It's easy to understand why Minor would covet these particular works.
"Well, Warhol is Warhol," says Alan Bamberger, a nationally renowned art appraiser based in San Francisco, "and 'Peaceable Kingdom' is one of the most important works of American folk art."
Still, according to Minor, he wouldn't have wanted "Peaceable Kingdom" to the tune of $9.6 million had he known one reason why Sotheby's was selling it. In his countersuit against Sotheby's– a class-action on behalf of Minor and "others similarly situated"– Minor claims the auction house failed to disclose that the previous owner had given Sotheby's the painting as a means of paying a debt.
"What they did is so egregious," says Minor, "I'm not going to pay a nickel to them."
Sotheby's and Minor can't even agree on what Minor said he'd pay for "Peaceable Kingdom." Sotheby's says in its suit that he bid $9.6 million. Minor says it's actually $8.6 million.
Whatever the price, Bamberger says, Minor will probably have a hard time getting out of paying it.
"I'm no legal expert, but I do know you can put a painting up at auction for any reason," he says. "Usually, the only reason there could be for pulling your bid after the fact is if there's something wrong with the painting itself, like if there's undisclosed damage or if it's a forgery, and even that is rare."
Minor contends that the lawsuit is nothing more than an attempt by Sotheby's to squeeze money out of him that they aren't able to find elsewhere in the current economy.
"Look at their stock price [$7.99 per share at press time], and you tell me what you think of this lawsuit," says Minor. "They're down just like any other high-end luxury brand right now. They're losing hundreds of millions of dollars."
Even if Sotheby's did fail to disclose its interest in selling the painting, Bamberger says, Minor's problem could have been solved had he simply done his homework.
"Like any multi-million dollar purchase," says Bamberger, "when they put the painting up there, you had better have solicited multiple opinions of what the painting is worth, know why it's worth that price, and know what you're willing to pay for it."
Art collection isn't the only high-stakes game of the rich and famous Minor has recently joined.
In March, he jumped into the horse racing business in a big way, paying $3 million for Fierce Wind, a three-year-old thoroughbred colt, four months after having already dropped $3.3 million on a filly named Dream Rush.
While Dream Rush seemed a promising pick, experts believed Fierce Wind had a chance to run in the Kentucky Derby. He certainly had the right genes.
"His pedigree is fantastic," says Jeremy Plonk, who covers horse racing for ESPN. "His grandfather is A.P. Indy, who won the Belmont Stakes in 1992. His father, Dixie Union, had a great career as a three-year-old as well. His mother, Post Parade, has turned into one of the preeminent dams."
That's not to mention the champions further back in Fierce Wind's lineage. His great-grandfather is Seattle Slew, who in 1977 became only the ninth horse to capture the Triple Crown, and his great-great-grandfather is Secretariat, the 1973 Triple Crown winner whom ESPN ranked the 35th Greatest Athlete of the 20th Century (human or otherwise).
So when Minor plucked up Fierce Wind just two months before the Kentucky Derby– allegedly telling associates that "he looks just like Seabiscuit," it was still a gamble, but not an unprecedented one.
"You see this sometimes with people with a lot of money who enjoy the limelight and are looking for that horse," says Plonk, "who will put them in the Derby and make them socially relevant."
The last person to pull off the rare feat of buying a horse right before a Derby win was also a crown prince of the financial world– only he also happened to be an actual crown prince. Prince Ahmed bin Salman from the Saudi royal family bought War Emblem right before he won the Derby in 2002.
Minor's first race as the owner of Fierce Wind was the March 29 running of the Florida Derby, the last big race before Louisville. With four-time Breeder's Cup winning jockey Cornelio Velasquez on his back, Fierce Wind started strong, charging to the front on the inside. He was second behind Big Brown heading into the first turn, but pulled up lame in the backstretch and slowly faded as Big Brown ran to victory.
Minor did not make it to Churchill Downs, as Fierce Wind finished dead last in Florida. The horse did not race in the Kentucky Derby, also won by Big Brown, and has not raced since.
Still, Plonk says hope is not lost for Minor's equine expenditure.
"He just started training again in Florida," says Plonk. "The injury could be a blessing in disguise because horses sometimes have a tendency to break down after the grind of the Triple Crown, with three races in five weeks. If he has a good four-year-old season, Minor could easily make that money back in breeding fees."
That won't necessarily be the case for filly Dream Rush. Since the average gestation period for horses lasts 11 months, fillies usually make the bulk of their revenue during their racing careers.
And, thus far, Dream Rush has yet to win a race, and has earned Minor only $109,000 of her $3.3 million price tag. As for her $3 million male counterpart in Minor Stables, Fierce Wind has netted his owner $0 in winnings.
Minor has also bet big on other, metaphorical, race horses. In 1999, he made his one and only donation to a candidate running for state office, and he made it count. Minor donated a whopping $50,000 to the successful re-election campaign of then-Albemarle delegate Paul Harris (R), which constituted more than a quarter of the money Harris raised that cycle.
How much did Minor like Harris? To date, he has donated a combined $10,000 to candidates running for president or the U.S. Senate.
But in 2007, Minor hinted he'd rather be running the race himself than simply wagering on the contenders, and said he'd like to run for Governor of Virginia.
On paper Minor doesn't look like a bad candidate. Lately, the Republicans have lost with conservative candidates with backgrounds in law like former governor Jim Gilmore and former senator George Allen. Minor, by contrast– and like former governor and now Senator-elect Mark Warner (D)– is a business-based moderate (Minor has donated to Democratic candidates as often as to Republican ones).
However, when Portfolio magazine profiled Minor in September and asked him whether he'd run for an open governor's mansion in 2009, Minor demurred.
"I don't spend enough time right now in Virginia to understand the complexity of the issues," he said. "And I think I'm too blunt, ultimately."
Still he wouldn't go so far as to rule it out in the future, even comparing himself to Virginia's most famous governor of all.
"I have faith in my own decision-making process," he said. "Thomas Jefferson had James Madison to kind of make things happen. And maybe I'll find a James Madison, and he can take my idealistic visions and get them implemented."
This quote got the attention of local political blogger and one-time Democratic candidate for City Council Waldo Jaquith.
"Read the whole profile to learn why this is such a hilariously bad idea," Jaquith wrote. "He's got the money of Mark Warner, but all of the lovable attributes of Jim Gilmore and the myriad enemies of Harry Byrd."
As fate and Google should have it, that quote got Minor's attention.
If the screen name is to be believed, Minor weighed in on Waldo.Jaquith.org with a 200-word comment of his own ripping the Portfolio piece.
"These are just stupid words in an article without a reason for being," Minor allegedly wrote. "And I'll just stand by my accomplishments. Lets see if Portfolio makes it 10 years and gets bought for $2 billion by CBS [as CNet had in May]. Something tells me I don't have to worry about a follow-up story in five years."
It would appear Minor had more to say on Portfolio's website with another 379-word comment under the online version of the magazine's profile. His main quibble? The headline.
"It says I am the 'baddest boy in Silicon Valley,'" Minor reportedly wrote. "The strange thing is I commute between LA and San Francisco, and the week I am in San Francisco I am with my kids the whole time and never go out. I don't go to Silicon Valley parties, conferences, dinner parties, roof top gatherings, and I don't know any of the V[enture] C[apitalist]s except the few top ones I knew when I ran CNET."
Still, it would seem Minor liked the idea of being the "baddest boy of an area where I'm totally irrelevant."
"I decided that I am now the baddest boy in bass fishing," Minor would appear to have written. "I don't have a boat, and I am not sure what a bass looks like, although I am certain I could tell the difference between a bass and a tuna. And then there was one of the many 'unnamed' sources who said I was a 'psycho.' So how about this, 'I am 'the baddest psycho in bass fishing.' I think its an insanely cool way to be introduced."
If appearances are to be believed, Minor doesn't save his comments for just big national magazines like Portfolio. Last month, a real estate blog called "Curbed San Francisco" tweaked Minor for his Sotheby's lawsuit calling him "litigious as all hell."
"Well...," Minor allegedly responded. "I am not sure you can be considered litigious when you have run a publicly traded internet company during the bubble and you have your first lawsuit at age 43."
It also looks like Minor took time to address one "guest" commenter who wrote, "Halsey Minor will be more remembered as an aging rich kid throwing temper tantrums than for anything else."
"Its so ironic," shot back the "Halsey Minor" screen name, "that I am painted as having this huge temper, and I swear 'guest' seems like he would throw something on me if he could. What's up with that? Not sure why you are so angry, 'guest,' but I did have a few thousand employees, and I do remember that not all of them practiced Yoga regularly."
Indeed, when the Hook spoke with Minor, he did not seem to be a particularly angry sort. He has, however, not returned repeated calls for follow-up questions, perhaps because of inquires about one particular unkept promise.
Before he began acquiring historic works of art or Triple Crown contenders, Minor had an interest in merging two of his great loves, the Internet and the University of Virginia.
In 2000, he put a price on that love when he pledged $25 million to the University to fund something called the Digital Academical Village.
"Extraordinary in its foresight," is the way UVA president John Casteen heralded the pledge– as well as the donor for his "creative thinking and generosity."
Six years later, when the University of Virginia undertook its $3 billion capital campaign, the university published an "honor roll" to thank those who had already given generously. But Halsey Minor's name was missing from the list of those who had given $10 million or more.
Asked by the Hook whether he's fulfilled his $25 million pledge, Minor confirms he has not.
"UVA killed the project," he says. "I can't donate to what is not there.
"I had some very specific ideas about following Jeffersonian ideals through using things like distance learning," he continues. "I really wanted to reshape the way education was delivered."
Technically, the project was subsumed into the campus expansion known as the "South Lawn Project," an ambitious mix of classroom and public spaces that includes a grassed terrace over Jefferson Park Avenue from the historic Lawn.
But Minor says he's not as concerned with merely constructing more buildings.
"I'm sure they'll have wi-fi and that the architecture will be beautiful," he says, "but this is about building classrooms, and I find that less interesting. There's no innovation for me to participate in."
Nevertheless, the two other original donors to the Digital Academical Village came through with their gifts. Former Citibank executive David Gibson and Georgia media mogul Bert Ellis have each fulfilled their respective pledges of $5 million, even if the project morphed.
"I just gave the money," says Ellis. "I didn't tell them what to do with it."
Still Minor says he continues to support UVA in a big way.
"I still donate to other things like stadiums and scholarships," he says.
Indeed, that 2006 honor roll of donors does list "The Halsey Minor Family" as having given between $500,000 and $1 million.
Minor wasn't always set on high-profile investments. In that 1998 Charlie Rose interview, the PBS host asked Minor what he'd do if he suddenly couldn't run CNet anymore.
"I would do something e-commerce related," Minor said. "In other words, opening a store on the Internet."
As an example of where Internet commerce was headed, Minor cited a little-known company based in California.
"One company I think is really interesting is a company called eBay," he said. "What they've done is take markets like trading cards, for example, where people would get together once a year, and they've created a continuous virtual marketplace."
Nowadays, though, Minor has invested in both virtual and literal marketplaces, and the man who once spoke so much of Internet-driven synergy says he doesn't see the connection between his investments.
Asked about whether his other financial losses in the real estate world of California, or on the race tracks of Florida, or at the auction houses of New York would affect his hotel in Charlottesville, Minor said the following:
"How would that have anything to do with it? The bank didn't write a check. How does that have to do with Sotheby's, or my horses, or that I'm selling my house in Bel Air? We're going beyond where we need to go in this conversation. You can twist facts around all you want, but I don't see what the hotel has to do with any of these other facts."
Editor's Note: The print edition of this story contained an error about thoroughbred Fierce Wind's lineage. It has been corrected in this online edition.