Geeknet to be acquired by Hot Topic

http://www.nasdaq.com/article/geeknet-to-be-acquired-by-hot-topic-for-1750shr--quick-facts-20150526-00216

by hownottowrite • 11 years ago

68 47 11 years ago

ben10402• 11 years ago

Always funny how VA Research started out as a company that sold computers and had an absolutely bonkers 1990s IPO[1], only to wind up as a company that just sold T-shirts to people who use computers.

[1] http://en.wikipedia.org/wiki/Geeknet#Initial_public_offering

rwmj• 11 years ago

Anyone have the inside story about why VA stopped selling Linux computers? It seems to me a business which could have been huge.

dagw4• 11 years ago

Basically Dell, HP, IBM and everybody else all of a sudden also started offering Linux systems and the competition got too stiff driving down profits and market shares, leading to huge losses in the hardware part of the company. Combine this with the fact that they at the time had a large and seeming solid web and software side business it made sense to focus on that and simply drop the hardware, instead of trying to go head to head with Dell/HP/IBM.

ben10402• 11 years ago

VA's original raison d'etre was that commodity systems manufacturers like Dell didn't make any effort to support Linux, and they often shipped machines that had hardware that wasn't workable under Linux. If you wanted a known-good supported hardware configuration and you didn't want to build it yourself, then VA was one of your few options. They also were pretty expensive machines, IIRC.

There was a tide change around 2000-2001 where those manufacturers began caring about Linux, at least with regard to business customers. Dell's economies of scale and brand basically meant they could steamroll VA.

gaius• 11 years ago

What's the market for people who want boxes running Linux, but don't want their own installation?

VLM• 11 years ago

I haven't shopped at a classic mall in decades. I wonder if a "thinkgeek" store at a mall would make me go back?

edude03• 11 years ago

I'm not an economist by any stretch of the definition, but I wonder if the multitudes of acquisitions we're seeing is a net plus or a net minus for the economy

naturalethic• 11 years ago

Every voluntary exchange is a net plus or it wouldn't occur.

criley2• 11 years ago

It's a net plus for the investors and owners, not necessarily for "the economy". If one believes the health of the economy is measured by the broad-based success of those involved in the economy, then M&A is rarely a net good for the economy, as it generally converts labor and assets into investment and profit. They'll downsize, fire redundant people, sell off redundant assets and be more profitable with a smaller business. Great for investors, not great for the people who lose their jobs and the businesses those displaced workers used to spend at.

mikeash• 11 years ago

That's not necessarily true if the parties involved incorrectly estimate the consequences. Since humans are far from omniscient, there's no particular reason to assume their ideas of how the outcome will unfold are accurate.

calpaterson• 11 years ago

No, it doesn't have to be a net plus, it just has to be thought to be a net plus for the trade to happen. The Time Warner/AOL merger was thought to be a good idea but it was not actually a good idea!

michaelt• 11 years ago

There's a lot of indication that, on average, mergers and acquisitions destroy shareholder value [1] [2].

But they're good for the bankers and consultants who advise on such things, and often for the incentive system the shareholders have offered the CEO. And not every acquisition destroys value, think of Google buying Youtube. Of course we are going to buck the trend, right?

[1] http://www.nber.org/digest/aug03/w9523.html [2] http://www.businessinsider.com/damodaran-the-acquisition-pro...

normloman2• 11 years ago

Sounds like you live in a fantasy land where everyone acts rationally! How's the weather down there?

dragonwriter• 11 years ago

Every voluntary exchange is a net plus or it wouldn't occur.

This generalization is justified if, and only if, there are no externalized costs and the perfect knowledge of resulting utilities pillar of the rational choice model accurately reflects reality; neither of these are true generally of real-world transactions, so the generalization is unjustified.

Like the world without friction of many introductory mechanics problems, the world of Econ 101, while it may be a useful foundation for building an understanding of the real world, is very much not the real world.

falcolas• 11 years ago

Well, there goes the neighborhood.

I've always enjoyed Think Geek, both as a brand and as a company. They have a great sense of humor, and come up with some great T-Shirts. I've also walked my niece through Hot Topic, and I didn't really care much for the quality of their goods, or the feeling I get in their store.

I hope TG can retain what makes them good, but I'm not hopeful at this point.

drincruz• 11 years ago

Right, same here; I've always enjoyed picking up great t-shirts from Think Geek. Now, are we looking forward to geek humor shirts sold in a mall?

/me shrugs

amyjess3• 11 years ago

Hot Topic has had a long, slow decline.

They used to be a store for the goth subculture. They carried not only goth fashions but also goth music. They built a good reputation and had a distinct market niche because they were the only place in the mall you could get actual goth stuff. They actually made the subculture accessible to people.

And, then, at some point, they stopped caring. They stopped carrying goth music and switched their fashions over to generic "edgy" stuff. They stopped carrying anything belonging to a subculture or anything, and they became just another Spencer's knockoff for kids to buy stuff their parents won't approve of.

I shudder to think what will happen if Hot Topic applies this model to ThinkGeek. ThinkGeek has done a good job of, well, doing what Hot Topic used to do: sell products associated with a subculture and make that subculture accessible to people. I'd hate to see it diluted like Hot Topic has been...

philwelch• 11 years ago

The goth subculture has either been dying out or else the last remaining goths these days are approaching their thirties, so Hot Topic would have had to change up their business model just to survive.

For me, ThinkGeek is increasingly catering to a kind of mainstream, pop-culture "geek" subculture that's focused around watching TV more than anything. It's already gone through the same transition that Hot Topic went through. So it's a perfect fit.

ethbro• 11 years ago

It's what happens when whoever is at the company wheel decides that market share / broad appeal is more profitable than niche appeal.

Can't say I blame them as I'd imagine that's usually true.

That's the definition of niches: they're not the majority.

PS: I think it is to the detriment of the company when this "blanding" is overdone (e.g. Hot Topic) vs when mixed with a revitalizing sub-group (e.g. Sony Pictures Classics) that keeps that DNA available to the larger company (and provides a reference to measure how watered down your main product actually is).

stcredzero• 11 years ago

Well, there goes the neighborhood.

I like a lot of things in both the ThinkGeek and Hot Topic stores. However, I've always been dismayed at the commodification of what it means to be a "geek." I used to be able to assume that someone who was a geek/nerd at least understood basic science and the epistemology of science. Now, you can't assume anyone who calls themselves those things realizes the relative magnitudes of the speed of light and the speed of sound, or that you don't turn into a block of ice in 2 seconds after jumping out an airlock, or what happens with pressure in a column of water regardless of shape.

I used to remember how someone in goth finery started to explain what he thought was the goth scene's connection to 19th century literature.

What forms of signalling actually mean anything anymore?

pnathan• 11 years ago

Thinkgeek has rotted on the vine for years and years: they have carried almost no Linux swag for 5? years now.

brickmort• 11 years ago

ThinkGeek had already become a geekier Hot Topic somewhere in the past two years. This news isn't surprising.

chmullig• 11 years ago

I think it's been on that trajectory for longer than 2 years. They lost anything that made them unique or interesting years ago. It just became Dr Who/Star Trek/Star Wars/LOTR/whatever franchise of the moment shit.

heimatau• 11 years ago

Can someone explain this to me? Why would HT buyout Geeknet? Just seems strange to go against their own culture and model.

electronvolt• 11 years ago

It's totally in HT's business model/corporate DNA. Hot Topic's business model is about commodifying, accessorizing, and packaging subcultures in order to sell them at a huge markup.

ThinkGeek conveniently packaged nerd/geek culture as a set of things you could buy. Delightfully nerdy things, sure, and their employees seemed to genuinely be pretty nerdy but the model is not too different from HT. Now that being a nerd/geek is starting to become 'cool' (see recent uptick in portrayals of geeky/nerdy protagonists in non-comedy hollywood, etc.), HT probably wants to package up nerd/geek culture, and acquiring ThinkGeek was probably the most straightforward way to do that.

dagw4• 11 years ago

Both HT and Geeknet are in the business of selling clothes and fashion accessories to popular subcultures. There may even be a bit of overlap between the two customer bases. Also with geek subculture seemingly on the rise and the HT targeted subcultures seemingly on the decline it seems like a smart move for HT to diversify.

blueskin_• 11 years ago

I remember when thinkgeek had a wide variety of genuinely interesting stuff and not just the latest pop culture 'geek' merchandise (sure, they've always had some of that, but years back it wasn't the overriding theme like it is today). This is a sad moment, but probably to have been expected.

gyardley• 11 years ago

The mainstreaming of 'geek' culture is interesting. It feels like I'm increasingly being targeted - which isn't necessarily a bad thing, because hey, I generally like comic books and video games and light sci-fi / fantasy television shows, and there's a lot more of all of those lately. But why is this happening at this point in time?

Is this some sort of response to economic changes in American society? The job market has polarized, with 'geeks' landing on the more attractive side on the divide. Is this a case of an economic domination leading, gradually, to a cultural one?

I wonder if strapping on a geeky t-shirt and throwing oneself into geek culture is becoming the equivalent of dressing preppy in the 1980s, with both reflecting higher economic aspirations.

vosper• 11 years ago

I'm not sure it's a response to economic aspirations. I think it's more that a lot of the things that used to mark one as being a geek have become massively mainstream - owning a computer, owning a smartphone, using the internet, using reddit, using emojis / emoticons, etc...

At the same time (possibly it's the same effect) the definition of geek has softened. It's much less pejorative, much less sci-fi and math-club, than it used to be. It's almost trendy. It's certainly been co-opted by marketing and consumer interests.

Sort-of related, Simon Pegg wrote an interesting blog post recently [1]. Here's an interesting quote:

"[...] this extended adolescence has been cannily co-opted by market forces, who have identified this relatively new demographic as an incredibly lucrative wellspring of consumerist potential. Suddenly, here was an entire generation crying out for an evolved version of the things they were consuming as children. This demographic is now well and truly serviced in all facets of entertainment and the first and second childhoods have merged into a mainstream phenomenon."

[1] http://simonpegg.net/2015/05/19/big-mouth-strikes-again/

toomuchtodo• 11 years ago

At the same time (possibly it's the same effect) the definition of geek has softened. It's much less pejorative, much less sci-fi and math-club, than it used to be. It's almost trendy. It's certainly been co-opted by marketing and consumer interests.

I think that's right around the the world found out that if you're a geek, you have leverage (tech skills) are are more likely than the average citizen to have higher than average income (tech workers) or wealth (founders).

TL;DR Geeks (we) inherited the modern day economy.

"Render unto Caesar the things that are Caesar's, and unto God the things that are God's"

IgorPartola• 11 years ago

At a high level, we have a younger generation (currently in their 20's) who have grown up with video games and the Internet. They have spent countless hours playing anything from Donkey Kong to Call of Duty, which exposed them to this culture. This is the first generation to experience this en masse, and they are the right demographic to target since they may become lifetime customers.

mathgeek• 11 years ago

Going to be a great opportunity for small geek-centric online retailers to step in and grab some market share. I'm sure I'm not the only one who won't shop at ThinkGeek anymore.

adventured• 11 years ago

For those unfamiliar, Geeknet had one of the wildest IPO rides in recent history, at the peak of the dotcom bubble:

"It was the first time an IPO has ever finished the regular session at above $200 a share on the Nasdaq Stock Market. It meant that in an instant, the stock of the Sunnyvale, Calif., company went from small-capitalization territory to large -- $9.5 billion, or more than half that of Apple Computer."

http://www.wsj.com/articles/SB944749135343802895

"VA Linux Systems took its stock public in an initial public offering (IPO) on 9 December 1999, under the stock symbol LNUX. The IPO offered shares at $30, but the traders held back the opening trade until the bids hit $299. The stock popped up to $320 later in the day, and closed its first day of trading at $239.25—a 698-percent return on investment."

http://en.wikipedia.org/wiki/Geeknet#Initial_public_offering

And another good story on it:

http://www.cnet.com/news/10-years-gone-the-va-linux-systems-...

libraryatnight• 11 years ago

Think Geek is mostly just a pop-culture store now, and that's pretty much what Hot Topic is, so this makes sense to me. Think Geek hasn't been focused on 'geeks' in a long time.

Geeknet to be acquired by Hot Topic

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