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'90s Dot-Coms — Where Are They Now?
An anonymous reader writes "The Industry Standard has put together a list of 10 dot-com stars from the Internet bubble of the late 1990s, and tracked down what happened to the services and their founders. A lot of the services are still around, albeit under new ownership, including eToys, Garden.com, and DrKoop.com. Others have been completely reinvented — Boo.com, an online clothing retailer that burned through $125 million in funding in the late 1990s, is now an online travel community. Of the founders, many were able to cash out early and/or achieve later online success. Excite's Joe Kraus and Graham Spencer later started JotSpot, which was bought by Google, and Kraus now directs work on Google's OpenSocial initiative. Others did not fare as well, such as two of the co-founders of Garden.com, who declined to cash out at the height of the bubble, and are currently 'between business ventures.' The insiders' post-mortems of the failed dot-coms are interesting — several suggest the concepts were good but too early for their time, while others identify specific factors that led to the failures — ranging from a lack of advertising to 'intense' greed."
There are still ads for Stamps.com.
Of all the Dot Bombs that I would have thought would go tits up, this was one.....guess I was wrong.
Now if only I can get LNUX back to $100 a share, I have a chance to get my IRA back into the black.
WTF? Over?
Ironic, isn't it, that the people who "declined to cash out"(read: take investors money and run) are unemployed, while many of those who pocketed the money are employed elsewhere? I would prefer it the other way around.
In case it's not been said before, thank you for having honor and respecting your investors.
I think the fundamental flaw in most of these is that the cash flow was completely disproportionate to the amount the company is valued at (stock price). This is not a trend that is going away either. Is facebook really worth billions of dollars? Really? Suppose someone buys it for a couple billion. Is it possible to recoup that investment without driving all the users away? I would argue no.
I pick on facebook, but there are plenty of other examples to be found.
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
Ahhh the bubble. I'm quite nostalgic about it now.
What I don't miss about the bubble is TV programs documenting some teenage CEO playing at running a business with apparent massive backing from stupid investors. Hey this kid is "worth millions"! (failed six months later of course).
That an generic domain names. I still don't know who is typing those in.
They missed the most influential and groundbreaking site of the whole dot-com era: Zombocom!
siener's youtube channel
When I look at the list of dot coms there, I'm struck by the 'normality' of the offerings: pets, holidays, clothing etc.
These are all things that are sensible things to sell on the Internet - and if you compare them to some of the (relatively) completely off the wall offerings that we use on an everyday basis, they don't seem all that odd (or novel).
Maybe "too early for their time" is true, but too early in the sense that at that time the Internet had just emerged from a very geek world and everyone was just settling into the concept of using it for something else.
Books and second-hand crap (and of course porn) weren't really a problem for people. Maybe a dog was.
Genesis 1:32 And God typed
You don't seem to understand. "Lack of advertising" in the context of dot-coms doesn't mean "we dot-coms should have advertised" but rather "damn, we thought people would pay millions to advertise on our site, and the bastards didn't." It's a different end of that shafting.
To recap, the dot-com bubble was started by greed over advertising money.
In the stone age of the Internet, sites had one ad banner on the front page. That was it. Not animated, not pop-up, no pop-under, and certainly not wall to wall. It also usually had something to do with the site's topic, e.g., a site about games, would likely had a banner to some games shop or publisher. It was easy to target those by hand since, well, you only had one and it stayed with you a long time.
And people actually tended to look at it, and occasionally even click on it. I mean, why not. We hadn't been flooded with ads yet and desensitized to the point where they're mentally filtered out.
And the ad rates were calculated for _that_ situation. A page view for your ad in those conditions was considered worth a lot. More importantly, the ratio between total ads shown and advertising budgets allowed quite a nice price per view. The pie was divided into a smaller number of slices, so to speak.
Unfortunately, that also gave some people the idea that, basically, they could make a site with 10 banners per page, and rake in tens to thousands of dollars (at those rates) per month for just being there. Heck, that there's even room for growth there. If you want twice as much money, just double the number of banners, and there you go, the ad provider surely will keep paying the same rate for them.
Whole sites were _designed_ to be little more than wall to wall ads, with a tiny frame in the middle for the actual content. Heck, I worked for one.
Others had no qualms to just lie to ad provider. (At first most sites hosted the banner themselves, so the ad provider had to just trust them that they actually had a trillion pages served last month.) Others used scripts to refresh the page in a loop, and/or to simulate a click on the ad if they were paid more for a click. Others urged their users to do that for them. Etc.
Basically a whole "industry" and a lot of financial analysts, built a model and started a bubble, based on little more than defrauding the ad providers. And on the bet that the ad providers were drooling retards, and wouldn't recalculate the rates. Most weren't even too secretive about their plans to abuse the system, and built whole projections for the next 20 years based on the underlying assumption that the rates would indeed stay the same, and the rest of the economy wouldn't react when that scam bleeds it dry.
Unfortunately, while the ad providers did react somewhat slower than expected (and it helped further "confirm" the belief that, yep, they're helpless and waiting to be fleeced), react they did. Among other things, because the actual companies advertising their products had a finite marketing budget. You couldn't tell them to pony up 100 times more money than last year, just because the number of ad banners on the web rose 100 times. Most didn't even have that kind of money.
And what happened was, well, basic economics. If there's the same X million dollars on the "demand" side for ad space, but the "supply" side has grown 100 times, then the price per banner dropped 100 times too. In fact, what happened eventually went even further than that, like often is the case in an overproduction situation. The old style plain banner views didn't just become 100 or 1000 times cheaper, they became outright worthless. The ad providers started wanting to buy better stuff instead, like better ads, or clicks instead of views, or unique users.
And that's when the dotcom's dreams of an endless stream of billions in advertising money, started going downhill. Almost none of them got as much advertising as they had built their business plan on.
A polar bear is a cartesian bear after a coordinate transform.
Even watching it go on live while I was in high school, it always struck me that a company that didn't actually sell anything was pretty much doomed to failure.
/you/ as their source for whatever stupid crap they were talking about, and then trying to sell ads to other companies...
.com boom? sun, cisco and whoever makes those aeron chairs -- 'cause they were actually selling stuff. ratemypetrock.com or whatever sort of ideas that people had failed because they were stupid.
Slopping some "information" up on a web page, hoping that enough people will "recognize" your "brand" and choose
who made out well from the
then again, I'm sure if I could have justified sporks as an "e-commerce solution," I could have been a billion heir for 15 minutes, too.
Back in 2000-2001, our Downside site ran an automatic predictor for dot-com failure. It was amazingly simple and painfully accurate. The system read through SEC filings, extracted the numbers for cash on hand and rate of losses, and projected when the cash would run out. We called that the "death date". That was a good predictor of when the company would go bust. This is a surprisingly good predictor for companies financed via an IPO. You can only IPO once (yes, secondary offerings are possible, but not when you're failing), so there's a finite amount of cash, and when it's gone, so is the company.
For Deathwatch purposes, "dead" was defined as "investors lost essentially all (90% or worse) of their investment". Some of the companies, like Dr. Koop, hung on for years, but their investors did not. (This, by the way, is a common phenomenon to venture capitalists. Many failing companies hang on as overfinanced small companies, downsized until they are able to make just enough money to cover current operating costs but not to recover their startup costs. VC's call these "zombies".) By our standards, essentially all the companies on the Industry Standard list died.
dealnews.com (originally just deal-mac.com) is still alive and kicking. We are still doing what we did in 1997. We still have the same owners. (I was employee #3, the owners were #1 and #2). We did not burn through crap loads of other people's money. We did not hire a huge rock band for our company parties. We did not do any of those things that the failures (and sure, some of the success) did. Good business decisions for the win.
One major problem the early .com's faced was that it was hard to undercut the local brick and mortar store with the additional cost of shipping on top of it. It didn't matter if you could sell dog food $5/bag cheaper if it cost $20 to ship it and waiting 3-5 working days to actually get it wasn't either convienient or cost-effective. Between that and the fact that the consumer buying habits didn't change quickly enough (as you had lots of people without the internet, or those like my dad who are terrified to use their credit card online); They weren't doing enough sales (in volume) to fully utilize their capital investments (warehouse, infrastructure) or lower their shipping costs.
I still think to this day (having developed sites for companies and their affiliate agents) is that insurance is bar-none, the perfect B2C product for the internet, because essentially, you're using a similar program your agent is to get a quote and the insurance company only has to send a single post-letter (or in a lot of cases now, generate a PDF) to send your insurance card, policy number and policy documents. They avoid the high cost of warehousing and shipping which has allowed them to be incredibly profitable (and even reduce their brick and mortar presence in a lot of cases) simply by making a public version of the software they already have (with some features removed).
In any case, it is significantly easier to sell a good (such as insurance or a digital file) or service that doesn't involve a physical product if you're the one shouldering the responsibility of getting it to the customer's doorstep (unless you've got a great way of passing the cost on and still remain competitive or all your competitors have the same situation like a furniture store.)
Forgive my spelling from time to time. I'm often posting during short breaks.
My favourite:
-- Ed Avis ed@membled.com
There's a used office furniture store in Manchester, NH, filled with the office furniture from failed .coms. Of course, all the employees of the store have Herman Miller Aeron chairs. If you like leather and mahogany office furniture, this is the place to go!
Even back in the 90's I was going these are not High-Tech companies. They are just freaking Mailorder companies. That they had for hundreds of years. Except for Mailing or Telphoneing and seeing the description your order you did it via the web. But all in all it was just an other mail order company. The problem was people though it was some new way of doing things. It really wasn't Using the web is just an improvement of the Mail Order system.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Thats pretty much standard for conventional underwriting. That all went out the door in the dot.com era. Valuations switched to revenue streams, which meant much less. Google waited until it had profits.
"93. Y2K hysteria."
hysteria? Hysteria? no, there was a real issue, and it was fixed throughout the industry with a lot of hard work and money.
AS someone who watched banking systems completly collapse in spectacular ways in testing environments during rollover simulations, I would not call it hysteria. Yes, some people went overboard but as a whole it certianly wasn't a blunder, it was an amazing success.
Most of the things they talk about made perfect sense at the time, or were great ideas but the people in charge of the money didn't know what they were doing. And some were just plain dumb.
The whole list is a failed attempt to try and make people thing they are smart.
The Kruger Dunning explains most post on
Actually, yes, I did. Once you get past the first 3 or 4 pages which actually had a product, you run even there into examples like TheGlobe.com who had _no_ business plan other than being a social site, and no way to monetize on the user base. Other than serving ads on their web pages, there was no other source of income. In Paternot's own words, and it's right in TFA, " way too little advertising revenues to support everyone ". So there you have exactly what I was saying, right from TFA, and from the horse's mouth.
Later in the list: DrKoop.com. From TFA: " DrKoop.com's business plan rested on advertising, and in 1999 there weren't enough healthcare advertisers to support it and the many other healthcare dot-coms trolling for ad buyers. "
Those are the only ones explicitly mentioning advertising as a factor, and they're both in the "we didn't get enough ad money" category I was describing. Neither of them says that they themselves didn't advertise enough.
But anyway, that's one list, and it just presents a debatable sample of it all. The "we'll get billions in ads" plan, although somewhat under-represented in that particular list, was actually the story of about 90% of the dot-coms back then. And as I was saying, I had the pleasure of actually working for one which had even less of a business plan.
Lack of their _own_ advertising? Heh. Where did you get that idea from TFA? The companies picked there are the ones which were maybe the best known back then, precisely because they advertised and built a lot of hype. The Pets.com sockpuppet from their ads is pretty much _the_ reason we all remember that one, out of the tens of thousands of dot-con flops.
So, heh, did _you_ read TFA? Doesn't sound like it.
A polar bear is a cartesian bear after a coordinate transform.
At first their office and server were together in a windowless closet in downtown Santa Cruz, California, just on the other side of the wall (and a short ethernet run) from Scruz.Net, the first commercial ISP in Santa Cruz.
They later expanded to about twenty-five employees and a nice office. I worked there for a time as a web programmer.
Chris and Thomas sold out to Verio. Chris' take was six million dollars. Thomas invested his share in two new dot-coms that failed, so that he wound up looking for sysadmin jobs again.
Chris did what most would say was the smart thing and retired. I didn't see him for a long time, until I came across him riding a mountain bike when I was hiking in the woods at UC Santa Cruz. I envied him for his apparently happy life.
One day, Chris was turned away from a psychiatric hospital because he was considered not sick enough to hospitalize. This is actually a very common problem - mental health is a popular victim of budget cuts, so there are never enough beds for all the potential patients.
The next day he blew his brains out.
It is thought that he was an undiagnosed manic-depressive.
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