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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."
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.
They missed the most influential and groundbreaking site of the whole dot-com era: Zombocom!
siener's youtube channel
It's not always about revenue - sometimes companies are bought to stifle competition from entering new areas.
Did Microsoft ever recoup their investment in Internet Explorer?
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.
'80s - Savings and Loan, Junk Bonds
'90s - Dot Coms
'00s - Housing/Mortgages/More Junk Bonds
The same "entrepreneurs" get away with it every time. The late adopters get there bit, but aren't smart enough to get out.
And then John Q. Public is told (after all the initial investors are ready to entrap them all) that such investments are "sure-fire" and the value will "only go up".
It's not even a question of "How do were prevent this from happening again?" but "What will the next 'big thing' be?"
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.
You forgot one:
'20s - Radio
The 1920s stock market bubble had a number of features in common with the 1990s bubble. There was a trendy new technology, lots of VC folks desperate to throw money at any company that had anything even remotely to do with it, and lots of people lost their shirts when the bubble burst.
...laura
It sold for $345 million last year, so sounds like a smart investment.
Stamps.com actually makes a pretty good product for small businesses. I own my own business and use it, as do many similar businesses. It's not a website but is actually a product that you install on your computer. Simply put, it allows you to print postage from your PC onto envelopes, labels or "net stamps," and it integrates into your word processing software. It's easier to use than electronic postage scales and you don't have to buy individual stamps which are fine if you only have standard sized letters, but a pain in the rear if you send anything which weighs more. With regular stamps, a business needs many different values of stamps which are just lying around.
The fact that Stamps.com is still around is testament to one central truth: good, well implemented ideas escaped the dot com bubble. Junk didn't.
Make love, not reality television.
The problem was the investors were also greedy and yet didn't take the time to understand what they were investing in.
The companies thought they immune to the rules regular business had to follow. It all became a grand pyramid scheme: You set up on a shoe string, get people to advertise so you don't have to charge visitors and (add some pixie dust) = Profit!
Like them or hate them, Amazon did things right. I remember reading news where all the numbers wonks were shaking their head over Amazon's meager profits. Oh, they were making money all right, but they were smart enough to sink it back into their business. And, sure enough, five years later (the average time any other business takes to show a profit) they started making money hand over fist and haven't stopped.
The computer chain, Egghead, did something even more radical. They closed all their brick and stick stores down and went to a strictly on-line presence, New Egg. It ended up being a good risk, CompUSA and others had come along and Egghead's retail prices were too high to the superstores. Online, they didn't have to maintain the physical presence and they were able to reach a lot more customers with lower prices. Like Amazon, they also kept shipping costs down. Now it's CompUSA that is floundering and closing their stores.
Both of these companies have succeeded because they 1) Had something that appealed to broad number of people; 2) Were able to offer products at a discount--in some cases where there had been little or no discount; 3) Kept shipping costs to a minimum--why the catalog companies haven't been smart enough to follow suite, I don't know--they're going to go the way of the dodo bird; and most importantly 4) Have really good customer service. A person doesn't have the comfort of just walking in the door with a return or a complaint. There's a certain amount of trust you've got to have that you're not going to get shafted by whomever you buy something from on-line. And reports of bad service sprout like weeds.
If you've never been modded as "flamebait" or "troll," you've never tried to argue a minority viewpoint here!
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.