Dot-com company
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A Dot-com company, or simply a dot-com, is a company which does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" (in turn derived from the word "commercial"). During the stock market crash ending the Dot-com bubble, many failed and failing companies became known as dot-bombs, dot-cons, dot-composts or dot-gones.
While dot-com can refer to present day companies, it is also used specifically to refer to companies with this business model during the late 1990s. Many of these startups formed to take advantage of the surplus of venture capital funding. Many were launched with very thin business plans, sometimes with nothing more than an idea and a catchy name. The stated goal was often to "get big fast" i.e. capture a majority share of whatever market was being entered. The exit strategy usually included an IPO and a large payoff for the founders.
Others were existing companies that re-styled themselves as Internet companies, many of them legally changing their names to incorporate a .com suffix.
After the crash, many of the surviving firms dropped the .com from their names.[1]
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[edit] The three C's
There are a couple of ways to do business and make money with the internet. They are emphasized in the three C’s, which stand for Commerce, Content and Connection. Commerce is about selling products over the internet, like Amazon.com does. Content refers to placing content on the internet, varying from news headlines to blogs. Some examples are BBC News and Facebook. Lastly you can do business by supplying an internet connection, like AOL, one of the largest internet service providers (ISP) in the US.[2]
Some companies, like Google, Microsoft and AOL, offer all three of them, which gives them an advantage on their competitors. This combination should be a success formula according to some information specialists.
[edit] List of well-known dot-bombs
There are thousands of failed companies from the Dot-com bubble of the late 1990s. Here are a few of the largest and most famous.
- 360HipHop: Promoted as 'the ultimate hip-hop destination on the web' and funded by an array of big name investors like Russell Simmons, the lack of consistent content and an inability to earn more in advertising or eCommerce than they spent tanked the project. The site is now a link farm.
- AmCy.com: American Cybercast was the publisher of pioneering episodic sites TheSpot.com and EON4.com, with backing from Intel and Softbank. The company's collapse is documented in the book "Digital Babylon: How the Geeks, the Suits, and the Ponytails Fought to Bring Hollywood to the Internet."
- Broadband Sports: A network of sports-content Web sites that raised over $60 million before going bust in February 2001.
- CyberRebate: Promised customers a 100% rebate after purchasing products priced at nearly ten times the retail cost. Went bankrupt in 2002, leaving thousands of customers holding the bag. The bankruptcy was settled in 2005 and customers received about eight cents on the dollar from their original rebates.
- DigiScents: Tried to transmit smells over the internet.
- Excite@Home: Excite, a pioneering Internet portal, merged with high-speed Internet service @Home in 1999 to become Excite@Home, promising to be the "AOL of Broadband" and partnering with cable operators to become the largest broadband ISP in the United States. After spending billions on acquisitions and trying unsuccessfully to sell the Excite portal during a sharp downturn in online advertising, the company filed for bankruptcy in September 2001 and shut down operations.
- Flooz.com: a service touted as "e-currency" launched at the height of the dot com boom in the late 90s and subsequently folded in 2001 due to lack of consumer acceptance and a basic lack of necessity. Famous for having Whoopi Goldberg as their spokesperson.
- Kozmo.com: delivered small goods (like a pint of ice cream) via messenger courier in under an hour to anyone in their service area. They charged normal retail rates and did not charge a delivery fee. They thought they could make up the difference by avoiding the expense of a retail storefront and on volume.
- theGlobe.com: Broke the record as the company having the largest percentage change in its stock price on its first day of trading. CEO Stephan Paternot was famously filmed dancing in a Manhattan nightclub wearing plastic pants.[3] Limped along in various forms until an anti-spam lawsuit forced its closure in 2007.[4]
- Kibu.com: Online community for teen girls, founded in 1999 and backed, among others, by Jim Clark. Although traffic to its website had begun to materialize, kibu.com abruptly closed its doors 46 days after a launch party in San Francisco, in October 2000. It had not run out of its $22 million in venture capital, but company officials concluded, "Kibu's timing in financial markets could not have been worse."[5]
- Pseudo.com: One of the first live streaming video websites. Pseudo produced its own content in a SoHo, NYC studio and streamed up to 7 hours of live programing a day from its website in a format divided into channels by topic.
- Yadayada.com: Founded in 1999; Internet browser and portal technologies for the first generation of wireless PalmPilot and HandSpring organizers, and Kyocera smartphone devices, competing with OmniSky (also defunct) and AvantGo. The name of the company came from a Hindu phrase (its CEO was Hindu), and not as was widely reported from the similar phrase "Yada yada yada" made famous by a Seinfeld episode (although the similarity certainly helped marketing). The business plan specified 12x as many sales as actually occurred in the first 12 months of operations. The cheap plastic, easily breakable HandSpring devices, sold directly by YadaYada via a reseller agreement, accounted for 96% of support calls vs. the magnesium cased Palm devices, despite the latter's market predominance at the time, and the resulting consumer discontent resulted in many returns and canceled contracts. The company's CEO was also CFO and embarked without oversight on disastrous, expensive marketing campaigns, such as planned Super Bowl ads without basics like a target market. 90%+ of all sales were within the Manhattan area, and the 3GL networks needed to expand the service failed to materialize after the telecom market meltdown in 2000-2001. The most-hyped feature of the service was a public bathroom rank-and-search service, available in Manhattan only, which allowed users to rank bathrooms by several factors such as cleanliness, appointment, etc., and provided directions to such bathrooms based on the user's location. The company laid off practically all workers in 2001, and shutdown formally shortly afterwards. Its CEO was rumored to have fled to Canada to avoid the IRS and lawsuits filed by a few disgruntled employees who were terminated with no severance despite existing written employment contracts. The URL is now in use by another, unrelated company.
- Zap.com: an internet media venture founded by Zapata Corporation, a fish protein company intent on monetizing its domain name.
Top 10 dot-com flops CNET.com
[edit] Acquisitions
[edit] Notes and references
- ^ Glasner, Joanne. "Dot's In A Name No More", Wired news, 2001-08-31. Retrieved on 2005-12-27.
- ^ "Top 23 U.S. ISPs by Subscriber: Q3 2007", ISP Planet, 2003-12-13. Retrieved on 2008-03-03.
- ^ "So Who's Crying Over Spilt Milk?", The Guardian, 2001-05-10. Retrieved on 2007-06-27.
- ^ Game Mags Gone Because of MySpace Spam? (2007-03-13). Retrieved on 2007-06-27.
- ^ Top 10 dot-com flops - CNET.com
- ^ Company History | Network Solutions
- ^ NBCi agrees to acquire AllBusiness.com | CNET News.com
