Dot-com company

A dot-com company, or simply a dot-com (alternatively rendered dot.com, dot com or .com), is a company that 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").

While the term can refer to present-day companies, it is also used specifically to refer to companies with this business model that came into being during the late 1990s. Many such startups were 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. to 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.

With the stock market crash around the year 2000 that ended the dot-com bubble, many failed and failing dot-com companies were referred to punningly as dot-bombs,^[1] dot-cons^[2] or dot-gones.^[3] Many of the surviving firms dropped the .com suffix from their names.^[4]

List of well-known failed dot-coms

In the late 1990s many businesses were interested in investing in the Internet to expand their market. The Internet has the ability to reach out to consumers globally as well as providing more convenient shopping to the consumer. If planned and executed correctly, the Internet can greatly improve sales. However, there were many businesses in the early 2000s (decade) that did not plan correctly and that cost them their business.

One of the biggest mistakes early dot-com businesses made was that they were more interested in attracting visitors to their website but not necessarily winning customers over. Early e-commerce thought the most important factor was to have as many visitors as possible gather to their website and this would eventually translate into profits for their business. This was not necessarily the case and businesses failed. Early dot-com businesses also failed to take the time to properly research the situation before starting their businesses. There are many factors that come into play when starting a new business. Research needs to go into the product the business is actually trying to sell. The business also needs to research a price for their product. They need to be competitive with the cost of their product compared to their competitors. Early businesses failed to research how they promoted their product. If they decided to advertise their product only through the cheapest avenues (i.e. banner ads, radio), then most likely they would not get the amount of consumers they would if they advertised through more popular means.

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.

• boo.com: A fashion retailer which spent $135 million of venture capital in just 18 months,^[5] and was later placed into receivership and liquidated.
• Broadband Sports: A network of sports-content Web sites that raised over $60 million before going bust in February 2001.
• Cyberian Outpost: Founded in 1994 and one of the first successful online retailers. Used controversial marketing campaigns and was acquired by Fry's Electronics in 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.^[6]
• eToys.com: A retail website that sold toys via the Internet. The etoys.com domain name was acquired by Toys "R" Us in February 2009.
• 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 1990s 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.
• Go.com: A portal launched by The Walt Disney Company
• 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.^[7] Limped along in various forms until an anti-spam lawsuit forced its closure in 2007.^[8]
• govWorks: Producer of software to help government clients track contracts and purchasing functions. As the internet boom accelerated, the company transitioned toward becoming an Internet portal. Its rise and fall were chronicled in the documentary film Startup.com.
• 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."^[9]
• Pets.com: Sold pet supplies to retail customers. It began operations in August 1998 and closed in November 2000.
• 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 programming a day from its website in a format divided into channels by topic.
• Ritmoteca.com: One of the first online music stores retailing music on a pay-per-download basis and an early predecessor to highly successful iTunes business model. Pioneered the digital distribution deal as one of first companies to sign agreements with Universal Music Group, Sony Music Entertainment, Bertelsmann Music Group and Warner Music Group.
• Webvan: An online grocery retailer which delivered products to customers' homes within a 30-minute window of their choosing. In June 2008, CNET named Webvan the largest dot-com flop in history.^[10] It is now owned and operated by Amazon.com.
• Zap.com: an internet media venture founded by Zapata Corporation, a fish protein company intent on monetizing its domain name.

Acquisitions

Notes and references

See also

• List of largest Internet companies

External links

External video

Web StartUps, Net Cafe