Sunday, December 12, 2010

⅏Did You Know - Failed Dot-coms?

 Did You Know there were many well-known failed 'dot-com' businesses In the late 1990s when it came to 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 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 them over to customers. 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 business.

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 need to research price of 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 19902.  Here are a few of the largest and most famous:
  • American Cybercast was the publisher of pioneering episodic sites and, 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."
  •  Was a British Internet company founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin that famously went bust following the dot-com boom of the late 1990s. After several highly publicised delays, launched in the Autumn of 1999 selling branded fashion apparel over the Internet. The company spent $135 million of venture capital in just 18 months, and it was placed into receivership on 18 May 2000 and liquidated.
    In June 2008, CNET hailed as one of the greatest dot-com busts in history
  • 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. Controversial marketing campaigns. 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.  The company had invested $20 million to build its business, including investments from Givaudan and Quest International, European fragrance and flavor houses. Other companies supporting the Digiscents plans included RealNetworks, which was hoping to develop technology that would have allowed consumers to download Digiscents’ ScentStream software free of charge. Procter & Gamble also had a strategic research alliance with Digiscents
  • A paneuropean portal for university students, covering Italy, Germany, UK, Spain and France.
  • 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.
    Goldberg at
    Comic Relief in 2006
    pic by Wiki user
    CrazyLegsKC 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.
  • 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.
  • 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. Limped along in various forms until an anti-spam lawsuit forced its closure in 2007.
  • Online community for teen girls, founded in 1999 and backed, among others, by Jim Clark. Although traffic to its website had begun to materialize, 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."
  • 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.
  • 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.
  • 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 Hindi phrase (its CEO was of Indian origin), 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.
  • an internet media venture founded by Zapata Corporation, a fish protein company intent on monetizing its domain name.
Others worth mentioning:
    The Sock puppet
    pic by Wiki user Howcheng
  • They sold pet supplies to retail customers. It began operations in February 1999 and closed in November 2000. A high profile marketing campaign gave it a widely recognized public presence, including an appearance in the 1999 Macy's Thanksgiving Day Parade and an advertisement in the 2000 Super Bowl. Its popular sock puppet advertising spokespersonality was interviewed by People magazine and appeared on Good Morning AmericaAlthough sales rose dramatically due to the attention, the company was weak on fundamentals and actually lost money on most of its sales. Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble of the early 2000s. US$300 million of investment capital vanished with the company's failure. The company was headquartered in Emeryville, California, U.S. 
  • Webvan: An online "credit and delivery" grocery business that went bankrupt in 2001. It was headquartered in Foster City, California, USA, near Silicon Valley. It delivered products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in ten U.S. markets: San Francisco Bay Area, Dallas, San Diego, Los Angeles, Chicago, Seattle, Portland, Atlanta, Sacramento, and Orange County. The company had originally hoped to expand to 26 cities.  In June 2008, CNET hailed Webvan as one of the greatest dotcom disasters in history.  It is now owned and operated by
  • was launched in 1995 by entrepreneur Jeff Gold (now president and chairman of the nonprofit World Environmental Organization), as an entertainment portal featuring one of the Internet's first web-based chat room networks. The site was affiliated with nearly 3,000 radio stations worldwide, and nearly 1 million people became members of the network, making it the second largest web-based chat network at the time. was acquired from Gold by the Walt Disney Company and redeveloped after Infoseek, created by Steve Kirsch, was merged into the network in 1998. The site originally started off as a search engine, using a distinctive green stoplight logo. However, in early 2000 was forced to abandon its logo because of a complaint of similar-looking logos filed by (A court later ruled that had to pay $21.5 million in damages to Because its Disney, there were restrictions - such as a ban on mature content, that others didn't have to deal with.  Hence, the website was never able to justify the millions of dollars spent promoting it. was eventually shut down in Janurary, 2000.

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