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A Dot-com company, or simply a dot-com, was any company that promoted itself as an Internet business during the Dot-com boom. The name stems from the popular top-level domain, ".com", in turn derived from the word "commercial". During the subsequent stock market crash, the many failed and failing companies became known as dot-bombs.
Many were 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-style 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*.
List of well-known dot-coms
- Amazon.com
- AOL
- eBay
- Google: Successful IPO, post bubble
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.
- Boo.com: Sold clothing and accessories. After blowing through hundreds of millions of dollars of venture capital on a poorly-planned business model, it became the poster-child for mismanaged dot-coms. As of 2006, the brand name is returning (under the ownership of a different company).
- eToys: Failed Web toy superstore. Notorious for attempting to sell its customer list in an attempt to ward off bankruptcy, despite its TRUSTe-certified privacy statement promising that "We do not sell, rent, loan or transfer any personal information regarding our customers or their kids to any unrelated third parties. Any information you give us . . . will not be used in ways to which you have not consented." Name was acquired and the site relaunched October 23, 2001 by KB Toys.
- 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.
- Freeinternet.com - The 5th largest ISP and famous for its mascot "Baby Bob", the company went bankrupt in 2000. Baby Bob was later sold to Quiznos Sub. [http://www.addlebrain.com/articles/freei.html
- Kibu.com Online community for teen girls.
- iSmell: Tried to transmit smells over the internet.
- Kozmo.com: Bike messenger delivery service for individuals
- Pets.com: An online pet food store that focused more on its brand name than profitability. Most notable for its sock puppet icon, seen in a Super Bowl commercial.
- Webvan: This grocery delivery service spent far too much on infrastructure (close to one billion USD) before it had even turned a profit.
- WorldCom: Broken by accounting scandals and eventually acquired
- zap.com: an internet media venture founded by Zapata Corporation, a fish protein company intent on monetizing its domain name
- flooz.com: a service touted as "e-currency" launched at the height of the dot com boom in the late 90's 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.
Definitions of Dot Bombs:
To develop a clearer focus of what an actual “dot bomb” consists of, we provide a few examples of definitions for the term.
“A dot-com company that went out of business or one that is failing.”1 - http://computing-dictionary.thefreedictionary.com/dot+bomb
“An internet based company that fails before maturity in the e-commerce market.”2 - Keith Wilson and Michael Olivella
“A failed Internet business.”3 - MSN Encarta, http://encarta.msn.com/dictionary_701705660/dot_bomb.html
Reasons why Dot Bombs Fail:
We have identified some key reasons for failure among the dot bombs that should be looked at when deciding to start a dot com company. By looking at the sources of failure, people can learn to avoid those same situations themselves.
A large part of the failures among many of the dot bombs is the inability to manage supply chains. Supply chain management is very important because delivering a product on time satisfies people. They may not remember the product arriving on time, but they will definitely remember how tardy the company was. When all a customer has to do is click on the next Google link down to come across the competitor, customer service becomes essential.4
http://www.istart.co.nz/index/HM20/PC0/PVC197/EX232/AR2425
Another basis for failure that we came across ourselves is a combination of two items that all internet start-up companies were battling against.
First, the usefulness of each and every dot com or dot bomb has to be considered. If a company is offering to ship a product in under a week which any consumer can purchase at the corner store five minutes away is not useful. This company would be adding shipping costs and time. Another small point to make is that time is money and therefore, this type of start-up seems useless. Many of the pharmaceutical internet start-ups fit this description in our humble opinion.
Secondly, the sheer number of dot com companies all emerging around the turn of the century is a hurdle of its own. The simple law of supply and demand solves this mystery. If there are enough internet start-up companies to satisfy a market larger than exists, the market won’t be able to satisfy the supply. Some companies will inevitably disappear. This is what happened to many companies and should not have come as a huge surprise to so many people.
Another aspect of failure lies within how the companies are set up. Some dot bombs tried to make the website perfect, the technology work perfectly, the ideas were good, but they forgot about business fundamentals. Without a solid understanding of business and how to run one, it becomes impossible to make a company successful on the internet, especially considering the fact that the internet is not a traditional place of business. The internet we know today didn’t even exist 20 years ago.5
http://www.oreilly.com/news/deathofdotcom_0601.html
The internet is a massive feeding trough for all companies and competition will always be intense. If leaders of new start-up companies take these ideas into account while planning online business, they will have a greater chance of becoming successful “Dot Coms” instead of unfortunate “Dot Bombs”.6
http://www.digitalwebcast.com/2001/02_feb/editorials/whydotcomsfail.htm
1. thefreedictionary.com. “http://computing-dictionary.thefreedictionary.com/dot+bomb”. Retrieved June 26, 2006.
2. Wilson & Olivella, 2006
3. MSN Encarta. “http://encarta.msn.com/dictionary_701705660/dot_bomb.html”. Retrieved June 26, 2006.
4. istart.co.nz. “http://www.istart.co.nz/index/HM20/PC0/PVC197/EX232/AR2425”. Retrieved June 26, 2006.
5. oreilly.com. “http://www.oreilly.com/news/deathofdotcom_0601.html”. Retrieved June 26, 2006.
6. digitalwebcast.com. “http://www.digitalwebcast.com/2001/02_feb/editorials/whydotcomsfail.htm”. Retrieved June 26, 2006.
Acquisitions
"Dot-com company"