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A dot-com company, or simply a dot-com (alternatively rendered dot.com or dot 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, dot-cons or dot-gones. Many of the surviving firms dropped the .com suffix from their names.
List of well-known failed dot-coms
In the late 1990s (as well as today) 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 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 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 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 1990s. Here are a few of the largest and most famous.
- 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.
- 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.
- E-Loft.com: 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.
- 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. Limped along in various forms until an anti-spam lawsuit forced its closure in 2007.
- 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."
- 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.
- 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 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.
- 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
Acquisition Bought by Price Date Hotmail Microsoft $400,000,000 December 1997 Internet Movie Database Amazon.com 1998 Viaweb Yahoo! $49,000,000 June 8, 1998 Netscape Communications AOL $4,200,000,000 24 November 1998 GeoCities Yahoo! $3,570,000,000 January 28, 1999 Broadcast.com Yahoo! $5,700,000,000 April 1, 1999 Thawte VeriSign $575,000,000 December 1999 Network Solutions VeriSign $21,000,000 2000 eGroups Yahoo! $432,000,000 June 28, 2000 AllBusiness.com NBCi $225,000,000 March 2000 HotJobs Yahoo! December 27, 2001 CDNow Amazon 2001 PayPal eBay $1,500,000,000 October 3, 2002 Inktomi Yahoo! $235,000,000 March 2003 Pyra Labs 2003 Overture Services, Inc. Yahoo! $1,700,000,000 July 2003 Keyhole Inc. 2004 Kelkoo Yahoo! March 25, 2004 Picasa July 2004 Oddpost.com Yahoo! July 9, 2004 Lycos Daum $95,400,000 August 2, 2004 Upcoming.org Yahoo! October 5, 2005 Skype Microsoft $8,500,000,000 May 10, 2011 Ask.com IAC/InterActiveCorp $1,850,000,000 March 2005 TheHomeBuyingCenter.com Internet Leads Systems $20,000,000 2007 DialPad Communications Yahoo! June 14, 2005 MySpace News Corporation $580,000,000 July 2005 Konfabulator Yahoo! July 25, 2005 dodgeball May 2005 Provide Commerce Liberty Media $477,000,000 December 5, 2005 Friends Reunited ITV plc $230,000,000 December 6, 2005 del.icio.us Yahoo! $15,000,000 December 9, 2005 Webjay Yahoo! January 9, 2006 Shopbop Amazon.com February 27, 2006 SketchUp March 14, 2006 Writely March 9, 2006 AME Info Emap $27,000,000 July 4, 2006 BuyCostumes.com Liberty Media $55,000,000 July 26, 2006 YouTube $1,650,000,000 November 13, 2006 WebEx Cisco $3,200,000,000 March 15, 2007 Backcountry.com Liberty Media May 8, 2007 Last.fm CBS $280,000,000 May 30, 2007 Homestead Technologies Intuit $170,000,000 November 26, 2007 Bodybuilding.com Liberty Media $100,000,000 January 6, 2008 CNET Networks CBS $1,800,000,000 May 15, 2008
Notes and references
- ^ USA Today. December 28, 2000. http://www.usatoday.com/money/dotcoms/dot039.htm. Retrieved May 1, 2010.
- ^ Skillings, Jonathan. "Explaining the "dot-cons"". ZDNet. http://www.zdnet.com.au/explaining-the-dot-cons-120263916.htm.
- ^ http://www.thisislondon.co.uk/news/article-811729-details/From+dotcoms+to+dotgones../article.do
- ^ Glasner, Joanne (2001-08-31). "Dot's In A Name No More". Wired news. http://www.wired.com/news/business/1,46403-0.html. Retrieved 2005-12-27.
- ^ Helmore, Edward (2001-05-10). "So Who's Crying Over Spilt Milk?". London: The Guardian. http://www.guardian.co.uk/internetnews/story/0,,488346,00.html. Retrieved 2007-06-27.
- ^ "Game Mags Gone Because of MySpace Spam?". 2007-03-13. http://gigagamez.com/2007/03/13/game-mags-gone-because-of-myspace-spam/. Retrieved 2007-06-27.
- ^ Top 10 dot-com flops - CNET.com
- ^ Company History | Network Solutions
- ^ NBCi agrees to acquire AllBusiness.com | CNET News.com
- ^ "Liberty Media Form 8-K". SEC. http://www.secinfo.com/dVut2.zr8z.d.htm.
- ^ "Shopbop Acquired". Business Wire. February 27, 2006. http://findarticles.com/p/articles/mi_m0EIN/is_2006_Feb_27/ai_n16085470.
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