A Look Back At Ten Dot-Com Flops 463
climbing_monkey writes "CNET.com has posted what, in their opinion, are the top 10 dot-com flops." From the article: "The most astounding thing about the dot-com boom was the obscene amount of money that was spent. Zealous venture capitalists fell over themselves to invest millions in Internet start-ups; dot-coms blew millions on spectacular marketing campaigns; new college graduates became instant millionaires (albeit on paper) and rushed out to spend it; and companies with unproven business models executed massive IPOs with sky-high stock prices. Of course, we all know what eventually happened to this world. Few of these companies actually made enough money to recoup that cash, and when their investors fled to the hills, these start-ups died dramatic deaths. These are the celebrity victims of the new-economy bust."
see top 10 tech we miss article, instead (Score:4, Interesting)
- Manned space exploration
- Kozmo.com
- the original Napster
- The Concorde
- GM's EV1 (interesting)
- The original Palm Pilot
- Good keyboards
- Wires
- LPs
- The Newton
(I would have put kozmo at #1. Those who used it know what I'm talkin' about.) Read the part about the EV1 car, though. Pretty interesting.Kibu (Score:4, Interesting)
There is a nice book by Lori Gottlieb and Jesse Jacobs called, "Inside the Cult of Kibu: And Other Tales of the Millennial Gold Rush" [amazon.com] which talks about the madness during that era.
Nothing new, but it is an interesting read, written by some of the very people behind Kibu.
LNUX (Score:2, Interesting)
But at least it's CEO and his pals cashed out in time. Wonder if slashdot sucks so much now because CmdrTaco is living high on his LNUX riches.
I got caught two ways (Score:4, Interesting)
First, I invested in some of those dot coms at ridiculous prices. I'm young, so it's not like I blew my life savings or anything, but still... lesson definitely learned.
Second, I worked in one of those never-quite-successful dot coms. A small company that started just late enough to miss the VC gold rush (or at least that's what we told ourselves). I had to exercise my options before I could tell if it was going to be bust. Regrettably it did bust. Oh well.
I'm feeling the heebie-jeebies about the housing market right now. Seems pretty similar: lots of institutional investment, lots of trendy discussion, lots of people moving around a lot... we'll see, but I'm not too hopeful about real estate right now.
Real Estate Bubble (Score:5, Interesting)
Slashdot dotcom timeline (Score:4, Interesting)
Dot ComBack, Or More Of The Same? [slashdot.org]
Dotcom Era Fads [slashdot.org]
Dot-Com Service Memories? [slashdot.org]
The Dot Com Super Bowl [slashdot.org]
Another Dot-com Boom? [slashdot.org]
*sigh* the goo' ol' days
Mistakes will be repeated (Score:5, Interesting)
BTW while I have seen plenty of news articles about how stupid investors and companies were during the dot-com era, how about some insiteful self-criticism about the role the media (including the tech media) played in building up all the hype that helped produce the atmosphere that allowed these excesses to take place, esp. in light of how they profited from the era (eg. advertising)?
Re:Real Estate Bubble (Score:1, Interesting)
So what does it mean if we used them? (Score:3, Interesting)
Re:BELO! (Score:1, Interesting)
I don't think it it was the biggest.
Wasn't there a magazine cover which went something like "This guy just lost 800 million dollars. Why is he smiling?"
I believe that was eToys.
What's wild is how startups would spend money. I worked for one here in Indiana. $750 top-model Aeron chairs. What everyone doesn't realize is that webbing is like sandpaper on your jeans - providing you're smart enough to wear jeans when sitting in those chairs. Dress pants are guaranteed a short life. The worst part about sitting in those webbed chairs? You can't fart. Nothing to muffle the sound. You have to become an expert at left cheek sneaks or throw caution to the wind and forget what anyone else thinks.
It's (the one in Indiana) still in business (but a shadow of its former self and essentially zero market share. [escient.com]
Boo.com and its Mac support (Score:5, Interesting)
Re:see top 10 tech we miss article, instead (Score:3, Interesting)
One thing they didn't list, but should have listed, is three button mice. I finally gave up trying to find a three button optical mouse last week and ordered a couple of the modern version of three button mice consisting of two buttons and a mouse wheel. I would have much preferred three real mouse buttons.
Flashback (Score:2, Interesting)
Dec 10, 1999, 07:10 UTC
By Eric S. Raymond
A few hours ago, I learned that I am now (at least in theory) absurdly rich.
I was at my machine, hacking, when I got email congratulating me on the success of the VA Linux Systems IPO. I was working on my latest small project -- a compiler for a special-purpose language I've designed called Scriptable Network Graphics, or SNG. SNG is an editable representation of the chunk data in a PNG. What I'm writing is a compiler/decompiler pair, so you can dump PNGs in SNG, edit the SNG, then recompile to a PNG image.
"Congratulations? That's interesting," said I to myself. "I didn't think we were going out till tomorrow." And I oughtta know; I'm on VA's Board of Directors, recruited by Larry Augustin himself to be VA's official corporate conscience, and it's a matter of public record that I hold a substantial share in the company. I tooled on over to Linux Today, chased a link -- and discovered that Larry Augustin had taken the fast option we discussed during the last Board conference call. VA had indeed gone out on NASDAQ -- and I had become worth approximately forty-one million dollars while I wasn't looking.
Well, that didn't last long. In the next two hours, VA dropped from $274 a share to close at $239, leaving me with a stake of only thirty-six million dollars. Which is still a preposterously large amount of money.
You may wonder why I am talking about this in public. The first piece of advice your friends and family will give you, if it looks like you're about to become really wealthy, is: keep it quiet. It's nobody else's business -- you don't want to look like you're gloating, and you don't want to be deluged with an endless succession of charity appeals, business propositions, long-lost best friends, and plain bald-faced mooching.
Trouble with the "keep it quiet" theory is that I've made my bucks in a very public way. When you're already a media figure, and your name is on the S-1 of a hot IPO, and email from friends and journalists starts coming in like crazy as the stock breaks first-day-gain records, playing it coy swiftly ceases to look like a viable option.
Besides, it wouldn't be fair to dissemble. I serve a community. I'm wealthy today because my efforts to spread the idea of open source on behalf of that community helped galvanize the business world, and earned the respect and the trust of a lot of hackers. Larry thought that respect was an asset worth shelling out 150,000 shares of VA for. Fairness to the hackers who made me bankable demands that I publicly acknowledge this result -- and publicly face the question of how it's going to affect my life and what I'll do with the money.
This is a question that a lot of us will be facing as open source sweeps the technology landscape. Money follows where value leads, and the mainstream business and finance world is seeing increasing value in our tribe of scruffy hackers. Red Hat and VA have created a precedent now, with their directed-shares programs designed to reward as many individual contributors as they can identify; future players aiming for community backing and a seat at the high table will have to follow suit. In this and other ways (including, for example, task markets) the wealth is going to be shared.
So while there aren't likely to be a lot more multimillion-dollar bonanzas like mine, lots of hackers are going to have to evolve answers to this question for smaller amounts that will nevertheless make a big difference to individuals; tens or hundreds of thousands of dollars, enough to change your life -- or wreck it.
(Gee. Remember when the big question was "How do we make money at this?")
The first part of my answer is "I'll do nothing, until next June". Because I'm a VA board member, under SEC regulations there's a six-month lockout on the shares (a regulation designed to keep people from floating bogus offerings, cashing out, a
Interesting Read (Score:4, Interesting)
Re:Real Estate Bubble (Score:2, Interesting)
The point of Flooz? (Score:3, Interesting)
Nobody was going to actually put money into a Flooz account and then use it to buy stuff for themselves, I assume, but it was a halfway decent gift idea. Not worth the hype, though. Now that you can get prepaid 'credit' cards--which I'd never heard of or seen at that point in time, myself--there's no point. But some of us did have a use for it then!
Dot-Bomb Experience (Score:5, Interesting)
There was a real brick-and-mortar, mail-order prescription drug fullfillment business footing the bill for this. It had been started by a father. He was semi-retired and had turned the business over to his two sons. The Web site was their idea and they were in charge.
We had a million dollars in middleware, a couple million in consulting to customize the middleware, an Orcale backend running on a high end Sun (E7500), and the Web site itself running on a top of the line, Sun E10k. At this point there was about $5 million sunk into the project, and we had not yet gone live.
Before going live, management felt the need to run a load test. At that point, you saw the IBM commercials on TV were dot coms went live only to see the site crash due to too much traffic. They didn't want to see that happen. The load tests showed that we could only handle 1000 simultaneous transactions. Clearly, that wasn't enough. So we bought another E7500, another loaded E10k, and another Oracle license. I don't know the exact numbers but I think this was close to another $3 million. With this new equipment and an additional DS3 line, we could handle 2500 simultaneous transactions.
Early in 2000 it comes time to turn the web site live and crank up the advertising. Tension was running high - and expectations were greatly disappointed. The largest number of visitors we ever had to the site was eight. We never had more than one active transaction.
I only stayed around for another couple of months. Before I left, the father, who founded the business and ultimately footed the nearly $10 million dollar tab, said:
My experiences during that time (Score:3, Interesting)
I got called it from @work/@home for an interview. They flew me across the country, gave me a car, interviewed me. They had the foosball tables around. Totally chill place. I remembered reading about all the other companies that had pool tables, video games, stocked fridges, company cars, etc for their employees. Sounded fun. I didn't make the cut. A year later, the company didn't make the cut either.
I got a call to work for Alta Vista (remember them?) to do some HTML work. I had JUST received an offer to work at a more stable, multi-national company as a web developer but I was willing to entertain their offer. I asked what they wanted and they wanted nothing more than HTML coding. They were willing to pay $60k or so to do that. It was much more than my current offer but I took into consideration the fact I'd have to move the family across the country and still wasn't sure it was the safest thing to do. I'm glad I didn't because within five months the company had gone under. Go figure.
As a CMU grad right about the time the net bubble was growing, I saw A LOT of "and we're the coolest company on the planet" propoganda. I watched Cramer on CNBC talk about how all these companies (of course, Amazon, Yahoo, eBay were some of them too) had nothing to stand on. "Get out! It's gonna crash!" It did. Still...it's interesting to see what survived and what didn't.
Re:Real Estate Bubble (Score:3, Interesting)
Re:I got caught two ways (Score:2, Interesting)
I live in the Dallas area (since 1999) and you have reminded me of stories I heard when I moved here. It seems that houses would sit empty for months and then suddenly burn down one night. Apperently it happened to a lot of house here. Houston I guess was even worse. My wife has friends who moved there in the mid 90s and the houses were dirt cheap. 70-80 k for a house that had been listed for 300k a year or two yearlier. Same thing happened in the NJ area. We owned a house there that had been valued at ~300k. (No we did not pay that much!)
The moral of the story 30 to 60% drops in house prices are not only possible they have happened in the recent past.
online supermarkets (Score:2, Interesting)
You would order online via their website (with the right tech you could even make it possible to swipe a barcode and order that way) and then they would package the order for you.
Given the need for it to be "local" and given the initally small demand, the best way to do this would be to implement it such that you place the order online then someone goes around the local supermarket and gets whatever it is you ordered which could then be picked up or delivered (with people paying extra for this).
I am sure a fair few people would love to be able to have their weekly food shopping home delivered or packaged ready for them to pick up on the way home from work instead of having to take the time to wander around the supermarket (even if it cost a little extra, depending on how much your time is worth the time might be more valuable than the delivery or packaging costs).
The service could also be combined with stores like K-mart, Target or Big W in australia or whatever it is in your part of the world where you could have department store items available through the same service (i.e. you would be able to have department store items available from the same online site and delivered/packaged along with your food).
Essentially you would be paying someone else to go and find/buy the food you want (someone who would know exactly where everything is located and might therefore be able to find what you want faster) and then optionally paying for it to be delivered.
Re:LNUX (Score:1, Interesting)
My point is this: Just where are there "safe" and "sane" investments these days? How many big Old World corporations are as decayed with fraud as these Dot Bomb 10? The entire American investment scene appears to be riddled with corruption; it's barely better than govenment sanctioned money laundering. And the courts don't have the balls or the intellectual horsepower to deal with it. They go after a few high profile creeps and then hope all the others change their ways, but let them keep the money they've stolen. They (the courts) are too enamoured of the nuvo-royal class of multi-billionaires. Makes me sick. OK, Rant Mode off...
Hardly Accidental (Score:5, Interesting)
These companies weren't expected to succeed. The VCs even said so: profits didn't matter, sales prospects didn't matter, even embarrassingly stupid products didn't matter. What mattered was that large amounts of money could change hands with very little oversight. It was money launderers' heaven.
If you want to pay somebody off, buy their company at a massively inflated price. (No company to sell? Start one!) Want to hide paper profits? Stage a stock collapse. Want to reward a toady? Make him CEO or CFO of a startup. (The CEOs were all directors of one anothers' companies.) Want to pocket the investors' money? Have your CEO spend it all at your marketing or advertising service.
None of the money was wasted. It wasn't burnt. Every dollar went into somebody's pocket. Every dollar came from somebody else's. One group got most of it, another lost most of it. The ones who lost were pensioners, whose pension funds were "mismanaged" into oblivion. Did the pension fund managers suffer? Or did they make out like, er, bandits? Which do you think is more likely?
This is not to say that everybody involved was a crook. Lots of people worked really hard to try to make something new, and most of them suffered as much as the pensioners.
How do you imagine W funded his campaign? His father used banking fraud, and had to bait Saddam into invading Kuwait to keep son Neil (Silverado) out of prison. The W crew relied on more modern, less legally-risky securities fraud (Enron). They're not very imaginitive, though: count on the VCs to ramp things back up before the next election season.
Re:Crappy list (Score:5, Interesting)
Torque. That guy had more low-end torque than a lamborghini. Of course it cost more than a lambo too, but since it was only available through a lease the real price didn't matter to the actual drivers.
I personally find that there's basically no technology I miss. I find that I either like the new stuff better, or I can get the new equivilant of the old stuff for a better price.
I see you never owned the model of replaytv that automagically detected and skipped commercials during playback, no manual intervention required except in the rare case where it guessed wrong. No other PVR before or since has been so nice to use.
Uhm, Excite? (Score:2, Interesting)
Re:Crappy list (Score:3, Interesting)
"IBM keyboards. Oh give it a rest. I have an old IBM keyboard and it's annoying. Takes a lot of pressure to hit a key and makes an excess amount of noise. Give me my nice modern keyboard any day."
And that one I partially agree.
There are people - like myself - who tend to hit the keys pretty hard. Right or wrong, it's the way I type and while I've tried to change I can't seem to (and yes, I've been doing this for many years, and no an repetitive stress injury has not happened, I type wierd anyway and it's not really that repetative - I'm known to actually cross my hands. I learned to type by long hours on a keyboard and type quite fast. See my sig for reasons why my spelling is terrible).
I've only had one keyboard stand up to it for more than a year. Amusingly enough it's an IBM, though not one of the older style of boards. For people who type similar to me (at least as far as hitting the keys) there are no keyboards that feel anywhere near as comfortable as the old IBM keyboards. Just as you find todays to be great, I find the older ones to be better. Taking the extra pressure is a *plus* for me.
Is it *that* much of a stretch to think that people who spend most of thier life at a keyboard know which one they prefer and if it is easily available? I'll buy that you prefer the newer ones so will you please understand that I greatly prefer the older ones (and also understand they are almost impossible to find)?
Re:some of those ideas are good (Score:3, Interesting)
It was a risk investors' pyramid game (Score:3, Interesting)
The money came mainly from the risk branches of investment firms started off of regular industry money. Risk capital typically is 5% of the total capital. This money is more or less expected to go out the windows, hence the "risk."
The model these guys worked from was to seed a company with some potential to attract more investors, then sell their shares at 10x the buying price as soon as that happened.
They were not morons. They didn't care if your business model made it likely that you would ever actually make money. It was a pyramid game. I seed this company, in the hope that another investor will step in and buy a large chunk of the stock for signifficantly more than I paid, before it all goes to hell. The second investor makes the same gamble, praying to God that there will be someone coming in after them, buying stock for an even higher price. And so on. It had nothing to do with business plans, except that plan was part of the general image of the company.
This is what the crazy expansions were about. The seeding investor needed the company to grow fast, so they get a fast return on their money. The entrepenours were usually a lot more sane in their plans. It was, in my experience (and I mingled with the founders of most European dot-coms) that it was the investors who insisted on opening offices on the most expensive streets, start branches in London, San Francisco, and Hong Kong, and hireing a thousand people, not the founders. Because that was the only way to quickly attract the next batch of investors.
So here are some conclusions: What really happened during the dot-com boom was that regular industry money were pumped into a lot of advertising companies and computer consultancy firms, to force along development projects with broken project plans and unrealistic time tables. But it put food on the tables of a lot of consultants. It might perhaps have advanced some web technologies (such as application servers) as well.
Eventually the investors realized the game wasn't working, and they pulled out. It was an investor-driven process, and most of the money was expendable. No big loss.
Re:I got caught two ways (Score:3, Interesting)
Re:There's a difference with real estate (Score:3, Interesting)
So, barring really stupid investements, you never lose everything.
If you buy a property with cash, maybe, but if you fund a property with debt, which almost everyone does, you might just lose more than everything.
Even if you don't decide to really invest and get pure investment properties, you should get a house if at all possible. When you rent, your money goes nowhere. It just dissappears to your landlord every month.
As opposed to when you buy a house with a mortgage, and your money just disappears to the bank (interest), home depot (repairs), and the government (real estate taxes)? Yes, a growing portion is going to be going toward equity, but if you had taken that down payment and invested it you'd get to see compounded interest work in your favor as well.
Not all people should buy rather than rent. It depends on your tax bracket, how much cash you have for a down payment, how good your credit is, how secure your job is/how often you plan on moving, etc.
Granted, as long as you are sure you're not going to move within about 10 years, and you have at least good credit, the numbers usually work out in your favor. But even then you usually have to consider the tax benefits, and you have to assume the value of the house is going to grow.
Not everyone wants to get in to actual real estate investment (like buying rental properties and such) but nearly everyone should look in to investing in to a home.
I'd say just the opposite. The way the numbers work out, it's usually better financially to own a rental property and rent yourself. This is because for tax purposes you can depreciate a property you rent out, but you can't depreciate a property you live in. As a quick example, if two families own equivalent $100,000 homes that would rent out for $1000/month, they'd be better off if each rented the property from the other rather than if they lived in the house they owned, because they'd get to depreciate the value of the property on their taxes.
Of course, this ignores the intangible benefits of owning a home. You don't have to deal with as many rules. You can paint the walls however you want. You can install solar panels on the roof. That kind of stuff.
Maybe you have to take a step down and buy something older, and smaller than you are used to living in, but at least your money is then going somewhere that will do you some good.
Why not rent something older and smaller, and invest the extra money you save?
Re:Crappy list (Score:3, Interesting)
Solar is a joke right now, due to the horrid process to manufacture the cells. You'd likely be doing better by the environment to run a generator to charge your car in the field. If we're fortunate, this will change in the near future rather than the distant one.
Also, remember that Europe is much more clustered than the US, so public transit is much easier to provide. 320M isn't even that much when you consider the amount of work that needs to happen. Putting in a new large building might run you 35M, so getting an entire city-wide tram system isn't bad for under ten times the price.
Re:Flashback (Score:3, Interesting)
Ah, yes. Right after the SEC cut the holding period. [findlaw.com] Until 1997, you usually had to hold restricted stock for two years. The reduction from two years to six months fueled the dot-com bubble. LNUX launched at $239.00. Six months later it was at $34.00. At two years, it was at $3.21. So the insiders made money, but nobody else did.
Re:Hardly Accidental (Score:4, Interesting)
Who needs grand conspiracy theories when garden-variety white-collar crime, venality, and regulatory restructuring suffice?
Banking regulation and oversight were gutted in the Reagan years, directly bringing about the "savings and loan scandal", thence the bailout which you and I are still paying off. It's a matter of public record that the Bushes were deeply and lucratively involved. Neil Bush's indictment (successfully buried during the war) is an embarrassing footnote.
During the Clinton years -- the Newt Gingrich years -- securities regulation and enforcement were similarly gutted. The subsequent "scandals" -- the dot-com bubble, MCI, Global Crossing, Enron, Tyco -- were trivially predictable, albeit not in detail. Anyone not committing securities or accounting fraud was leaving money on the table, a much greater crime. Bush's connections with Enron make another footnote.
Here's a page tracking one of those toady CEOs installed at startups, this the one who gutted LinuxCare [advogato.org]. The CEO installed at Cygnus Solutions, just a year before it was sold out to Red Hat, waltzed away with $100M, more than all the founders combined.
The conspiracy theorist would say that enabling what they did (and what most got away with) was the whole point, but extremist ideology must be as large a factor as ordinary greed. However, it's not always so easy to tell the difference: an idiot ideologist and a clever crook may promote the same policies. Most ideologists aren't habitual idiots, but don't care to examine too carefully what benefits them and their friends at the expense of people they don't know. It's an easy habit, and it works better than actually conspiring.
Re:Hardly Accidental (Score:3, Interesting)
Management of most IRAs and 401Ks is handed over to professional fund managers.
Not any more.Clue: if the professional funds got hit badly (and they're not supposed to lose money at all, ever -- the risk is supposed to be that they won't make much, sometimes) what do you imagine happened to even less well-managed accounts?
It's obvious you are absolutely tickled at the thought of people losing money in the crash ... which is irrelevant, because I didn't. (VC money paid my salary until it dried up. I didn't give any of it back.) Furthermore, I didn't blame Bush for the crash; his lot are just some of the higher-profile beneficiaries. It was Newt and his crew who set it in motion.
What did pensioners ever do to you?
Re:Hardly Accidental (Score:3, Interesting)
I wrote of hundreds of billions of dollars changing hands via freshly-legalized malfeasance, fraud, money laundering, and logrolling, and you're talking about a dip in somebody's IRA returns? Do try to pay attention, at least to what you're saying yourself.
Changing the subject doesn't fool me, and it won't fool anybody else. (But why try to change the subject? Are you a fraudster yourself?) Nothing you've posted has addressed any substantial point. (No, saying "moonbat" does not make a substantial point.)
What do you imagine kept pension fund managers immune to pressures to "perform" as well as "the market", year after year? What do you suppose happened to the pensions of former employees of all the companies that were bought up by dot-coms (and by MCI, and Enron) with bubble money, and then ridden into the ground? What do you imagine happened to the Orange County employees' pensions when the county defaulted? Or those of the State of Oregon, even thought it didn't? Or those managed by the banks that listed doomed companies as "strong buy" long after they had been thoroughly gutted?
You'll need to find other ways to squelch your conscience than imagining that only millionaires and dopes were hurt in the crash. Maybe you should hand your own share of the take over to somebody more honest.