N.B. This article was written at the height, sorry ... the depth of the dot com crash and we've decide to keep it live as a reminder to not be ... stupid. If it seems to good to be true ... hummm.
I am a pilot, and like many (or most) other pilots, I have a somewhat morbid
fascination with aircraft crashes. Whether reading Flying magazine or other
aviation periodicals my eyes just seem to key in on some safety authority
report or other report of the latest 'uncontrolled descent into terrain' or
I know that my morbid interest is in the "why" - of how the
events transpired, and what the pilot(s) did or didn't do, and the sequence
of events that resulted in their demise. The "why" is learning - learning
from the ultimate failure. I need to know "why" and what happened in detail
- to keep my brain sharp and my planning comprehensive, and my limitations
clearly in view, and my competence up to snuff. So I pour through the accounts,
and empathize with the pilots, and share their loss, and somehow think I must
learn from their failure - to be a better pilot - and a live pilot.
I have a similar morbid fascination with the dot com crash. All that venture
capital money and the hopes and 'get rich quick' schemes of enterprising and
creative wonderkids - dashed into despair by the relentless accountability
of the 'old' economy. There is no 'old' or 'new' economy. Valuation based
on sales with no bottom line or cashflow or business model was never a 'new'
economy proposition - it was stupidity, in a sense just as stupid as it has
always been to take off in marginal weather conditions without the skill or
competency to execute IFR, or to be scud running below the clouds when you
know you should execute a 180 and head for clearer skies at home.
We all knew
better. And although many made sizable fortunes in riding the wave up, it
seems that many more will see their hopes and dreams smashed to bits as they
faced the unforgiving turbulence of the old economy thundercloud that ultimately
holds you accountable for 'real' business performance, and survival. It's
not 'old' economy or 'new' economy - it 's just business and the need to add
'real' value somewhere.
The dot com carnage has been brutal.
So far ... with the dot coms' rise and fall, all we have proven again is
the power of greed - to create a wave of excitement and expectations and to
take other peoples' money and call it our own. The "get rich quick" schemes
are alive and well because greed is the dominant 'virtue.' As long as
there is money chasing opportunities for the 'home run' and the next great
wave we will have stupidity, and the investors that have experienced the 'meltdown'
have no one to blame but their own greed. But this article is not about greed
... it's about a morbid fascination with failure. So let's see some ... and
see what there is to learn.
Check out www.dotcomdoom.com .
(Sorry the site was doomed and gone!)
They have a layoff tracker - 54,456 as of Feb 8, 2001. A few notable sites:
- Motley Fool - Layoffs represent 30% of its workforce.
- Business.com - Eliminating positions in order to become profitable,
according to a company spokeswoman. Layoffs affected 25% of its staff.
- Barnesandnoble.com - Closing one of its original processing centers
in New Jersey and its Fatbrain.com book fulfillment operation in Kentucky.
Layoffs represent 16% of its staff.
- Inc.com - Reducing staff in order to conserve cash. Also withdrew
its IPO plans.
- Razorfish - Reducing spending in just about all areas of the company
to become profitable this year. Layoffs represent more than 25% of its worldwide
- eToys - Layoffs affected staff at its Ontario, Calif., and Blairs,
Va., distribution centers. This round of cuts will be complete by April 6.
The company now has issued job-elimination notices to all of its employees.
- Page 1 of 40 - scary stuff!
Check out their flop tracker: 96 as of Feb. 08, 2001. A few notable sites
- Petopia.com - Unable to secure additional funding and has withdrawn
its planned $100 million IPO. Sold assets to Petco, one of its main backers
along with NBC, and is no longer in business.
- Go.com - Created in 1998 when Disney acquired Infoseek and launched
in January 1999. As Go.com has been unable to establish a "leadership position"
or turn a profit, Disney is integrating its online properties with its traditional
media businesses. Disney also announced today that it will convert shares
of Disney Internet Group common stock into Disney common stock on March 20,
2001. Go.com will continue to operate during a 30-day transition period.
Some of its content will be folded into other Disney-owned properties.
- GreatEntertaining - Will stop taking orders Jan. 29, 2001. The
customer service department will remain open until Feb. 15. Unable to continue
because of unfavorable market conditions. Secured $35 million from Benchmark
Capital and Technology Crossover Ventures, among others.
The www.dotcomdoom.com site also featured the ultimate in dot com failure mania - the dot com survivor
And then check out www.fxxxedcompany.com - (Site is still there sort of, but f$%ked) - for more torment and very enlightening commentary: A few highlights:
- Rumor has it Yahoo.com is about to lay off 15%...
- Rumor has it Utility.com let go of half its staff and may be closing
its doors soon. Apparently the $22M in VC was "already spent" upon receipt
of the funds. Last one out, turn off the lights...
- Rumor has it MuseumCompany.com is laying off again. MuseumCompany.com
was founded by a former exec from ValueAmerica... remember them...? Hype
up the company, pay huge salaries, promise employees the world, fail to deliver
a product, then fxxx the investors and the employees after the founders cash
out their millions.
... and from their archives:
- Good sausage, bad business - HotLinks.com: I like when employees
are asked to volunteer... Rumor has it the last paycheck at HotLinks.com
has been issued but everyone is "welcome" to come to work for the rest of
- Vicinity - Looks like one round of layoffs wasn't enough for Vicinity....
Rumor has it they'll be laying off half of their staff in the next week.
Funny thing -- I heard this story about how when Vicinity makes travel reservations
for their employees, they book hotel rooms at the senior citizen discount
-- because the hotels "never check."
- eHow.com - eHow.com is "the most comprehensive source of information
on how to do things," like how to lay off your staff... or how to burn through
millions without making a cent. Rumor has it all have been laid off and the
doors are closing.
- InfoSpace.com - InfoSpace.com just laid off over 200 people --
around 20%. Many were from engineering and customer service. Apparently the
laid-off are referred as "realigned resources" there... The new alignment
must be "grab your ankles"
- No class - Classmap.com - Rumor has it Classmap.com failed to
get a new round of funding so it has fired everyone and will be closing their
doors next Wednesday...
- Losers of the world unite - TheStreet.com - Rumor has it TheStreet.com
is in final negotiations to buy WorldlyInvestor.com and many layoffs
will follow... Net effect? Faster drain of remaining cash... shareholders
- MVP.com - John Elway, Michael Jordan, and all the other investors
let MVP.com officially close down... Just proves that popularity in the sporting
world and 50 cents will get you a cup of virtual coffee and that's about
- Wonderful news - JustBalls.com - I'm proud to announce that JustBalls.com
-- a site that sells balls -- just received $13 million in funding. Yes,
- I love that the word "execute" has another meaning... Radnet.com - "We have been unable to secure the funding needed to execute our business
plan," says the homepage of Radnet.com. 120 gone.
An so on ... of 1,309 entries - oh my!
So ... the moral of this little story? Don't fly when you shouldn't. Learn
from the failures of others. And above all ... don't be stupid.
(Know of any magical transformations? Let us know. e.d.)