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Dot Com Doom
by Henry K.


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 other accident.

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 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. 
  • - Eliminating positions in order to become profitable, according to a company spokeswoman. Layoffs affected 25% of its staff. 
  • - Closing one of its original processing centers in New Jersey and its book fulfillment operation in Kentucky. Layoffs represent 16% of its staff. 
  • - 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 staff. 
  • 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 and comments:

  • - 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. 
  • - Created in 1998 when Disney acquired Infoseek and launched in January 1999. As 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. 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 site also featured the ultimate in dot com failure mania - the dot com survivor contest! 

And then check out - (Site is still there sort of, but f$%ked) - for more torment and very enlightening commentary: A few highlights:

  • Rumor has it is about to lay off 15%...
  • Rumor has it 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 is laying off again. 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 - I like when employees are asked to volunteer... Rumor has it the last paycheck at has been issued but everyone is "welcome" to come to work for the rest of February...
  • 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."
  • - 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.
  • - 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 - - Rumor has it 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 - - Rumor has it is in final negotiations to buy and many layoffs will follow... Net effect? Faster drain of remaining cash... shareholders fxxxed here....
  • - John Elway, Michael Jordan, and all the other investors let 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 it...
  • Wonderful news - - I'm proud to announce that -- a site that sells balls -- just received $13 million in funding. Yes, I'm serious.
  • I love that the word "execute" has another meaning... - "We have been unable to secure the funding needed to execute our business plan," says the homepage of 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.)


The Author


Henry K. is a private pilot, author, artist, actor, whale watcher, fly fisherman, tour guide, seasonal server and surfer residing in Tofino, B.C. Canada, as well as a contributing editor to The CEO Refresher.

Many more articles in eBusiness in The CEO Refresher Archives
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