Death of a Dot-Com
Did anyone ever witness the death of a dot-com? As you can imagine, it isn't pretty. So what can go wrong? Rob shares this story and gives us lessons learned in hopes that it may help other dot-coms avoid a similar fate.
Did anyone ever witness the death of a dot-com? As you can imagine, it isn't pretty. So what can go wrong? Rob shares this story and gives us lessons learned in hopes that it may help other dot-coms avoid a similar fate.
I have borne witness recently to the death of a dot-com. As you can imagine, it wasn’t pretty. What went wrong? Well, I’d prefer to start with what went right.
First, the company did a good job of identifying a market with an unmet need. A specific market segment was targeted, a brand identity was created, content partners were recruited, a message was crafted, a sales team was hired, and the company launched the marketing and sales effort. In less than four months, almost 80 customers had signed on as site sponsors – without even seeing the product. By any measure, the marketing and sales effort was hugely successful. That’s the good part.
The problems began in November 1999, soon after the company made its public debut via a live webcast. The site development vendor had promised that by January 18, the site would go live and that the development costs would be around $1.5 million. At that time, late October seemed like a great time to launch the marketing and sales program.
In November, several things became clear: Nobody had accurately scoped the development effort, the site would not be ready by January, and the development partner was unfit for the task at hand.
The company responded to this dilemma by seeking refuge with a nationally recognized web development firm who (at that point in time) refused to give an estimate to build the site since the scope of work had not been clearly defined. For the next eight weeks, the development partner proceeded on a time and materials basis to define the scope of work.
Then, in mid-January (at about the time the first development firm had promised the site would go live), the first blow hit: It would cost about $6 million to build Phase 1 of the site, and it wouldn’t be ready to launch until July. Ouch!
At that point in time, the choices were limited. Promises had been made to customers and potential customers about site functionality. The industry press was buzzing about this “new player” on the scene and the breadth of its offering. And a site was needed – fast. The development firm brought in a team of a dozen or so developers and began cranking out the code.
Meanwhile, the “angel” investor (a company that to date had provided all of the funding) began getting nervous about the “real cost” of this initiative and asked the CEO to begin looking for additional investment partners. The executive summary was written and revised again and again until it was ready for prime time. Then the pitching began.
Reality struck pretty quickly when it was learned that the investor market had gone cold on anything B2C. The plan was actually B2B2C; however, too much emphasis had been placed on the B2C part. So it was back to the drawing board, recreating the plan to emphasize the B2B strategy (sound familiar, anyone?).
The plan was well received. Everyone seemed to think that it was a great idea, and they were impressed with the progress that had been made in a short period of time. BUT there were problems. Among them:
So what are the lessons learned?
I share this story in the hope that it may help other dot-coms avoid a similar fate. May you enjoy these prosperous times.