Opportunity Rises From Dot-Com Ashes

While the dot-com deathwatch continues, Andy sees something a little different. Wise entrepreneurs have a rare opportunity to create successful online and offline businesses by borrowing solid business ideas and executing them on a small scale.

As the dot-com deathwatch continues with this week’s loss of Garden.com from our ranks, the continuing decline of tech stocks on Nasdaq, and the growing number of profiled companies in FuckedCompany.com, I keep asking myself what went wrong.

Actually, I know that every company has its own story. You can’t generalize.

I also know that there are certain cycles to business, nature, and life in general — and that much of this is healthy in the long run. It had to happen sooner or later.

But failure can provide wonderful lessons for the survivors. I’m of the mindset that many of the failed businesses fell by the wayside not because of the soundness of their concepts, but because of the way in which they executed those concepts.

Where did they go wrong?

I remember the mantra of ’97 and ’98 was “scalability.” Can you take your business idea and grow it into a billion-dollar company? Is the core concept applicable to any number of different variations that could grow it into a multigazillion-dollar business?

Once a plausible scenario was created wherein scalability could be achieved, the rush was on to staff up as quickly as possible to reach those heady projections. Companies spent absurd amounts of money on personnel and brand marketing.

All this before the concept had any time to prove itself in its original form.

The fact is, I think there are any number of dead dot-coms that would have made superb small, growing companies — highly profitable, in fact — had they been left to execute in a smaller arena on their core competency.

Many failed because they weren’t big enough and couldn’t grow fast enough to achieve the grandiose (and greedy) visions of the VCs that backed them.

Many others failed because they weren’t built to fill a need or solve a problem any greater than finding a way to capitalize off the Internet gold rush.

Where the popular press looks at the online landscape and sees layoffs, closings, and failure, I’ll admit to seeing something a little different.

Where there are layoffs, there are a number of bright, energetic individuals who would make great hires and excellent start-up teammates for companies with a solid idea. The pain they went through in the process of getting burnt by their previous employers has in fact made them somewhat wiser, less apt to get caught up in blue-sky thinking, and more concerned with making damn sure their new ventures succeed. They might have also gotten past the notion of the short-term IPO that polluted all of our thinking during the recent past. Let’s hope so, because that thinking created many of the problems we have right now.

Where there are companies closing, there are some great assets to be had — valuable technology and tools that were developed at great expense that can now be purchased at fire-sale prices.

Most important, there are dead companies with core ideas that were solid, but their direction got lost in the woods of growth and greed. Boil those ideas down to their essence, and ask yourself if they are still sound, if they could succeed on a smaller scale. The ideas are there for the taking.

So the bottom line is this: Those of us who are wise have a rare opportunity to create small but fabulously successful online and offline businesses by paying close attention and discerning the wheat from the chaff.

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