Lamenting the Dot-Coms

FRAMINGHAM (07/17/2000) - Dot-coms seem to be dropping like flies, and those that have not died yet will soon as they run out of their venture capital. The popular press seems to be writing off the whole concept and even PBS's "News Hour With Jim Lehrer" had a segment entitled "Dot-com failure" lamenting the fate of the consumer e-commerce revolution.

But it seems the lamenting is premature and many of the failures are the result of aggressive daydreaming.

It was not that long ago that venture capitalists were throwing money at and the trade press was drooling over just about any start-up that was going to sell stuff or services to customers over the Internet. Wall Street seemed to think shopping malls were about to close down. That is the only explanation of the relative valuations that were given to physical and virtual stores.

But in the last few months the same pundits that told everyone to bet the farm on the future of business-toconsumer e-commerce are now saying "nevermind."

The fate of some start-ups should have been very easy to predict. It should not have been hard to guess that any company that decided to spend 80% of its capital reserves on Super Bowl ads last January was not long for this world.

The same should have been obvious in response to a press release talking about spending a few tens of millions of dollars on a Web site to sell some yuppy bobbles. In a potentially related story, the auto industry announced the other day it was spending $75 million on a business-to-business Web site.

Just as it should have been a no-brainer to ignore the wacko projections of success that many of the business-to-consumer start-ups had, it should also be a no-brainer to recognize that business-to-consumer Web sites have a real future - maybe not billions of dollars per Web site - but a good, solid future.

Just take a look at the catalog business. My household gets catalogs from hundreds of companies every year. Every one of these companies could put up a cheap order-entry Web site and save money over having a human answer the phone.

All they need to do is add a page in the catalog telling the reader the URL.

That worked just fine for the specialty spices catalog we got the other day.

They got a Web order the next day. (And I'd rather not say how much it was for.) I see no reason to think the business-to-consumer companies are failing at a rate greater than catalog companies, they just blow a whole lot more money failing. Once some of the irrational exuberance has faded, the many quiet successes will become visible.

Disclaimer: I have found that the farther you are from Harvard, the more irrational the exuberance about the place is, but the above spice order was mine.

Bradner is a consultant with Harvard University's University Information Systems. He can be reached at sob@sobco.com.

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