Dot Bombs Made Simple

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Dot Bombs Made Simple

Posted By: Michael Ross
Date: Friday, 15 October 2004, at 2:21 a.m.

In Response To: A reminiscence of the dot-com era! (Dien)

Rod,
Thanks for the link.
Dien,
Thanks for adding.
I'd also like to add to what you said...
> That is, too many companies were created to
> fill a "need" or
> "desire" that didn't really exist!
> Too often, companies were created for the
> sake of technology - without even thinking
> too deeply about the market...!
...
> Many of those which "survived" are
> those who mastered direct-response methods
> of marketing - it's a good approach to take
> to the internet... :)
My take is: Companies were created trying to sell something no-one wanted. Their revenue model was "give it away and make money from advertising" and the stock price was based on hype without real world profits to back it up. Just like in the old bad days of the market - people bought stocks in companies simply to make money of the price of the stocks regardless of whether the company made money.
E.g. There was one company whose purpose was "To make a lot of money in such ways that are secret" or some such. And people bought into it!?!?!?!
The guy made something like $20k tha day it was laucnhed and left the next day with the money. Never to be seen again.
This was the problem.
To much money being tossed at untested ideas. Rolling out fully without testing it first to see what works to make a few bucks.
The VC's didn't care because they made their money from the IPO. Mom and pop are left holding the ice-cream in 100 degree heat.
Even novice entrepreneurs could see the businesses were not based on anything substantial and/or workable and/or profitable.
They could see the dot bombs were doing the equal of MacDonald's giving away food wile hoping to make money selling ad space to those who wanted to advertise to the people in the restaurant.
It just cannot work.
Those who succeeded did so because they followed basic business rules. Make a profit selling stuff people want/need to buy. And don't give everything away.
While direct marketing methods may have played a part. That is not why those companies survived.
Michael Ross

Messages In This Thread

What didn't work
Rod Newbound -- Wednesday, 13 October 2004, at 6:45 p.m.

A reminiscence of the dot-com era!
Dien -- Thursday, 14 October 2004, at 7:25 p.m.

Dot Bombs Made Simple
Michael Ross -- Friday, 15 October 2004, at 2:21 a.m.

Re: Dot Bombs Made Simple
Rod Newbound -- Saturday, 16 October 2004, at 1:06 a.m.

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Message: > Rod, > Thanks for the link. > Dien, > Thanks for adding. > I'd also like to add to what you said... > ... > My take is: Companies were created trying to > sell something no-one wanted. Their revenue > model was "give it away and make money > from advertising" and the stock price > was based on hype without real world profits > to back it up. Just like in the old bad days > of the market - people bought stocks in > companies simply to make money of the price > of the stocks regardless of whether the > company made money. > E.g. There was one company whose purpose was > "To make a lot of money in such ways > that are secret" or some such. And > people bought into it!?!?!?! > The guy made something like $20k tha day it > was laucnhed and left the next day with the > money. Never to be seen again. > This was the problem. > To much money being tossed at untested > ideas. Rolling out fully without testing it > first to see what works to make a few bucks. > The VC's didn't care because they made their > money from the IPO. Mom and pop are left > holding the ice-cream in 100 degree heat. > Even novice entrepreneurs could see the > businesses were not based on anything > substantial and/or workable and/or > profitable. > They could see the dot bombs were doing the > equal of MacDonald's giving away food wile > hoping to make money selling ad space to > those who wanted to advertise to the people > in the restaurant. > It just cannot work. > Those who succeeded did so because they > followed basic business rules. Make a profit > selling stuff people want/need to buy. And > don't give everything away. > While direct marketing methods may have > played a part. That is not why those > companies survived. > Michael Ross
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