The ten biggest dotcom disasters
A bewildering name, poor delivery and a dearth of in-depth product information (a must in the obsessive world of health fads) meant Clickmango passed its sell-by date in only three months when the money ran out. As one marketing wag put it: “Eight days to raise £3 million, eight weeks to spend it.”
Failing to deliver the goods sounded the death knell for many dotcoms, perhaps most notably this massive US toy retailer, which is probably still reviled by thousands of heartbroken children.
In the run-up to Christmas 1999, parents flocked to the site, which promised low prices and delivery on or before Christmas Eve. Yet many of those pressies never made it down the chimney in time for the big day, leading to thousands of disappointed kids and grief for parents who vowed never to return.
The company limped on until the following Christmas, but once-bitten-twice-shy parents voted with their mice and sales for Christmas 2000 brought in only $130 million – half the company’s projection.
The UK site came down with the decorations in January 2001, shortly before its US mothership crashed and burned, filing for bankruptcy in March, having once been valued at $12 billion. The company has since been bought out and relaunched.
Free internet access – anyone see the flaw? With roughly £50 million in venture capital and 3 million subscribers, everything was rosy for US ISP Freeinternet – except that noone was paying for its services.
Anonymous employees went on record to say they thought the company never really intended to make money, and that the whole operation was a ruse to attract investors – a giant IPO machine. Freeinternet, however, said advertising revenue (the fool’s gold of many destitute dotcoms) would eventually cover the costs.
Even as the wolves closed in, like Nero fiddling in Rome, the company spent big. It bought, rather than leased, 200 expensive routers and servers, and also agreed a £70 million deal with Cable & Wireless for bandwidth to accommodate another 10 million freeloaders.
Freeinternet eventually sold its assets to former rival NetZero, which, wisely, now charges for internet access.
Religious website iBelieve.com failed to turn water into wine. Despite spending the lion’s share of its £20 million start-up capital on marketing, the advertising-based site failed to attract a large enough congregation to make a profit out of Jesus. An expensive advertising campaign stalled when US TV channel CBS refused to carry the site’s adverts during the religious series Jesus and Touched by an Angel. Even after meeting its visitor targets, ibelieve.com was unable to “monetize” and closed down just 268 days after flinging open its doors, with the collection box showing a deficit of some £60,000 a day. The site has since had a second coming.
Pets.com bit off more than it could chew. It presupposed revenues would grow quickly enough to allow it to make profit before seed money ran out. It didn’t even come close.
A tongue-in-cheek advertising claim – “Because pets don’t drive” – turned out to be painfully close to the truth. Pets don’t shop, either, and whereas books fit through the letter box, a hundred-weight of bone meal biccies don’t. The only way it could attract shoppers was to sell below cost, which isn’t a model for early retirement.
Financial statements showed that for every $10 in sales during the fiscal year 1999, Pets.com spent approximately $46 in advertising. It was eventually put down in November 2000, when it was bought by petsmart.com.