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Bubble 2.0 January 20, 2008

Posted by Doriano "Paisano" Carta in Movies, Web 2.0.
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All of the web 2.0 pundits and so-called experts are predicting another bubble burst like what took place in 2000 when the dot com phenomenon came to a cataclysmic end. Who is to say for sure what will happen for sure? In order to predict the future it is always wise to examine the past to study and learn possible explanations for a certain conclusion. By learning from the past mistakes of others, one could possibly avoid the same fate, but it doesn’t guarantee success either. Still, it might be fun to take a stroll down memory lane. Shall we?


Startup.com is a documentary that captured the fate of a dot com startup called GovWorks.com. Many entrepreneurs and universities use this film as a training guide for online businesses. The film has won numerous awards thanks to its voyeuristic approach to the subject matter, giving an inside look at the world of dot com startups that was up till that point totally unknown.
Here is the Trailer and a Charlie Rose Interview with Cast and Crew

Kozmo.com is considered the poster-child for the dot com bust. They offered a one-hour delivery service for items such as Starbucks coffee and Blockbuster DVDs. While the concept was simple and appealing, the execution of the business became increasingly perplexing and astonishingly destructive to its long-term success. Somehow, despite a business model that most financial experts criticized, Kozmo managed to raised over $250 million dollars and burned thru it in record time!

e-dreams is a documentary that chronicles the rise and fall of Kozmo.com. Some have criticized the documentary itself for being to sympathetic to the Kozmo executives, painting them as victims of sorts when they were the primary factors for its historic demise. Instead of pointing fingers they just needed to look in the mirror.

WebVan is another perfect case study for demonstrating how to take a sure-fire can’t miss business idea and totally blow it up into millions of pieces in no time at all. For those of you who don’t remember, WebVan delivered the groceries you ordered online right to your house! Here is one of their TV Commercials:

I loved WebVan because we used it on a regular basis in Atlanta, GA. Their website was excellent and easy to use. The food was usually fresh and almost always in stock and available. Heck, even the fish was fresh and tasty! Still, I know something was wrong when I noticed all of the shiny new vans zooming around town and all of the ultra expensive palm pilots (hey, this was way before the iphone, kiddies!) that every driver carried around including portable printers for receipts! When I saw their warehouse on a television special my mouth dropped open and I knew they were doomed. We later learned that WebVan spent over $1 Billion just on their warehouses alone!

Eventually, WebVan managed to offer their services in nine U.S. markets, but had planned to service 26 before they went bankrupted in 2001. The autopsy of their financials would become historic for examples of blatant excess and carelessness. One example being the purchase of 115 Herman Miller Aeron chairs (at over $800 each)!

Here is a mockumentary of WebCan called IceVan:

Final Thoughts:
I’d like the end this piece with the clever Bubble Song that everyone’s seen by now but still worth a glance:

Comments»

1. Chris Heuer - January 20, 2008

Good post and nice wrapup of the historically relevant items too. There is no cure for a bad business model. In this case, many of these companies had great products, sketchy operations, but bad marketing – not the communications work, that was excellent. They failed at being able to deliver a product the market wanted at a price tehy were willing to pay while being profitable. In the rush for users at any cost, they flubbed the business basics of delivering a good or service at a cost that is less then people are willing to pay…

2. Stephen - January 21, 2008

I actually hadn’t seen the bubble video…glad I clicked through; that was hilarious! No, I didn’t get the ‘privilege’ of working for any startups during the first dotcom burst, but I felt the aftershocks here in Atlanta, and after 9/11 things totally sucked.

3. *robert - January 21, 2008

Wonderful piece Pai. I have always seen the dotcom era as being no different than any other mad rush for wealth in this world. When the next “big thing” comes along, there will continue to be stories of winners and allot of losers.

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