 The Failure of a Dot Com
© 2008 Max Lent
Ok, I admit it. Like many other dot com Lemmings I
was uncontrollably drawn to the scent of money the ideal of making
dreams come true. I had a great idea--an idea much greater than
those being funded for tens or hundreds of millions of dollars in
Silicon Valley. I was going to change an industry for the good of
all those who were involved. It was a no-brainer. I couldn't
lose.
I did all of the right things. I wrote a great
proposal (traveldotcom.rtf). The
RTF document will display in Internet Explorer and can be read by most
word processing software. I assembled a fabulous team of
enthusiastic seasoned professionals, I brought in brilliant advisors,
and I pitched the concept wherever someone would listen to me to
the point where I was good at it. I talked with attorneys,
financial advisors, and other business people. Everyone I talked
with loved the concept and wanted to use it immediately. (A little
of the content proposed is actually online at
etravelwriting.com.).
The original plan called for developing a huge database
of business travel specific information. That plan based the
income on revenue derived from standard Web-based revenue generators
such as advertising. Eventually the idea expanded to include the
sale of demographic data. At the end of our effort this is how we
described our effort.
“Our
company is business travel Web portal unlike anything currently
online. We are answering
three basic needs of business travelers:
-
The
need for higher quality more detailed personalized information
-
The
need for business travelers to establish social networks while on
and off the road
-
The
need for business travelers to provide public feedback about
products, places, and services
A
portion of our revenue will be generated from the standard menu of Web
site revenue generators such as click through ads, banner ads,
partnerships, and so on.
A larger portion of our revenue will be generated through the sale
demographic reports about the aggregated and anonymized behavior of
business travelers, custom polls, and custom surveys. Essentially we are creating
two businesses. The first
business is a business travel information provider. The second is a consulting
firm similar to Forrester that deals specifically with the business
travel industry.”
What went wrong
The economy
It's the economy stupid. There's no question about it.
We picked the wrong time to start a dot com. By the time we
started looking for capital nearly all of the investors had changed the
locks on their vaults. One advisor from a large data storage
company told us that none of the top ten venture capital firms had
invested in any new projects for more than six months. Other
venture capital firms were, we were told, paying investors from their
own pockets to the tune of a billion dollars. We were told that
living in Rochester, NY put us at a huge disadvantage. It seems
that venture capital firms like to invest in firms less than an hour's
drive from their offices. They like, we were told, to keep a close
eye on the happenings within the companies in which they invest.
People in the know told us that big money wasn't coming to Rochester,
NY.
Time
Our team ran out of time. We had to get funded
before a specific date. After than date we had to return to work
or face going broke. What ate up a lot of time was the constant
redefining of our plan. The team was split on the fundamental
concept of the business. Would we be a content provider or a
demographic consulting firm? As time ran and money ran out this
division grew and eventually became the straw that broke the camel's
back.
Personalities and roles
The topic of personalities and roles are combined
because they are interrelated. Good friends and trusted colleagues
become different beasts when vertical power structures are overlaid on
them. We had way too many discussions about what the roles were
for the Chairman, president, and CEO. My totally biased view was
that the CEO reported to the Chairman. I also saw the role of the
CEO was to implement the vision of the founder/Chairman. Again
from my biased perspective, I observed that the CEO saw their role as
being in control of everything. They only used the original
concept of the founder as a starting point on which to create a
completely different business. Add lack of money and time to this
inconsistency in the understanding of roles and the situation becomes
volatile. Luckily the team was professional enough to dissolve the
business before anyone resorting to back stabbing or name calling.
The business plan
A premature draft of the overly long business plan was
distributed to more than thirty professionals. Most reviewers
never read past the first ten pages. Those that did fell into two
groups those that hated it and those that thought it was beautiful.
Unfortunately, those who hated it were correct in their assessment and
those who loved it were buffaloed by the business jargon. Beyond
the bad writing, the plan was fundamentally wrong. Neither the
content portal concept or the consulting business concept was
substantiated. We had no proof that a market existed for business
travel content or that any business would buy the demographic
information collected from such a site. The plan contained highly
detailed information, graphs, and charts that said basically nothing.
The business plan was the most important factor in my recommending that
the team vote to dissolve the company. We didn't have enough time,
money, or expertise to rewrite the plan. Even if we had, the
original concept had become so diluted and misinterpreted that it was
irreparable.
The name
The name of the business was Biztripinfo, Inc. The
name was derived from business trip information. It clearly
defined what the business was about. In hind site changing the
name was a bad move that I should not have allowed. It was the
beginning of the end of the company. The name change was the first
indication that the fundamental vision of the company was being morphed
into another entity. The new name, Jade Ibis, Inc. was a throw
away name that came up in a discussion as silly example. There is
no such thing as a Jade Ibis and I spent lots of valuable time in
business meetings trying to explain it away. The name was supposed
to allow the company to expand beyond being just a business travel
information portal. It was supposed to empower us to take the
Biztripinfo concept and clone it to deal with different markets.
What the new name really signified was the abandonment of the original
concept and the adoption of a new concept, a consulting business.
Who is to blame
No matter who is to blame the founder and leader is
responsible. It didn't work because I didn't make it work.
Even the external pressures of the market decline were my responsibility
to know. Had I done adequate research about the marketplace I
would have recommended closing down the company much sooner.
Unfortunately, I was learning by doing and that comes at a price.
Summary
I had a great time thinking up the idea. I had
lots of fun working with the team. I met lots of interesting
people. I feel privileged for having participated in one of the
great gold rushes in business history. Would I do it again,
absolutely not. Why do you ask? Do you have an idea?
Well, let's just talk about over a latte at Starbucks.
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