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Encyclopedia > Dot com

Dot-com (also dotcom or redundantly dot.com) companies were the collection of start-up companies selling products or services using or somehow related to the Internet. They proliferated in the late 1990s dot-com boom, a speculative frenzy of investment in Internet and Internet-related technical stocks and enterprises. The name derives from the fact that many of them have the ".com" TLD suffix built into their company name. A startup company is a company recently formed, usually until IPO or acquisition. ... // Events and trends The 1990s are generally classified as having moved slightly away from the more conservative 1980s, but otherwise retaining the same mindset. ... Speculation involves the buying, holding, and selling of stocks, commodities, futures, currencies, collectibles, real estate, or any valuable thing to profit from fluctuations in its price as opposed to buying it for use or for income ( via dividends, rent etc). ... Investment is a term with several closely-related meanings in finance and economics. ... Technology [from Gr. ... A stock, also referred to as a share, is commonly a share of ownership in a corporation. ... .COM is also the extension of the DOS COM file, an extension used for executables. ... A top-level domain (TLD) is the last part of which Internet domain names consist of. ...

Contents


Overview

In 1994 the Internet came to the general public's attention with the public advent of the Mosaic web browser and the nascent World Wide Web, and by 1996 it became obvious to most publicly-traded companies that a public web presence was no longer optional. Though at first people saw mainly the possibilities of free publishing and instant worldwide information, increasing familiarity with two-way communication over the "web" led to the possibility of direct web-based commerce (e-commerce) and instantaneous group communications worldwide. These concepts in turn intrigued many bright young, often underemployed people, who realized that new business models would soon arise based on these possibilities, and wanted to be among the first to profit from these new models. Mosaic is a web browser (client) for the World Wide Web written at the National Center for Supercomputing Applications (NCSA). ... Graphic representation of the World Wide Web around Wikipedia The World Wide Web (WWW, W3, or simply Web) is an information space in which the items of interest, referred to as resources, are identified by global identifiers called Uniform Resource Identifiers (URIs). ... Electronic commerce or e-commerce consists of the buying, selling, marketing, and servicing of products or services over computer networks. ...


The sudden low price of reaching millions worldwide, and the possibility of selling to or hearing from those people at the same moment when they were reached, promised to overturn established business dogma in advertising, mail-order sales, customer relationship management, and many more areas. The web was a new killer app -- it could instantaneously bring together unrelated buyers and sellers, or advertisers and clients, in seamless and low-cost ways. Visionaries around the world grabbed friends, developed new business models that would not have been possible just 3 years before, and ran to their nearest venture capitalist. Generally speaking, advertising is the paid promotion of goods, services, companies and ideas by an identified sponsor. ... Mail order is a term which describes the buying of goods or services by mail delivery. ... The generally accepted purpose of Customer Relationship Management (CRM) is to enable organizations to better serve their customers through the introduction of reliable processes and procedures for interacting with those customers. ... A killer application (commonly shortened to killer app) is a computer program that is so useful that people will buy a particular computer hardware, gaming console, and/or an operating system simply to run that program. ... Venture capital is a general term to describe financing for startup and early stage businesses as well as businesses in turn around situations. ...


The venture capitalists saw the fast rise in valuation of other such companies, and therefore moved faster and with less caution than usual, choosing to hedge the risk by starting many contenders and letting the market decide which would succeed. The low interest rates in 1998-1999 helped increase the startup capital amounts. Of course a proportion of the new entrepreneurs were truly talented at business administration, sales, and growth, but the majority were just people with ideas, and didn't manage the capital influx prudently. This majority formed the bulk of the "dot-com" companies.


A canonical "dot-com" company's business model relied on network effects to justify losing money to build market share, or even mind share, through giving their product away in the hope that they could eventually charge for it. (It's worth noting that Amazon.com, and the few other successful survivors of the era, proved this strategy sound in the long term.) Many raised cash through public offerings on the stock exchanges, with stock often soaring to dizzying heights and making the initial controllers of the company wildly rich on paper. Dot-com companies were stereotyped as having extremely young and inexperienced managers wearing polo shirts with lavish offices including foosball, free food and soft drinks as well as Aeron chairs. Companies frequently held parties or expositions where free pens, t-shirts, stress balls, and other trinkets were given away emblazoned with the company's logo. The companies were also stereotyped as requiring extremely long work hours and high pressure. A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits. ... The network effect causes a good or service to have a value to a potential customer dependent on the number of customers already owning that good or using that service. ... Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. ... One of the main objectives of Advertising and promotion is to establish what is called mind share (or share of mind). ... Amazon. ... A stock, also referred to as a share, is commonly a share of ownership in a corporation. ... Foosball (from the German Fußball = soccer - In German itself its called Kicker or Tischfußball) is also known as table soccer, table football, babyfoot, jitz, or gettone. ... A soft drink is a drink that contains no alcohol. ... Detail of Aeron chair seat The Aeron chair is a product of Herman Miller, designed in 1994 by Don Chadwick and Bill Stumpf. ...


An annual event started in 1995, the Webby Awards, working to recognize the best websites on the Internet. The event was typically an extravaganza held annually in San Francisco, California, near the heart of Silicon Valley. The ceremonies mirrored the flashy dot-com lifestyle with costumed guests, modern dancers, and faux-paparazzi to make guests feel important. The event peaked in 2001 with thousands in attendance. In 2002, it was a more somber event with only several hundred guests and little of the excess of the late 1990s. In 2003, the awards were reduced to a virtual event because many of the nominees couldn't fly to San Francisco due primarily to corporate belt-tightening and fear of losing their jobs. The 2005 edition was held in New York City. 1995 was a common year starting on Sunday of the Gregorian calendar. ... Presented by The International Academy of Digital Arts and Sciences, the Webby Awards are a set of awards presented to the worlds best websites. The awards have been given out since 1996. ... The downtown San Francisco skyline, looking east from the central part of the city. ... A view of downtown San Jose, the self-proclaimed Capital of Silicon Valley. Like many large cities, San Joses downtown is expansive and encompasses much more area than shown in this view. ... For the article on the 2004 film, see Paparazzi (movie) Paparazzi is a term for photographers who take candid photographs of celebrities, usually by relentlessly shadowing them in public and private activities. ...


Historically the dot-com boom can be seen as similar to a number of other technology inspired booms of the past including railroads in the 1840s, radio in the 1920s, transistor electronics in the 1950s, computer time-sharing in the 1960s, and home computers and biotechnology in the early 1980s. Railway mania was the term given to the speculative frenzy in Britain in the 1840s. ... Events and Trends Technology First use of anaesthesia in an operation, by Crawford Long War, peace and politics First signing of the Treaty of Waitangi (Te Tiriti o Waitangi) on February 6, 1840 at Waitangi New Zealand. ... Sometimes referred to as the Jazz Age or primarily in North America as the Roaring Twenties. // Events and trends Technology John T. Thompson invents Thompson submachine gun, also known as Tommy gun John Logie Baird invents the first working mechanical television system (1925) Charles Lindbergh becomes the first person to... // Events and trends The 1950s in Western society was marked with a sharp rise in the economy for the first time in almost 30 years and return to the 1920s-type consumer society built on credit and boom-times, as well as the height of the baby-boom from returning... The 1960s, or The Sixties, in its most obvious sense refers to the decade between 1960 and 1969, but the expression has taken on a wider meaning over the past twenty years. ... The home computer is a consumer-friendly word for the second generation of microcomputers (the technical term that was previously used), entering the market in 1977 and becoming common during the 1980s. ... Biotechnology is technology based on biology, especially when used in agriculture, food science, and medicine. ... // Events and trends The 1980s marked an abrupt shift towards more conservative lifestyles after the momentous cultural revolutions which took place in the 60s and 70s and the definition of the AIDS virus in 1981. ...


Soaring stocks

A stock market bubble in financial markets is a term applied to a self-perpetuating rise or boom in the share prices of stocks of a particular industry. The term may be used with certainty only in retrospect when share prices have since crashed. A bubble occurs when speculators note the fast increase in value and decide to buy in anticipation of further rises, rather than because the shares are undervalued. Typically many companies thus become grossly overvalued. When the bubble "bursts", the share prices fall dramatically, and many companies go out of business. A stock market bubble is a type of economic bubble taking place in stock markets, in which a wave of public enthusiasm, evolving into herd behavior, causes an exaggerated bull market . ...


The late 1990s boom in technology dot-com company stocks is a good example of a bubble, which burst in late 2000 and through 2001. // Events and trends The 1990s are generally classified as having moved slightly away from the more conservative 1980s, but otherwise retaining the same mindset. ... This article is about the year 2000. ... 2001: A Space Odyssey. ...


The dot-com model was inherently flawed: a vast number of companies all had the same business plan of monopolising their respective sectors through network effects, and it was clear that even if the plan was sound, there could only be at most one network-effects winner in each sector, and therefore that most companies with this business plan would fail. In fact, many sectors could not support even one company powered entirely by network effects. In economics, a monopoly (from the Greek monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a kind of product or service. ...


In spite of this, vast fortunes were made by a few company founders whose companies were bought out at an early stage in the dot-com stock market bubble. These early successes made the bubble even more buoyant. An unprecedented amount of personal investing occurred during the boom. Stories of people quitting their jobs to become full-time day traders, while not representative, were common in the press. In physics, buoyancy is an upward force on an object immersed in a fluid (i. ... Day trading most commonly refers to the practice of either buying and then selling or selling and then buying a stock within the same day. ...


Free spending

According to dot-com theory, an internet company's survival depended on expanding its customer base as rapidly as possible, even if it produced large annual losses. The phrase "Get large or get lost" was the wisdom of the day. At the height of the boom it was possible for a promising dot-com to make an initial public offering of its stock and raise a substantial amount of money even though it had never made a profit. But then the matter of burn rate came into play as capital was expended in operating a company with no profit and no viable business model. In financial markets, an initial public offering (IPO) is the first sale of a companys common shares to public investors. ... Burn rate is the rate at which a company is using up its venture capital. ... A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits. ...


Public awareness campaigns were one way that dot-coms sought to grow their customer base. These included television ads, print ads, and targeting of professional sporting events. The January 2000 Super Bowl featured seventeen dot-com companies (most memorably pets.com) that each paid over $2 million for a 30-second spot. In January 2001, just three dot-coms bought advertising spots. Iwon.com gave away $10 million to a lucky contestant on an April 2000 show that aired on CBS. Many dot-coms named themselves with onomatopeic nonsense words that they hoped would be memorable and not easily confused with a competitor. The pets. ... In linguistics and poetry, onomatopoeia is the device of a word, or occasionally, a grouping of words, with a sound imitating the sound it is describing, such as bang, click, fizz, hush or buzz. Onomatopoetic words exist in every language, although they are different in each. ...


Not surprisingly, the "growth over profits" mentality and the aura of "new economy" invincibility led some companies to engage in lavish internal spending, such as elaborate business facilities and luxury vacations for employees. Executives and employees who were paid with stock options in lieu of cash became instant millionaires when the company made its initial public offering; many invested their new wealth into yet more dot-coms. A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). ...


Cities all over the United States sought to become the "next Silicon Valley" by building network-enabled office space to attract internet entrepreneurs. Communication providers, convinced that the future economy would require ubiquitous broadband access, went deeply into debt to improve their networks with high-speed equipment and fiber optic cables. A Worldcom executive famously remarked that internet traffic would double every hundred days for the foreseeable future. Companies that produced network equipment, such as Cisco Systems, profited greatly from these projects. Broadband Internet access, often shortened to broadband Internet or just broadband is a high data-transmission rate Internet connection. ... Fiber Optic strands An optical fiber in American English or fibre in British English is a transparent thin fiber for transmitting light. ... Cisco Systems, Inc. ...


Similarly, in Europe the vast amounts of cash the mobile operators spent on 3G-licences in Germany, Italy and the United Kingdom for example led them into deep debt. The investments were blown out of proportion regardless of whether seen in the context of their current or projected future cash flow, but this fact was not publicly acknowledged until as late as 2001 and 2002. Due to the highly networked nature of the IT industry this quickly led into problems for small companies that were dependent on contracts from operators. World map showing location of Europe When considered a continent, Europe is the worlds second smallest continent in terms of area, with an area of 10,600,000 km² (4,140,625 square miles), making it larger than Australia only. ... Motorola Black Razr mobile phone A mobile phone, also known as a cellular phone or cell phone, is a portable electronic device which behaves as a normal telephone whilst being able to move over a wide area (compare cordless phone which acts as a telephone only within a limited range). ... 3G (or 3-G) is short for third-generation mobile telephone technology. ... In finance, cash flow refers to the amounts of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. ... 2001: A Space Odyssey. ... 2002 is a common year starting on Tuesday of the Gregorian calendar. ... Categories: Information technology ...


Thinning the herd

Over 1999 and early 2000, the Federal Reserve had increased interest rates six times, and the runaway economy was beginning to lose speed. The dot-com bubble burst, numerically, on March 10, 2000, when the technology heavy NASDAQ Composite index [1] peaked at 5048.62 (intra-day peak 5132.52), more than double its value just a year before. The NASDAQ fell slightly after that, but was attributed to correction; the actual reversal and subsequent bear market may have been triggered by the adverse findings of fact in the United States v. Microsoft case in the US. The findings, which declared Microsoft a monopoly, were widely expected in the weeks before their release on April 3. The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ... March 10 is the 69th day of the year in the Gregorian Calendar (70th in Leap years). ... This article is about the year 2000. ... A Bear Market is a phase in the life of a stock market or other financial market in which the value of most listed shares of stock fall consistently, or values in a financial market trend downward, as reflected by a downward movement of one or more key stock indexes... A finding of fact is a determination on the evidence regarding a issue of fact raised by one party to case made by the fact finder, usually a judge or a jury. ... United States v. ... Microsoft Corporation (NASDAQ: MSFT) is the worlds largest software company, with over 50,000 employees in various countries as of May 2004. ... In economics, a monopoly (from the Greek monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a kind of product or service. ... April 3 is the 93rd day of the year (94th in leap years) in the Gregorian calendar, with 272 days remaining. ...

The technology-heavy NASDAQ IXIC index peaked in March 2000, reflecting the high point of the dot-com bubble. Even the Russian default in late 1998 was only a temporary setback for US stock traders.
The technology-heavy NASDAQ IXIC index peaked in March 2000, reflecting the high point of the dot-com bubble. Even the Russian default in late 1998 was only a temporary setback for US stock traders.

Another reason may have been accelerated business spending in preparation for the Y2K switchover. Once New Year had passed without incident, businesses found themselves with all the equipment they needed for some time and business spending dried up. This correlates quite closely to the peak of U.S. stock markets. The Dow Jones peaked in January 2000 and the Nasdaq in March 2000. Hiring freezes, layoffs, and consolidations followed in several industries, especially in the dot-com. Small rendering of Image:NASDAQ IXIC - dot-com bubble. ... NASDAQ MarketSite (Times Square, New York City) at night NASDAQ (originally an acronym for National Association of Securities Dealers Automated Quotations) is a U.S. electronic stock exchange. ... The year 2000 problem (also known as the Y2K problem and the millennium bug) was a flaw in computer program design that caused some date-related processing to operate incorrectly for dates and times on and after January 1, 2000. ... 2000 : January - February - March - April - May - June - July - August - September - October - November - December Events: January 1- Millennium celebrations take place throughout the world. ... 2000 : January - February - March - April - May - June - July - August - September - October - November - December This is a timeline for events in March, 2000. ...


By 2001, the bubble's deflation was running full speed. A majority of the dot-coms have now ceased trading, after having burnt through their venture capital, often without ever making a gross profit, thereby becoming dot-compost. 2001: A Space Odyssey. ... Venture capital is a general term to describe financing for startup and early stage businesses as well as businesses in turn around situations. ... Profit is defined as the residual value gained from business operations. ... A dot-compost is a term for an internet startup company forced to cease operations as a result of the stock market correction beginning in March, 2000. ...


Aftermath

On January 11, 2000, America Online, a favorite of dot-com investors, acquired Time Warner, the world's largest media company. Within two years, boardroom disagreements drove out both of the CEOs who made the deal, and in October 2003 AOL Time Warner dropped "AOL" from its name. The acquisition thus became a symbol of the dot-coms' challenge to "old economy" companies and the old economy's ultimate survival. The revolutionary optimism of the boom faded, and analysts once again recognized the relevance of traditional business thinking. January 11 is the 11th day of the year in the Gregorian Calendar. ... This article is about the year 2000. ... America Online, or AOL for short, is a U.S.-based online service provider and Internet service provider that is owned by Time Warner. ... Time Warner Inc. ... Within a corporation, the chief executive officer is the highest-ranking corporate officer or executive. ... October is the tenth month of the year in the Gregorian Calendar and one of seven Gregorian months with the length of 31 days. ... 2003 is a common year starting on Wednesday of the Gregorian calendar. ...


Several communication companies, burdened with unredeemable debts from their expansion projects, sold their assets for cash or filed for bankruptcy. Worldcom, the largest of these, was found to have used accounting devices to overstate its profits by billions of dollars. The company's stock crashed when these irregularities were revealed, and within days it filed the largest corporate bankruptcy in US history. Other examples include NorthPoint Communications, Global Crossing, JDS Uniphase, XO Communications, and Covad Communications. Demand for the new high-speed infrastructure never materialized, and it became dark fiber. Some analysts believe that there is so much dark fiber worldwide that only a small percentage of it will be "lit" in the decades to come. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... NorthPoint Communications was a CLEC (Competitive Local Exchange Carrier), focused on data transmission rather than voice. ... Global Crossing Ltd. ... JDS Uniphase (NASDAQ: JDSU) is a company that manufactures and designs products for fiber optic communication and test equipment. ... Covad Communications Group is a nationwide provider of broadband voice and data communications. ... Dark fibre or unlit fibre (or fiber) is the name given to fibre optic cables which have yet to be used. ...


One by one, dot-coms ran out of capital and were acquired or liquidated; the domain names were picked up by old-economy competitors or domain name squatters. Several companies were accused or convicted of fraud for misusing shareholders' money, and the Securities Exchange Commission fined top investment firms like Citigroup and Merrill Lynch millions of dollars for misleading investors. Various supporting industries, such as advertising and shipping, scaled back their operations as demand for their services fell. A few dot-com companies, such as Amazon.com and eBay, survived the turmoil and appear to have a good chance of long-term survival. Liquidation, or winding up, refers to a business whose assets are converted to money in order to pay off debt. ... Cybersquatting is a derogatory term used to describe the practice of registering and claiming rights over internet domain names which are, arguably, not for the taking. ... For other uses of SEC, see SEC (disambiguation) The Securities and Exchange Commission, commonly referred to as the SEC, is the United States governing body which has primary responsibility for overseeing the regulation of the securities industry. ... This article needs to be cleaned up to conform to a higher standard of quality. ... Merrill Lynch & Co. ... Amazon. ... The title of this article begins with a capital letter, due to Wikipedia capitalizing the first letter in article titles. ...


List of well-known dot-coms

Successful dot-coms

Amazon. ... The title of this article begins with a capital letter, due to Wikipedia capitalizing the first letter in article titles. ... Google, Inc (NASDAQ: GOOG), is a U.S. public corporation, initially established as a privately-held corporation in 1998, that designed and manages the Internet Google search engine. ... MSN (or Microsoft Network) is an Internet service provider and web portal (initially meant to be a parallel net to the Internet) created by Microsoft on August 24, 1995, coinciding with the release of Windows 95. ... PayPal is an Internet business which allows the transfer of money between email users and merchants, avoiding traditional paper methods such as checks/cheques and money orders. ... For other uses, see Yahoo. ...

Failed dot-coms

For more comprehensive listing of failed dot-coms, see here

Flop redirects here. ... Boo. ... Kozmo. ... The pets. ... Webvan was an online credit and delivery grocery business that went bankrupt in 2001. ...

See also

Terminology

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. ... The Digital Revolution is a term describing the effects of the rapid drop in cost and rapid expansion of power of digital devices such as computers and telecommunications. ... Electronic commerce or e-commerce consists of the buying, selling, marketing, and servicing of products or services over computer networks. ... Irrational exuberance is a phrase used by Federal Reserve Board Chairman Alan Greenspan in a speech given during the stock market boom of the 1990s. ... Hogarthian image of the South Sea Bubble by Edward Matthew Ward, Tate Gallery More well known than The South Sea Company is perhaps the South Sea Bubble (1711 - September 1720) which is the name given to the economic bubble that occurred through overheated speculation in the company shares during 1720. ... A stock market boom is a sudden dramatic gain of value of shares of stock in corporations. ... A spin-off (or spinoff) is a new organization or entity formed by a split from a larger one such as a new company formed from a university research group. ... A stock market bubble is a type of economic bubble taking place in stock markets, in which a wave of public enthusiasm, evolving into herd behavior, causes an exaggerated bull market . ... The term tulipomania (alternatively tulip mania) is used metaphorically to refer to any large economic bubble. ... Techno-utopianism is any ideology based on the belief that advanced science and technology will eventually bring about ideal living conditions in the future. ...

Media

e-Dreams is a 2001 documentary film directed by Wonsuk Chin, portraying the rise and fall of a unique dot-com company, Kozmo. ... From 1999 to 2002, SatireWire was one of the most popular humor websites on the Internet. ...

Venture Capital

Directories of Venture Capital Firms Directory of Venture Capital Sources - Capital Vector Venture Capital Resources and Data Dow Jones VentureOne ...

External links

  • The Nasdaq Stock Market Crash - Learn about the spectacular rise and downfall of the Nasdaq.
  • Looking back on the crash - 5 years on, the Guardian sums up
  • Top 10 dot-com flops - CNet's list of ten most notable failed dot-com companies

 
 

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