Dot Com - From boom to bust, an eyewitness account

It was the year 1999 and apart from the impending Y2K problem, the overall picture looked rosy. Business confidence was high and so was the rate at which new businesses sprang up. In a way, it was the best of times for a fresher to enter the job market. But, as it turned out later, it was also the worst of times! No one knew about the impending bursting of the Dot Com bubble, and the recession, that would follow. After all, despite all technological advances, there are no ways to predict the future.

shovon chakraborty business blog

As a fresher, just out of the university with a degree in business management, I had also wanted to join the vibrant, cool and a quick-short-cut to riches world of the Dot Com industry. After all, it was 1999-2000 and every other young entrepreneur had secured funding for his/her dot com venture. It seemed that the venture capitalists were roaming around with bags full of dollars and were willing to hand it over to anybody, who could come up with a half-decent idea about a new dot com and a catchy enough name for the domain. On hindsight, I must agree that it was only fair that the whole thing would implode, as the fundamentals for most of the ventures were weak or even worse, almost non-existent.
dot com bubble bursting
So, what went wrong? Well, almost everything!
dot com boom to bust followed recession
Let me share my own experience. I had been doing freelancing works for three channels - a portal where people could hire experts for getting their work done, a site which allowed people to send and receive e-mails through their mobile devices and a site which provided updates to people on the availability of targeted domain names. Let's call them Adotcom, Bdotcom and Cdotcom respectively, and see how they fared.
dot com y2k problem business fundamental
The idea behind Adotcom was to provide a platform to people from diverse backgrounds to virtually meet one another and leverage the diversity of their skills and experience. Sounds familiar? It should, because the same concept was later on used by Amazon Mechanical Turk and other online jobs marketplace service providers to build sustainable business models, but Adotcom did not survive. Why? Because, in those days, there was an underlying belief that everything on the Internet should be free. So, for providing the services, that an offline intermediary would provide for a fee, the portal did not charge anything from the members. The whole burden for generating revenue was on online advertisements to be put up in the site. Today, the model might have made sense, with all the targeted advertising and payable additional services, but in those pre-Google days, it was not at all sufficient. To this basic flaw in business plan, if one adds the other drawbacks, the business plan would come across as a recipe for disaster. The number of Internet users in India was yet to attain a critical mass. Even the connectivity, mostly dial-up in those days, was erratic at best and pathetic at worst. Moreover, the people of India had a mind block, which prevented them from transacting online and the fact that core banking solutions were still some years away, only added to the woes. It comes across as no surprise then, that this venture folded up by 2001 itself.
dot com weak revenue stream
Bdotcom was also some years ahead of its times. Mobile telephony was in nascent stage and was yet to achieve the level of penetration, that would have been required for such a venture to succeed. Moreover, the call charges in those days were really prohibitive and people even hesitated to receive a call on their mobile. It worked out to be cheaper if, instead of receiving, the person simply disconnected the call and made an outgoing call from the nearest PCO. Under such circumstances, it was only foolish to expect a dedicated user base who would use the services for checking their mails on mobile. Even the Wireless Application Protocol or WAP, used in those days to communicate with the mobile devices, was in a relatively primitive stage and could not ensure a positive user experience. With the inevitable fate clearly visible, it wound up probably by the beginning of 2001.
dot com shovon chakraborty first person account
Cdotcom was borne out of people's fascination with domain names in those days. Without a clear idea about the applicability of the the brick and mortar corporate and intellectual property laws on the online world, the general belief was that if someone could get hold of a domain name, there was a fair chance of holding off the rightful owner of the name and making way with a hefty sum by selling the name to the owner itself. As things became clear and the IPR related laws were enacted for the Internet, the demand for such a paid service drastically got reduced. Also, soon it became pretty clear that a snazzy domain name alone cannot guarantee success, as was seen in the case of boo.com, the first spectacular fatality that started a chain reaction of more such failures. So, bereft of customer interest, this one also died sometimes in 2002. But, it also showed that a paid service model was much more sustainable, provided there are enough numbers of willing customers and the fact that Cdotcom outlived the other two, bears testimony to that.
dot com new age networks google facebook
Today, when we look back at the amount of money that went down the drain, during the peak of the dot com frenzy days, we can't but feel saddened by the sheer wastage of good capital, which could have been utilized in business projects having much better viability. The ventures, which faltered and with them, took down venture capitalists too, were lacking any kind of solid business fundamentals. Some ventures failed due to being ahead of its time too. The over dependence on advertising revenue for sustaining the business, spelled doom for many ventures. The ones that survived the bursting of the dot com bubble phase and the recession that followed, had to reinvent themselves and work on creating multiple revenue streams. Those, who could reduce their dependence on the ad revenue and could generate revenues from multiple other streams too, are still around, albeit with varying degrees of success. If the early baby boomers had their swinging sixties, our generation had an equivalent in business terms during those heady days of late 1990s and early 2000s. Somewhere down the line, between then and today, two companies, Google and Facebook, changed the whole market dynamics of the online businesses. But that's another story, to be told at a different time.