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.

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 (many of Generation X), 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.

Related Topics:
Internet - Mosaic - World Wide Web - E-commerce - Generation X

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The suddenly 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.

Related Topics:
Advertising - Mail-order - Customer relationship management - Killer app - Venture capital

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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.

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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. (Yahoo! and a few other successful survivors of the era actually succeeded with this strategy.) 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.

Related Topics:
Business model - Network effect - Market share - Mind share - Yahoo! - Stock exchange - Stock - Foosball - Soft drink - Aeron chair

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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.

Related Topics:
1995 - Webby Awards - San Francisco, California - Silicon Valley - Faux-paparazzi

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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.

Related Topics:
Railroads - 1840s - 1920s - 1950s - 1960s - Home computers - Biotechnology - 1980s

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