Dot-Com Bubble: A Cautionary Tale

www.virtualbizgroup.com — Wed, 14 Jul 2010 14:30:02 +0000

Today’s virtual business market is thriving (relatively, in this economy of course), but it is doing so under a heightened sense of awareness and caution as compared to preceding eras. As is the case with some technological advancements, forward thinkers and idea guys take off with a concept before the realities necessary to make it work truly come to fruition. Using new business platforms to launch successful, profit turning companies requires a level of patience and thorough planning, with trial by fire businesses often quickly burning to the ground. Rising over the course of the late 90s before crashing down in the year 2000, the dot-com bubble burst epitomizes the dangers of putting caution on the back-burner, prioritizing quick profit margins over detailed strategic planning.Arguably the height of virtual business optimism, the late 90′s enjoyed unprecedented success for internet based companies whose stock soared based not so much on their company’s platform or numbers, but on the prefix “e-” or suffix “.com” that attached to their name. So commonplace was it for investors to sink money into the stocks of under-evaluated online operations, the term “prefix investing” made its way into Wall Street vernacular. Mainstay evaluation techniques (i.e. price-to-earnings ratio) were thrown to the wind as stockholders banked on technological advancements to overcome the time tested benchmarks of success.E-business owners, financed by quick with the wallet venture capitalists, saw online giants Google and Amazon take years to turn initial profits before achieving their superpower status. Thus, when early numbers reported losses, spending continued as normal with too much faith and not enough discretion. The prevailing school of thought believed that if you could expand your consumer base to reach a large quantity quickly, future profits and success were inevitable. Ignorant to the obvious red flags, instant millionaires, made from soaring stocks and internet fortunes, tried to turn all their new found wealth into even more by investing everything back in to even more dot-com upstarts.When the stock market hit a bumpy road in year 2000, owners and investors with all their money tied up stocks saw their assets quickly dwindle, with millions of dollars disappearing overnight. Once companies quickly burned through their initial venture capital investment thanks to poor planning and exorbitant spending, still unable show signs of turning a profit and with no other outside investors looking to join in, they were forced to shut their doors as quickly as they’d opened.

Amazon.com: a virtual business pioneer

www.virtualbizgroup.com — Wed, 14 Jul 2010 14:28:51 +0000

Amazon.com is not only a true heavyweight in the online commerce industry; it helped to pave the way for other virtual business entrepreneurs and pioneers to follow in its supremely successful footsteps. Today, Amazon is the largest online retailer in the country, with little to no imminent threat to challenge the crown. Staples, the silver medalist in the category, claims only a third of the total online revenue generated by the e-commerce supergiant.Amazon has become a household name among pretty much any computer literate family in America, but this kind of mainstream recognition did not happen overnight. What we now know as Amazon.com was actually founded 16 years ago, in 1994, by Jeffrey P. Bezos. The idea was to create an online bookstore, but as time would tell, this was only the starting point of much loftier aspirations. The website first launched online a year later in 1995, under its original name “Cadabra.com.” At a time before online shopping was commonplace, Bezos had the innovative mind to look at the internet not as intimidating wilderness but as a vast, bountiful forum in which business could be conducted sans the inherent limitations of the typical brick and mortar company. Without having to carry a copy of every title in a bevy of consumer accessible stores, the internet allowed for Bezos’ upstart bookstore to make a wider variety of books available to the public for purchase. In a sense, the new company’s capacity for breadth of selection was only just being realized, expanding to sell everything from home improvement products to electronics. The ingenuity behind Amazon’s zShops (now Amazon Marketplace) and Auctions was the driving goal to offer a one stop shop where consumers could find any item their heart desired.Amazon’s insatiable entrepreneurial spirit, combined with the impressive scope of the operation just a few years after its launch, led Time Magazine to honor founder Bezos as its Person of the Year for 1999, citing his influence in popularizing online shopping, now the bread and butter of the virtual business world.

Virtual Biz Group » Virtual Business History

Dot-Com Bubble: A Cautionary Tale

Amazon.com: a virtual business pioneer