Dotcoms: building to flip is a business flop

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Dotcoms: building to flip is a business flop

The jury is still out on whether e-commerce will significantly change the business world, or whether the desire to make a fast buck will be the cause of the dotcoms downfall

There has been a recent media backlash, particularly in the UK, against the market valuation of the dotcoms. The words "crazy" and "South Sea Bubble" have begun to appear with increasing regularity.

Yet the First Tuesday phenomenon shows no sign of abating. In fact, more organisations, such as DCfor.com, are beginning to spring up, intent on serving the overflow from First Tuesday's success.

But recent reports from Silicon Valley throw some light onto whether some of these market valuations really do represent a change in business, or whether the valuations of Amazon, Yahoo etc - that, of course, have yet to turn a cent into profit - are valuations built on foundations of straw.

One student, who had learnt the basics of building up a great company at Stanford University, recounted her experiences at the hands of various Silicon Valley venture capitalists, who greeted her ideals with incredulity.

"Build a great company?" one questioned. "We're not interested in anything like that. Come back to us with an idea that you can do quickly and take public or get acquired within 18 months."

In business theory terms we are light years away from the days when Bill Hewlett and Dave Packard co-founded their company in a Silicon Valley garage 50-odd years ago.

Then the idea was to found a company "built to last". These days, it appears, the concept has been overturned, and the intention is better summed-up as "build to flip".

If this is the case, then there is hardly any real prospect of these organisations ploughing real resources into delivering long-term customer service. If you are building to flip, why plough money into it? Just come up with the idea - build, float, or flog.

The get-rich-quick mindset is similarly summed up by one US marketing specialist who suggested that on the Web, "there is no discipline and too much money. Most dotcom start-ups don't have a unique consumer proposition anywhere. They are technology-driven."

Having witnessed the media mania of the dotcoms, perhaps there is an opportunity for bricks and mortar giants to learn what the Internet has to offer - such as personalisation, community, and customisation - and adopt them.

Meanwhile the mania continues. One US entrepreneur working at a dotcom, who I'll spare the embarrassment of naming, admits to such a hectic lifestyle on the end of a cellphone, working every possible hour, that he now schedules a weekly meeting with his wife and son to ensure his family's priorities are not lost in Silicon Valley's caffeine-overdosed culture.

Every Sunday night at 6.30, they sit around the kitchen table to discuss the details of the coming week. This is what he says - I kid you not.

"Our family meetings are like my company's project update sessions. Nothing interrupts them - not friends, phone calls or TV. We take turns telling each other what's on our schedule for the coming week and what's been nagging us.

"We have great conversations, the point of which is to affect how we spend our time."

So, if you're an IT director thinking of leaving your admittedly slow bricks and mortar company for a dotcom, think "family", think "build to flip" - then think again.

David Bicknell


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This was first published in March 2000

 

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