by: Elena Fawkner
There was an article on the front page of the Los Angeles Times Friday that caught my eye. The headline was "Small Dot-Coms Thrive While Industry Giants Melt Down". Here are the opening paragraphs...
"Beneath the chaotic dot-com busts of the last half-year, an overlooked breed of Internet companies - mostly small and nimble - is thriving.
"They have no public stock, no Super Bowl commercials, no million-dollar product launch parties, and no naming contracts with professional sports stadiums. Their small size has allowed many to weather a storm that has quickly taken down hugely stupid, profligate and unlucky internet firms.
"This year's grim portrait of the Internet economy has largely been painted by big-money Wall Street nose dives such as those by Priceline.com, Drkoop.com and Etoys.
"By contrast, the mundane dot-com survivors are small operations with few employees that have trudged along, slowly but steadily, in a parallel universe that more closely resembles the so-called Old Economy."
Well, gee, no kidding. Finally the dust begins to settle and the resulting landscape resembles, well, something suspiciously like the real world. And WE, the "mundane dot-com survivors" are the ones trudging along in a parallel universe? I think not. We've always been firmly rooted in the real world. It's the "hugely stupid, profligate and unlucky [and what's "luck" got to do with it?] internet firms" that were always living in a parallel universe of their own imaginations.
So what's the lesson of the great internet shakeout of 2000? It's this: just run your own race. Forget about what the so-called mega dot-coms are doing. They're not operating in the real world, they're in some la la land where venture capital is a (for now) bottomless pit and the bottom line doesn't seem to matter. Yet. What's the future for such businesses? They're destined to bite the dust! I don't care how much money they have at their disposal, sooner or later they have to pay the piper. There is NO successful business model on earth that doesn't, at some point, require black ink on the all-important bottom line.
So, don't stress out over what your mega-competition is doing. Look to your niche and focus on that. Ever tried emailing one of those mega sites? I have. You get auto-generated responses. No such thing as personal service. And how could there be? They're in a parallel universe, after all, where such things as basic customer service are delivered by autoresponders, not real humans.
For you and me, the "mundane dot-com survivors", the trick is to focus on business and not get caught up in the hype and swirl of The Internet. We understand that the internet is but a tool at our disposal, not some mystical plane where you can afford to throw out antiquated "old economy" principles such as the fact that revenues must exceed expenses in order to make a profit.
The LA Times article profiled a small dot-commer who is thriving despite the so called "melt-down". A sole-employee business, this entrepreneur "turned her idea for a coupon-clipping Web site into a profitable business by keeping expenses low". Fancy that. Keeping expenses low. What an epiphany. The business took a year and a half to turn a profit with expenses of around $800 a month. It has remained in profit ever since, generating a salary of between $75,000 and $125,000 a year for its owner.
Even more startling is the fact that "the vast majority of Internet companies have never seen a drop of venture capital or had a public stock offering. Of the about 10,000 dot-coms in the United States, fewer than 500 have publicly traded stock. Only a quarter have received venture-capital money, depending instead on money from more patient private investors, their own checkbooks and credit cards or - remarkably - company revenues."
Fancy that.