What Set Off The Dot Bomb?

from the bad-business-models dept

A look at some of the faulty assumptions made by dot coms that have cause many companies to go out of business. All of them basically have to do with business models that rely on “spend lots of money now, and we’ll make money somehow later”. Of course, they point out that many of the failed companies aren’t blaming business models, but investors for “not seeing them through”. While this is silly as well, they do have a point. Many of those business models, and bad business practices were pushed on these entrepreneurs by VCs who said “this is the way it has to be done”. Those same VCs are pretending they had nothing to do with forcing all that ridiculous advertising, and are washing their hands of their failed companies. I recently heard a VC joking about how stupid some of these business models are. It was the same VC I spoke to two years ago who told me that “profits are useless, all we want to see is revenue”.

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Comments on “What Set Off The Dot Bomb?”

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Ryan says:

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I think it’s obvious that VC’s also took part in what people now call a “mania”, although before it use to be investing in the future. However, a lot of people got caught in that trap.

I understood that a lot of these companies wouldn’t last however I couldn’t help be dazzled by their seemingly infinite ability to increase in value. I may have even contemplating investing in a company with a crappy business model just because I might have thought investors would have kept pumping up the price until I could have made a bundle and sold to a dummy (luckily I decided against investing for a while).

Moral of the story = we can all get caught up in hype sometimes.

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