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Learn from 4 Dotcom Tech Companies that Failed
Posted on February 18th 2014
While the tech industry is booming, not all tech companies make it big. In fact, there are several companies that simply explode --and not in a positive way. Take a look at some of the biggest flops in the tech industry over the last few decades.
Boo.com was Clunky
Boo.com launched in 1999. This company's mission was to bridge the gap between tech and style. The website was intended to show off the latest styles and best clothes. There was even an assistant that walked you through different clothing choices. The company spent $42 million on ads and marketing, hired hundreds of employees, and the technology behind the site was advanced (to say the least). So, why did it collapse in such a colossal way?
First, the technology was great, but it was beyond its time. Most people who headed to boo.com ended up having extremely slow loading pages. To view the merchandise available, you actually had to download a proprietary software program. On top of this, even the checkout system had problems, and those interested in purchasing products weren’t able to finish their purchases. When simply photographing the merchandise costs more than $200 per item, it’s important to have a product to sustain it.
The Learning Company Lagged Behind
The Learning Company was a software development company that specialized in educational games. The company produced games such as “Where in the World is Carmen Sandiego?” and “Myst”, which were huge hits with kids at the time. The Learning Company was purchased by Mattel in 1999 for $3.6 billion. This purchase is known now as one of the most disastrous purchases ever. This is because just a few months after the acquisition, The Learning Company lost more than $200 million. This caused Mattel’s stock to drop from about $46 per share to $12 per share.
One of the reasons that this was such a disastrous failure is partially because The Learning Company hadn’t stayed up to date on the newest technologies and best practices. New companies that want to keep their business on the cutting edge need to stay abreast of their industry’s trends and leverage technology that can streamline production.
EToys Lost Steam
In 1999, EToys was set to take over the toy industry. It spent extremely large amounts of money on marketing and ads to help compete against the big boys such as Toys R Us and Walmart. It worked to increase its exposure by signing deals with Discovery Toys, Gap, and more. It had a bit of trouble with late arrivals for the Christmas season, but it seemed to be doing well. Unfortunately, in a short time it accumulated nearly $250 million in debt. The company had a hard time finding more money to keep going, and its stock went from a high of $89 per share to a ridiculously low $0.09 per share.
KB Toys did purchase the company, and even put nearly $9 million into it. However, KB Toys later went out of business, as well. Overall, the company had a vision and initial success, but overtime it began to lose its steam. If you are a company with a lot of media momentum it is important to be strategic and proactive with how you use that energy.
Wouldn’t it be great to order your groceries online and have them delivered to you? This was the thought behind Webvan.com. It did well for a while, and customers were happy with the quality of the food and service they received. The first day the company went public; its stocks shot up to $34 each. Webvan.com kept a warehouse of the groceries and ended up spending a lot of money on produce, warehousing, and staff. In addition to this, it expanded much more quickly than they should have.
On top of expansions that the company wasn’t ready for, it also made other mistakes. It substituted low-quality products while keeping the prices the same. This angered customers and eventually the company’s stock dropped to $0.06 per share. The company went under in 2001.
There has been many a company to rise and fall in this new frontier of innovation. Luckily, the failures of some can help steer the path for future companies to not follow suit. While no company is immune to bad decisions, lacking tech, or other problems, there are ways to plan accordingly to avoid the negative explosion of a business.