
The Dot-Com Bust’s Worst Flops Were Actually Fantastic Ideas - InternetGiant
http://www.wired.com/2014/12/da-bom/
======
tptacek
This is a terrible commenting habit for me to get into, but I'm going to do it
again: "I stopped reading at...".

Instacart is _not_ "exactly like" Webvan. The only thing the two companies
have in common is groceries. What distinguishes them is everything else.
Webvan:

* Shipped their own groceries from their own gigantic centralized warehouses

* Did a land-grab rollout to a large number of cities

* Had a gold-plated customer experience enabled by enormous spending on employees and infrastructure. I _still_ store all my electronics in a large stack of those big plastic crates Webvan gave me for free

* Built a massive central _kitchen_ so they could deliver prepared meals to their customers

Instacart:

* Sends randos to Whole Foods and Safeway to get groceries using those people's own vehicles

* Rolls out slowly (I still can't get service in Oak Park, despite being half a block from Chicago, and Chicago only happened months and months after they launched SFBA)

* Has no discernable infrastructure expenses. I think they _might_ reimburse some of their drivers for $20 dollies.

You can turn any "flop" into a "fantastic idea" if you devise a sustainable
business model for it. If you can buy for a nickel and sell for a dime, you're
golden. Webvan bought for a dollar and sold for a penny. Groceries had nothing
to do with it.

~~~
ghaff
> You can turn any "flop" into a "fantastic idea" if you devise a sustainable
> business model for it.

Not all, but many of the failed dot-coms can be summed up as offering Service
X at a price that people were willing to pay that happens to be less than the
cost of delivering the service.

If I can relax the price > cost constraint there are any number of fantastic
ideas that I can come up with. Private jets for the price of commercial. A
driver for $1/hour. Etc.

Grocery delivery can be a perfectly fine business but, like most services that
fundamentally offer convenience, it's also a premium service that people need
to be willing to pay for--and the business plan needs to recognize that fact.
And, as is often true, grocery delivery seems to make the most sense when it
can piggy-back on a standard self-service grocery business.

------
neilk
This is clickbait, slightly more subtle than usual. Some of what they say is
true, but an article in a real business magazine would attempt to quantify
what's changed since the 90s and what the limits of the new paradigms are.
Wired is a hype and lifestyle magazine, and they're just trying to outrage all
of us with absurd comparisons between Flooz and Bitcoin.

One sign of a bubble: articles that proclaim, without caveats or quantifiable
reasons, that caution and experience are for suckers.

~~~
throwawaymsft
Exactly. Yes, "delivering groceries to people able and willing to pay for
them" is a great idea, The problem is Webvan didn't have it.

1) How many people were online?

2) How many people had credit card info online?

3) How many people trusted WebVan (vs. Amazon, which built trust over decades)

4) How many people had portable computers in their pocket at all times, with
instant access to your service?

Saying "X is a good idea" doesn't make sense without the surrounding strategic
context.

~~~
lotharbot
"Deliver groceries to people able and willing to pay for them" has been going
on for a very long time.

Back before home internet access was a thing, companies like Schwan's (
[http://en.wikipedia.org/wiki/Schwan_Food_Company](http://en.wikipedia.org/wiki/Schwan_Food_Company)
) were making home deliveries of frozen foods. Dairies have done deliveries
for as long as I can remember.

Webvan didn't fail because grocery delivery is a bad idea.

------
SideburnsOfDoom
These wouldn't have been _high profile_ failures without something appealing
about them. Nobody remembers the really terrible ideas that never got past the
drawing-board.

~~~
pluma
Selection bias. It's really no different from how people always seem to think
all music in ${decade that they were teenagers} was so much better. Because
all we remember are the handful of songs we liked plus the memorable stuff
that survived in "best of" compilations.

~~~
jedberg
Actually there is a different reason music during your teenage years is the
most meaningful to you. It's because it was the music you listened to while
having your strongest emotional experiences. It consoled you after that first
breakup, was playing during that first kiss, etc.

[http://www.slate.com/articles/health_and_science/science/201...](http://www.slate.com/articles/health_and_science/science/2014/08/musical_nostalgia_the_psychology_and_neuroscience_for_song_preference_and.html)

~~~
pluma
The two aren't mutually exclusive, though. This merely explains why you
remember certain individual songs and think they are better than you might
think if they didn't have any special meaning to you. The fact that those that
you remember are likely the better ones (rather than an unbiased sampling) is
what makes you think _all music_ was better (or that there was more better
music, at least).

------
al2o3cr
"though Flooz was a flop, bitcoin has now shown that digital currency can play
huge role in the modern world"

Sure - if one considers "never-ending hype-machine" and "engine for producing
scam mining-hardware companies" to be a "huge role"...

~~~
chiph
Well, the #1 problem for me was the name -- too close to "fleece". But also
they were injecting themselves between the buyer and the merchant, adding
friction and uncertainty (Why should I use them when the merchant already
accepts Visa?)

------
Fede_V
Doesn't this sort of confirm that 'ideas are cheap, execution is everything'?
The abstract idea of 'an online virtual currency' is garbage without the
brilliant crypto implementation.

I admittedly have a very strong bias against people that think they have a
brilliant idea and just need 'someone to build it'.

------
lmm
I've seen this suggested in another context: maybe the "bubble" was never
actually irrational. The Internet was new, and no-one knew exactly how high it
was all going to go; maybe all these ideas really were million-dollar ideas,
and will be now.

Of course, an alternate reading is that the Valley now is just the bubble all
over again.

~~~
swalsh
They say Afghanistan is where empires go to die. Well perhaps same day
delivery of food is where bubbles go when they're ready to pop.

more seriously though, time is as much a part of good ideas as any other
component. Google glass is probably a good idea, but also ahead of its time.
Even if every other part of the execution is perfect, people need to be ready
to accept it.

~~~
jon-wood
Or perhaps its just a case of executing it right. I certainly hope so since
the startup I work for[1] does same day delivery of food (and has been doing
so for years now), and so far we're doing it without bubble-esque levels of
investment.

[1] [https://www.hubbub.co.uk/](https://www.hubbub.co.uk/)

------
flyinghamster
The article mentions Webvan, but didn't note that its early rival, Peapod, is
still around. Peapod managed to survive by strategically retreating to the
markets where it was working - a useful counterpoint to the ever-present
"grow, grow, GROW!" mentality. Webvan overextended itself, and paid the price.

~~~
kapilkale
Is this true? Peapod was acquired by Royal Ahold in 2001 and thus cancelled
its contracts with all other grocery stores that were not Royal Ahold-owned.

[http://en.wikipedia.org/wiki/Peapod](http://en.wikipedia.org/wiki/Peapod)

~~~
dtauzell
Peapod delivers here in Milwaukee. I haven't used it much but I just noticed
that they now have a "pickup" option in some cities where you drive up and
they load you your vehicle. I might actually use the service more if they
offer that as my biggest problem is that I usually go shopping only when I'm
totally out of something I really need. If I planned ahead better I would use
it more.

~~~
freshyill
In DC they might start doing a thing where they'll have lockers at Metro
stations, so you can pick up your groceries on the way home. There was a
Washington Post article from just a few days ago.

[http://www.washingtonpost.com/local/trafficandcommuting/too-...](http://www.washingtonpost.com/local/trafficandcommuting/too-
busy-to-shop-for-groceries-pick-them-up-at-your-metro-
station/2014/12/03/b4e0ac3c-7b07-11e4-9a27-6fdbc612bff8_story.html)

My Giant store has the Peapod curbside pickup although I've never used it or
Peapod in general.

------
bkeroack
There's actually a very important lesson here--one that has been confirmed for
me personally by speaking with some more experienced people in the industry.

Success in a startup is not _just_ about a good idea, great people and great
execution. It's also very much about timing. You can find lots of stories
about smart people trying to create amazing businesses five or ten years
before the world is ready for them.

~~~
lotharbot
You can further break down "the world is ready":

1) are customers ready for it? Will they see it as a weird idea that they'd
never spend money on, or as a quality of life improvement? Ten years ago I'd
have thought buying kitchen towels on the internet was a crazy idea when I can
drive 3 blocks to the store to get them; now I think it's crazy to take a trip
to the store for one thing when I can get a better selection and better prices
on amazon prime.

2) is the technology / infrastructure you need to implement it in place? Apps
related to local travel became much more viable when people started carrying
portable computers (with telephone functionality) everywhere they went. Niche
resale became much more viable when you could plug in to a pre-existing
marketplace (ebay, amazon) with an existing customer base, payment processing,
etc. so you don't have to spend big bucks developing those things yourself.

~~~
ghaff
I'd add a somewhat related #3: Do the underlying economics as they exist today
support a business based on that idea? [1] There are lots of things I'd jump
at spending some money on but not nearly enough money to cover the cost of
providing me with the service.

[1] Obviously, companies often do have some runway before turning a profit but
normally there needs to be a viable path to get there at some point.

------
CapitalistCartr
I think this reinforces the notion that ideas are fairly cheap; it's execution
that matters.

~~~
joshbaptiste
Looks like timing was the issue with the companies listed, Many times ideas
are sound, execution is solid but the audience just isn't ready for the actual
product in the current landscape.

~~~
aaronem
Well, for a lot of them, execution was crap too.

~~~
coldcode
Shipping 50lb bags of dog food at pets.com for free is still a bad idea.

~~~
jerf
"Shipping for free" is a slippery concept, since it just means that the cost
of shipping has been moved out of a line item called "shipping" into another
one. But there are certainly people making money today shipping big bags of
dog food for not much money. Amazon alone is full of them, to say nothing of
these new retailers starting up. (I'm curious what they expect to offer me
over Amazon, but that's a question for another article, I suppose.) It doesn't
seem to me it was a "bad idea" so much as "one whose time had not come yet".
Pets.com couldn't afford to set up Amazon-scale infrastructure for mere pet
food, but now, Amazon-scale infrastructure exists. Even if these new
businesses go under, the idea is frankly already proved to some extent, since
people are already doing it, and I wouldn't expect them to stop.

~~~
coldcode
Amazon also is clearly no making profit doing what they are doing either. They
can afford it due to the vast scale but for how long?

------
DigitalSea
People are often wrong when they speculate what caused the dot-com bubble bust
of the 90's. For some it was a matter of being too ahead of their time, but
for many, it was a case of irresponsible management and use of funds. The
whole lean startup concept was basically nonexistent.

I might have been relatively young back then, but seemed to me startups in the
90's went a little too overboard on advertising. Expensive Superbowl
advertisements, TV ads, radio and outlandish publicity stunts. Not to mention,
the ridiculous parties CEO's would throw. Look around, you can find countless
stories of 90's startups throwing lavish and expensive over the top parties
courtesy of VC money and high valuations.

A few of the commerce based ideas were ahead of their time. Sadly, the
Internet was still this unknown and unsafe looking entity to many consumers in
the 90s and early 00's. Not every startup failed though, some did make it
through to the other side, but quite a few failed.

I am concerned we are starting to see a repeat of the dot-com boom taking
place again. As history has shown, it tends to repeat itself.

~~~
blumentopf
I worked at an ISP in the late 90's which was bought up, together with several
other small ISPs. Before the acquisition it was a bunch of techies working
their asses off. After, dozens of non-technical staff came on board who all
got huge paychecks and a BMW, bossed the techies around in clueless Outlook 98
fullquote e-mails but contributed zero to the bottom line.

The money, in our case, came from a large north-european telco with deep
pockets. They turned a blind eye to the burn rate for almost 2 years before
pulling the plug.

I've heard of a German tech company hiring a philosopher, you know, just for
fun. On a superficial level, this might seem comparable to Google hiring Ken
Thompson, Guido van Rossum and tytso. In reality however these folks not only
boost Google's reputation among developers, they innovate and make a technical
contribution to the company. That precisely is the difference between 90's
dotcoms' thrift-spending habits and how companies work today. The article
misses that completely.

~~~
smacktoward
_> I've heard of a German tech company hiring a philosopher, you know, just
for fun._

Oh, there are American companies that do that too:
[http://www.newyorker.com/magazine/2014/11/17/crystal-
ball-3](http://www.newyorker.com/magazine/2014/11/17/crystal-ball-3)

------
debacle
Just because Google and Amazon are (newly) competing in a space doesn't mean
that space will ever be profitable.

~~~
onion2k
I think it's likely that the space will be profitable for Amazon and Google.
They work at the sorts of scales where you can make a decent business even
with a lifetime value of pennies for each customer. Doing a startup that
doesn't have that sort of scaling advantages is a _very_ different proposition
- anyone thinking that this is the same idea as Kozmo hasn't really thought
about it very hard.

------
Qworg
Interesting that they don't mention Peapod - it isn't Amazon, nor a SV darling
like Instacart, but they survived the dot-com and are still going strong.
Fantastic idea indeed.

~~~
techsupporter
Ah, Peapod. My last memory of Peapod is getting my final grocery delivery for
free because it got lost in the shuffle of them backing out of the Dallas/Fort
Worth market.

------
lhnz
Fantastic Ideas != Economically Viable Ideas

Pay close attention to the underlying costs of the implementation of your idea
and look for new technologies which you can use to enter a market with a
higher quality product/service at a reasonable price.

------
grimtrigger
Is there any reason to believe the modern day incarnations are more
sustainable then their dot-com counterparts? It certainly feels that way but
the article is very light on evidence.

~~~
TazeTSchnitzel
Online food delivery has worked for years and I believe is profitable, at
least in the UK.

~~~
pothibo
Unless I'm mistaken, Ocado is still not profitable even if it's been at it for
13 years.

~~~
pluma
There's an online shoe/fashion retailer in Germany (Zalando, because faux
Italian is the new dot-com) that's apparently following Amazon's "every sale
is a loss but we're making up for it in volume" model. They're ridiculously
successful (in terms of sales and market share) and often held up as an
example for successful tech companies.

I'm not entirely sure what their long term plan is, but I'm hoping this is
just an attempt to establish a monopoly that can then be exploited to turn the
operation into a profit.

~~~
andrioni
Zalando is already giving profits since Q2 2014.

~~~
pluma
Interesting. Is this in any way correlated to the change in legislature
regarding free returns? Many armchair economists were speculating that that
would be one of the biggest financial pain points.

------
fivedogit
Ideas are nothing. Timing and execution is everything. Just because something
might work in today's world (when it didn't before), doesn't make it a good
idea.

Marc Andreesen: "1/A thing I believe that few believe: Almost all Silicon
Valley startup ideas from qualified founders = great ideas. But some are too
early."

The whole tweetstorm is a good read.

[https://twitter.com/pmarca/status/502476823402270720](https://twitter.com/pmarca/status/502476823402270720)

------
lotsofmangos
I vaguely remember something called Boo.com that tried to sell t-shirts. From
what I recall, they warmed their offices by burning money in gold fireplaces
and insisted on traveling by elephant. Of course these days that kind of
behaviour is considered showy and inefficient and so the investor's cash is
now spent on social media campaigns instead, which is a much more direct
method of achieving the same result.

------
andyidsinga
problem with this post is this "THE WORLD IS READY TO CASH IN ON THE WORST
IDEAS OF THE ’90S."

I disagree with that. I was working on tablets in the late 90s, online chat
software too. Neither went anywhere. So "worst ideas" or too early or poorly
executed? ..probably mostly the latter two.

~~~
porsupah
Indeed, there are quite a few similar examples. Remember CUSeeMe, an early
VoIP app? Now all but forgotten outside the HN crowd, and yet Skype managed
quite well several years later.

One could argue the Newton falls into that category, coming simply too early
for pervasive (sometimes) high speed cellular data, where Palm/Handspring and
RIM fared so well - even if transiently - later on.

------
johngalt
You can outrun your customer base pretty quickly. Regardless of how good your
ideas and execution are, you are limited by how fast the status quo can
change.

------
inglor
The lesson here is that it's not about the idea it's about execution.

------
btreesOfSpring
there are plenty of good ideas, the hard part is the execution on those ideas.

its akin to music. there are a lot of good musicians but it is much harder to
put together a great band.

------
soyiuz
Ideas are cheap. Implementation is key.

