Marketing the New Venture 237intellectual property of defunct dot-coms. For example, eToys, which is in bankruptcy,
has not been able to sell the proprietary management system it developed to guarantee
on-time delivery of over a million Christmas toys. The company spent $80 million on a
system that now appears to be worthless. Firms with billion-dollar valuations that spent
millions on Super Bowl advertising have been unable to recoup that investment. When
Petsmart.com bought Pets.com, it promptly junked the corporate icon sock puppet. The
brands, trademarks, and associations of failed dot-coms and other failed businesses are
not of much value to their former owners.
Technological resources are valuable in the start-up and running of e-commerce busi-
nesses. Indeed, many of these firms rely for their very existence on technological capa-
bilities. Electronic entrepreneurs who promise cutting-edge technology but cannot
deliver are doomed. One major technological advantage is a grasp of the effectiveness of
the firm’s Web presence. This is especially true in terms of Web advertising which is
increasingly expensive for start-ups, but also hard to evaluate. Street Story 6.4 describes
some new tools for e-entrepreneurs seeking to make their advertising more effective.
To review: The Internet companies’ obsession with financing and the amounts that
they raised were examples of misplaced energy in the long term. Financial endowments
are not critical resources, but financial management is. Organizational capabilities, intel-
lectual property, and up-to-the-minute technology are also sources of sustainable com-
petitive advantage.
What Have We Learned?
When the Internet bubble burst at the beginning of the twenty-first century, a Fortune
cover story discussed the lessons learned by e-entrepreneurs in their dot-com business
ventures.
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These are lessons that nascent Internet entrepreneurs can use to avoid the
errors of the Web pioneers:
- The Internet doesn’t change everything. It is not a disruptive technology, but one that
complements existing businesses. - If it doesn’t make sense, it doesn’t make cents. Businesses need to make profits. The
search for successful business models continues. - Time favors existing businesses. Many of the early start-ups taught important lessons
in what not to do. Dot-com investors paid for everyone’s education. - Making money is harder than it looks. Even B2B, which looked as if it couldn’t miss,
now has the same gloomy outlook as B2C ventures. It’s just not easy. - There is no such thing as “Internet time.” Things can change fast, and the Internet
helped us understand that, but too often “Internet time” meant leaping before
looking and was used to justify an absence of discipline. - “Branding” is not a strategy. Historically, most companies have grown organically
and developed a brand by producing high-quality products or services over time.
Instant branding—skipping the many years of fine service—doesn’t work. - Entrepreneurship cannot be systematized. “The idea that you can institutionalize the
creation of entrepreneurial ventures is bunk,” according to venture capitalist Bill
Unger. True. You must not follow the rules. You must break them. - Investors are not your customers. The ability to attract investors is different from the