Business Lessons From Winners and Losers of the Dot-Com Bubble

POV Magazine's 1999 list of the top 100 websites takes us back to a time when connecting to the Internet was noisy, slow, and dazzlingly new. Before Facebook. Before Wikipedia. Business, reference, and entertainment sites were popping up everywhere, to be indexed on Lycos and Yahoo! and fawned over by investors looking for the hot new thing. And then came the Internet's first great mass extinction—the rupture of the dot-com bubble in 2001.

The Internet is still relatively young, but business is business: Booms and busts tend to be cyclical, and tech is hot these days. So we took a long look at that Top 100 list from 1999. Which sites survived and thrived? Which were consumed by competitors? Which enterprises have evolved so much that they're almost totally different animals today? And what can investors learn by studying the e-commerce fossil record?

Of 1999's Top 100 sites, 40 are no longer around. Some were killed by the dot-com crash, others built their businesses on now-obsolete technology, and many just plugged along until their creators or audiences lost interest. Some of the biggest media and entertainment names from 1999 were bought by competitors or sidelined by legal issues, and we'll look at those in the next part of this series. In this first part, we'll look at some of the business sites that went extinct and examine why they didn't survive.

Survivors held onto their money and diversified their revenue streams.

Would-be blockbuster health website DrKoop.com (#34 on the POV list) and its investors learned this the hard way as the company went from IPO darling to the business morgue in just two and a half years, taking more than $88 million in investor funds and a long-term AOL content deal with it. With the name of the country's most respected Surgeon General and a huge IPO, DrKoop.com should have dominated the medical information niche.

But the company spent fast and relied on a single source of revenue—advertising, which presented at least the appearance of a conflict of interest. Surviving competitors like WebMD Health Corp. (NASDAQ: WBMD  ) have a more diverse income base that adds paid sponsorship and professional services for physicians, employers, and health plans to its advertising revenue.

Survivors evolved successfully with the environment—or changed environments.

Sometimes what looks like a world-beating technology is soon beaten by something better. Palm (#52) and Kodak (#18) were both knocked out by the rise of the smartphone. Palm kept producing PDAs for a shrinking customer base and tried unsuccessfully to get into the smartphone game; it was eventually bought by HP in 2010 and its products rebranded under the HP label. Today you won't find any PDAs for sale on HP's website. Smartphones and tablets have rendered them obsolete.

Kodak (NYSE: KODK  ) , on the other hand, may turn out to be a survivor. Long the dominant brand in film photography, Kodak in 1999 was a leader in digital photography for consumers, turning out cameras, printers, and portals to help people take, print, and share their photos. (For those of you who are too young to have ever seen camera film, let alone waited a week for your vacation pictures to come back from the lab, trust us: Digital cameras were truly revolutionary.) But there was no point in carrying—or purchasing—a separate camera once the iPhone and Android phones hit mass-market price points.

Rather than continue trying to compete in the consumer digital device market, Kodak declared bankruptcy in January 2012. The company has reemerged as an imaging, digital printing, and product-packaging provider to business customers.

A cool idea is not enough.

This sums up pretty much all the other extinct sites from POV's 1999 Top 100. From FasTV's (#73) film-clip collection to the build-your-own-online-radio-station ImagineRadio.com (#8), aggregators, artists, sports fans, creative writers, and comedians dropped out in droves as funds dried up, larger companies like Viacom snapped up smaller sites, and visitors moved on to the next new thing. Even the once-mighty HotWired.com (#49), Wired magazine's online site, was consumed by Conde Nast and left to fossilize as Wired Extra, which hasn't been updated since November 2012.

And POV Magazine, the source of our nifty list? Shuttered, like so many print magazines that were wiped out by the tidal wave of content online.

Up next: A look at the now-extinct media and entertainment sites that looked unstoppable in 1999—and the companies that consumed them.

Those companies didn't make it, but some are built to last.

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