To give you an idea how totally uncool it is these days to be a dot-com, take a look at Richard Hanks' business card. Six months ago it listed the company's name as "MyAssociation.com." Now it's just MyAssociation.
"We dropped the dot-com when it became bad karma," explains Hanks, president and chief executive officer of the Utah-based "vertical service provider."
Less than a year ago, everybody wanted to be a dot-com or invest in a dot-com or open a latte shop next to a dot-com. Those were the days when the first thing one Utah County dot-com did after it raised venture capital funds was buy Utah Jazz courtside season tickets (tickets it has been trying to sell for the past couple months now that its resources have dwindled).
Utah's dot-coms range from successful marquee companies like Flipdog.com and MyFamily.com to at-home dot-coms such as sweet-annies.com. (elaborate copper cookie cutters) and thelearningcalendar.com (a mom-and-daughter dot-com that provides a historical site for kids). For every two Utah dot-coms that are still alive, however, another has failed, estimates Richard Nelson, president and chief executive officer of the Utah Information Technology Association.
As the days of wine and rose-colored glasses come to an end for dot-coms nationwide (no more hundred-thousand-dollar launch parties in Silicon Valley), tracking dot-com failures has become something of a sport. Online there's dotcomdoom.com, dotcomdeathwatch.com and TheStandard.com's "flop tracker" and "layoff tracker." None of these keep state-by-state statistics, but Brad Bertoch, president of the Wayne Brown Institute, guesses a thousand dot-commers have been laid off in Utah. That doesn't count the mom-and-pop dot-coms that have quietly closed up shop.
But there's nobody really keeping score of either the failures or the total numbers. The Economic Development Corporation of Utah has a list of current dot-coms, but it hasn't been updated in a couple of months — and that's geologic time in today's tech world.
Citybob.com is on the list, for example, but Robert Augat has already closed down that site and opened another one (2002rentalhomes.com, a site for Utahns eager to lease out their houses during the Olympics). Thinkhuge.com is on the list, but it's gone now, too, joining the ranks of high-profile flops such as ysource.com and pointclick.com.
"There are companies on the verge of failing," notes former Thinkhuge executive Daniel Ray. "Any company not generating money right now is not going to make it. And these are companies that have (already) raised 30, 40, 50 million dollars" in venture capital funds.
"I'd be willing to bet no one is thriving," says Don Owens, president and CEO of click4staff.com in Farmington about the bigger dot-coms. But some companies, such as his online temp help provider for the health industry, are holding their own and sometimes actually turning a profit.
"We had a good business model and not a lot of overhead that put us at risk," he says. "We took a very conservative approach."
The dot-coms that have succeeded, says Tyler Thatcher, vice president of corporate finance at Campus Pipeline, have common elements: they hired an experienced management team and had a solid business plan that included an actual source of revenue that did not just amount to selling banner ads.
Advertising has turned out not to be a moneymaker on the Web. People "were just trying to get eyeballs," says Kent Madsen, a partner with Wasatch Venture Fund. "The presumption was that when they got the eyeballs they could monetize that. But it proved to be more difficult than people expected."
Successful dot-coms have figured out other ways to make money. MyFamily.com (which moved its official headquarters to San Francisco but still has more than half its employees in Provo) charges users a subscription fee to access its genealogy data bases.
MyAssociation sells online technology to nonprofit groups to help them manage their members and collaborate with other nonprofits. The company also prides itself on having "deep vertical experience" (managers, in other words, who have actually had other management jobs).
"Our average age is 39, which is unheard of in the dot-com world," says CEO Hanks, who came to MyAssociation from Marriott International.
The successful companies also have been cautious, says Thatcher. At Campus Pipeline (considered a dot-com by some observers but not by the company itself), "we never let ourselves get caught up in the giddiness of the era and spend like drunken sailors," he says. Yes, the company has a miniature golf course in its headquarters in the Salt Lake Hardware building, but the course only cost $300. The company raised $25 million in 1999 and another $55 million last spring — and still has $45 million left, Thatcher says.
Getting venture capital funds isn't the slam dunk it was in 1998 and 1999. In those heady days entrepreneurs were getting funding if they wrote their business plan on the proverbial napkin, says Evelyn Rodriguez, executive in residence at the School of Business at Weber State University. "Investors thought they would get left out, and that's why there wasn't much due diligence."
"There's money out there, but right now at least, if there's a dot-com on the end of the name, or an 'i' or an 'e' in front of the name, people are pretty scared of it," says Kent Bowman, office managing partner for the accounting firm Arthur Anderson.
"I think there's a huge push back in the venture community, in the same way there was manic investment 18 months ago," agrees Jim Dreyfous of Utah Ventures. His company is more likely to fund biotech or infrastructure technology companies (the ones that make the Internet work faster and better). The unfortunate thing, says Dreyfous, is that "there are some good businesses out there that won't get funded."
Meanwhile, as dot-coms come, go and hang on, a few are actually profiting from the upheaval. Utah-based Overstock.com sells excess inventory online. And these days 20 percent of its merchandise is the "second-hand iron" and other odds and ends from failed dot-coms.
E-mail: jarvik@desnews.com