Pets.com was the poster child of dotcom stupidity. They raised $300 million in a 2000 public offering, threw gazillions into marketing (sock puppet anyone?), and promptly burned through all of their cash, shipping pet food at a loss. They had minimal revenues and no path to profitability. Turns out companies can’t survive forever selling products for a loss and continually raising capital. Who knew? eToys saw that and said, “hold my beer.” They had a market cap larger than Toys“R”Us, minimal revenues, enormous losses – and no skills. They were going to “disrupt” (because, who wasn’t?) toy retailing, but they forgot that retailing requires a tremendous amount of skill that nobody at the firm had. Like Pets.com, they went bankrupt shortly after their IPO. I was a loan officer doing loans at ground zero (SF Bay Area) of the dotcom boom, and I watched it all with both amusement and incredulity. There were dotcom millionaires everywhere conspicuously checking stock prices, and constantly dropping dotcom cliches to make sure everyone knew they were in the know… “first-mover-advantage,” “cap raise,” “network effect,” “web-enabled,” “B2B,” “B2C,” “monetize,” exit strategy,” “clicks and mortar…” I also knew about a thousand “angel investors,” including my yard guy, plumber, and car detailer. One of my favorite stories from the era, though, involved one of the hapless and skill-less dotcom CEOs from the era for whom one of my LOs did a loan. After his revenue-less company went bankrupt, he spent the next several years looking for a new job as a CEO because he was a CEO after all. I think, however, that he ended up settling for a job as a barista – where he no doubt tried to help his coffee shop “scale” and “get big fast.”Read More