Why Some of the Dot Com Era's Worst Busts Are Now Being Funded

No, not sock puppets. Sock puppets were not a good idea.

But same day delivery, fresh groceries at home, internet based currencies, cheap hardware running open-source operating systems?

You may or may not believe in the future prospects of any of those concepts, but, as the following article explains, all of them are currently being funded, some with considerable success.

The reasons why they failed then and may be succeeding now have little to do with the people who thought them up and attempted to bring them to life nor with the efficacy of the concepts themselves. VCs say they invest in people, not products, but the reality is that a crucial part of their function is monetizing the art of the possible. And a key ingredient in determining that future value proposition is timing.

In these cases and many like them, there was almost always a missing technological ingredient that made the idea somewhat less than practicable then, but whose presence makes it logical now. The biggest issue may be that convenience was, and is, an essential determinant of success. Advances in speed, accuracy and ease of use now give these services the requisite urgency and lack of effort that enable the growth to scale not previously possible. Dotcommers swore that the net would change everything. What they may not have realized was that that would continue to be true, especially for the net itself. JL

Robert McMillan reports in Wired:

Innovation is built on the shoulders of failure, and the line between the world’s biggest success and the world’s biggest flop is a matter of timing or logistics or tools or infrastructure or luck, or—high flying startups should take to heart—scope of ambition.
If you had to pick one really annoying sock puppet to represent the imploded excesses of the dot-com boom, it would be the microphone-wielding mascot of online pet food retailer Pets.com.
For a few months back in the late 1990s, he was everywhere—the Super Bowl, Live with Regis and Kathy Lee—and then he was gone, sucked into a black hole of dot-com debt.
But the bust was so big and so widespread, there are so many deliciously ideal symbols for this dark time in the history of the internet, a period when irrational exuberance trumped sound business decisions. Fifteen years on, people—particularly people in Silicon Valley—still talk about these epic failures. In addition to Pets.com, there was WebVan, Kozmo.com, and Flooz.
The irony is that nowadays, they’re all very good ideas.

The world is ready to cash in on the worst ideas of the ’90s.

Now that the internet has become a much bigger part of our lives, now that we have mobile phones that make using the net so much easier, now that the Googles and the Amazons have built the digital infrastructure needed to support online services on a massive scale, now that a new breed of coding tools has made it easier for people to turn their business plans into reality, now that Amazon and others have streamlined the shipping infrastructure needed to inexpensively get stuff to your door, now that we’ve shed at least some of that irrational exuberance, the world is ready to cash in on the worst ideas of the ’90s.
WebVan burned through $800 million trying to deliver fresh groceries to your door, and today, we have Amazon Fresh and Instacart, which are doing exactly the same thing—and doing it well. People laughed when Kozmo flamed out in 1998, but today, Amazon and Google are duking it out to provide same-day shopping delivery. A year ago, Kozmo.com even told WIRED it was making a comeback “in the near future.”
We’re still waiting for Kozmo 2.0. But there’s also good reason to applaud the folks behind Flooz.com. They wanted to create their own internet-based currency, and though Flooz was a flop, bitcoin has now shown that digital currency can play huge role in the modern world.
Even the Pets.com idea is looking mighty good. The basic notion that people wanted to buy pet food online and have it delivered to their homes turns out to be a sound one. Market research firm IBISWorld pegs it at a $3 billion market and a new generation of companies—Chewy.com, Petflow.com, and Wag.com to name a few—all making a go of it.

People laughed when Kozmo flamed out, but today, Amazon and Google are duking it out to provide same-day shopping delivery.

Still not convinced? It’s not just the failed dot-coms that now look good. Take VA Linux, which spiraled to its death after a 1999 IPO provided the biggest first-day boost in NASDAQ history. As it turns out, VA had the right idea. Cheap hardware running the open source Linux operating system eventually changed the computer world. That’s what Google and Amazon and Facebook run on today.
It’s just that the beneficiaries of this changes weren’t American startups like VA. It was no-name hardware manufacturers in Asia.
The lesson here is that innovation is built on the shoulders of failure, and sometimes, the line between the world’s biggest success and the world’s biggest flop is a matter of timing or logistics or tools or infrastructure or luck, or—and here’s the lesson that today’s high flying startups should take to heart—scope of ambition.
Maybe if Pets.com had kept its head down and worked harder on getting the dog food to our doors than assaulting U.S. airwaves with ads like the one below, they would have made it.