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BUSINESS: INTERNET
The Dotcom Waste Land
A walk through the dotcom junkyard provides insightful
tales of frustration and hope. The bets are now on a new Internet era.
By Rohit Saran
 On
September 15, Anurag Chandra Gupta gave a quiet burial to yatraindia.com.
The death of his three-year-old travel portal had become imminent in November
2000 when a big venture capital fund suddenly slammed its doors on him.
If Gupta kept his ailing dotcom alive for eight months, it was because
he had spent a fortune-Rs 2 crore-on it. "I did everything to keep
yatraindia.com alive but the time had come to shut it, at least for the
time being," says a circumspect Gupta.
Call it a sobering experience or a head-splitting
hangover after the great dotcom party, Gupta's woes are shared by a growing
army of ex-dotcomers. Having popped up like mushrooms after a summer rain
last year, dotcoms are now being reduced to tombstones in the graveyard
of India's Internet business. Kabadibazaar.com, smartbahu.com, khuljasimsim.com,
indiarituals.com ... a new grave is added almost every week, each symbolising
dashed dreams and shattered schemes.
The quest for the Grail on the Net had blinded
grey-haired and greenhorns alike. A little over Rs 3,000 crore was invested
in Internet businesses in India between 1999 and 2000. In their dying
declarations, most ex-dotcomers have nuggets of wisdom to offer. Then
there are dotcoms that are alive but not kicking, waiting for some promise
of redemption. The mutations they have gone through to survive also hold
out lessons.
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DYING DECLARATION
Lessons from the dotcom crash
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The dotcom era is over but the Internet era is beginning.
The Internet is not a new business, it is just a new way of
doing business.
A business is viable online if it is viable offline.
The number of website hits is meaningless. What matters is the
number of paying consumers.
Services on Internet won't be free forever but they'll be cheaper
than offline services.
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The simplest and the most profound learning is
that the Internet isn't quite the gold mine a lot of people thought it
was. It is not even a business. It is just a new way of doing business.
That dispels the notion of Internet time-an idea propagated by early dotcomers
to emphasise that on the Internet decisions must always be taken at an
infinitely faster speed than in non-Internet businesses. The buzz: "In
the dotcom business, futurists become historians in a year." It turns
out now that the concept of Internet time wasn't as much an expression
of commercial reality as a confection of people with vested interest:
venture capitalists who wanted a quick and profitable exit from investment,
consultants who wanted to rush their clients into buying and some startups
who wanted to live up to hype like first mover advantage.
That triggered many dotcoms to spend an astronomically
high proportion of their funds on advertising even before their product
or services were ready. "The good part of the dotcom bust is that
spending on advertising has come down," says K. Vaitheeswaran, vice-president
of marketing with Fabmart, a Bangalore-based online store. Relatively
spartan in its promotional spending, Fabmart preferred low-key and sustained
advertising to a one-time advertising blitzkrieg. Thanks to which, it
has survived and thrived-so far. The Delhi-based content provider Netaphase
had a similar experience. When many content providers were hiring big
names on fat salaries and advertising madly just to please their investors,
Netaphase had to either "jump into the well after its competitors
by spending big or keep a low profile and stay steady". By design
and default it chose the second, and that is why it is still in business
while many of its rivals have folded up.
The end of the dotcom boom is actually the end
of the beginning. The dotcom era is over but the Internet era is just
getting started. An American investment banker clarifies the subtle difference
between the end and the beginning, "It's true that the Internet will
change everything. It's not true that everything will change." So
thousands of birthday greetings are sent via the Net every day but people
still celebrate birthdays. In effect, in times to come there will be no
online businesses and offline businesses. Most businesses will be a mix
of both. In addition to taking home-delivery orders on the Net, Fabmart
has also started taking orders on the phone-something that general stores
have been doing for years.
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