The tech bubble of the late ’90s produced a number of flash-in-the-pan internet companies that raised millions — often in public offerings — only to flame out a year or two later.
There are surprising similarities between some of today’s hottest tech companies and those dot-com predecessors.
Was the first generation too early? Or are today’s companies heading for a similar fate?
If you want some help cleaning your apartment, getting groceries delivered, or if you're in need of a handyman, you can hire a helper from TaskRabbit to help you get it done.
Founded in 1999 and funded by VC firms including WaldenVC, MyLackey.com was similar to the present-day iteration of TaskRabbit: you could hire someone to run your errands for you. Mylackey.com signed deals with local businesses to carry out the tasks. Sixteen months after launching, MyLackey.com shut down in October 2000.
Napster was a peer-to-peer file sharing service that let users exchange MP3 files. However, since it hosted copyrighted music, Napster ran into legal troubles and eventually shut down and sold to software company Roxio in 2001. It seems companies like Spotify have learned from Napster — they work with record labels and artists to allow for legal music streaming.
Webvan and Kozmo offered instant delivery, similar to Amazon Fresh, Instacart, and other on-demand services today.
Both Webvan and Kozmo were dot-com era delivery startups. Webvan promised 30-minute grocery delivery, while Kozmo delivered Starbucks coffee, magazines, music, and more. Webvan was founded in 1999, raised $US400 million from Softbank, Sequoia Capital, and Goldman Sachs, and went bankrupt two years later. Similarly, Kozmo launched in 1998, raising $US280 million from Softbank, Flatiron Partners, Amazon, and Starbucks before eventually going out of business in 2001. Although Kozmo filed an IPO, it never went public. In a postmortem in April 2011, Forbes referred to Kozmo as 'a bellwether for lunacy.'
Instacart is 2015's answer to Webvan. You can use the service to get groceries delivered on-demand. Instacart has raised $US275 million and is valued at $US2 billion. Fresh Direct, another grocery delivery service, has raised $US91 million. Both Amazon and Google have their own same-day grocery delivery services, too: Google Express and Amazon Prime Pantry.
Before there was bitcoin, a venture-backed startup called Flooz.com wanted to create a new kind of currency for online retailers. Launched in February 1999 and famously promoted on TV by Whoopi Goldberg, Flooz let businesses give customers Flooz credits, which could then be used to purchase goods at participating online retailers. However, Flooz had a hard time signing up both businesses and customers. The company went under in August 2001.
It's been about 15 years since Flooz. Now, bitcoin startups are huge. 21, founded by Andreessen Horowitz VC Balaji Srinivasan, has announced a product in the form of an embeddable chip called the BitShare chip that lets you 'mine' bitcoin in the background of your phone. 21 has raised $US121 million from Andreessen Horowitz, Peter Thiel, and Khosla Ventures. Early in 2015, bitcoin exchange startup Coinbase closed a $US75 million funding round -- the largest ever for the industry at the time -- at a $US400 million valuation. It then went on to launch the first US-based bitcoin exchange.
Before YouTube, Mark Cuban had a site called Broadcast.com, which made him rich when Yahoo bought it.
Broadcast.com, an internet audio and video streaming startup co-founded by Mark Cuban, sold to Yahoo in 1999 for $US5.7 billion. It made billionaires of its cofounders, who sold the company just before the dot-com era bubble burst. Once Yahoo acquired Broadcast.com, Yahoo split up its services, launching Yahoo Platinum for video content and Yahoo Launchcast for music content.
Today, streaming is dominated by companies like Hulu, YouTube, and Netflix. A number of smaller startups, like Vessel, also lets users stream multimedia content. Even Spotify is getting in on the action by allowing users to watch video and listen to podcasts from companies like Comedy Central, the BBC, and ESPN.
Boo.com burned through $135 million in VC funding in a year and a half. Now, there are online fashion stores like Gilt Groupe and Fab.
British online fashion retailer Boo.com launched in 1999, after several delays. In 18 months, the company burned through $US135 million in venture capital funding. In May 2000, the company was liquidated, its remaining assets selling for less than $US2 million.
Modern fashion-commerce companies like Gilt Groupe and Fab have experienced similar turbulence. Fab in particular burned $US200 million of the $US336 million it had raised. Since then, its remnants have been sold to PCH Innovations.
Way before Mark Zuckerberg ever thought about launching Facebook, two Cornell kids started TheGlobe.com.
Cornell students Stephan Paternot and Todd Krizelman founded TheGlobe.com in 1994, when Facebook was just a twinkle in Mark Zuckerberg's eye. When the company went public in 1998, it had the biggest first-day gain of any IPO in history at the time, making its 23-year-old founders millionaires. But its stock collapsed following the dotcom bubble, and the company eventually folded in 2008.
Facebook is unquestionably one of the biggest success stories of the modern web era, with a $US269.8 billion market cap
and a monthly active userbase of 1.49 billion. Facebook owns four of the five largest brands in social media and messaging.
Mercata was a group-buying website funded by Microsoft cofounder Paul Allen that preceded daily deals sites like Groupon.
Mercata let users buy items in bulk to save money, but it withdrew its $US100 million IPO in 2001 and shut down. In the end, Mercata couldn't provide better deals than other websites.'The difficulty that Mercata faced was that it wasn't able to capture great discounts and, in fact, the search bots like Ask Jeeves turned up better prices than Mercata,' Andrew Bartles, senior e-commerce analyst told CNET at the time.
A number of daily-deals websites have emerged since Mercata's demise. Groupon went public in 2011, raising $US700 million at a $US12.5 billion market cap. The company missed Wall Street expectations several times, and shareholders forced CEO Andrew Mason to step down. Today, cofounder Eric Lefkofsky is the company's CEO. Its current market cap is $US2.4 billion. LivingSocial, another dailty deals website, has raised almost a billion dollars in venture capital funding, but it's laid off hundreds of people and is now half the size it used to be.
Pet goods marketplace Pets.com made $300 million in VC funding vanish when it went under. But sites for pet lovers are back!
Pets.com, a pet goods and supplies marketplace, is one of the more notorious dotcom era tech failures. The company with the adorable sock puppet mascot launched in August 1998 and went public in February 2000. Its IPO price, $US11 a share, dwindled to a mere $US0.19 when the company announced its liquidation in November 2000. When the company folded, the $US300 million in venture capital funding it had raised also disappeared.
Toady, startup Barkbox caters to dog owners, asking them to pay a subscription in exchange for monthly dog toys and treats. It's raised $US21 million in VC funding. There are also sites like DogVacay ($US47 million in funding) and Rover.com ($US51 million) that help match dogsitters with dog owners.
Business Insider Emails & Alerts
Site highlights each day to your inbox.