Another comment on the videos- We all have fairly disturbing taste...
"Dot Bomb"
Joseph D'Hippolito's article focuses on the rise and fall of the dotcom economy wave, why it happened, and what can be learned from the early internet failures of the mid-nineties. As D'Hippolito concisely puts it, "The supersonic growth of dotcom businesses—and their equally supersonic collapse—is one of the most spectacular developments in technological and commercial history."
Pets.com, the feature of two other articles this weeks, is the symbol of the dotcom disaster. The monitary loss quoted by D'hippolito is substantial, as I understood it somewhere near 62 million dollars. How did this happen? According to the article, it was the ability for entrepeuners to start business without any assets. Ideas had investors, money thrown at them, and were off the ground trying to run all without a business plan or competent management. Ralph Oliva, executive director of the Institute for the Study of Business Markets and a marketing professor at Penn State University said, "“An entrepreneur should not get money until that idea is translated into a great business design. If all venture capitalists are doing is funding ideas and the business infrastructure hasn’t been put in place, then a very important part of the capitalist system has broken down.”
Dotcom economy failed for the very reason that Internet succeeds, an extension of net neutrality. Anybody with computer experience could feasibly open their own online business, without economic training, and with the correct greedy corporate connections without even their own assets to risk in the venture.
What can be learned from this failure? A digital Market is still a market, business theory works the same in the digital world as in the real world. Though the internet economy failed in the nineties, it will revive as all economies eventually revive, "Once the current market anomalies are over, I feel there will be an incredible demand for people who really know how to coach in this converging economy,” Oliva says.
Before the readings for this week, I hadn't understand the true disaster of the dotcom economy. Most of all, why did these big businesses not see the holes and why did they keep throwing money at a non-returning venture? I'm not sure if it was greed, or hope.
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This not a response but an abstract. I cannot post in normal fashion due to a series of lingering problems I am having with this website.
Summary
In the internet article, "21st Century Markets: From Places to Spaces," Fingar, Kumar, and Sharma (I will use Fingar) explore the impact the internet will have on the future of business, commerce, and economies. Fingar's argument largely rests on the notion that the internet is and will continue to change the way business is done from the micro- to macro-levels. Fingar desribes this as a change from "Market Places" to "Market Spaces." The idea behind these two concepts is quite simple. That is the tangible "Market Place"- the place where an individual personally goes to consume product is and will convert(ing) to a "Market Space" - a "place" on the internet ("space") that will provide everything from a visual "catalog" products that a consumer is interested in to the final stages of a buyer/seller's relationship: payment and customer care. Transferring the physical, more costly "place," for the more efficient, less costly "space."
"Internet Markets (I-Market)," as Fingar aptly describes these collective spaces, are highly efficient. To develop an effective web-site for e-Commerce a company should follow an adapted business model for selling product over the internet (catalog to purchase). If this is done, and the company develops an effective, user-friendly web-site, Fingar posits that the company would not only reduce costs by eliminating many variables (stores, print catalogs, etc.), but they would also be able to appeal to a much larger audience (the world). Companies with effective e-Commerce web-sties no longer have to be physically present in a location to attract business. Therefore as Fingar states, "I-Markets make for interesting investment propositions in that they provide double leverage. They can increase revenues and decrease costs, simultaneously."
Fingar details another very important aspect to this discussion with the concept of "Cybermediaries - Digital Brokers." In Fingar's word's, "The digital broker is a cybermediary who adds value to and mediates between buyers and sellers." Think stock-broker around this concept. Think about a web-site that manages the aggregate supply of a certain product from every constituent supplier by listing all the prices from each. Then think of this web-site giving the ability to the consumer to decide which is the best option (most often this will be the lowest price). And this is the most important change in the I-Market revolution- the consumer's ability to choose amongst all possible suppliers (perfect competition amongst suppliers). But businesses are not simply doing business with consumers of good and services, they are also doing business with other businesses.
Business to business e-Commerce is a much larger portion of internet business monetarily (as of 1999). But Fingar explains that there has not been much change from the way businesses traded with each other before the internet to the way they do over the internet. The venue for communication and business has simply made a change and there are no dynamics of business to business relations that have evolved.
Fingar goes on to discuss effective business models for e-Commerce and how to develop successful e-Commerce web-sites, but does not implement any new pertinent information.
Thoughts
What Elmer-DeWitt, Heilemann, Jackson, Wolverton, and D'Hippolito, along with the "E-Failure"-cemetary are getting at is that e-Commerce and business of the internet is not as simple as creating. D'Hippolito and Elmer-Dewitt discuss the frantic rush of investors and entrepenuers that believed in the enormous potential of the internet. The potential is indeed there, but as Fingar suggests there needs to be a sound, effective business model behind e-Commerce websites.
The Pets.com case is an extreme example of the fallout that occured after the internet explosion. As the Musuem of E-Failure documents there are many examples of the same thing. But what is learned from all of this?
Fingar's position is that business is still as tricky on the internet as it is in the real world.
E-Commerce is possible and potentially awesome, that is obviouse, but like Fingar I believe that businesses cannot walk into the room and ask,
"Now what? Where's the money?"
The creator of Amazon, Jeff Bezos discusses internet business potential and warns that a business must be ready to take on a large influx of consumers and be ready to grow. This seems to be a mistake given the multiple fatalities. Bezos has a distorted grasp of success on the internet because he has had tremendous success, but it was not because he got lucky and "found" the money.
He had a sound, effective, and creative business model that allowed for growth and expansion.
I cannot speak to other business models, but what can be gleaned from this information is the idea of understanding your business and who is buying- knowing your audience.
Although many businesses could sell over the internet, they do not. They don't because they don't know how to approach their customers over the internet. They don't because they don't want to fail. Cowardly, but understandable. This seems to be the true litmus for success over the internet. The potential for the internet is limitless, but because companies fail on it we know it is not automatic. Therefore a crux to the situation must be identified.
Catering to your customer in the correct way is the hinge on which success and failure swings in the internet world. Amazon's success can be given to the web-sites user-friendliness, while Pet's failures can be given to its lack of reasoning. That is consumers failed understand the benefit of using pets, "additionally, the e-tail pet stores have not offered a compelling reason to shop online. Although delivering pet food and supplies directly to consumers is a convenience, that benefit is outweighed by the fact that the consumer has to wait days to receive their orders, Stamski said. Considering that pet food is available at just about any neighborhood grocery, few people have a reason to shop online, he said." Amazon does not have this problem, people understand perfectly well the reason to buy from this website and do so. All internet sites cannot boast the same popularity.
The internet and internet-markets have enormouse potential, but in realising those potentials businesses must carefully analyze the internet landscape and their product's potential on the internet and in the internet-markets.
That is also something that puzzled me... why did they keep putting money into these businesses? They had to have known at some point that what they were doing wasn't the best idea. I'm sure more could have pulled out a lot sooner than they did. I'm not sure if it was greed or hope. Maybe just stupidity.
I think that this article touched on a very important subject, and that is the idea that people without any assets, and without any prior experience being capable of opening a business because of the internet. This brings me back to an article we read much earlier in the semester, it talked about how soon everyone will have either written their own song, their own book, made their own movie or video, etc. And I posed the question, I asked if this were really good for society and for humanity in general, if everyone is capable of doing what everyone else is doing. I believe that it is not good, to give people the power to do whatever it is they "think" they can do. Here happens to be a group of cases that backs up my argument. We have people of all kinds of educational backgrounds, starting up business without any experience, and most importantly, without any business plan. Millions of dollars have been lost, because people with a good idea think they have it made. We just aren't cut out to all do the same things, everything that everyone else is doing. This is why we have professionals in our society.
This article scared me, especially the following passage:
“More and more technical people are being looked on as business people,” says Dan Greenberg, founder and president of The Allegiance Group, an IT consulting and staffing firm. “Prospective employers are looking for technical people who are going to be able to understand the business and communicate with higher management. They’re looking for people who can convert the needs of the company into information technology.”
There is a reason why I did not choose to get a business degree. I think that employers keep looking for the quentisential worker, who does their job, and when the network goes down, they fix that, and when an important proposal for a client comes up, Jack O. A. Trades can take care of that as well. This is an unrealistic expectation. Our society has forced us to become specialist. There are people who are competent in a few fields, but they are not the norm. In order to keep up with everything, you would have to spend all your free time researching the up and coming trends in different industries.
I work out at Micron, and have realized that a job will eat you up if you let it. My boss has told me of multiple times when he was required to be at work every day for a month straight, because he is in leadership. If he wasn't willing to do that, he was at risk of losing his job. I realize that this isn't the case everywhere, but I know it is at Micron. In fact, a student just yesterday told me that her husband had one day off in the past three weeks. When I asked where he worked, she said Micron.
I have no desire to be a buisness person. I don't think that the corporate world would be better if everyone was a business person. I think more money could be made, but I highly doubt that people would be happier in their jobs. People need a balance of activities, not only within the workplace, but outside of it as well. Work should not be central to life, in my opinion. I work to live, not live to work.\
John
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