Retailers Put All Their Grenades in One Basket Full Metal Bonnet by Erik Baard March 4th, 2003 1:00 PM

“A lighthearted and fun gift,” says one merchant.

While Pentagon war planners may be gunning for an attack on Iraq by mid March, heavily armed soldiers have already quietly seized a strategic position: your Easter basket. National retailers like Kmart and Walgreens have stocked their shelves with baskets in which the traditional chocolate rabbit centerpiece has been displaced by plastic military action figures and their make-believe lethal paraphernalia. Tri-state Rite Aid, Genovese, and Wal-Mart stores promise their martial Easter baskets will arrive soon.

At the Astor Place Kmart, the encampment is on display just inside the main entrance. A camouflaged sandy-haired soldier with an American-flag arm patch stands alert in a teal, pink, and yellow basket beneath a pretty green-and-purple bow. Within a doll-arm’s reach are a machine gun, rifle, hand grenade, large knife, pistol, and round of ammunition. In the next basket a buzz-cut blond with a snazzy dress uniform hawks over homeland security, an American eagle shield on his arm, and a machine gun, pistol, Bowie knife, two grenades, truncheon, and handcuffs at the ready.

One must hunt a little harder to find the Easter sniper at Walgreens, but what lies in wait among the bunnies and chicks there is perhaps even more surreal. The Super Wrriors (sic) Battle Set and Placekeepers (sic) Military Men Play Set bristle with toy assault rifles and machine guns, tanks, troop transports, bomber planes, commanded by armored men with shaved heads and sunglasses. The assortment also includes a space-age ray gun and other imaginary hardware for orbital combat. Packets of jellybeans are tossed in as if an afterthought, nestled in the cellophane underbrush like anti-personnel mines.

Not surprisingly, the merger of religious observance and jingoistic lust sparked the ire of Christian leaders. Bishop George Packard, who oversees spiritual care for Episcopalian members of the armed services, worries about practical issues. He’s concerned about creating a backlash against the military, and questions the message sent to Muslims by the melding of a Christian holiday with images of war.

The products themselves, Packard says, are “really, really bizarre. It’s a crass embrace of the far end of a range of options for parents to provide their kids. Easter baskets have been deteriorating for a long time, but they’ve really gone over the edge. I am so disturbed, I am so confounded by this bad taste.”

Other Christian groups agree. Dr. Richard Land, president of the conservative Southern Baptist Convention commission on ethics and religious liberty, says, “Well, of course, it certainly would be a jarring note for the celebration of Easter. I certainly wouldn’t buy one for my children, when my children were small.”

The religious leaders noted that the eggs, bunnies, and chicks so intimately associated with the holiday are also unrelated to the narrative of Jesus. They are instead the trappings of Ostara (also known as Eostra), a Teutonic goddess of spring, fertility, and the dawn, who also lends her name to estrogen and the East.

But guns would seem to be at odds with that convergent pagan and Christian spirit of renewal. The juxtaposition is an affront to some soldiers, too. “I call that, myself, a pretty stupid insult and a slap at a religious observance,” says Bruce Zielsdorf, who served 23 years in the air force and is now a spokesperson for the army in New York City. “First they commercialize one of the holiest days of the Christian calendar, and now this? It sounds like some vendor threw some stuff up on a shelf to see what would sell. I can assure you that we were not consulted on any decision to make any such Easter baskets.”

Retailers went on the defensive. “There was no intention on our part to offer up a violent Easter basket. We’re very conscious of what will and what will not offend our customers. It was meant to be a lighthearted and fun gift,” says Kmart spokesperson Abigail Jacobs. “It’s in my opinion a harmless toy included in an Easter basket.”

The reaction to a Voice query at Walgreens contrasted sharply, with company representatives retreating instead of digging in. “Going forward next year, we don’t plan to have Easter baskets with toy soldiers or a military theme. The thinking on these Easter baskets was more toy-related and we didn’t really think about it otherwise,” says Walgreens spokesperson Carol Hively. “We apologize to anybody who is offended or felt that this was inappropriate.”

That’s not enough for Bishop Packard. “Well, isn’t that nice? What about this season? This is when it really counts,” he says. “Kids are eavesdropping on the talk of war and get enveloped in its trauma.”

The armored baskets are only the latest combat-themed toy to hit the shelves. Hasbro’s G.I. Joe is a perennial favorite that’s surged 46 percent amid the war fever, and new ones like Tora Bora “Ted” are still being rolled out by other companies. In the current climate, the plastic soldiers allow children to “role-play out their feelings about war,” says toy industry analyst Reyne Rice of the NPD Group.

Easter provides a way for makers of generic troops to capitalize on the trend. Unlike superhero dolls, war toys don’t come with costly trademarks attached. That lowers the bar to entry for small manufacturers, today typically Chinese. That industry has followed confectioners to transform Easter into the second-largest selling season, Rice says. “Maybe they are trying to promote products in another way, to draw attention to them. Obviously this isn’t the kind of attention they intended,” she says. Kmart’s basket supplier, Megatoys, didn’t return calls.

Most toy-filled baskets contain items like sandbox goodies and cuddly dolls, and this isn’t the first time the toy soldiers have made an appearance. This year, though, the action figures seem to have more prominent shelf positions at the two downtown Kmart and Walgreens stores. Hively says they were particularly strong sellers. Walgreens’ supplier, Wondertreats, justifies its product as the result of careful market analysis. “We don’t determine the mix [of toys]. It’s determined by what the consumers want. We talk to kids and watch kids in stores,” explains Greg Hall, owner of Wondertreats. “They’re exposed to the violence and blood that sells newspapers. We don’t create that, we’re just responding to what customers want.”

Such toys are, however, a frequent focus of children’s advocacy groups like the Lion & Lamb Project, which during the Christmas season highlighted another toy, the Military Forward Command Post, made by Ever Sparkle Industrial, that seemed to cross culture lines in an unsettling way. The Web site for Kay-Bee Toy Stores describes it as “a lifelike replica of a real battlefield headquarter. . . . Two-tiered and loaded with realistic weapons, accessories, furniture and equipment, this set is ready for action.” This “battle-worn playset,” also carried for the holiday season by Kmart, Toys “R” Us and Amazon.com, looks like a dollhouse but has been gutted, torched, and bullet-pocked. A similar toy offered by Hobbylinc.com features a bombed-out farmhouse.

“Parents say, ‘Oh, kids know it’s fantasy,’ and then they want to tell their kids to believe in Santa and the Easter Bunny,” observes Lion & Lamb director Daphne White. “You can’t have it both ways. To market war as something fun and to play around with is sending them a very dangerous message.”

AOL Invests in Amazon, Expands Marketing Pact

SEATTLE (Reuters) – AOL Time Warner Inc. (NYSE:AOL – news) said Monday it made a $100 million equity investment in Amazon.com (NasdaqNM:AMZN – news) and expanded a multi-year marketing pact.

The pact is aimed at joining Amazon.com’s online retail services with AOL’s shopping channels and technology, the companies said in a joint statement. It expands a deal first struck in 1997. Some of the fruits of the pact will be seen in the 2002 holiday shopping season.

Amazon.com will also promote AOL as its exclusive Internet service provider, allowing its customers to download the service from various areas across the online retailer’s sites.

The two companies will also work together on future e-commerce initiatives and extend the alliance internationally.

Shares of AOL closed down nearly 3 percent, or $1.31, at $43 before the news. Shares of Amazon.com closed down 5.6 percent, or 95 cents, at $16.03.

Sunday, March 4, 2001

Workers Who Survive Layoffs Often Share Certain Traits

By SARAH HALE, Times Staff Writer

     Am I a keeper or a goner?

     That is the question Edward, an engineer for a multibillion-dollar company, asked himself when his employer announced last fall that his close-knit research unit was going to be cut.

     He had worked with the manufacturing company for 25 years and was counting on an added pension bonus when he turned 50 in a few years. He didn’t want to leave.

     Edward and his co-workers began an involuntary, workplace version of “Survivor.” Instead of the $1-million jackpot 16 castaways are fighting for on CBS’ staged, unscripted series, the prize was a coveted position at another unit of the company.

     As the number of layoffs at U.S. companies continues to soar–totaling more than 275,000 jobs since December–many workers are being forced to play this game. In the meantime, a resounding “Do I have what it takes?” lingers in the back of their minds. Who is the best and the brightest?

     Layoffs are hitting every segment of the economy, experts say, so no one is safe. Just two weeks ago, Polaroid Corp. and Samsonite Corp. each said they plan to cut several hundred jobs. SCI Systems Inc., an electronics contract manufacturer, said last week that it plans to cut about 3,800 jobs. Even officials at Cisco Systems, a leading technology company, noted that layoffs are possible, an action the company had vowed to avoid. Auto maker DaimlerChrysler, Amazon.com and media giant AOL Time Warner also have announced job cuts in recent months.

     Edward, who asked that his full name and company name not be used, was lucky. Because of his experience heading big projects, he was offered a job in a different department in the company. Although Edward recently started his new position, many of his former co-workers are jobless.

     “For a long time, we didn’t know what was going on,” Edward said. “That’s what hurt the most.”

     Edward’s ability to use his experience and skills in a new position pushed his name to the top of the list. That kind of flexibility is essential for surviving a downsizing, workplace experts say.

     Eric Rolfe Greenberg, director of management studies for the American Management Assn., said mass layoffs–those in which a company fires 50 or more employees–aren’t about choosing the good guy over the bad guy.

     Layoffs are about finding employees with the skills needed to handle two or three times more work. These employees can easily pick up the extra workload that builds after co-workers leave. Employees who can be described as multi-specialists or as able to multi-task are automatically considered more valuable, Greenberg said.

     “These employees are considered gold-collar workers,” he said, adding that employees should consider themselves nonstop students, taking advantage of free training programs and seminars.

     Bill Price, a spokesman with Lucent Technologies Inc., agreed. Lucent, a communications equipment maker, said a month ago that it plans to cut 10,000 jobs, including about 350 jobs in California. Although the company plans to target certain units, namely those involved with digital messaging, Price said, employees who could easily apply their skills to a more profitable area have the best chance of being retained.

     But this version of workplace “Survivor” doesn’t give employees a lot of time to evaluate and change their skills. Becoming a key company asset can take months or years of hard work, Greenberg said.

     In order to outlast the others, employees should think of a layoff strategically.

     “It’s a giant game of musical chairs,” said John A. Challenger, chief executive of Challenger, Gray & Christmas, an outplacement firm. “There aren’t enough seats for everyone.”

     Employees working in a part of a company that generates high revenue can probably avoid becoming a casualty, he said. Employers also look for people who can generate new ideas and motivate others. Employees who fill leadership roles without being asked also have more favorable odds, he said.

     It’s important the company know about your accomplishments, Challenger said. “Sit down and talk with your boss over lunch. Don’t assume everyone knows what you’ve done.”

     Jane Caddell, a former human resources employee with Atlantic Richfield Co.’s Arco Gas division, said that by demonstrating flexibility and leadership skills, she was able to hold on to her job when the company downsized. By indicating her willingness to try new things, work with new people and take on new projects, she stayed with the company longer.

     Although Caddell, now a vice president at Employer’s Group, a corporate consulting firm, eventually lost her job, she was able to better handle the bad news because that earlier victory had assured her she was a good employee.

     “I was confident in my performance,” she said. “That’s what mattered the most.”

     Susan Annunzio, coauthor of “eLeadership” (Free Press, 2001) and a corporate consultant, said employees should first evaluate their positions on the company’s food chain. If they determine their skills would be an asset to the company’s new direction, they should approach a senior-level manager to discuss new ideas or past accomplishments. It’s important, she noted, to be respectful and not sound arrogant or condescending.

     “Technology is the key,” she said. “When employees suggest new Web or digital ideas, it tells the company that they care about the industry’s future.”

     The best strategies for surviving a layoff don’t begin when the company makes the announcement. Instead, employees should pay attention to industry reports, company stock prices, quarterly reports and evaluations. These employees will know about potential layoffs before they are formally announced.

     In the meantime, Patrick Lennahan, director of the Career Center at Roger Williams University in Rhode Island, said employees should be prepared to leave their jobs at any time. Lennahan recommends that employees update their resumes, organize portfolios and gather work samples in preparation for unanticipated cutbacks. “You have to be realistic,” he said.

     After the layoffs have been made and the desks have been cleared, layoff survivors have an additional emotional burden to overcome. Oftentimes, “survivor syndrome” kicks in.

     “It can be more traumatic for the people who stay than the people who go,” Lennahan said.

     Feelings of guilt, stress from heavier workloads and uneasiness about the company’s future contribute to survivor syndrome. Morale and productivity go down as well, the AMA’s Greenberg said.

     “Companies often lose people they intended to keep,” Greenberg said. And it can take up to two years for a company to bounce back. “Remaining employees don’t like the new atmosphere.”

     Survival hasn’t been easy for Edward.

     “It’s been a grieving process,” he said. “I’m happy to still have a job, but I’m worried about my friends who don’t.”       * * *

How to be a Survivor

     Some tips that may help employees survivor a downsizing:      1. Understand your company. Follow the industry and learn about the company’s products. Read quarterly reports and evaluations for your company and its competitors.      2. Fine tune your skills. Be willing to learn new things and then use them to enhance your performance.      3. Be proud of your accomplishments. Without sounding arrogant, remind senior level managers of some of the projects you’ve completed.      4. Be flexible. Offer to move to a different unit within the company. Be willing to work with new people under new supervisors.      5. Learn about technology. Companies value employees who have are up to date ontechnology.      6. Make friends. Employees who demonstrate their ability to get along with others are in demand.      7. Become a self-manager. Communicate directly with supervisors. Take a leadership role whenever possible, resolve disputes, and offer to work late. Copyright 2001 Los Angeles Times

(http://www.amazon.com/exec/obidos/ASIN/B00004XONG/kerbango)

The first Kerbango Radio (Model RZ-100E) is broadband only. That means it uses an Ethernet connection as is typical with cable modems, DSL, ISDN or office LANs. The radio plays Real Audio and MP3 streams using the Kerbango Tuning Service to find channels from around the world. Sporting two full-range ducted stereo speakers with 2 watts per channel, the RZ-100E also includes a built-in antenna for receiving AM/FM broadcasts, a clock that’s updated automatically when connected to the Internet, and connectors for your home stereo or headphones.

The first release of the Kerbango RZ-100E Internet Radio is scheduled for January 2001, so we cannot offer Christmas availability. If units are available in December, however, they will be shipped at that time. More details are available at the link above or at our web site at www.kerbango.com.

-Ian.

What? Since when did “the market” do her payroll budget for her? How did a drop in share value affect sales and revenue? Were they honestly counting on further investment, or a secondary offering, to make their numbers? Obviously so.

The market is only reacting to, and punishing executives for, their stupid naive belief that they could continue ad infinitum without any signs of trending towards profitability or even sustainability. The prevailing philosophy in the dot com business over the last two years seems to have been that they could essentially write-up investment as revenue — that’s the funny accounting that has kept them deceptively healthy all along.

The death of each wacky dot com is clearly just the evolution of a bad idea with poor execution heaped on top. Nothing more. No company exhibits that more brilliantly than idealab.com, which is presently floundering as a result of a fairly liberal diffusion of cash to wacky startups like firstlook.com, which evidently don’t even have a hope of sustainability. Their future was built on an illusion, and that illusion was dependent upon a never-ending succession of fools and their investment money — well, guess what? The number of people on this planet is finite, and so is their wealth. The NASDAQ is not a money machine.

And as these execs sit among the ashes of their crappy companies in the dot com junkyard, the only focal point they can find for their utter failure (apart from themselves) is “market sentiment”. Sorry Gardens.com… that billboard you’ve had on the 101 in Redwood City for the last 2 years costs $100K a month. How many of the employees that you recently laid off would that have paid for?

What a swindle. These execs attempted to pull off a scam and they hadn’t finished before the loophole closed. The Venture Capitalists made out like bandits, funding companies early and taking profits on the IPO — who gets left holding the bag are people.

People like the bartender I met in Whistler who prodded me for stock tips last winter because her RRSP was “under-performing”, or the retired couple I met on a plane to San Francisco one day who bought into all of the hype and plunked all of their savings into eBay stock, only to watch it rise and fall. Those people ARE “the market” and their sentiment is PISSED OFF. Rightfully so, too.

These people were told to ignore the obvious and succombed to the very human trait of greed, looking to get ahead quickly. After all, all those rich punks in Silicon Valley had to be on to something, right? What they didn’t realize was that all of those Ferraris, BMWs, and Atherton estates were paid for by THEM. Those bartenders, retirees, auto mechanics, and waitresses were the money machine, and the veritable end-of-the line as far as wealth was concerned.

In Canada we saw what happened to the BRE-X fiasco executives. They were fined and brought to trial on fraud charges. BRE-X was a gold mining company that went public and brought down the entire industry when it was finally revealed that there was no mine, and no gold. This is a wonderful allegory for the dot com craze.

So, then, why should some of these dot coms be any different? They amassed dump trucks full of wealth and burned it to chase after no gold. Perhaps the difference is that the vast majority of dot com executives, through naivety, ignorance, stupidity, and inexperience actually believed what they were selling.

So, if not them then who? Caveat Emptor or Caviat Venditor?

To answer the question I’ll pose another one:

Who knowingly gave these bad ideas life through early investment, who carried them through to the IPO, and then ran away with 800% profits?

And where are those people now that these ideas that they supposedly bought into need “further funding” to come to fruition?

Any guesses?

-Ian.

—- Monday October 16 09:00 AM EDT Catchy domain names lose their luster

By Cecily Barnes, CNET News.com

Pat Patten vividly remembers negotiating for the domain name Jewelry.com in October 1999, before the launch of his online jewelry site. Although he and his partners had purchased Netjewelry.com as a backup, he really wanted “jewelry.”

“Our thought was that it would be very significant in raising capital,” Patten said. “Obviously, to have the generic industry URL gave the group instant credibility.”

Such thinking was common during the go-go days of the Internet, when a generic URL plus some research figures about the potential size of a market often equaled millions of dollars in venture capital and even a high-flying IPO. But as the rise and fall of Jewelry.com and countless other sites shows, playing the name game has often been a losing proposition.

Jewelry.com folded last month soon after it was bought by Miadora.com. Patten won’t say how much he and his partners paid for the Jewelry.com domain, but he acknowledges that a good name does not make a successful business.

“The name could get us an appointment with anybody we wanted to see,” said Patten, “but it still comes down to the management team and the marketing plan.”

Jewelry.com is not the only site to realize that a good domain can be more of a bauble than a jewel. Dozens of online e-commerce companies, with ownership of domain names considered some of the most valuable property on the Internet, today are facing a drought of funding and investor disinterest on Wall Street.

Which raises the question: Just what is the value of a domain name?

This issue is especially pertinent now, as the Internet Corporation for Assigned Names and Numbers (ICANN), the regulatory agency for Internet addresses, prepares to approve a list of new Web suffixes. Applications have included request for such suffixes as “.kids,” “.biz” and “.xxx.” If approved, the dramatic addition of names could affect the value of the “.com” suffix.

William D. Miller, a partner with Kirkland, Wash.-based venture capital firm Olympic Venture Partners, believes such a move would dilute the value of domain names. More people, he surmises, will start using a feature that lets people type words such as “food,” “stocks” or even “akamai” into their browser and pull up the most common Web site along with a list of other options.

“Technology will remove the need for what will come after the dot,” Miller said. Indeed, such technology already exists but has not been widely adopted.

Others disagree, arguing that a confusing jumble of new Internet suffixes will further enhance the value of the common “.com” suffix.

Substance over style Regardless of who is right, most seem to agree that the value of an easy-to-remember domain name is secondary to the quality of the management and business plan.

Take Garden.com, for example. Co-founder Lisa Sharples and her partners bought the domain name in 1995 for $2,500 and were clearly the first to emerge in this market. While Sharples is thrilled to own the name and believes it is superior to the names of her competitors, she holds no belief that it alone will carry the company.

More than five years after its founding, Garden.com has yet to show any profits. Following its IPO in September 1999, the company’s stock climbed to more than $24 but now trades around 50 cents–and is at risk of being kicked off the Nasdaq. Last month, the company laid off about 40 percent of its staff.

“I think the layoffs and stock price have a lot less to do with the URL and a lot more to do with the sentiment of the market,” Sharples said. “The market has had a somewhat schizophrenic approach to dot-coms. A lot of good companies that are hitting their metrics are still going down.”

And while Sharples said she never relied too much on the company’s name, it was certainly easier to get cash with a good name and no profits a couple of years ago than it is now.

“It was definitely easier to get funding back then,” Sharples said, referring to the months and years before last spring’s sell-off in the Nasdaq. “We’re beating revenues, beating margin, and our stock still goes down.”

Food.com, Garden.com, Furniture.com and Living.com are just a handful of companies with seemingly valuable names that have been forced to issue pink slips while unusually titled Web-based businesses such as Yahoo and eBay flourish. Many dot-com companies report that the funding is simply no longer there.

Olympic Venture Partners’ Miller says he doesn’t even consider a company’s name when determining whether it deserves funding.

“It doesn’t even make the radar screen,” Miller said, adding that when helping companies seek out new names, he would never advise anyone to pay more than $100,000. “You can just pick a name that rolls of the tongue and fill it with branding,” he said, ticking off Amazon.com, Inktomi, eBay and Akamai as examples of companies that have done this.

Others disagree, saying a company can spend millions on branding and marketing or use that money for a domain name that provides the equivalent. “Lycos went out and spent tons of money to brand their dog to get people familiar with their business,” said John Beausang, CEO of Cyberfinancial.net and owner of Stocks.com. “Or you can type ‘stocks’ into an Internet browser and our site will be the first to pop up.”

Beausang has the domain name Stocks.com for sale on GreatDomains.com for $2.5 million. He also owns Bonds.com and several other names.

Keeping it simple Beausang is not alone among believers of the value in a strong name. When Bank of America bought the domain name Loans.com last January for $3 million–the second-highest amount paid in public auction ever–the banking giant said it wanted to build its online business and hoped to start with an easy and accessible domain name.

And clearly the immediate traffic was a factor when eCompanies bought Business.com for $7.5 million in 1999, reported to be the highest price ever paid for a domain purchase.

“Loans.com was getting three to four thousand hits a day. Bank of America, they were able to justify that expense,” said Jeff Tinsley, CEO of GreatDomains, which hosted the sale of the name. “That’s the case with many of these really good domain names.

“Some of these names are so good that people are just typing the name into their browser,” he added.

Still, the average price paid for a domain name slipped by $10,000 between July and August at GreatDomains, which also facilitated the sale of Loans.com. The mediam price, a more accurate measure, fell during that same period by $1,000. So far this year, the median price for all domain names sold is $3, 315.

Tinsley says that more transactions are taking place, only for less money per name.

Whether the days of million-dollar domain sales are over depends on factors such as how many people are willing to second-hand shop.

Like physical real estate, even the most coveted domain names can be expected to resurface on the market at some point, as people and companies die.

But Charles P. Waite, a partner with Olympic Venture Partners, believes some names will be tainted by the struggles of the original owner. In fact, he is funding an Internet company that falls under the domain of gardening. Despite the catchy brevity of Garden.com, Waite said he wouldn’t consider buying the name, should it go up for sale.

“I don’t think even if it were available at a reasonable price I would take it because the company would have to spend so much more on re-branding and marketing,” Waite said. “This is a problem I think you’re going to see.”

Peter Sisson, CEO of WineShopper.com, agrees. His company recently merged with Wine.com, and the combined entity will adopt the domain name Wine.com. However, Sisson does not imagine that he would want to sell the domain name WineShopper.com or that anyone would want to buy it.

“I don’t think we see it as an asset that had value for selling,” Sisson said.

Ultimately, Sisson believes that a company’s actual domain name will give way to an Internet dominated by keyword searches, voice activation and other tactics. The URL, he predicts, will be “a passing theme.”

—

-Ian.

What? Since when did “the market” do her payroll budget for her? How did a drop in share value affect sales and revenue? Were they honestly counting on further investment, or a secondary offering, to make their numbers? Obviously so.

The market is only reacting to, and punishing executives for, their stupid naive belief that they could continue ad infinitum without any signs of trending towards profitability or even sustainability. The prevailing philosophy in the dot com business over the last two years seems to have been that they could essentially write-up investment as revenue — that’s the funny accounting that has kept them deceptively healthy all along.

The death of each wacky dot com is clearly just the evolution of a bad idea with poor execution heaped on top. Nothing more. No company exhibits that more brilliantly than idealab.com, which is presently floundering as a result of a fairly liberal diffusion of cash to wacky startups like firstlook.com, which evidently don’t even have a hope of sustainability. Their future was built on an illusion, and that illusion was dependent upon a never-ending succession of fools and their investment money — well, guess what? The number of people on this planet is finite, and so is their wealth. The NASDAQ is not a money machine.

And as these execs sit among the ashes of their crappy companies in the dot com junkyard, the only focal point they can find for their utter failure (apart from themselves) is “market sentiment”. Sorry Gardens.com… that billboard you’ve had on the 101 in Redwood City for the last 2 years costs $100K a month. How many of the employees that you recently laid off would that have paid for?

What a swindle. These execs attempted to pull off a scam and they hadn’t finished before the loophole closed. The Venture Capitalists made out like bandits, funding companies early and taking profits on the IPO — who gets left holding the bag are people.

People like the bartender I met in Whistler who prodded me for stock tips last winter because her RRSP was “under-performing”, or the retired couple I met on a plane to San Francisco one day who bought into all of the hype and plunked all of their savings into eBay stock, only to watch it rise and fall. Those people ARE “the market” and their sentiment is PISSED OFF. Rightfully so, too.

These people were told to ignore the obvious and succombed to the very human trait of greed, looking to get ahead quickly. After all, all those rich punks in Silicon Valley had to be on to something, right? What they didn’t realize was that all of those Ferraris, BMWs, and Atherton estates were paid for by THEM. Those bartenders, retirees, auto mechanics, and waitresses were the money machine, and the veritable end-of-the line as far as wealth was concerned.

In Canada we saw what happened to the BRE-X fiasco executives. They were fined and brought to trial on fraud charges. BRE-X was a gold mining company that went public and brought down the entire industry when it was finally revealed that there was no mine, and no gold. This is a wonderful allegory for the dot com craze.

So, then, why should some of these dot coms be any different? They amassed dump trucks full of wealth and burned it to chase after no gold. Perhaps the difference is that the vast majority of dot com executives, through naivety, ignorance, stupidity, and inexperience actually believed what they were selling.

So, if not them then who? Caveat Emptor or Caviat Venditor?

To answer the question I’ll pose another one:

Who knowingly gave these bad ideas life through early investment, who carried them through to the IPO, and then ran away with 800% profits?

And where are those people now that these ideas that they supposedly bought into need “further funding” to come to fruition?

Any guesses?

-Ian.

—- Monday October 16 09:00 AM EDT Catchy domain names lose their luster

By Cecily Barnes, CNET News.com

Pat Patten vividly remembers negotiating for the domain name Jewelry.com in October 1999, before the launch of his online jewelry site. Although he and his partners had purchased Netjewelry.com as a backup, he really wanted “jewelry.”

“Our thought was that it would be very significant in raising capital,” Patten said. “Obviously, to have the generic industry URL gave the group instant credibility.”

Such thinking was common during the go-go days of the Internet, when a generic URL plus some research figures about the potential size of a market often equaled millions of dollars in venture capital and even a high-flying IPO. But as the rise and fall of Jewelry.com and countless other sites shows, playing the name game has often been a losing proposition.

Jewelry.com folded last month soon after it was bought by Miadora.com. Patten won’t say how much he and his partners paid for the Jewelry.com domain, but he acknowledges that a good name does not make a successful business.

“The name could get us an appointment with anybody we wanted to see,” said Patten, “but it still comes down to the management team and the marketing plan.”

Jewelry.com is not the only site to realize that a good domain can be more of a bauble than a jewel. Dozens of online e-commerce companies, with ownership of domain names considered some of the most valuable property on the Internet, today are facing a drought of funding and investor disinterest on Wall Street.

Which raises the question: Just what is the value of a domain name?

This issue is especially pertinent now, as the Internet Corporation for Assigned Names and Numbers (ICANN), the regulatory agency for Internet addresses, prepares to approve a list of new Web suffixes. Applications have included request for such suffixes as “.kids,” “.biz” and “.xxx.” If approved, the dramatic addition of names could affect the value of the “.com” suffix.

William D. Miller, a partner with Kirkland, Wash.-based venture capital firm Olympic Venture Partners, believes such a move would dilute the value of domain names. More people, he surmises, will start using a feature that lets people type words such as “food,” “stocks” or even “akamai” into their browser and pull up the most common Web site along with a list of other options.

“Technology will remove the need for what will come after the dot,” Miller said. Indeed, such technology already exists but has not been widely adopted.

Others disagree, arguing that a confusing jumble of new Internet suffixes will further enhance the value of the common “.com” suffix.

Substance over style Regardless of who is right, most seem to agree that the value of an easy-to-remember domain name is secondary to the quality of the management and business plan.

Take Garden.com, for example. Co-founder Lisa Sharples and her partners bought the domain name in 1995 for $2,500 and were clearly the first to emerge in this market. While Sharples is thrilled to own the name and believes it is superior to the names of her competitors, she holds no belief that it alone will carry the company.

More than five years after its founding, Garden.com has yet to show any profits. Following its IPO in September 1999, the company’s stock climbed to more than $24 but now trades around 50 cents–and is at risk of being kicked off the Nasdaq. Last month, the company laid off about 40 percent of its staff.

“I think the layoffs and stock price have a lot less to do with the URL and a lot more to do with the sentiment of the market,” Sharples said. “The market has had a somewhat schizophrenic approach to dot-coms. A lot of good companies that are hitting their metrics are still going down.”

And while Sharples said she never relied too much on the company’s name, it was certainly easier to get cash with a good name and no profits a couple of years ago than it is now.

“It was definitely easier to get funding back then,” Sharples said, referring to the months and years before last spring’s sell-off in the Nasdaq. “We’re beating revenues, beating margin, and our stock still goes down.”

Food.com, Garden.com, Furniture.com and Living.com are just a handful of companies with seemingly valuable names that have been forced to issue pink slips while unusually titled Web-based businesses such as Yahoo and eBay flourish. Many dot-com companies report that the funding is simply no longer there.

Olympic Venture Partners’ Miller says he doesn’t even consider a company’s name when determining whether it deserves funding.

“It doesn’t even make the radar screen,” Miller said, adding that when helping companies seek out new names, he would never advise anyone to pay more than $100,000. “You can just pick a name that rolls of the tongue and fill it with branding,” he said, ticking off Amazon.com, Inktomi, eBay and Akamai as examples of companies that have done this.

Others disagree, saying a company can spend millions on branding and marketing or use that money for a domain name that provides the equivalent. “Lycos went out and spent tons of money to brand their dog to get people familiar with their business,” said John Beausang, CEO of Cyberfinancial.net and owner of Stocks.com. “Or you can type ‘stocks’ into an Internet browser and our site will be the first to pop up.”

Beausang has the domain name Stocks.com for sale on GreatDomains.com for $2.5 million. He also owns Bonds.com and several other names.

Keeping it simple Beausang is not alone among believers of the value in a strong name. When Bank of America bought the domain name Loans.com last January for $3 million–the second-highest amount paid in public auction ever–the banking giant said it wanted to build its online business and hoped to start with an easy and accessible domain name.

And clearly the immediate traffic was a factor when eCompanies bought Business.com for $7.5 million in 1999, reported to be the highest price ever paid for a domain purchase.

“Loans.com was getting three to four thousand hits a day. Bank of America, they were able to justify that expense,” said Jeff Tinsley, CEO of GreatDomains, which hosted the sale of the name. “That’s the case with many of these really good domain names.

“Some of these names are so good that people are just typing the name into their browser,” he added.

Still, the average price paid for a domain name slipped by $10,000 between July and August at GreatDomains, which also facilitated the sale of Loans.com. The mediam price, a more accurate measure, fell during that same period by $1,000. So far this year, the median price for all domain names sold is $3, 315.

Tinsley says that more transactions are taking place, only for less money per name.

Whether the days of million-dollar domain sales are over depends on factors such as how many people are willing to second-hand shop.

Like physical real estate, even the most coveted domain names can be expected to resurface on the market at some point, as people and companies die.

But Charles P. Waite, a partner with Olympic Venture Partners, believes some names will be tainted by the struggles of the original owner. In fact, he is funding an Internet company that falls under the domain of gardening. Despite the catchy brevity of Garden.com, Waite said he wouldn’t consider buying the name, should it go up for sale.

“I don’t think even if it were available at a reasonable price I would take it because the company would have to spend so much more on re-branding and marketing,” Waite said. “This is a problem I think you’re going to see.”

Peter Sisson, CEO of WineShopper.com, agrees. His company recently merged with Wine.com, and the combined entity will adopt the domain name Wine.com. However, Sisson does not imagine that he would want to sell the domain name WineShopper.com or that anyone would want to buy it.

“I don’t think we see it as an asset that had value for selling,” Sisson said.

Ultimately, Sisson believes that a company’s actual domain name will give way to an Internet dominated by keyword searches, voice activation and other tactics. The URL, he predicts, will be “a passing theme.”

—

-Ian.

URL: http://cbs.marketwatch.com/archive/19990925/news/current/rebecca.htx

Tech stocks are overvalued And we like them that way

By Rebecca Lynn Eisenberg, CBS MarketWatch Last Update: 8:33 PM ET Sep 25, 1999 SAN FRANCISCO (CBS.MW) — What is Steve Ballmer thinking?

“There is such an overvaluation of technology stocks, it is absurd,” the Microsoft (MSFT: news, msgs) president told a bunch of business writers in Seattle.

“I could put our own company and others in that category,” he continued, temporarily driving down his own net worth a few billion dollars. “I used to believe in the theory of perfect markets,” he whined. “But I no longer believe that.”

Maybe Ballmer just wanted a chance to pick up more shares at lower prices. If he really lacked faith in the value of tech stocks, one would think he would leave his post at the industry’s top company, place all his money in government bonds, and retire.

The truth is, Ballmer, like the rest of us, knows that tech stocks are overvalued. But we like them that way.

Tech stocks, especially Internet stocks, are part self-perpetuating prophesy, part Ponzi scheme. The fact that their valuations are based on future growth is what allows them to grow. As long as investors keep believing in their potential, they will continue to impress.

And, as long as they continue to impress, venture capitalists will continue to pump money into start-ups, fueling the growth of more and more publicly traded overvalued Net firms, getting more and more people rich in the process.

Take Yahoo! (YHOO: news, msgs). A mere Web directory in 1994, the company launched into the public market in 1996 to the tune of an almost $1 billion market cap. Granted, Yahoo!’s shares might have been a tad overvalued at that time, but the company made good use of them.

Yahoo!’s rise

Using its shares as funny money, the company was able to acquire a whole slew of other Internet companies, including Internet directory service Four11, ecommerce software company Viaweb, Web scheduling company WebCal, direct marketing company Yoyodyne, Web communities site Geocities, and Web casting service Broadcast.com.

What emerged from the buying spree is far better than funny: it’s a genuine, valuable Web destination that offers free personalized news, event listings, e-mail and multimedia services for individual users. It also offers one of the Web’s best, biggest and most affordable shopping malls for small businesses who set up with its storefront services.

Best of all, the company actually started to turn a profit. All because of its so-called overvalued stock.

Amazing Amazon.com

Amazon.com (AMZN: news, msgs) is another company that used its so-called overvalued stock to build an Internet empire. Launched in July, 1995 as “the world’s biggest book store,” it hit the public market in 1997, then used its stock, as well as proceeds from its so-called overvalued bond offering in early 1999 to branch out into the music, movie, drug, pet supply and grocery markets.

It also acquired everything from online scheduling company PlanetAll and online price comparison shopping firm Junglee to ecommerce enabling software company Accept.com, Web use tracking library service Alexa Internet and online movie directory Internet Music Database.

As a result, Amazon.com is now a full-service Web store, offering customers the ability to buy just about anything they want for everyone they know. Of course, the site isn’t profitable yet, but take my word: it will be.

And eBay!

Online auction service eBay (EBAY: news, msgs) is yet another Web company that never would have been able to grow so big had it not been so highly valued. Starting out, like Yahoo, as a Web extension of a hobby, the site managed to grow so large simply because it offered such a popular service. And, the more people that use eBay, the more reason new people have to use it – – after all, if you want to sell something online, it makes sense to sell it at the store that has the most customers. No matter how hard all its competitors try, no one has managed to put a dent in eBay’s momentum. That is the value of overvalued stock.

But then there’s The Globe

Of course, not every Web company enjoys the vast success of Yahoo!, Amazon.com and eBay. TheGlobe (TGLO: news, msgs) experienced both the highest first day gain in IPO history, as well as one of the greatest and fastest stock declines. Its problem was not overvalued stock, but rather lack of vision among management.

Instead of purchasing companies with clear value propositions for its users, the company used its overvalued stock to buy things of marginal interest: a half-rate online department store, a content site of dubious interest and a semi-entertaining network of entertainment properties. TheGlobe.com may rise again, and seems to be doing a bit better these days, offering new services for its free homepage customers, but only if it does what Yahoo!, Amazon.com and eBay all did: figure out what its customers want, and give it to them.

TheGlobe.com’s bouncing-ball stock prices teach another lesson about the value of overvaluation: Internet stocks come with a built-in risk factor. They move so far up so fast only because there is always the chance that they will move down just as quickly. The upward movements are justified by the risk of the downward slides.

The end result: overvaluation proves that, unlike Ballmer’s assertions to the contrary, the market is perfect after all. Without overvaluation, there would never be such fast growth. Those who don’t want that kind of upside are welcome to stay out of the game.

For Ballmer, actions speak louder than words. The Internet stock market might be risky, but it’s a game that Ballmer seems happy to play.

Rebecca Lynn Eisenberg of San Francisco writes her column on Internet issues for CBS MarketWatch. —