internetbust.webvan - EC Marketing-Reading for Class 1 2...

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The Internet Bubble and Bust- 1994 to 2000 plus. . Who was and What Happened to them? Ground zero for the Internet explosion was Netscape Communications. The company produced the first Internet browser and then gave it away. The thinking behind this bold move was based on their experience in the software business - i.e. that you could lock in customers to one dominant product - in this case the Netscape Navigator browser. The large captive market created would attract significant advertising revenue which was expected to be much greater than the income lost from the browser giveaway. By the time Netscape went public, its value had skyrocketed even though there was no demonstrated path to profitability. The dot-com gold rush had begun. A new but untested model for valuing companies had arrived. The inherent risks in the untested model were overlooked because of the large amounts of capital available for investing in the next big thing and an exponentially growing new medium that promised unlimited opportunities for connection. In addition, entrepreneurs recognized the opportunities for commerce on the Internet and the advantage of bypassing existing customer-business relationships and "going direct". They could remove significant costs incurred by traditional businesses in servicing these same customers. The challenge would be bringing these customers to their website within the new medium. To do this, they needed to brand the company's name to the largest audience possible. The metrics for doing this successfully would in fact be eyeballs and page views at the company's website. It was assumed that if you could attract visitors to the website, they could be converted to paying customers. Branding became an end unto itself. It was even more important than profitability. The market analysts were influential in communicating market potential and mapping the territory of Internet space. They described the Internet as a huge land grab where the first mover had to sacrifice profits for rapid growth. Everybody – from venture capitalists, money managers, individual investors, entrepreneurs, to executives in traditional companies - wanted in on the action. The early successful IPO's (initial public offerings) certainly rewarded investors, but a huge pyramid scheme
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  • Fall '09
  • staff
  • Marketing, eventhoughtherewasno demonstratedpathto profitability, companyproducedthefirst Internetbrowserandthengaveit away.The, customersto onedominant product, thenextbig thingandanexponentially growingnewmedium, removesignificantcostsincurredby traditionalbusinessesin servicingthesesamecustomers, Internetspace.TheydescribedtheInternetasa hugelandgrabwherethefirst mover

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internetbust.webvan - EC Marketing-Reading for Class 1 2...

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