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T W E N T Y
O N E
T
he last few days have seen a lot of turmoil
and even meltdown of quite a few dotcom valuations around the world. Does it
mean that the dotcom party is over? Or is it just a temporary setback? Are the
valuations down for B2C or even for B2B? What about valuations in India? Are
they dotcoms or dotcons? These are some of the questions being asked by lots of
youngsters and entrepreneurs who are either launching their start-ups or are in the
incubation process or have just started dreaming about the dotcom business. Let me try to
answer some of these questions to the best of my ability.
First of all, let me shout from the rooftops that the dotcom party is far from over.
On the contrary, it has just begun! What we have seen in the last few weeks is
what is termed as a “reality check” in the dotcom retail business. In other words,
dotcom companies, mainly in the B2C segment, which were cash-starved, were spending
more money than required, or had no great revenue model, at last started wilting under
pressure. Realization took over hype. It had to happen one day. It has happened.
However, companies with strong fundamentals or those creating technologies are
still riding high. The good software companies are continuing to do regular
business and consequently doing well on stock exchanges. The B2B segment is not
performing badly either. In short, companies with a sound “revenue model” are not
doing badly at all.
The meltdown began at NASDAQ, mainly among B2C companies, which had either
not proved their revenue models, or were cash-starved, or had no possibilities
of profits for years to come. And rightly so. Businesses which cannot or do
not have the ability to make profits cannot be supported. This meltdown came
close on the heels of a report that almost 8 percent of B2C portals were
cash-starved and were trying for fresh rounds of finance, even IPQ, to raise money.
One would recall that over the last several weeks, warnings about dotcom viability
had been emanating from US analysts and the business. Gartner Group, a
The Times of India-Bombay Times April 26, 2000
Dotcom: Boom, Bust and Beyond
