Word: dotcomers
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...earthquakes or the New Economy apocalypse, San Franciscans are accustomed to treading on the rubble of yesterday's talk of the town. But some collapses are more symbolic than others, and last Friday's news that the Industry Standard would cease publication was the dotcom equivalent of the Transamerica Pyramid toppling over...
Compared with the frothy content plays of the era, the Standard stood as a solid foundation, pulling in $158 million in ad revenue in 2000--and actually turning a profit, albeit briefly. How could it fold so suddenly? Could the publication that had adroitly skewered all those bogus dotcom business plans have been brought down by the same shortcomings...
...word: yes. Like dotcom flameouts Kozmo.com and Webvan, the Standard followed the mantra--first popularized by Amazon.com founder Jeff Bezos--of Get Big Fast. Hundreds of reporters were hired. A New York City office opened. A second magazine, Grok, was launched (though quickly abandoned). Conference costs spiraled. Lease commitments for tony office space were more than $50 million. "We were very aggressive," editor in chief Jonathan Weber said last Friday from the magazine's suddenly empty offices. "We took funding from venture capitalists and had a high-growth strategy. It's clear from hindsight that wasn't the best idea...
...when dotcom-driven advertising dried up--and ad revenues fell 62% from January through July this year alone, according to the Publishers Information Bureau--cash reserves quickly followed. Weber unleashed regular showers of pink slips but not fast enough to help. Last Tuesday plans for a second round of financing fell through. IDG--the technology trade-magazine giant based in Boston that owns 85% of the Standard--decided to pull the plug...
...Morgan Stanley, the question is more along the lines of, Did the firm do right by its customers? Should it have underwritten so many high-risk companies? The short answer is yes. The firm was merely doing what it always does: matching those who need capital (dreamy dotcom start-ups) with those eager to supply it (dreamier market neophytes, as well as a large number of institutional investors). Sometimes the dreams come true. After all, Morgan floated Microsoft and AOL, speculative plays in their early days...