In 2000, the Internet Was the Future, until Every Internet Company Went Broke
Every other Wednesday in Fads!Crazes!Panics!, Luke T. Harrington looks at one of the random obsessions to have gripped the public mind in the recent past, and tries, in vain, to make sense of it all.
Viewers of 2000’s Super Bowl XXXIV (a matchup between the St. Louis Rams and the Tennessee Titans) were witness to a weirdness people still talk about today: a sudden flood of ads for this new thing called “dot-com businesses.” E*Trade had trained a chimp to dance. Electronic Data Systems had gotten some cowboys to herd cats. And, of course, there was Pets.com, with their weird little dog sock puppet, who wore a wristwatch like a collar and sang Chicago songs (but, like, ironically). In all, there were seventeen different commercials for internet-based companies—compared to just two the year before. It was clear the internet was here, and it was going to be huge.
Well—until the next year, when Super Bowl dot-com ads were down to only three. And then the year after that, when nearly all of those seventeen companies had gone belly-up. So, never mind, the internet thing was just a fad.Nobody really had the answers to these questions, but it was clear there was a lot of venture capital to be raised by pretending you did.
Of course, you’re reading this on the internet, in 2021, so probably everything about this seems hopelessly quaint to you. In the roaring 2020s, everything is on the internet, from your TV to your music to literally all of the social contact you’re getting. You carry the entire internet around with you in your pocket at all times. Clearly there’s something to this “making money on the internet” thing, as long as your name is Bezos or Zuckerberg. But this is twenty years later, and along the way—well, there was a lot of carnage.
To understand what was going on with the internet at the turn of the century, it might be helpful to recall that knowing about a new technology and knowing how to use it are two different things. There was a time when people thought the radio was going to replace the telegraph or the telephone, before it ended up becoming the worst way to hear the latest terrible pop songs. There was a time when conventional wisdom imagined motion pictures as a box you’d stick a quarter and your face into at a carnival arcade. The best (or most profitable) use of a new technology isn’t always obvious from the get-go.
So it was with the internet. Both the easily excitable and the thoughtful could recognize that the internet was a communication tool unlike anything that had ever existed—now anyone could send any kind of data around the world in an instant—but the best way to make money off of it wasn’t necessarily obvious: Should an online store feel more like thumbing through a catalog or more like watching the Home Shopping Network? Should it prioritize speed, or the “wow” factor? What were the advantages of ordering online over just driving to the real store?
Nobody really had the answers to these questions, but it was clear there was a lot of venture capital to be raised by pretending you did. King Solomon may have once written, “Do not boast about tomorrow, for you do not know what a day may bring,” but the internet entrepreneurs knew otherwise—the internet was the future, so you had to get in on the ground floor now! Only one company could own the name “pets.com” (or “furniture.com,” or “travel.com,” or whatever), so the land rush was on!
The problem with joining a land rush, though, is that sometimes you get stuck with a worthless piece of real estate.
Those who spent the turn of the century yelling “The internet is the future!” might seem moderately prescient now, but the skeptics of the time weren’t exactly wrong about the internet’s shortcomings—at least for the moment. In the first place, the internet of 2000 was appallingly slow: it came in over phone lines, and “logging on” took several minutes. And that’s to say nothing of how clunky and sluggish computers were at the time—RAM still came in megabytes, processors were still single-core, DVD-ROMs were state-of-the-art storage. These problems were only compounded by certain websites’ insistence on trying to impress visitors with loads of flashy (and often Flashy) animation and sound, which—even when they worked (compatibility between machines was even more of a crapshoot then than it is now)—still slowed the already-glacial experience of shopping online to a near standstill.
It’s not for nothing that Pets.com—they of the sock puppet—are one of the most oft-cited examples of the wrongheadedness that characterized the dot-com-bubble. The thinking—stake out that choice dot-com address, and figure out the details later—is a strategy of sorts, but it only works until you run out of money. People loved that little puppet, but for most part, no one knew or cared what he was selling. In 2000, only 52% of Americans had internet access, and of those, it wasn’t clear how many both (1) had pets and (2) were looking to avoid making trips to the pet store. The site’s official slogan (“Because pets can’t drive!”), and their Super Bowl ad, which portrayed pets as hopelessly depressed every time their owners left them at home to go shopping, were funny, but they failed to seriously make the case for Pets.com’s existence.
None of this, mind you, prevented Pets.com from raising $82.5 million in a single day when they launched their IPO a week and a half after the Super Bowl. This, combined with a sizable investment from Amazon (which bought thirty percent of the company) provided Pets.com with a massive influx of cash; what it didn’t provide them with was a viable business model. The cost and logistics of shipping large, heavy bags of pet food made it near-impossible to turn a profit, especially given that the profits on pet food are typically razor-thin. Most pet stores make up the difference with considerable markups on toys and accessories, but Pets.com was selling nearly everything at a loss—and offering free shipping—in an (increasingly desperate) attempt to attract as many customers as they could as quickly as they could. It was an all-too-common strategy at the time, but given—as we’ve seen—the limited pool of potential customers, it was a losing battle.
In November of 2000, less than a year after their splashy Super Bowl ad, Pets.com announced they were no longer taking orders. The company was liquidated, and ironically (appropriately?) its URL and some of its other trademarks were sold off to PetSmart. Most of the other Super Bowl advertisers suffered a similar fate: of the original seventeen, only Monster.com, AutoTrader.com, and WebMD.com are still active, and I’m not sure I’d want any of them on my résumé.
In a lot of ways, making fun of failed internet companies is like shooting fish in a barrel—both fun and delicious—but it’s important to remember that in 2000, no one really had a clue what the internet would end up being. Wi-Fi was in its infancy, the smartphone was still seven years away, and humanity’s general awfulness felt safely quarantined in 4chan. The paths technology and culture take always seem inevitable in retrospect; in the moment, all any of us can do is sow our proverbial seeds and pray for rain.