What were the mistakes of the days of dot-com mania?

I worked in a major international advertising agency at the height of the dot.com boom.

Everybody knew that these cyber folks were crazy, but they had so much money it was impossible to tell them that they were being set up for a fall.

I remember sitting in a conference room with a 23-year old Swedish entrepreneur who had just been given $10m by a venture capitalist to launch a 'new concept in chat rooms.'

We all knew that his idea was rubbish - everyone in the agency had spent a day trying to use the chat room. It took about an hour just to sign on!

Yet, when this spotty lad sat in tattered jeans sat in our boardroom and insisted that we send out for smoked salmon (which he left) and champagne (at 10 am, but he did drink it), did we tell him his site stank?

No. The emporers new clothes appeared before our eyes and we smothered him with fantastically well thought out advertising concepts for targeting online chatroom users.

Did we get the business? No. As he left, he mumbled that we didn't 'get it'. His bankers, he said, would never let him spend the money online - 'they want to see a big splash, you know, TV, Cinema, that kind of stuff.'

That was one of the reasons so many dot.coms failed. They thought (or their investors did) that all it takes to build a trusted and respected brand is to spend huge amounts of money. Forget brand values. Ignore the fact that these things take time to establish.

They saw a simple equation: money in = brand out. More money in = bigger brand out.

Burn rate was the mantra. 'You can't hope to make money in the future unless you are burning enough right now.'

That is what happens when marketing is taken over by financiers, programmers, chancers, and everybody else who should be getting on with their own job. If they had left the sales and marketing to the people who understood it, some of them might have survived.

Just my observations (and by the way, I've nothing against Swedish people).

Martin Avis




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