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How to burn $1 Million a Day

By malikcoates in MLP
Tue Dec 19, 2000 at 08:02:00 AM EST
Tags: Internet (all tags)

In this article the president of the WebHouse Club tells us what he learned while spending $1 million a day.

He blames this train wreck on crazy marketing schemes, poor technology choices, trusting in a financial genius, and growing too fast. Part of the article could be read as blaming the failure on trying to use WinNT.


Voxel dot net
o Managed Hosting
o VoxCAST Content Delivery
o Raw Infrastructure


My dot com
o is making me rich 1%
o is fun to work for 9%
o is paying the bills 12%
o is laying people off 3%
o owes me money 8%
o no dot-coms for me, thank you very much 64%

Votes: 82
Results | Other Polls

Related Links
o this article
o financial genius
o trying to use WinNT
o Also by malikcoates

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How to burn $1 Million a Day | 10 comments (10 topical, editorial, 0 hidden)
Yeah... (3.11 / 17) (#1)
by maketo on Mon Dec 18, 2000 at 10:51:43 PM EST

Some spend a million a day and some (even countries) have no food......ah well....noone said life would be fair.
agents, bugs, nanites....see the connection?
um (4.00 / 1) (#10)
by delmoi on Wed Dec 20, 2000 at 12:43:28 AM EST

If they lost a million dollars a day, then they were giving it a way. The people who used the service were able to buy food cheaper, to.
"'argumentation' is not a word, idiot." -- thelizman
[ Parent ]
What a stupid (but typical) excuse (4.16 / 18) (#2)
by Dacta on Mon Dec 18, 2000 at 11:25:23 PM EST

It's nice that they blame NT for their problems. No doubt Sun will love that, and be quoting it everywhere within a couple of months.

Unfortunatly, it simply isn't true. It IS possible to create scalable (transaction based) websites on NT. Religious arguments aside, it should be obvious that WebHouse was just looking for things to blame for their losses. Sure, Unix is better, but if they had properly architectured their app, NT can cope okay. The would have probably had the same problems on Unix if they had taken their architecture designed for Priceline and tried to move it to the (very different) WebHouse site. To me it sounds like a typical excuse people use when trying to do things to quickly: Blame the machines, because it is never your fault.

They complained about slow access from AOL. I mean, who's fault is that if not their own? It doesn't take much to figure out that they needed better connectivity to AOL. If this is typical of the problem solving skills they had, no wonder they ran into problems.

The faster you rush, (4.52 / 19) (#3)
by Global-Lightning on Tue Dec 19, 2000 at 12:54:10 AM EST

The sooner you crash and burn.

The damning flaw in so many failed dot.coms was the rush for "first to market" lead to so many poor decisions. To quote the article:
"...we just couldn't take the time to perform proper market research on something people had never done before. Just put up the service, fix what doesn't work, and build it as we move along"
"...it made sense to leverage that technology to get the business started and then build something better later, when necessary."

Imagine applying this thinking to any other business. You see an new restaurant with an "Open for Business" banner, so you walk in. Once inside, you see 10 guys in hardhats with tools in hand and bloodshot eyes. The Maitre'D, wearing a dust covered tuxedo, approaches you and takes you to your "table". Your chair consists of an iverted bucket with a cushion, and as you sit 3 workers position two A-frames and a wooden plank in front of you. The waiter (actually, the Maitre'D wearing another jacket) gives you a menu.

"Nice menu, I'd like the chicken provecale"
"Sorry sir, we don't have that"
"OK, how about the paella valenciana"
"Sorry sir, we don't have that either"
"the Osso Bucco?"
"Errr, nope"
"Hmmm, what would you recommend?"
"I highly recommend the beanie-weenies or the delightful pigs-in-blankets"
"... I'll try the beanie-weenies"

The waiter disappears to the back, and you wait for your meal.
And wait, and wait some more...
After waiting for 45 minutes, you head to the back, and see the Waiter/Maitre'D now wearing a chef's hat.
"Where's my meal?!"
"Sir, I just got of the phone with the owner. He's just bought the cooking utensils and cooking supplies. He should be here in four hours"
After yelling some expletives, you storm out of there. The Waiter/Maitre'D/Chef comes after you, promising how exellent this restaurant will be, and if you wait for three week you'll get a free meal, and how this business will be the most succesful restaurant in the area because they were the first to market...

A rather telling quote (4.06 / 15) (#4)
by Carnage4Life on Tue Dec 19, 2000 at 02:09:42 AM EST

From the article:
How ironic that such a bold enterprise would fall victim to religious zealotry over the choice of technology when Walker himself repeatedly avowed: "We're a marketing company, not a technology company." Yet the massive problems with the technology platform prevented all but the most minimal marketing nuances to be deployed and thwarted our quest for real breakthroughs in modifying consumer buying behaviors.

It constantly amazes me that the mentality of most dotcomms with regards to technology is to put it on the back burner when it was a core factor in their business and instead focus on branding and advertising.

It seems they forgot that their primary business is running a website not synthesizing transparent e-services, engineering seamless methodologies or any of that other Web Economy bullshit. What a collosal waste of funds, almost as sad as the boo.com fiasco, at least the staff didn't hop on Concorde every time they wanted to talk to someone in Europe.

MLP addition (4.80 / 10) (#5)
by Beorn on Tue Dec 19, 2000 at 03:23:32 AM EST

Here's another pre-christmas dawt-com horror story for ya, My Time in the Den of Iniquity. Read and weep.

(In the immortal, untranslatable words of Wenche Foss: "En million går da så fort i våre dager.")

- Beorn

[ Threepwood '01 ]

Scary (4.00 / 3) (#6)
by sugarman on Tue Dec 19, 2000 at 04:19:40 AM EST

That is probably one of the scariest pieces I've read in ages. Thanks for the link?

Now, with a show of hands, who else is thinking that this would show up on Fox or UPN as the premise for a sitcom in the next year? I mean, there's scads of ex dotcom employees now looking for work, and I'm sure there are more than a few (like this guy) with connections to the mainstream television media.

I mean, you probably couldn't get away with calling it f*ckedcompany, but sometyhing along the lines of "misery.com" or "hell.com" might pass.

And yes, I know there's the Dilbert cartoon, but I'm thinking live action here. Anyone?

[ Parent ]

dot.coms die like flies these days (2.84 / 13) (#7)
by Philipp on Tue Dec 19, 2000 at 04:44:18 AM EST

Have you checked out F*cked Company lately? It's really amazing how many of these companies are going under these days.

alias kn 'killall -9 netscape-communicator'
You can't sell at a loss and make it up on volume (3.92 / 13) (#8)
by TuxNugget on Tue Dec 19, 2000 at 06:23:56 AM EST

yet this was the business model of so many internet companies. Of course, he can burn $1 million a day. Why should we be proud of this? Likewise, Amazon could sell $200 million worth of books and CDs on the web for $175 million. Why is that a big deal? Bricks and mortar could also increase revenues by selling at a loss. But they usually don't. They know better, because it is profit rather than revenue that keeps things going in the long run.

All these failures has got me to thinking. Some new economy firms are completely dependent on the online world. For example, one can create a convenient corporate entity, get a free 800#/fax/email center, online banking, and use B2B marketplaces for outsourcing almost everything. The result is a small business with almost no paperwork, no (or few) messy employees, and the limited liability of being incorporated.

However, having no physical roots, what happens when your infrastructure providers start going belly-up? All of a sudden, no more 800 number message/fax line and you have to get a different one and redo all your advertising. Or maybe you can't find those guys at the B2B who used to do your taxes, and the IRS is curious about something. You have to go get someone else, and of course they need to charge you to get up to speed. Seems like this shakeout could be a big challenge for even healthy concerns.

Obviously no clue (4.00 / 11) (#9)
by stuartf on Tue Dec 19, 2000 at 08:17:03 AM EST

Scaling a transaction-based business capable of processing 5,000 orders an hour is fairly trivial for a Unix platform, but not for Windows NT, the platform we used at WebHouse.

That's (roughly) 83 orders per minute, just over one order per second. DOS could probably cope with that heavy load...
Seriously, why blame Windows NT for obvious failures in your business model? I guess that's what you get when you let marketing try and implement your technology.

How to burn $1 Million a Day | 10 comments (10 topical, 0 editorial, 0 hidden)
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