I just finished reading a great refresher article on some of the top dot com company burn outs. Its astounding to think that a company like webvan was once valued at 1.2 billion dollars. Thats right folks it was worth (on paper) over one billion dollars.
So why did all these companies fail? Simply some blew it once they received their funding. They’ll likely did not have proper business analytics software set up from the start. They likely bought some type of software but did they actually use it properly from the start? When your burn rate is several thousands dollars per day it pretty easy to avoid proper systems.
Almost all the companies reviewed in the article were burning through the venture capital cash faster than they were generating any sales. But if they actually had used some real budgeting planning software they likely could have slowed the burn rate and maybe had some time to turn things around. Well maybe not in all the cases but something like Webvan could have worked if they slowed down their expansion.
Plus with something like Webvan they actually had orders and they were running the business. They blew through to much cash buying instead of leasing physical systems. If they had used some better forecasting software they would have seen that having the cash on hand instead of buying real estate would have allowed them to last longer in the marketplace. It might even have stopped them from buying Homegrocer which was the final nail in their dot com coffin.