dot.bomb: my days and nights at an internet goliath

Of all the dot.coms to burn themselves out after going public, Value America left one of the most distinctive trails of smoke. Unlike most of its competition, Value America's management team was experienced, its board distinguished, and its business plan understandable. The company's ambitions were even grander than those of the competition. Not satisfied with just selling books or CD's, Value America aimed to offer virtually everything from automobiles to ice cream at the same IP address. After a successful public offering, the name Value America appeared everywhere - in newspapers, Visa statements, the FedEx web site, and on Dennis Conner's last America's Cup boat. Then it became the first dot com on record to do a big lay-off. Just as quickly as it appeared, Value America disappeared into bankruptcy.

J. David Kuo has written an instructive and entertaining first person account of Value America. >From May of 1999 until February of 2000, Kuo was the Senior Vice President of Communications at the company. Despite this short tenure, Kao was witness to success, excess, redress, and finally a corporate coup.

Much of the book revolves around the tragic-comic character of founder Craig Winn. Styled as the "The Prince of E-Commerce" in the trade press, Craig Winn is a familiar figure in the technology industry - the unrestrained salesman. A joke in the industry goes like this:

Q. What is the difference between a used car salesman and a software salesman?
A. The used car salesman knows when he is lying.

Winn's comic aspect was his gift for knowing what people wanted, and a nature that demanded he try and impress them by delivering it whether he was in a position to or not. Winn convinced not just Kuo, but experienced men of the world as different as Paul Allen, the founder of Microsoft, Jerry Falwell, the television minister, and William J. Bennett, the former U.S. secretary of education. That Winn publicly announced his intention to run for President of the United States showed just how deeply he sold himself on the possibilities of Value America. The tragic aspect of his personality comes though in those rare moments when Winn that recognizes despite all his good intentions and best efforts, his personality is a part of the problem.

As the book makes clear, David Kuo bought deeply into the Value America dream. He recruited his future wife, sister-in-law, and brother-in-law all to work for the company. The book is at its most amusing when Kuo recounts the difference between his enthusiasm for the company and the signs the business is starting to fail.

Unfortunately, as dot.bomb demonstrates, Value America was doomed from the beginning. After spending $50 million on advertising in the first nine months of 1999, Value America had 28,084 customers by the end of the year. That meant each customer cost over $1,750 to acquire! Rather than order goods through the internet, most customers preferred to order goods over the telephone, which hurt Value America's profit margins. Because it avoided inventory on principal, Value America's dependence on suppliers and distributors created significant customer service problems and resulted in the loss of many of those dearly acquired customers.

In his 10 months at Value America, Kuo learned the answer to many valuable questions. These he good naturedly shares in dot.bomb. For example, dot.bomb answers the question, "What happens when you share the Chairman's hand written press release announcing his return as CEO with the current CEO?" For anyone in the technology business, dot.bomb is a good investment; the least painful way to learn from mistakes is to learn from the ones others make.

dot.con: The Greatest Story Ever Sold

Business writer John Cassidy gives a clear eyed account of the historic events surrounding the recent dot.com bubble. The book is especially good on the financial aspects of the speculation in dot.com stock, a financial strategy that now appears to match in foolishness the 1711 demand for South-Sea company shares or the 1634 Dutch market for tulips.

Why anyone thought that Value America would become the "Wal-Mart of the Web" or be worth $2.3 billion dollars is now as puzzling as why its founder Craig Winn thought he would become President of the United States.

Yet one of the interesting aspects of a financial bubble is that at some point everyone buys into it. As dot.con makes clear this included respected industry analysts such as Henry Blodget and Mary Meeker, senior government officials such Dr. Everett Koop and Alan Greenspan as well as millions of individual investors.

The book gives an insightful description of how such unlikely events as the end of the cold war and the popularity of the Individual Retirement Account made investor's faith in the future possible. Although a concerted effort is now being made to indict a few of the individuals involved, as dot.con illustrates, financial bubbles are really an indictment of human nature.

As factual as the book is, in some respects dot.con was written prematurely since the aftermath of the bubble continues to unfold. The book ends with Henry Blodget resigning from Merrill Lynch and so does not cover his current legal problems or the fact that Amazon.com has turned an operating profit on book sales. dot.con is a worthwhile read for anyone interested in the financial aspects of the technology business or for anyone with a nostalgia for this increasingly distant time.