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Dot-Com Success Easy as Following Formula

November 6, 2000 - Having started in the industry at DEC in 1978, and having paid my dues through Wang Laboratories, Apollo Computer, Inc., Unisys, Dun & Bradstreet, the Network Systems Corp. and so on, I, too, was taken aback by the boundless excess of the entire dot-corn phenomenon (the bold, brash, 'take-no-prisoners' CEOs, the B-school dropouts who thronged to their teams, as well as the seemingly endless-and apparently unbridled-founts of venture funding without which those selfsame CEOs would have been a whole lot less brash and certainly less bold). I am also irritated in the extreme by the "edgy" approach to brand building; so much so, in fact, that I was moved to create a new dot-corn success formula. Here it is:

s = lop + loe + dmr - (upe + usteria) * r
where: s = success in terms of a profitable, enduring enterprise

Let's deconstruct the formula piece by piece.

To achieve success in the bold, new dot-corn reality (with success defined as a profitable, enduring enterprise), you must factor in the laws of physics. the laws of economics and a demonstrated market requirement:

• lop (lambda omicron pi = laws of physics) indicates that dot-corns do not operate outside the laws of physics in some strange. and hitherto uncharted, parallel universe. Neither are dot-corns immune from natural forces, the least of which is, perhaps. the business cycle.

Throwing away millions on Super Bowl commercials does not a brand build. More to the point, throwing away millions in "edgy," obtuse and even downright weird 30-second spots just demonstrates the absurdity of the situation. (While deftly spending tens of millions on clearly targeted demographic segments in a pretested, multi-dimensional media campaign only gives you a shot at successfully building your brand.)

• loe (lambda omicron epsilon = laws of economics) indicates the perhaps shocking revelation that dot-corns also do not operate outside the laws of economics. Just because someone has neither read Adam Smith nor studied macroeconomics does not make said person immune from the silent hand of the marketplace, nor the fact that nine out of 10 companies of any kind fail.

If this new economy is truly an economic revolution (which I believe it is) then why would we expect the lessons of the past (the Tulip Bubble, the Robber Barons, the consolidation of the auto and oil industries, the rise and fall of the mainframe, etc.) to not apply to the new reality? There were several thousand buggy makers in the US before the arrival of the automobile, but not one made the transition to building automobiles.

• dmr (Delta mu rho=demonstrated market requirement) indicates that a demonstrated marketplace requirement must be present to ensure success. A roomful of clever folks discovering hitherto unknown primary, secondary and tertiary "needs" does not in fact actually demonstrate a new, hitherto undiscovered need. Nor does the endorsement of the exercise by "edgy" agency types constitute a valid market requirement.

• Minus the hype and hysteria (upe + usteria: no explanation needed).

• r Rho is the reality factor. Why are we surprised when dot-coms that spend $50 or $100 million before launch on questionable business plans, hire hundreds of employees in anticipation of success and build decidedly 'brick-and-mortar' infrastructures, fail?