Brand Failures_ The Truth About the 100 Biggest Branding Mistakes of All Time - Matt Haig [86]
However, as the internet-related cases in this chapter illustrate, hard business realities were never as far away as the dot.com entrepreneurs had liked to think. Building technology brands isn’t any more difficult than any other form of brand building, providing the relevant companies remember the lessons of those that have perished. If these lessons can be taken on board, failure may become the exception rather than the rule for technology brands.
80 Pets.com
In the mid-1990s, when the commercial potential for the internet was beginning to be realized, people started to register internet addresses with no intention of using them. This so-called land-grab was fuelled by a desire to sell these addresses at a later date.
Indeed, names such as business.com and sex.com proved to be so attractive to certain companies that millions were paid for the right to set up a website at that address. The belief was that if someone was looking for business information or pornography they would type a generic name into the address box in the assumption that it would lead to a relevant site, if not the most relevant site. It was also anticipated that such a name would be easy for internet users to remember.
One of those who set about registering addresses was Pasadena-based entrepreneur, Greg McLemore. Among the hundreds of generic names he chose was Pets.com. However, instead of selling the name he decided to use it himself in a bid to target the highly lucrative US pet market.
This wasn’t just going to be any old internet company. Pets.com was set to be huge. Immediately after founding his venture McLemore relocated to San Francisco and went on the hunt for investment. In early 1999, he found it. Hummer Winblad Venture Partners, a highly respected venture capital firm based in Silicon Valley, liked what it saw and decided to fund the company.
So did Jeff Bezos, owner of a golden Labrador retriever and a certain online bookstore called Amazon.com, who was sold a 50 per cent stake in Pets.com. In a March 1999 statement to the press Bezos declared his enthusiasm. ‘We invest only in companies that share our passion for customers,’ he said. ‘Pets.com has a leading market position, and its proven management team is dedicated to a great customer experience, whether it’s making a product like a ferret hammock easy to find, or help in locating a pet-friendly hotel.’
Julie Wainwright, Pets.com’s CEO and negotiator of the deal, was equally happy. ‘This is a marriage made in heaven and clearly positions us as the online category leader. The successful investment track record represented by Amazon.com and Hummer Winblad really makes this a CEO’s dream team.’
The press statement also included a statistic from the Pet Industry Joint Advisory Council, which stated that in 1998, the US pet category was valued at US $23 billion. As the online leader of this sector, Pets.com was clearly set for success. After all, the web users had already proved themselves willing to pay for books, CDs and software via the net, so why not pet products?
However, it soon became clear that Pets.com was not going to be the only major online player within the industry. Petopia.com, another San Francisco-based company, had managed to secure US $9 million from another high-profile venture capital firm, Technology Crossovers, which believed strongly in the pet market’s online potential. It also gained investment from one of the leading ‘real world’ pet companies, Petco. Petco’s longstanding rival PetsMart was equally keen to gain a piece of the action, and launched PetsMart.com. In addition, there was Petstore.com, backed by the Animal Planet cable network.
However, throughout 1999 Pets.com managed to keep a nose ahead of its three main competitors, securing a further US $50 million