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((((((((((((((((( WEBREFERENCE UPDATE NEWSLETTER ))))))))))))))))) March 8, 2001

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This week we have Kathy Pendracky with a story about a dot-com, her ex-dot-com, a dot-com that failed... Why did the dot-com fail, was it the market, was it bad management? Read and find out.

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New this week on WebReference.com and the Web:

1. TWO GREAT CONTESTS: Submit & Win NetObjects Fusion 5!, Signup & Win! 2. FEATURED ARTICLE: Lessons Learned from a Failing Dot-Com 3. NET NEWS: * DeCSS 2? DVD code broken again * Yahoo: Time for a change * O'Reilly to Halt Software Development

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1. TWO GREAT CONTESTS: Submit & Win NetObjects Fusion 5!, Signup & Win

>Submit & Win NetObjects Fusion 5!

Submit your article today and you could win NetObjects Fusion 5! If your article makes the cut, and we publish it on the site or in this newsletter, you win! Kathy Pendracky wins NetObjects this week for her article detailing her own deadly dot-com experiences. See the submission page for details:

http://www.webreference.com/new/submit.html

>New Signup & Win!

Sign up for the WebReference Update newsletter, and you could win a killer software bundle from Pegasus Imaging, JPEG Wizard and PICShow. Each week we'll draw new winners from our new subscribers - you could be next. Already a subscriber? Not a problem - just fill out the form, and you'll be automatically entered to win. Tell your friends!

The contest winners for last week are: Muhammad Rafi of Islamabad, Pakistan, Denise Friou of Houston, TX, Pietr Buttelmann of Chicago, IL and David Gerstman of Baltimore, MD. Congratulations!

http://www.webreference.com/new/contest.html

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2. FEATURED ARTICLE: Lessons Learned from a Failing Dot-Com

For the past five years I have experienced one of the most interesting and exciting times of my career working for a start up Dot-Com. Our little company was wildly expanding and offering a full range of Web-related services from building storefronts to housing catalogs, with the option of even going so far as to provide procurement services for the goods. And, with our government procurement services expanding, we were pretty comfortable with where we were going. Even so, when the entire commercial end bellied up a few weeks ago and we found ourselves out on the street, many of us weren't completely surprised by the turn of events. As a company, we learned some critical lessons too late. If we had taken steps much earlier to just ensure that a few key points were part of our operating plan there is no doubt that our little company would be thriving:

1. Define your niche in the marketplace and market it aggressively. Decide what your strategic goals are and stick to them. Be the first to grab the spotlight with a new idea and run with it. For too long and until it was too late, we continually shifted our priorities and game plan. We moved much too slowly after we built our initial storefront, before effectively and actively marketing an idea that was leading edge at the time. The IT group, and not marketing, produced the viable ideas and products in the early years and marketing struggled to catch up, initially understanding neither the technology nor the idea and its ability to succeed.

2. Don't give away the store. It's easy to entice new customers or renew contracts by giving away or charging nominal fees for software and/or support, but somewhere a line has to be drawn when costs of production far exceed the return on investment. For several years we had too many clients with too high expectations of free services because of precedents that were set by eager sales staff.

3. Define your underlying architecture carefully. Otherwise you risk losing customers and find yourself spending generously on conversions, internal training and outsourcing. One offering of our commercial area was to build storefronts and catalogs for customers. Within the time span of a few short years, our catalog architecture radically changed from a C-based non-parametrically searchable catalog to a packaged Oracle / DB2 based package that required expertise in C++ and several languages of its own. Finally we moved onto ASP / JScript / SQL server catalogs. Not only did our internal staffing have language and technology hurdles to overcome in the continual shifting, but our customers found themselves forced to accept catalog re-engineering from presentation, search tree structures and searching parameters and functionality. In some of the shifting, they lost some functionality that they relied heavily on. If the catalog was housed at a client site, every time we shifted our underlying database, we effectively forced the client to procure minimal DBA expertise in that particular database. In some cases, our UNIX based clients were miffed when we dropped support of earlier technologies and required them to switch operating systems and buy additional hardware or third party products.

4. Define Responsibilities / Stress Good Communication. Having seen three CEOs within about the same number of years, the continuous managerial shifting spiraled downward and produced a chaotic state internally. If the company had already been stabilized in terms of defining site and group responsibilities early on, the management turnovers would have been less disastrous. As responsibilities continuously shifted, communications suffered. In many cases, other sites had no idea which group should be contacted at a given time for specifics. Interfaces were built between systems that often were lacking in key requirements because people weren't talking. At times, people weren't talking not only because of not knowing who to talk to, but often for fear of losing their little niche in the company to another site (which could happen at any time).

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5. Focus. We often spent days and weeks when top "hot" projects on any given morning were no longer even considered worth discussing by the end of the day. Projects were driven hard and strong with lots of overtime and when completed, were often not used internally or sent out to customer sites. More often than not, they were shelved before completion in lieu of technology or marketing changes. In one specific case, over a million was invested in funding an upgrade to our catalog and at project completion all work was shelved as we opted to move toward the ASP/IIS/SQL server based catalog.

6. Invest In and Trust Your Employees. There is no need to demonstrate the power that low morale has on the effectiveness of production. Because our continual architectural changes demanded skill sets to match, internal staffing made every effort to comply wholeheartedly. Even so, at some sites, visiting management made no secret of the fact that they considered current staffing skill sets to be no longer adequate, sometimes commenting on this to outside recruiters while staff was within earshot. At times, work was outsourced and internal staff was excluded from much of the design meetings. As funding ceased on key projects, internal staffing was left to complete the same half-built projects that they previously were excluded from and were allocated much less time than those with superior expertise. Employee perception of trust was compromised as it became evident that key figures were strategically placed throughout the company to report on each site's effectiveness.

7. Luck and Timing. There is much to be said for luck and good timing - neither of which we seemed to have. We had bad timing in bringing the best upper management in too late and lost huge contracts because of events that were outside of our control - such as new CTOs at client sites favoring other products. For a startup that had no clear definition of itself during most of its existence, good luck would have been essential to succeed but a good business with growth potential can never rely on luck as its strongest operating plan. Timing is another issue. Good leadership is capable of bringing foresight and knowledge through experience to the table. Failure to critically assess internal operations clearly and honestly along with undermining your own place in the market through underselling are not only key steps toward ensuring poor timing, but indicate inexperience and misunderstanding of current trends.

Looking at all of this in retrospect, it's easy to realize that uncovering problem areas as they were occurring is not as simplistic as the historical review would indicate. Addressing them quickly and positively may have even been almost impossible at times. Yet, if I ask myself if I would do it again, if I would put my career on the line for a startup that holds no more promise than a long shot, I would have to say "Yes." There is something adventurous in bringing new technologies and offerings to a fairly unknown market and to be a part of the growing pains of a Dot-Com just finding itself. Now, of course, though, I am in a better position to see the signs that indicate trouble ahead and when to part company.

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Kathy has 25 years of solid hands on experience in all phases of Data Processing software development and design. This experience encompasses both mainframe and client/server applications with emphasis on participation as technical and or architectural advisory lead in porting mainframe applications onto a client/server base for applications ranging from banking and imaging to procurement. She is currently adjunct professor of Computer Information systems for West Virginia Northern Community College and am a long time Member of Western PA Mensa. She can be reached at mailto:dhamu@access.hky.com.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 3. NET NEWS: DeCSS 2? DVD code broken again Yahoo: Time for a change O'Reilly to Halt Software Development

>DeCSS 2? DVD code broken again

It appears the Motion Pictures Association (MPA) is going to be none too happy with the latest crack of the DVD code. http://www.zdii.com/industry_list.asp?mode=news&doc_id=ZD2693768 0308

>Yahoo: Time for a change

Leaders are leaving the dropping dot-com. Find out who it is this time. http://www.zdnet.com/zdnn/stories/news/0,4586,2693703,00.html 0307

>O'Reilly to Halt Software Development

O'Reilly, the publisher famous for having cute animals on their book covers such as the Perl camel, has decided to stop developing software. Why? http://www.internetnews.com/wd-news/article/0,,10_708491,00.html 0308

That's it for this week, see you next time.

Andrew King Managing Editor, WebReference.com update@webreference.com

Alexander Rylance Assistant Editor, WebReference.com arylance@internet.com

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