July 4, 2003:
Chicago eBusiness Year in Review: A Report
(Part 3 of 3)

Story: Part One | Part Two | Part Three
Transcript: Part One | Part Two | Part Three

ver two years have passed since I wrote the first installment of this series on Chicago eBusiness. Since then, the landscape of Chicago tech has changed dramatically. Gone are the bustling high tech events and meetings that once characterized the Chicago tech scene. Lavish kickoff parties at ritzy nightclubs have since been replaced by subdued get-togethers at local pubs, where once high-flying Internet wannabees now commisserate with each over cheap domestic beer. Discredited web strategists and PR hacks, once the darlings of the Internet set, now lurk furtively in the darkened corners of near-empty tech events, gibbering marketing-speak and bizaare non-sequiturs at each other in a desperate attempt to prove their relevance. Would-be Internet daimyo who once dominated the Chicago tech scene now sit cowering in their castles, fearful of the packs of ravenous creditors and tech journalists that pace and howl just outside their gates. Meanwhile, as the bonfires of the .com vanities burn down to wretched embers and finally disappear into dust, the same people who originally built the Chicago tech scene, now older and wiser, sit quietly working, watching ... and waiting.

The Story Thus Far

• Decentralization
• Multiple Revenue Streams
• Sales-Based Revenue Models
• Partnerships
• Client Focus

We also discussed the characteristics of failed New Economy companies, that included (but were not limited to):

• Lack of Industry-Specific Knowledge
• Poor Management
• Lack of Communication

Now, in Part 3, we will focus not on reviewing what happened generally, nor on analyzing the symptoms that accompanied the failure of so many .coms specifically, but the root causes of the tech crash as a whole.

Root Causes of the Tech Crash of 2000

As the discussion began to draw to a close, Brian, Gary and Ron began to assess what were the likely root causes of the Tech Crash of 2000. Most people assumed that management was solely to blame for the failure of so many companies. However, the panel believed that the lion's share of the blame lay not with the management, nor with the workers, or even with the market, but with the irresponsible VCs who funded them. Ron May had the floor, and illustrated this point using an example from his own experience:

Last night, after the MEF meeting, I [was confronted by] Jerry Mitchell.... Here's the point Mitchell made: 'Wait a minute, Ron, you're not doing your homework. The entrepreneurs are not the people we should be demonizing'.... And Jerry's point was, these entrepreneurs need a lot of guidance from seasoned people. The real culprits here are the VCs and the other higher-levels guys who are handing this money over to, frankly, a bunch of kids in many instances, and not giving them the proper guidance.¹

Jerry Mitchell, a well-known local entrepreneurial maven, had pointed out to Ron May the night before at a Midwest Entrepreneur's Forum (MEF)

“The real culprits here are the VCs and the other higher-levels guys who are handing this money over to, frankly, a bunch of kids in many instances.”

meeting that one of the prime causes behind the Tech Crash of 2000 was the reckless manner in which many venture capitalists had funded Internet startups. Often, little planning had gone into these ventures, and little guidance had been given along the way, with the result being that many startup companies failed. Therefore, the failure of many of these .coms was not caused by poorly thought-out business plans, workers with inadequate skills, or incompetent management, though these issues may have played a role. Rather, their failure was caused largely by management engaging in excessive, even reckless, spending with little or no guidance or controls imposed upon them by the VCs who funded their ventures. In fact, it is likely that the VCs encouraged, even demanded such lavish spending, working on the theory that making a big splash in the market would improve their company's chance of success, which would in turn improve the size of their return on investment. However, this theory actually appears to have had the opposite effect, as Ron May explained:

You don't just throw a bunch of money blindly at a problem — you have benchmarks, you have, you know, the whole concept of project management developed in the 70s.... Now you can overdo it, but, I am curious to know how many of these companies that get twenty, thirty, forty million dollars in venture capital, do they actually hand them a check for $30 million and say 'Here, build a company'? I mean, what kind of insanity is that? Then the company goes out and spends money like there's no tomorrow, and then five minutes later, you know, they've got to do layoffs, because they've overspent and their burn rate's too high.... What about applying the IT concept of, you know, project management, and you work towards certain benchmarks in the growth of these companies. Why not dole out the money on the part of the VCs in a more limited fashion. I guess Jerry's point is, 'Ron, when all of this baloney is over with, we still want to have some entrepreneurs left in this town, because it's not the entrepreneurs themselves who are at fault here. It's that they are being handed a lot of money, and not being properly managed.' ²

“When all of this baloney is over with, we still want to have some entrepreneurs left in this town.”

Gary Ruderman suggested that another of the root causes of the Tech Crash of 2000 was Y2K. He pointed out that the tremendous profits reaped from Y2K consulting had led IT consultants to believe that the Internet would be similarly profitable, and that the gold rush would continue on forever. Ron May, who was a tech headhunter before he became a self-styled journalist agreed, even going so far as to refer to the period just before Y2K as "The Full Employment Act".

Headhunting was never so good as when all that money was being spent on Y2K. Because first of all, even if you weren't placing Y2K guys, that drained all the resources. So many people were working on Y2K, there was a shortage of people in everything else. It was a huge boondoggle in a lot of ways, because the companies that were making money off of this, the big consulting firms, were really charging a lot of money. I mean, I don't know where we get off thinking that some of these kids right out of school that work at, you know, $200/hour billing or whatever the rates are these days.³

The heady days of the Y2K period, coupled with the nearly unprecedented economic growth throughout the late 1990s, appears to have created in the venture capitalist community the mentality that there was nowhere to go but up, that the prosperity would continue forever. It was this devil-may-care, "greed is good" attitude that was the most likely root cause of the Tech Crash of 2000, a crash that led the entire U.S. economy into a recessionary spiral that we are only now starting to recover from.

Chicago eBusiness Year in Review

That list had an unusual provenance in that it had been originally tabulated as part of a letter written by Darcy Evon to the Wall Street Journal. She and other local tech leaders had written the letter in response to an article the Journal had published in their November 24, 1999 Business section about the hottest high tech areas on the country. For some reason, the Journal had left Chicago out of their list of cities that they believed to be the hottest high-tech cities in the country, and Darcy had sent them the letter with a long list of Chicago tech companies in order to prove that Chicago, though not necessarily number one, was definitely a major player in the technology sector. As Ron explained,

I printed out from 11/24/99 the Year in Review. I figured you would have to go back prior to the start of the year 2000. This was a letter from Darcy [Evon] to the reporter at the Wall Street Journal — has anybody brought up that Wall Street Journal article today, or no? Okay. For those of you who don't remember it, does everybody know what I'm talking about? November 22nd, I believe, the Tuesday before Thanksgiving in '99, the front page of the Business section in the Wall Street Journal had a big map of high tech in the United States. Lo and behold, 13 cities were highlighted, and guess who wasn't on there? Chicago. We were among the five up-and-coming cities, so we could have been actually ranked as low as 18th on that list. Number 13 on the list was Pittsburgh. So, you know, kind of a blow to our collective egos that Chicago didn't even make it as high on the high tech list as Pittsburgh. That list was based on venture capital money that had flowed in as it was recorded in the famous PricewaterhouseCoopers survey [MoneyTree].⁴

MoneyTree is a quarterly report of venture capital financing published by PricewaterhouseCoopers/ Thomson Venture Economics/National Venture Capital Association that charts investments by industry, stage of development, sequence of financing and region, and also lists the most active investors. In this year's list, Chicago isn't even mentioned specifically, instead being lumped into the generic "Midwest" category, whereas New York, Washington D.C., San Diego, L.A., Sacramento, Philadelphia and, of course, Silicon Valley are mentioned by name.

Apparently, venture capital financing tends to be more spread out in the Midwest, rather than being concentrated more in the urban areas, as it is in other parts of the country. This may actually be a good thing, as extreme centralization of wealth tends to be unhealthy for economies. Also, Chicago is already an established "Old Economy" town, with its own stock exchange and robust manufacturing economy, so venture capital is not needed quite as much. Therefore, the fact that there is less venture capital financing in the Chicago area might actually be considered a good thing, as it may indicate that our local economy is relatively strong compared to other parts of the country. As Gary Ruderman explained in Part 1, "The difference between Silicon Valley and Chicago is that there is no trading pits — there's no commodity pits in California. So if you need a buzz, if you need a 'danger high', well you invest — you invest in startups. Well we never had that — we've had stability in Chicago."⁵

The fact that Chicago is a more economically stable area with less need for venture financing may be the reason that the Wall Street Journal rated Chicago so low on the list. They rated the top tech cities in the country solely based on the total amount of venture capital that went into funding high tech startups, rather than the quantity (and quality) of tech companies that actually were started in the area, with or without outside venture capital. Many .com plays in the Chicago area appear to have been "brick to click", with brick and mortar companies investing in the .coms as an extension of their brand into the web space, rather than as wholly separate entities. Brick to click sites, which were intrapreneurial initiatives funded by the parent company rather than entrepreneurial initiatives funded by VCs, likely would not have been counted in the Moneytree analysis. Moreover, the fact that many companies are based just outside the city limits within nearby suburbs most likely played a role. Since these were technically not in Chicago proper, this might have contributed to Chicago being lumped into the generic category of "Midwest".

Where Are They Now?

At this point, the issue of who was at fault and why has become moot. The damage has been done, the wound is healing, and the tech economy is beginning to rouse again from its long slumber. But one question remains: where are these companies now? Ron had made a point to read through the entire list compiled in Darcy's letter, providing us with a healthy list of companies to review. Though researching and writing up all of the details regarding every .com and brick to click startup in the Chicago area would be tiresome to read (and to write), here is a summary of the current state of all of the companies specifically mentioned in the list that Brian, Gary and Ron discussed in that AIP meeting two years ago:

AllScripts
Type: Brick to Click ^†
Founded: 1986
Location: Libertyville, IL
Description: Allscripts is a provider of medication management solutions, specifically, healthcare information technology solutions. In 2000, Allscripts completed three significant acquisitions to extend its product offerings beyond electronic prescribing, and in 2001 they moved beyond e-prescribing to providing physicians with mobile and modular clinical applications.
Condition: Healthy
NASDAQ Summary Quote

Archipelago
Type: .com ^††
Founded: January, 1997
Location: Chicago, IL
Description: In January, 1997, the SEC implemented new Order Handling Rules that revolutionized trading in NASDAQ® securities. The new rules created the opportunity for Electronic Communications Networks (ECNs) to interact directly with the NASDAQ National Market® System. The Archipelago ECN was formed in December 1996 in response to these rules as one of the four original ECNs approved by the SEC. Since its inception, the Archipelago ECN has offered its subscribers outbound order preferencing and has effectively created a national limit order book for NASDAQ stocks.
Condition: Healthy

art.com
Type: .com
Founded: 1997
Location: Chicago, IL
Description: art.com was started as "ArtToFrame.com" in 1997, with the art.com name later purchased for $450,000. Twelve months later (May 1999), it was sold it to Getty Images for $137 million, 10 million was in cash. The art.com domain name was subsequently sold to allwall.com, where it still resides today as the name of a profitable company.
Condition: Deceased (though the domain name lives on)

Blue Meteor
Type: .com
Founded: 1999
Location: Chicago, IL
Description: Blue Meteor was an ASP that united pre-built, scalable infrastructure with an array of application software, including Enterprise Resource Planning, Customer Relationship Management, E-commerce, Collaboration, and Productivity, and integrated and served them to users enterprise-wide via a customized portal application. Unfortunately, due to market conditions and what some alleged to be reckless spending on unnecessaries such as high-end accomodations and expensive office furniture, Blue Meteor lived up to its name by burning brilliantly for a time, and then crashing to earth spectacularly as one of the more prominent dot-com flameouts of 2001.
Condition: Deceased

britannica.com
Type: Brick to Click
Founded: 1999
Location: Chicago, IL
Description: The Encyclopædia Britannica was born in 18th-century Scotland, but by the time the fourteenth edition appeared in 1929, the principal operations of the company had moved to the United States, and to Chicago in the mid-1930s. Britannica was an early leader in electronic publishing and new media, including the first digital version of the Encyclopædia Britannica in 1981 and the first multimedia CD-ROM encyclopedia in 1989. In 1994 the company developed Britannica Online, the first encyclopedia for the Internet, and in 1997 saw the creation of the Britannica Internet Guide, a directory of the web’s best sites. Finally, in 1999 the company released the first version of the Britannica.com website in one of the most publicized product launches in Internet history. Britannica.com is a good example of a non-VC-backed internet play which, like other "brick to click" ventures, would not have shown up on the New York Times' radar.
Condition: Healthy

Business Logic Corporation
Type: .com
Founded: 1996
Location: Chicago, IL
Description: Business Logic is an Application and Integration Solutions Provider focused on the front-office needs of the financial services industry. They have relationships with many large financial services companies and have established strategic alliances with a range of technology leaders and third-party application providers. They also develop and deploy Internet-based financial management solutions.
Condition: Healthy

Click Commerce
Type: .com
Founded: 1994
Location: Chicago, IL
Description: Click Commerce is a provider of Internet-based Channel Management solutions for Global 2000 enterprises. Their software is designed to allow enterprises to effectively engage in and manage collaborative e-commerce throughout their distribution channels. They also team with clients to develop, implement and support customized, secure Channel Management solutions, connecting all sell-side partners in distribution chains via the Internet.
Condition: Healthy
NASDAQ Summary Quote

Commerx
Type: Brick to Click
Founded: 1995
Location: Westchester, IL
Description: Commerx was a provider and operator of business process automation solutions that allowed customers to integrate with existing business applications or to utilize one or more components of the suite to create a total solution for a particular business process. Commerx focused on bringing to market an integrated suite of solutions in a private, hosted environment, focusing on the process and workflow within trading communities. In 2002, their assets were purchased by FloorsNOW Technology Corporation of Calgary, Alberta, Canada, which took on the name Commerx Corporation, so though the original company is deceased, the name and ideas continues on as a merged entity.
Condition: Deceased (Friendly Acquisition)

CoolSavings, Inc.
Type: .com
Founded: 2000
Location: Chicago, IL
Description: CoolSavings is a comprehensive e-marketing solution that provides targeted advertising and promotional incentives to help offline and online companies identify, acquire and retain active shoppers. CoolSavings supplies marketers with a single resource for accessing and engaging a dynamic group of shoppers. In addition, their proprietary database technology tracks consumer response, shopping preferences and site behavior at the household and shopper level, to provide their clients with consumer data from which to make smarter marketing decisions.
Condition: Healthy
NASDAQ Summary Quote

digitalschoolhouse.com
Type: Brick to Click
Founded: 2000
Location: Lisle, IL
Description: The Digital Schoolhouse is a program run by the Computer Associates Digital Schoolhouse Foundation, an independent 501 (c) (3) non-profit organization. The program is designed for fifth grade students to participate in school-to-work lesson plans utilizing the Internet and Microsoft Power Point. The Digital Schoolhouse program takes place in a state-of-the-art computer lab with state certified teachers and Computer Associates volunteers leading all classes. The foundation's mission is to help prepare students for success in an increasingly digital world through access to and understanding of technology as a dynamic, global classroom resource. Computer Associates is actually headquartered in New York, though it has a Learning Center in Lisle, IL.
Condition: Healthy

Digital Work
Type: .com
Founded: 1998
Location: Chicago, IL
Description: Digital Work creates website solutions for small businesses and individuals, including a website management tool that allows users to update their website themselves. They also provide marketing services to assist business customers in driving traffic to their website.
Condition: Healthy

divine interVentures
Type: .com
Founded: 1999
Location: Lisle, IL
Description: The largest and most controversial of the Chicago tech companies, divine sought to put the Chicago tech scene on the map with an unprecedented amount of investment into Chicago-area tech companies. divine interVentures was the brainchild of Andrew "Flip" Filipowski, former founder of Platinum Technologies, who had sold Platinum for $300 million and used part of that money, along with hundreds of millions more from various other investors, to fund divine and a number of other local companies. divine started off bright and full of promise, full of interesting people and new ideas, and looked to all the world — and its employees — to be a big success story in the making.

divine interVentures' tagline was "The Internet Zaibatsu", zaibatsu being a Japanese term referring to a powerful, family-owned cartel of interrelated businesses. Though the concept was interesting, the fatal error that divine made in its early stages was, instead of using a standard corporate model of one large business with several departments, the divine management decided instead to take the zaibatsu concept literally and turn all of the departments into independent business entities, over which divine would maintain a controlling interest. Though there were many more of these "Greenfields" companies that were part of divine's portfolio, here is a listing of only the independent business units that were originally part of divine, all now defunct, including their original name(s), their final names, and their core service offerings:

• Web Divine > Xqsite: Website and applications development
  
• Buzz Divine > Buzz > Buzz MSP: Marketing communications
  
• Host Divine > Dotspot: Web hosting and office space
  
• Finance Divine > FiNetrics: Accounting and financial planning
  
• Sales Divine > SaleSpring: Sales and channel development
  
• Knowledge Divine > LightsEdge: Knowledge management
  
• Talent Divine > Talent Divine: Recruiting and HR services
  
• Justice Divine > Justice Divine: Legal services
  
• eXperience Divine > eXperience: Strategic planning and new markets development
  

After divine's disappointing IPO on 7/12/2000, the stock price quickly plummeted from its starting price of $9 per share, an event that applied the coup de grace to employee morale. Scores of people from all of the business units got out while the getting was good, and layoffs started a few months later. By 2001, all the business units had failed and/or been folded back into the parent entity, which was renamed divine, Inc. The new divine, Inc. limped along for a time as a provider of enterprise information portals, generally dubbed the "extended enterprise" suite of services, which was essentially a combination of the best service offerings of the former Xqsite, Buzz, DotSpot and LightsEdge. A good idea, but it was too late to gain market share in an already crowded market. Near the end, divine claimed it owned the patent for ecommerce so, theoretically, allegedly, everyone who used ecommerce of any type owed them substantial royalties. divine finally gave up the ghost and filed for bankruptcy in early 2003. Rosebud.
Condition: Deceased

Note: Some of divine's assets appear to be reemerging under a new brand called " Silk Road Technology, Inc.". These assets include OpinionWare, Participant Server, Showcase, Synchrony, TrueLook and XChange. It will be interesting to see how this smaller, more agile company fares in the marketplace.

Here is a list of some of divine's other portfolio companies that were mentioned in the AIP meeting. These companies were either acquired and brought into the zaibatsu from the outside, or were otherwise not one of divine's original business units:

• BeautyJungle.com: BeautyJungle sold cosmetics over the Internet. However, they did not have an agreement with Estee Lauder, which controls 50 percent of the cosmetic distribution in the United States, so they stood little chance of succeeding. BeautyJungle.com ceased operations on 11/16/2000.
  
  
• Live On The Net: LiveOnTheNet.com is an online entertainment network that creates its own technologies, content, and hosts a collection of original and classic entertainment archives. Their goal is to make streaming media available to virtually any content owner. Live on the Net still appears to be alive, and its relationship to divine, if any, is unclear, though divine once had a controlling interest.
  
  
• Opinionware: Opinionware was originally developed as a method to perform online surveying, data mining and information management, and has evolved from there to a fairly robust suite of applications. Opinionware was briefly turned into an independent business unit, but was later rolled back into divine, and is now part of the Silk Road portfolio.
  
  
• Perceptual Robotics: Perceptual Robotics developed and marketed software and systems for live webcams. They are best known for their live shots of sporting arenas, zoos, and similar venues, where users can remotely control and zoom a camera. Perceptual Robotics was acquired by divine, and is now part of the Silk Road portfolio, rebranded as "TrueLook".
  
  
• SHo Research: SHo Research was a market and opportunity assessment company focused on providing information about how businesses use and can be expected to use the Internet and Internet technologies. The owner, Steve Auditore, divine's VP of Research, had decided to spin off his own company to focus on Internet business intelligence. He was best known for his "map of the Internet".
  
  
• Whiplash: Whiplash had developed a web-based marketplace for travel agents, providing leisure travel information and automating the planning and booking of travel itineraries. They were up against larger, better funded players in the market, including Orbitz, and they did not use the ubiquitous SABRE airline reservation system, so they stood little chance of succeeding.

For a more complete list of Greenfields with more financial info, check out the e*prairie discussion list here.

Eppraisals
Type: .com
Founded: November, 1999
Location: Chicago, IL
Description: Eppraisals provided identification and valuation of fine art, antiques and collectibles, offering digital "eppraisal" certificates from experts in nearly 300 categories.
Condition: Deceased

Ethnic Grocer
Type: .com
Founded: 2000
Location: Elk Grove Village, IL
Description: EthnicGrocer.com, a division of TransEthnic Inc, is an online provider of authentic ethnic products.
Condition: Healthy

fob
Type: .com
Founded: 1994
Location: Chicago, IL
Description: fob originally was created as an online business-to-business purchasing hub for buyers of raw materials and other manufacturing inputs. In 2000, they developed a critical document transportation technology, and from there transformed into a simple electronic document transport solutions development company. They now operate under the name Automated Document Exchange Services Inc., (ADEXS).
Condition: Healthy (now known as ADEXS)

FTD.com
Type: Brick to click
Founded: September, 1999
Location: Chicago, IL
Description: FTD.com is an Internet and telephone marketer of flowers and specialty gifts. Founded by FTD, FTD.com sells directly to consumers through its website and its 800 telephone number. FTD.com was profitable one year after its IPO in 1999, but it merged back with FTD, Inc. in June, 2002 to leverage the strengths of FTD's business-to-business operations and increase its growth opportunities.
Condition: Healthy (though merged back into parent company)
NASDAQ Summary Quote

iGive
Type: .com
Founded: 1997
Location: Evanston, IL
Description: iGive is a charity-oriented website that gives a percentage of the sales from participating vendors to a charity of your choosing. iGive generates revenue by receiving commissions for every sale, and through advertising on their site.
Condition: Healthy

LookingGlass
Type: Brick to Click
Founded: 2000
Location: Oak Brook, IL
Description: Looking Glass builds, owns and operates metropolitan fiber optic networks using flexible optical platforms and operational support systems to provide a broad range of data transport services in the largest U.S. metro areas. They also provide fast provisioning of SONET, Wavelength and Ethernet-based lit services, high-capacity dark fiber and carrier-neutral collocation services for carrier and enterprise customers.
Condition: Healthy

marchFIRST
Type: .com
Founded: March, 2000
Location: Chicago, IL
Description: Though marchFIRST was not specifically mentioned in the meeting, it was perhaps the most spectacular flameout of the Chicago .com era, so it deserves inclusion in this list. marchFIRST, like divine, Inc., created customer outreach and enterprise improvement solutions for Global 3000 corporations and emerging companies, as well as general IT and marketing communications consulting. Unlike divine, which exited the scene relatively gracefully, marchFIRST crashed and burned spectacularly amidst a firestorm of controversy. Allegations of illegal dealings and shafted ex-employees carelessly jettisoned without benefits or even severance accompanied its infamous demise. Formed as the merger of Whittman-Hart and USWeb/CKS, marchFIRST was started in the ides of March, 2000. Between the tech crash that occurred at the same time as their big debut and a failed merger, marchFIRST stood little chance, not even after they allegedly spent $50 million on branding. marchFIRST declared bankruptcy under a cloud of thick darkness on 4/12/2001.
Condition: Deceased

OpenPort
Type: Brick to Click
Founded: 1993
Location: Chicago, IL
Description: Open Port Technology developed and distributed networking software that enabled telcos to offer voice, fax and other high-speed services. It burned through close to $50 million in venture capital before it closed down on 11/16/2000.
Condition: Deceased

Our House
Type: .com
Founded: November, 1999
Location: Evanston, IL
Description: OurHouse.com was a provider of online home improvement and services information OurHouse.com partnered with Ace Hardware, allowing them to leverage inventory from Ace's 17 warehouses, Ace's fulfillment centers, Ace's established warehouse distribution network and their relationships with more than 1,000 home improvement products manufacturers. Ace later broke off its relationship with OurHouse for unstated reasons. After several failed deals, and after having burned through over $150,000,000 in funding, Our House's remaining assets were sold off to Amazon.com, and it closed its doors sometime near the end of 2001.
Condition: Deceased

PCQuote.com
Type: Brick to Click
Founded: June, 1980
Location: Chicago, IL
Description: PCQuote.com originally was incorporated in Illinois on June 23, 1980 as On-Line Response, Inc. The company changed its name to PCQuote, Inc. in 1983 and incorporated in Delaware on August 12, 1987. In an effort to focus on the website and consumer business, the company incorporated a subsidiary, PCQuote.com, Inc. ("PCQuote") in March 1999. In June 1999, the company changed its name to HyperFeed Technologies, Inc. PCQuote continues separately, now owned by Money.net as an Internet-based provider of high performance, real-time financial data, timely business news and comprehensive research and analytical tools. The company's services provide access to financial information that allows users to make informed investment decisions.
Condition: Healthy (though now owned by Money.net)

Participate.com
Type: .com
Founded: 1997
Location: Chicago, IL
Description: Participate Systems is a provider of outsourced online sales and customer support community and self-help solutions. Participate Systems has proven how effectively Fortune 1000 companies can use online self-help communities to increase sales and decrease customer support costs. Participate Systems offers a complete outsourced solution comprised of hosted software and active management services to enable companies to capture and reuse the knowledge and expertise distributed throughout their organization and customer base.
Condition: Healthy

Peapod
Type: .com
Founded: November, 1999
Location: Lake Zurich, IL
Description: Founded in 1989 by brothers Andrew and Thomas Parkinson, Peapod has grown to be one of America's leading Internet grocers. Peapod is a wholly owned subsidiary of international food provider Royal Ahold, and works in partnership with Ahold USA supermarket companies including Stop & Shop and Giant Food.
Condition: Healthy

PocketCard
Type: .com
Founded: 1998
Location: Gurnee, IL
Description: Pocketcard was originally spun-off from Lindenhurst-based WelcomeCard in 1998. PocketCard made software that basically allowed parents to set-up secured VISA debit cards for their children. PocketCard raised $15 million from divine Interventures in 2000, but closed in 2001.
Condition: Deceased

QuoteSmith.com
Type: Brick to Click
Founded: 1984
Location: Darien, IL
Description: Quotesmith.com was originally founded in 1984 as Quotesmith Corporation. Quotesmith Corporation went on line in 1999 with Quotesmith.com, which was an instant insurance price comparison service on the Internet which provided instant auto, life, medical and annuity quotes from 375 leading insurance companies and allowed visitors to apply for insurance from the company of their choice. Quotesmith.com now owns and operates Insure.com, a comprehensive online consumer insurance information service that caters to the needs of self-directed insurance shoppers.
Condition: Healthy
NASDAQ Summary Quote

SpyGlass, Inc.
Type: .com
Founded: 1990
Location: Naperville, IL
Description: Spyglass was born in the very heart of Illinois tech. The company was originally created in Champaign, IL to commercialize and support technologies from NCSA including Mosaic, the very first web browser, and grew into a developer of visual data analysis tools for the engineering and scientific marketplace. Spyglass later evolved into a strategic Internet consulting, software and professional services firm. On July 24, 2000, Spyglass was acquired by San Francisco-based, OpenTV, effectively ceasing operations as an independent entity.
Condition: Deceased (acquired by OpenTV)

Starbelly.com
Type: .com
Founded: March, 1999
Location: Chicago, IL
Description: Starbelly.com was a web-based promotional products business that utilized in-house mass-customization technology. The company's business model included partnerships with Oracle, Ariba, PurchasePro, Yahoo! and Excite, among others. In March of 2000, interested in acquiring their web marketing and supply-chain technology, HA-LO stunned the promotional products industry by acquiring Starbelly.com for a whopping $240 million. Starbelly's domain name has redirected to HA-LO's website ever since.
Condition: Deceased (Acquired by HA-LO)

TheSauce.com
Type: .com
Founded: March, 1999
Location: Chicago, IL
Description: TheSauce.com caters to independent restaurateurs, helping them with recruiting, hiring and managing staff, ordering food and supplies, finding goods and services, as well as giving them advice about running a restaurant.
Condition: Healthy

TrafficCop.com
Type: .com
Founded: 1998
Location: Glen Ellyn, IL
Description: TrafficCop.com, later changing their name to iLink Global, was founded to provide "real time" shipment pricing and logistics services for e-commerce companies. Their revenue model was based on taking a transaction fee from their clients, which include B2B auction sites and exchanges such as Neoforma, iSteelAsia.com, and TranShopNet. iLink Global was acquired by Descartes Systems Group Inc. in November, 2000 for $15.6 million in an all-stock transaction.
Condition: Deceased

Telenisus
Type: .com
Founded: June, 1999
Location: Rolling Meadows, IL
Description: Telenisus Corporation was a leading managed Internet infrastructure service provider that offered web hosting, IT integration, and security applications to its clients. They raised more than $100 million before they fell into the trap of over-building in too many directions in an effort to satisfy venture capitalists. Telenisus succeeded in building one of the most successful and well-regarded security practices but faltered with its web hosting and Internet service business. It had offices in 15 cities in 2001 but little revenue to support them, and was forced to sell off its business units between late 2001 and early 2002 at fire-sale prices to such clients as Verisign.
Condition: Deceased

Transora
Type: .com
Founded: 2000
Location: Chicago, IL
Description: Members of the Grocery Manufacturers of America established Transora in mid-2000 to serve as the Consumer Packaged Goods (CPG) industry's business-to-business exchange. They established Transora in the shared belief that collaboration and new technologies would be essential to revolutionizing the industry and driving future growth.
Condition: Healthy

UBid
Type: .com
Founded: April, 1997
Location: Chicago, IL
Description: uBid is an Internet auction site featuring thousands of products in numerous product categories. uBid was founded in April 1997 as a division of Creative Computers, a U.S. catalog retailer, to help the company move its excess and refurbished computing inventory online. In December 1998 uBid IPO'd, and in April 2000, uBid officially joined the CMGI network as a majority-owned operating company. uBid re-launched its site in June 2001, integrating its three auction channels to enable three easy buying and selling solutions. In April 2003, uBid was purchased from CMGI, Inc by Takumi, a majority-owned company of Petters Group, LLC.
Condition: Healthy (but now owned by Petters Group, LLC)

VCapital.com
Type: .com
Founded: 1995
Location: Chicago, IL
Description: VCapital.com is a membership-based referral service and information hub/portal for entrepreneurs and private investors. Batterson Venture Partners first launched the site in 1995. In 2000, VCapital raised $4.8 million from Blue Vector and $2.1 million from Batterson Venture Partners, and has received additional funding from Apex On-Line Ventures, Inc.
Condition: Healthy

Web Street
Type: .com
Founded: 1996
Location: Northbrook, IL
Description: Web Street Securities was an online securities brokerage firm. It was built specifically for the Internet, unlike many other web-based trading sites, which were built on legacy systems. As a result, Web Street's technology tended to perform faster than competing systems. Despite this, they still lost the race, and were acquired by E*TRADE in 2001.
Condition: Deceased

YesMail
Type: .com
Founded: 1997
Location: Chicago, IL
Description: Yesmail is an online relationship marketing company specializing in email marketing for customer acquisition and retention.
Condition: Healthy

Zack's
Type: Brick to Click
Founded: 1978
Location: Chicago, IL
Description: Zacks Investment Research was formed in 1978 to compile, analyze, and distribute investment research to both institutional and individual investors. Zacks provides this information through their own website and through partnerships with over 1,500 websites who provide their data.
Condition: Healthy

^† "Brick to click" indicates a brick and mortar company with a substantial web presence and/or technology-oriented product or service offering.
^†† ".com" indicates a company that is completely web based, such as an ASP, or a company that does business primarily on the web, such as a web development firm.

"The New Normal"

It is difficult to let go of the past sometimes. In retrospect I realize I enjoyed being a part of the Internet boom — and bust — despite the extreme stress and personal hardships I had to endure. I guess it was the thrill of being part of something big, of taking a chance, of doing something daring — of having "the right stuff". But for now, the hardest part is enduring the flat boredom of "the new normal".

Since the ides of March 2000, most of the people who had worked in these .coms have had to start their own businesses, or leave the tech sector altogether — so great was the destruction of the post-crash IT job market. However, signs of a gradual recovery are beginnning to make themselves known. Computer sales are beginning to recover. Venture capital is beginning to flow, albeit slowly. Talk of tax cuts and fiscal responsibility is helping to create a sense of psychological stability, and the successful war on terror is reaffirming our sense of national security. All of these things together are forming the foundation for the next great economic growth period. Hopefully, we will not repeat the mistakes of the past.

Story: Part One | Part Two | Part Three
Transcript: Part One | Part Two | Part Three

Brand Warfare: 10 Rules for Building the Killer Brand

Gonzo Marketing: Winning Through Worst Practices

The Virtue of Prosperity:
Finding Values In An Age Of Techno-Affluence

The Monk and the Riddle:
The Education of a Silicon Valley Entrepreneur

Burn Rate

Search: All Products Books Popular Music Classical Music Video DVD Toys & Games Computer & Video Games Electronics Software Tools & Hardware Lawn & Patio Kitchen Camera & Photo Wireless Phones Keywords:

March 7, 2007

Doug Elwell, Inc. Launches New Print Division with a New Travel Guide to Ireland

July 4, 2003

Chicago eBusiness Year in Review: A Report (Part 3 of 3)

January 1, 2003

Doug Elwell, Inc. Announces New Integrated Marketing Initiative

March 20, 2002

Chicago eBusiness Year in Review: A Report (Part 2 of 3)

January 1, 2002

Doug Elwell, Inc. Purchases Raptor Communications

Sept. 27, 2001

DEI Unleashes Sevenfold Sites

August 6, 2001

January 29, 2001

January 17, 2001

January 16, 2001

January 2, 2001

January 1, 2001