Pets.com (CMC, Thursday, Week 10)
coming-of-managerial-capitalismyear-twoHow big was the dot-com bubble?
August 1995 (day before Netscape IPO) --- NASDAQ at 1,005
March 2000 (peak of the bubble) --- NASDAQ at 5,132
Yesterday --- NASDAQ at 3,068
Is Pets.com a good opportunity?
-- Category killer (race to get scale, realize economies)
-- High gross margin, low net margin because bricks-and-mortar is costly
-- Recurring revenue\
Rewards to first mover (theoretically); winner-take-all << Is this really a winner-take-all business? Maybe -- see also, Amazon. Concerns: Competitive dynamics (destructive rivalry between petstore.com and pets.com) Do consumers need to see/touch pet food and supplies? Margin / weight (Commentary: I did not find this implausible) Network effects? Loyalty? (Commentary: I did not find this implausible) Lots of grousing about specific assumptions in the business plan. (Commentary: Totally misses the point -- basic thesis in early-stage venture is that a smart team with a plausible business model and a big market will figure out how to win. At the beginning, Pets.com team made a reasonably compelling case that CAC