-
9-809-117A P R I L 9 , 2 0 0 9
________________________________________________________________________________________________________________
Professor Tom Nicholas and Research Associate David Chen prepared
this case. HBS cases are developed solely as the basis for class
discussion. Cases are not intended to serve as endorsements,
sources of primary data, or illustrations of effective or
ineffective management. Copyright © 2009 President and Fellows of
Harvard College. To order copies or request permission to reproduce
materials, call 1-800-545-7685, write Harvard Business School
Publishing, Boston, MA 02163, or go to
www.hbsp.harvard.edu/educators. This publication may not be
digitized, photocopied, or otherwise reproduced, posted, or
transmitted, without the permission of Harvard Business School.
T O M N I C H O L A S
D A V I D C H E N
Online Pet Supply Retailing
The pet industry is a great eulogy for the entire dot-com
industry . . . Blind is the operating word. Lots of blindly, highly
funded management teams and a blind anticipation that customers
would use the internet.
— Frank Creer, venture capitalist, May 20011
In a world of disruptive internet technologies, how do you know
if your business model is crazy or brilliant, and what do you do as
management to maximize your chances of success?
— Josh Newman, Mar. 2009
From 1995 to 1999, the U.S. experienced a period of tremendous
growth in its information technology (IT) sector. The IT industry,
although it accounted for less than 10% of the U.S. economy’s total
output, contributed disproportionately to economic growth.2
Consequently, as venture capital money flowed freely, many
companies developed an institutional mentality of rapid expansion,
with market share taking on crucial importance in their quest to
dominate the competitive landscape. The mantra was “get big, fast”
and the goal was to be first to IPO, so that cash could be
inexpensively raised to fund more rapid expansion (and investors
could reap huge returns). Hundreds of new entrants crowded the
market, spending vast sums for the purposes of customer acquisition
and revenue growth.
One market that was particularly contentious was online pet
supply retailing. Pet supply retailing had an estimated worth of
$31 billion in 1997, and in the late 1990s, several startups and
brick-and-mortar-based companies launched online retail stores,
hoping to become the premiere (and perhaps the only) online pet
supplies retailer. Two companies emerged as pure play frontrunners:
Oakland-based Petstore.com and San Francisco-based Pets.com.
Petstore.com had garnered significant investor attention in
November 1999 when it closed a round of funding estimated to be
worth $97 million.3 But in the intense race to an IPO, its
competitor, Pets.com, had finished first when it went public in
February 2000. Headed by startup veteran Julie Wainwright, Pets.com
was distinguished by its savvy marketing and its widely-known
mascot, an unnamed sock puppet dog. Its success at reaching an IPO
first was not matched by the stock’s actual performance: On its
opening day, the stock’s share price opened at $13.50 and rose to a
high of $14, but then dipped back down to its initial offering
price of $11.4 Afterwards, share prices steadily declined,
eventually closing at $0.22 in November 2000, when the company
declared it would be shuttering its operations, laying off staff,
and liquidating its assets.5
-
809-117 Online Pet Supply Retailing
2
In the years that followed, online pet supply retailers were
widely regarded by the media as epitomizing the excesses and the
follies of dot-com speculative mania in the late 1990s that
culminated in the 2000 stock market crash (See Exhibit 1 for a
chart detailing the 2000 stock market crash in historical context).
In 2008, CNet pronounced Pets.com as one of the greatest dot-com
disasters in history (See Exhibit 2 for a list of selected dot-com
failures).6 But what led to the failure, and subsequent
crucifixion, of these one-time media darlings? Were Petstore.com
and Pets.com the victim of poor strategic decisions, a prohibitive
and crowded market, investor attitudes that destroyed their chances
of success, or perhaps just bad luck or bad timing?
Background
Petstore.com
Petstore.com was co-founded in October 1998 – one month before
Pets.com – by entrepreneur Josh Newman, who also served as its CEO.
Newman had graduated from HBS in 1988 and worked for the Boston
Consulting Group. He quit BCG in 1990 to become the first employee
at a successful tech start-up that he led to an IPO (Amerigon
Inc.). Subsequently he helped to create an e-commerce Web site for
an internet telephony company, and was approached by a venture
capitalist to create Petstore.com from scratch. He recalled:
I was called by a venture capitalist and asked if I wanted to
put together a business plan for starting a pet e-tailer. At that
time, Amazon.com had a lot of traction, E-Toys had a sky-high
market valuation, and there was a land rush for the different
verticals in the e-commerce space. This VC had done a lot of market
analysis and had decided that the pet space was an attractive
vertical. I was asked to pull together a team and a plan.
Personally I saw this as my chance to breakthrough into the CEO
role and to roll-the-dice on the wildly exciting e-commerce
industry.
Pets.com
Pets.com was founded in November 1998 by Greg McLemore, a Web
developer in Pasadena, California.7 McLemore created the company
through WebMagic, his Web site design firm. Prior to Pets.com,
McLemore and WebMagic were responsible for several other startups,
including Toys.com, an internet commerce site that sold children’s
toys. Pets.com was originally conceived as a site that would serve
as a one-stop shop for pet lovers. McLemore envisioned a site full
of thriving message boards, databases for locating pet-related
services, and a fully stocked online store with thousands of items.
“My vision is to create the world’s largest pet site, a true
category killer that offers consumers the best products and
services for their pets,” McLemore said.8
Hummer Winblad, a venture capital firm that focused on
technology startups, purchased the Pets.com site and domain name in
early 1999 and approached Julie Wainwright, an executive at
e-commerce site Reel.com, with an offer to run the company and
develop the Pets.com online store. At the time, Wainwright had a
substantial background in IT startups. Prior to Reel.com,
Wainwright was CEO at Berkeley Systems, a software company whose
computer game, “You Don’t Know Jack,” became one of the
best-selling games of the 1990s. “You Don’t Know Jack” eventually
sold over 4.5 million units and generated $100 million in revenue.9
When Berkeley Systems was sold, Wainwright went to Reel.com, the
first e-commerce site that sold movies. Within 18 months, the
company had generated millions in revenue, and it was eventually
sold to Hollywood Entertainment.
-
Online Pet Supply Retailing 809-117
3
Building an Online Petstore
The question was, how big is the market, and can six or seven
sites really survive on people who buy trinkets for their pets?
—Carrie Johnson, Analyst, Forrester Research, Nov. 200010
Of course the market couldn’t support six or seven sites – or
three for that matter. The question was did we have a shot at
becoming #1 and blocking out the other competitors from getting
access to inexpensive public capital?.
—Josh Newman. Mar. 2009.
In order to get his online pet supply store off the ground,
Newman set his mind to assembling a talented team and figuring out
a profitable business model. Newman described his staff at
Petstore.com, saying, “We had a pretty broad team. One of our team
members was a Stanford GSB grad who founded and was running the
leading independent pet store in San Francisco, a brick-and-mortar
pet store. A Cal-Tech superstar headed-up our technology effort; a
key marketing executive from Nissan was in charge of marketing; and
a former BCG office-mate ran operations.” What started as a group
of five individuals would eventually become 300 when the business
was at its peak. “We took off like a rocket launch,” Newman
said.
At the time, no other pet e-tailers had launched. A business
school classmate of the founding team worked at PetSmart, one of
the brick-and-mortar retailers, and the sense was that the
traditional retailers were not going to move fast into e-commerce.
Newman and his team saw the pet vertical as competitively similar
to the books or toys verticals – the first one to “get big fast”
could win. The question was how the business model looked.
Next, Newman and his team performed a detailed analysis with
data from their co-founder’s brick-and-mortar pet store. Using a
database that had the weight and gross margin for every product in
the store, they did an analysis of what individual customers
actually bought (their “shopping baskets”) and cross-correlated it
with UPS shipping rates. Newman explained, “We asked the question:
If people online bought the same shopping baskets that they bought
in this physical store, and we shipped all these baskets around the
country, would it be a profitable business? The answer was yes.” He
continued:
According to our analysis, if you set up two distribution
centers – one in the West and one in the East and you ship with UPS
ground service, you could have one-day delivery to about 70% of
U.S. households using ground shipping rates. This is very high
service level with reasonably low shipping costs. Premium dog food
was not sold at mass market retail or grocery stores, and
super-premium food was only available though veterinarians. So it
was a pain-point for customers to have to make an extra stop to buy
their dog food. More importantly, the economics of shipping dog
food were essentially a wash. The margin on the dog food pays for
the net-shipping on the entire bundle, and then there’s 100%
markups, 50% margin on the other things that people buy. So the
essence of the analysis on the business plan was really built
around those two discoveries: The shopping cart margin and weight
data, and the shipping costs analysis married to it.
Petstore.com received $10.5 million of funding from Battery
Ventures and Advanced Technology Ventures in April 1999.11 This
made it the first VC-funded pet e-tailer to enter the market. For
many emerging e-commerce companies such as Petstore.com, getting to
market first was considered crucial for investors. Newman
recalled:
-
809-117 Online Pet Supply Retailing
4
I’d say that being first was enormously influential on
everybody’s actions. [Online toy retailer] E-Toys was a model that
people were looking at and at the time, it looked like that was a
wildly successful company with an $8 billion public market cap! The
analysis was they were wildly successful because they did it first,
and that there wasn’t room then for anybody else to do it second.
Amazon was felt to be that way too. Our plan was to be open for
business roughly three or four months after funding. We were the
first ones funded, but several days after we were funded, Julie
announced her funding. In retrospect, we had an opportunity in the
first few weeks to just stop and give the money back. But success
looked like the potential of a billion-dollar-plus return. So with
the support and encouragement of the VCs, we pulled our launch date
up to five weeks. We opened a warehouse with thousands of SKUs and
created a Web site and launched the company, all five weeks after
funding. We were the first ones open for business. It was a total
sprint.
At the time, interest in funding companies like Pestore.com and
Pets.com was at a fevered pitch (See Exhibit 3 for a chart
detailing the frequency of Internet IPOs from 1996 to 2008).
According to one industry observer, “In the first six months of
1999, venture capital firms invested $11.4 billion, or nearly 90%
of the . . . $13 billion they invested during all of 1998. And
[1998] was a record year.”12 In the second quarter of 1999 alone,
U.S. venture capital firms invested $6.8 billion in 661
companies.13
Wainwright began work at Pets.com in March 1999 in stealth-mode,
with a brand new Pets.com website scheduled to be launched in
August 1999.14 She hired high-profile talent familiar with the pet
supply retailing industry; John Benjamin from brick-and-mortar
chain Petco came aboard as VP of merchandising and John Hallon, who
was experienced with pet-lifestyle magazines such as Dog Fancy,
signed on as VP of editorial content.15
In late March, Amazon announced that it was acquiring a 50%
stake in Pets.com.16 Between Hummer Winblad and Amazon, Pets.com
had secured about $10 million in initial funding. Pets.com received
another round of funding worth $50 million from Amazon, Bowman
Capital Management, and Hummer Winblad in June 1999.17 This round
left Amazon with a 54% stake in the company.18
Competitive Landscape
A number of characteristics made online pet supply retailing an
attractive category for investors. Worth $23 billion in 1997, the
entire U.S. pet retail market was expected to grow to $27 billion
by 1999 and to $32 billion in 2001.19 The online pet supply retail
market had an estimated value of between $3 billion to $6 billion,
comprising 10 to 20% of the total pet retail market.20 As a whole,
the online retail consumer population was expected to skyrocket,
bringing online shopping sales from $3 billion in 1997 to an
estimated $41 billion in 2002.21 Moreover, gross margins for
pet-related retail products averaged around 37% to 43%. While bulk
food products had margins around 20%, certain supplies and novelty
accessories had margins as high as 70%.22 At the time, Newman
believed online pet supply retailing showed a great deal of
promise, saying:
The pet supply category is bigger than books or toys or music
and videos. And it has higher gross margins than those businesses.
The brick-and-mortar retailers are weak, with the largest player
controlling only 7% of the category. With a strong need for
replenishment, we’re already seeing very high reorder rates. The
logistics are tough to work out: it’s expensive to ship forty-pound
bags of pet food. But this can be a terrific, profitable business
if you reach a scale where you can lower your shipping costs by
having two distribution facilities nationwide and if you can
maintain gross margins at or above 30%.23
-
Online Pet Supply Retailing 809-117
5
Sensing the potential to dominate a budding, profitable market,
many competitors stepped into the fray. Two other major
competitors, both of which sold pet supplies online, were as
follows:
Petopia.com Originally founded as Paw.net, Petopia.com changed
its name when Technology Crossover Ventures invested $9 million in
the company in May 1999.24 In July, PETCO, the second largest
brick-and-mortar chain in the U.S. (with over 450 stores),
announced that it would be partnering with Petopia and acquiring a
20% equity interest in the company.25 By that point, over $79
million had been invested in the company.
Petsmart.com In May 1999, PETsMART, the leading brick-and-mortar
pet retailer in the U.S., partnered with Web startup and online
retailer Petjungle.com in order to bring PETsMART’s products
online. The new site would be hosted at Petsmart.com and PETsMART
would own a 50% stake in the venture.26 The company originally
received $8 million in funding.27
The atmosphere between these companies was intensely
competitive, and the business environment was chaotic. Newman
shared his perspective on his competitors’ approaches and the
overall environment:
At the time, the pure-play e-tailors felt that the
brick-and-mortar incumbent players would be too slow to win. This
was based on the experience of Amazon and E-Toys, who had outrun
Barnes & Noble and Toys “R” Us, respectively.
Remember that at that time the technology was not nearly as
facile as it is today. So, if you were going to go build an
e-commerce site, you had to figure it out yourself and deploy a lot
of money to pull together all these different systems: a warehouse
management system, an accounting system, e-commerce front end, a
customer service system, content management system, to name a few.
You couldn’t just go readily buy an integrated solution. So it was
a pretty big job for anybody, especially a slow-moving
brick-and-mortar company trying to get to market quickly.
In the pet space, the incumbent retailers had an opportunity to
compete in a different and effective way, as compared to books or
toys. Since there were four VC-backed pure-plays, the incumbents
could partner with one of the pure-plays and thereby achieve the
dual-objectives of leveraging VC Capital and accessing nimble
management teams. Also, they could cut great deals since there were
multiple partners to approach. So our original assessment was wrong
of the relatively low competitive threat from the incumbent
retailers.
In the planning phase, Newman had developed what he believed to
be a sound business model that would eventually take his company to
an IPO, and hopefully, to profitability. “We were going to be
profitable at somewhere around $250 million of annual revenue,”
said Newman, “but the model did not assume three or four
competitors with $300 or $400 million collectively between them
shooting bazookas at each other. So, the model quickly went out the
window. The key question was what might replace it.”
Strategy
Using a distribution center in Emeryville, CA, Petstore.com’s
Web site debuted in May 1999 with 1,200 SKUs, which featured a full
line of cat and dog supplies.28 The company also partnered with the
American Animal Hospital Association, which provided content for
the site geared towards pet owners.29 By August, Petstore.com had
4,500 SKUs and was adding them at a rate of 500 per week.30 While
its most popular item was pet food, Petstore.com offered a wide
range of products; describing
-
809-117 Online Pet Supply Retailing
6
his product mix in a 1999 interview, Newman commented, “We have
a large variety of products for your animals. We have things to
help them travel. We have carriers, leashes, bowls, toys and treats
– all the items that empirically customers readily purchase in
traditional stores.”31 Additionally, Petstore.com acquired Flying
Fish in August 1999, an online tropical fish retailer, adding live
fish to its expanding offerings.32
Wainwright launched the Pets.com website in August 1999. The
site offered 12,000 products for dogs, cats, birds, fish, reptiles,
and many other types of pets, positioning itself as a “one stop
shop” for pet owners.33 The site had functionality similar to those
from other e-commerce sites, allowing people to mark certain items
as “Favorites,” or to subscribe to a newsletter for special offers.
Initially, Pets.com offered a special promotion of 50% off all pet
food, with a flat delivery fee of $4.95.34
In the months that followed, Wainwright and Newman executed on
several measures that made each of their sites more visible and
more attractive to potential customers.
Infrastructure
In September, Pets.com opened a new 140,000 square foot
distribution facility in Union City, CA. The new building
effectively increased the company’s distribution square footage by
five fold, allowing it to handle up to 40,000 SKUs.35 Although
Pets.com purchased products from manufacturers, it handled every
other component of the distribution process. “We pick the products.
We pack and seal the box. We’re the last ones to see it out the
door,” Wainwright said at the time.36 Pets.com announced in
December that it would be utilizing 300,000 square feet in a
facility in Greenwood, IN as a distribution center.37 Indiana state
officials gave the company over $1 million in incentives for
choosing Greenwood, a location that also helped Pets.com cut down
on shipping costs.38
Meanwhile, Petstore.com opened two new distribution centers in
October 1999 to keep up with its growth. One Petstore.com executive
commented on the openings, saying, “Our business has increased
seven fold over the past few months and we expect that growth to
accelerate as more Americans shop online this holiday season.”39 In
San Leandro, CA, Petstore.com opened a brand new 130,000 square
foot facility. It also opened a separate 5,000 square foot
warehouse in Inglewood CA to facilitate its online sales in live
saltwater fish, which was a highly-profitable niche business.40
Financing and Partnerships
Pets.com received a third round of financing in November 1999,
amounting to $35 million from Amazon.com and other investors; in
total, the company had raised $100 million after its first three
rounds of funding.41 That month, Pets.com re-launched its Web site
with an entirely new design, streamlining the order process and
increasing the number of products sold on the site to 13,000. “We
now offer 60% [more] products than an average superstore,”
Wainwright claimed at the time.42 The Pets.com homepage linked to
community message boards and site resources, such as Veterinarian
Finder and Pet Sitter Finder. The site also introduced a Gift
Center feature, which recommended presents to pets based on 10
pre-determined “pet lifestyles.”
In the same month, Petstore.com made a significant step to its
corporate strategy when it received $97 million worth of
second-round funding from Discovery Communications, Battery
Ventures, and Advanced Technology.43 This round made Discovery
Communications the largest stakeholder in Petstore.com.44 Discovery
Communications had a market capitalization estimated at $12
billion, and its most compelling asset was its television network,
which featured programs such as Animal Planet,
-
Online Pet Supply Retailing 809-117
7
a popular documentary-style show about various animals. Under
the terms of the agreement, Petstore.com received promotion on
television and on Discovery’s Web site, as well as a license to the
Animal Planet trademark.45 Newman recalled, “The theory was that
we’d essentially have this enormous Animal Planet brand, largely
free media, and cross-promotional opportunities with their other
product lines and the like. I think it was a decent theory. Could
Animal Planet, the leading media brand in the animal space have an
attractive online commerce operation that complemented it? We
certainly thought so.”
Petstore.com had also entertained an offer for funding from a
consortium, comprised of a television network, a grocery store
chain, and a European conglomerate. The consortium would have taken
a smaller stake in Petstore.com, in exchange for a smaller amount
of money.46 From a competitive standpoint, Petstore.com management
had agreed that Discovery Communications’ offer was more
attractive. Newman described their reasoning:
When Pets.com was funded by Amazon, we knew we needed a gorilla
in our corner. It came down to a choice between three 200-pound
partners who all brought something different and important to our
company, and one 800-pound gorilla (Discovery Communications), who
brought tremendous brand equity and a powerful ability to drive
traffic to our site. At its core, the Discovery deal was driven by
the decision to lower risk by selling ourselves to a massive
strategic partner.
Advertising
Petstore.com’s newfound partnership gave it a formidable ally,
bolstering its advertising potential and visibility. In November,
the company launched a five month-long nationwide advertising
campaign, costing an estimated $15 million.47 However, it was
Pets.com’s campaign that garnered lasting, nationwide attention.
Pets.com hired ad agency TWBA\Chiat\Day to handle its marketing
campaign, estimated to be worth $20 million.48 The campaign
prominently featured a sock puppet dog who was voiced by Michael
Ian Black, a comedic actor. In television commercials, the dog
spoke energetically to the camera and interacted with pets, usually
before the ad concluded with the tagline, “Pets.com. Because pets
can’t drive.”
The campaign included television commercials, but eventually
grew to encompass a variety of media outlets. By November 1999,
Pets.com had received 2,000 e-mails inquiring about the sock
puppet.49 Additionally, the sock puppet became a sought-after media
guest, doing “interviews” with publications such as Entertainment
Weekly and appearing on several television programs, such as “Live
with Regis and Kathy Lee,” “Good Morning America,” and even ABC’s
late-night news show, “Nightline.”50 In winter 2000, the puppet
rose to new heights of nationwide fame. The 73rd annual Macy’s day
parade in New York City, which was watched by 50 million people
around the country, featured a 36-foot tall float version of the
sock puppet.51
Pets.com bought advertising time during the Super Bowl in
January 2000, prominently featuring the sock puppet in their
first-ever national ad (The average 30-second ad at the Super Bowl
that year had an estimated cost of over $2 million. Pets.com’s ad
buy cost $1.2 million).52 Of 31 Super Bowl campaigns tested by an
advertising surveying agency, Pets.com’s TV commercials were rated
most liked and most effective.53 The puppet became so ubiquitous
that Pets.com’s VP of marketing once proclaimed, “Our sock puppet
is one of the reasons why we’re going to win the Internet space for
pet supplies and accessories.”54
-
809-117 Online Pet Supply Retailing
8
Brand Extensions
Pets.com capitalized on ways to extend its brand to areas
outside of e-commerce. The company launched a bi-monthly magazine
in November 1999, Pets.com: The Magazine. The magazine included
columns about pet products and articles about the pet-owning
lifestyle. In April 2000, Pets.com announced that it would be
launching its own branded line of pet products. The line of 19 SKUs
included dog and cat food, and cat litter, and it was positioned as
“super-premium” for discerning pet owners.55 The rationale behind
the launch was to increase the company’s profit margins on
sales.
Pets.com also founded a charity foundation called the
Pets.commitment Fund in October 1999. Its purpose was to provide
funding to organizations that focused on animal welfare and
emphasized the importance of pets. In a press release describing
the organization’s impetus, Wainwright said, “There are thousand of
organizations that bring animals and pets together in special,
life-changing ways. However, many of them are drastically under
funded, making it difficult to fulfill their missions.”56
The Road to IPO
The roller coaster took us all the way up to the clouds and then
dropped everybody down into the depths of the ocean.
—Josh Newman, Nov. 2008
The online pet supply retailers employed costly tactics in their
battle for market share, borne out of the belief that the market
leader would benefit disproportionately.57 “There’s a laser-like
focus on our category; prospective investors are watching to see
whether anyone is pulling ahead of the pack or falling behind,”
said Newman at the time. “In the current market, you could
reasonably argue that every additional $1 of revenue this quarter
might increase your market capitalization by $300 next quarter.”58
For its part, in December 1999, Petstore.com offered customers free
shipping and a $15 discount on purchases $30 or more.59
Petsmart.com CEO Tom McGovern specifically remembered one
catalyzing incident dating back to August 1999. “This plane flew by
dragging a banner that said, ‘50% off dog food, Pets.com.’ So we
upped it: Buy one, get one free. Then Pets.com went to free
shipping.”60 He added, “There was a suspension of reality . . . In
the fourth quarter of ‘99, we were shipping and selling at a
loss.”61 Executives such as McGovern also felt pressure to respond
to Pets.com’s marketing blitz. Petsmart.com spent $18 million on TV
advertisements in fall 1999. “We spent lots of money talking to
people who never would give us a sale in the next five years,”
McGovern reflected.62
For many online retailers during this period, such cutthroat
tactics not only ate away at profit margins; they also had the
potential to create operational difficulties.63 Companies whose
executives focused intensely on Web traffic and customer
acquisition sometimes found themselves unable to cope with growth,
as technological infrastructures were ill-equipped to track
inventory and orders. This resulted in poor fulfillment rates and
customer dissatisfaction.
As competition grew more intense, each of the online pet
retailers was under increasing pressure to go public, bringing in a
fresh infusion of cash that would allow for more rapid expansion. A
venture capitalist for Petstore.com explained, “We wanted to get to
IPO in six to nine months.”64 Newman explained the investors’
perspective:
At that time there was this huge conventional wisdom that speed
to market and first mover advantage would confer a lasting
defensible competitive advantage through “first IPO.” An IPO is a
branding event and that branding event wins. The real pressure that
they were putting
-
Online Pet Supply Retailing 809-117
9
on us was to have a grand slam. Their math is driven by
supernova IPOs. It was either shoot the moon, or flame out.
Filing
In December 1999, Pets.com filed its preliminary prospectus for
an IPO.65 The financial data revealed in the filing were sobering.
Although the company reported $5.8 million in revenue, it had
incurred $61.8 million worth of losses since inception, $42.4
million of which took place in the three months prior to December
alone (See Exhibit 4 for selected financial data from Pets.com’s
prospectus).66 According to the company’s prospectus, “We believe
that we will continue to incur operating and net losses for at
least the next four years, and possibly longer, and that the rate
at which we will incur these losses will increase significantly
from current levels.”67
Moreover, Pets.com’s brand visibility had not definitively
translated into greater market share. According to one survey, in
October 1999, Petsmart.com had 1.1 million unique visitors,
followed by Petopia, which had 559,000, while Pets.com had 551,000
(Petstore.com had 303,000).68 Nonetheless, many competitor
companies were not profitable either. While Petsmart.com had earned
almost twice the revenue of Pets.com, it had incurred $47 million
in losses in the process.69 Given its financial state, its plans
for future expansion, and the competitive environment, Pets.com was
dependent upon outside funding for survival.
When Pets.com went public on February 11, 2000, its share price
opened at $13.50, above its initial $11 offering price, and rose as
high as $14 before falling back to $11.70 By all measures, it had
been a tepid performance. Yet despite its stock price, coverage on
Pets.com remained relatively upbeat. In March, investment banks
Bear Stearns and Warburg Dillon Read both initiated coverage on
Pets.com, rating it as an attractive investment. Others were not so
optimistic; discussing his own company’s prospects, Newman recalled
that, beginning in fall 1999:
Our objective had moved from winning to trying to eke out a
save. And then when Julie went public and was having trouble
raising a secondary offering –in late 1999 and early 2000 – there
was a feeling that the whole space was running into problems. And
then, of course, there was the market crash in March 2000, and that
was the end for everyone.
The Dot-Com Crash
Between early 1998 and early 2000, the internet sector was
equivalent to 6% of the market capitalization of all U.S. public
companies and the sector as a whole earned in excess of 1,000%
returns on public equity.71 This concentration of new high
technology companies in the market index made the dot-com crash
even more exceptional. Between the high point in March 2000 and the
low point in October 2002 $4.4 trillion dollars of market value
disappeared.72 Beyond the companies that did reach an IPO, during
the late 1990s it is estimated that 7,000-10,000 new dot-com
companies were established and operating from online web sites,
with the vast majority of these companies faltering in the
environment of the dot-com crash and its immediate aftermath.73
According to one estimate at least 3,892 dot-coms were sold and 962
closed or declared bankruptcy between mid-2000 and mid-2003.74
Pets.com had been caught up in a speculative mania that
witnessed a wave of optimism as new technology startups attempted
to accelerate the pace of innovation and race for market
leadership. While the nascent internet industry was far from being
profitable, expectations of a new technological revolution in
information and communications that would raise the valuation of
all companies drove
-
809-117 Online Pet Supply Retailing
10
equity prices upwards (Refer to Exhibit 1). Few internet
companies, however, created business models that were sustainable
over the long run (See Exhibit 5 for an example of media coverage
relating to these events).
Winding Down
Pets.com’s stock price steadily declined through 2000; as early
as February, its price had dropped to the $6 range. However,
despite the worsening economic climate, the company continued to
operate through the summer. By June 2000, the price was hovering
around $2 (See Exhibit 6 for Pets.com’s price per share over
time).75 That month, Discovery Communications announced that it
would be closing a deal to divest Petstore.com and that Pets.com
would be its new owner.76 As part of the deal, Pets.com would issue
$13.7 million in stock.77 Pets.com would also receive $3 million in
cash from Discovery Communications and other investors.78 “We
actually think there will end up being one (online pet site) and
it’s going to be us,” Wainwright declared at the time.79 Newman
commented:
Discovery Communications was planning on a huge initiative to
launch a major online portal, based on their four media properties
(Animal Planet, Discovery Channel, the History Channel and The
Travel Channel). Each would have an e-commerce play associated with
it. It probably was a $200 million initiative of theirs. They were
planning on spinning it out and doing a public offering. It was
very ambitious and it was exciting to be part of it. But their
crystal ball was telling them that the internet bubble was getting
ready to burst, so they backed off of their strategic portal
initiative.
At the time, Pets.com was perceived to be the leader. The
perception was that Amazon was king and the player that was
affiliated with Amazon was the winner, so it was pretty
straightforward in the math of the moment to think that getting
shares of Pets.com was a good bet. And so it was an easy strategic
decision for Discovery to try to divest Petstore.com to
Pets.com.
Despite its potential benefits, the transaction ended up being a
difficult one for Petstore.com. The worsening economic climate and
the vagaries of the acquisition process took their toll on Newman
and his company. He recalled:
The transaction occurred in the middle of the meltdown. We
struck a term sheet in early 2000, when Pets.com was trading at
around $11. They had taken the company public. We signed the final
papers when Pets.com was trading at something like $7. When you
sign the final transaction papers, there are some conditions to
close, so the deal didn’t close right away. It closed several weeks
later, and they were trading at $2. We struck the deal when they
were at $11 and everybody was thinking that it was going up to $40.
Then we ended up closing the deal at $2 when it was on its way down
to $0.30 or $0.20. So, that was a pretty tough transaction.
On November 7, 2000, Pets.com announced that it would be
shuttering its operations, laying off 255 of its 320 employees, and
liquidating its assets.80 That day, the company’s stock closed at
$.22 per share.81 Pets.com sold its domain name, www.pets.com, to
competitor PETsMART in December 2000.82 In January 2001, the
company’s shareholders approved its formal liquidation plan.83 In a
final act of kindness, Pets.com donated 21 tons of dog food to
mushers in Alaska, who faced a severe shortfall of the commodity in
winter 2000.84
-
Online Pet Supply Retailing 809-117
11
Exhibit 1 The 2000 stock market crash in historical context
0
5
10
15
20
25
30
35
40
45
50
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
2010
Pric
e-Ea
rnin
gs R
atio
1929 Great Crash
Internet Bubble
Panic of 1907 1987 Crash
1973 Oil Price Shock
Source: Adapted from Robert Shiller, Irrational Exuberance (New
York, NY: Doubleday Business).
-
809-117 Online Pet Supply Retailing
12
Exhibit 2 List of selected dot-com failures
Company Segment Founded IPO Raised at IPO Closed
Webvan Online grocer Dec. 1996 Nov. 1999 $375m Jul. 2001
Kozmo.com Generic online store and delivery (e.g., movies, snack
food etc.)
Mar. 1998 Did not - Mar. 2001
Flooz.com
Online currency “flooz” as an alternative to credit cards for
purchases
Sep. 1999 Did not - Aug. 2001
eToys.com Online toys store Mar. 1997 May. 1999 $166m Mar.
2001
Boo.com Online fashion store Apr. 1998 Did not - May. 2000
MVP.com Online sporting goods Oct. 1999 Did not - Jan. 2001
Go.com Walt Disney portal Jan. 1998 Did not - Jan. 2001
Kibu.com Online community Apr. 1999 Did not - Oct. 2000
GovWorks.com Online link to local government services
Dec. 1998 Did not - Dec.2000
Source: Adapted from Kent German, “Top 10 dot-com flops,” Cnet,
http://www.cnet.com/1990-11136_1-6278387-1.html, accessed December
15, 2008.
-
Online Pet Supply Retailing 809-117
13
Exhibit 3 Frequency of Internet IPOs from 1996 to 2008
0
20
40
60
80
100
120
140
160
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2008
Num
ber
of In
tern
et IP
Os
Source: Compiled from Thomson Financial Venture Economics
(VentureXpert), accessed November 2008.
-
809-117 Online Pet Supply Retailing
14
Exhibit 4 Pets.com Statement of Operations (in Thousands)
Quarter ended 6/30/1999
Quarter ended 9/30/1999
Quarter ended 12/31/1999
Period from 2/17/1999
(inception) to 12/31/1999
Net sales $39 $568 $5,168 $5,787 Cost of goods sold 76 1,766
11,570 13,412 Gross margin $(37) $(1,198) $(6,402) $(7,625)
Operating expenses: Marketing and sales $1,122 $10,693 $30,676
$42,491 Product development 1,624 2,194 2,646 6,481 General and
administrative 838 1,205 2,211 4,254 Amortization of stock-based
compensation
--
1,139
979
2,118
Total operating expenses $3,584 $15,231 $36,512 $55,344
Operating loss (3,621) (16,529) (42,914) (62,969) Interest income,
net 123 577 491 1,191 Net loss $(3,498) $(15,852) $(42,423)
$(61,778)
Source: Adapted from Pets.com, Prospectus (San Francisco:
Pets.com, 2000), p. 6, http://www.sec.gov/Archives/edgar/
data/1100683/0000891618-00-000749.txt, accessed November 25,
2008.
-
Online Pet Supply Retailing 809-117
15
Exhibit 5 Excerpt from “Burning Up,” a March 2000 Barron’s
article by Jack Willoughby
When will the Internet Bubble burst? For scores of `Net
upstarts, that unpleasant popping sound is likely to be heard
before the end of this year. Starved for cash, many of these
companies will try to raise fresh funds by issuing more stock or
bonds. But a lot of them won’t succeed. As a result, they will be
forced to sell out to stronger rivals or go out of business
altogether. Already, many cash-strapped Internet firms are
scrambling to find financing.
An exclusive study conducted for Barron’s by the Internet stock
evaluation firm Pegasus Research International indicates that at
least 51 `Net firms will burn through their cash within the next 12
months. This amounts to a quarter of the 207 companies included in
our study. Among the outfits likely to run out of funds soon are
CDNow, Secure Computing, drkoop.com, Medscape, Infonautics,
Intraware and Peapod.
The ramifications are far-reaching. To begin with, America’s 371
publicly traded Internet companies have grown to the point that
they are collectively valued at $1.3 trillion, which amounts to
about 8% of the entire U.S. stock market. Any financial problems at
these Internet firms would affect the myriad companies that supply
them with equipment, including such giants as Cisco Systems and
Intel. Another consideration is that a collapse in highflying
Internet stocks could have a depressing effect on the overall
market and on consumer confidence, too. This, in turn, could make
Americans feel less wealthy and cause them to spend less money on
everything from cars to clothing to houses.
It’s no secret that most Internet companies continue to be
money-burners. Of the companies in the Pegasus survey, 74% had
negative cash flows. For many, there seems to be little realistic
hope of profits in the near term. And it’s not just the small fry
who are running out of cash. Perhaps one of the best-known
companies on our list, Amazon.com, showed up with only 10 months’
worth of cash left in the till.
“That’s the problem with these IPO run-ups. They introduce so
much hype and emotion, when what’s really needed is stability,”
says William Hambrecht, founder of Hambrecht & Quist, owner of
W.R. Hambrecht, a pioneer in offering IPOs to investors via the
Internet. “A volatile price on a new stock kills your ability to
finance in the future. It’s very destructive.”
The evidence shows the race for the exits is especially
pronounced among Internet companies. So far this year, in
two-thirds of the secondary stock offerings by Internet companies,
25% or more of the shares were sold by insiders, according to
CommScan. In non-Internet deals, only about one-quarter of the
deals involved insider selling of 25% or more.
The Internet investing game has been kept alive in large part by
a massive flow of money out of Old Economy stocks and into New
Economy stocks. Last week’s steep slide in the Nasdaq and the sharp
recovery of the Dow Jones Industrial Average may mark a reversal of
this trend. As illustrated last week, once psychology changes,
cash-poor Internet issues tend to fall farthest, fastest.
Source: Jack Willoughby, “Burning Up,” Barron’s, March 20, 2000,
via Factiva, accessed January 12, 2009.
-
809-117 Online Pet Supply Retailing
16
Exhibit 6 Pets.com’s price per share over time
0
1
2
3
4
5
6
7
8
9
10
11
1202
-11-
2000
02-1
8-20
0002
-28-
2000
03-0
6-20
0003
-13-
2000
03-2
0-20
0003
-27-
2000
04-0
3-20
0004
-10-
2000
04-1
7-20
0004
-25-
2000
05-0
2-20
0005
-09-
2000
05-1
6-20
0005
-23-
2000
05-3
1-20
0006
-07-
2000
06-1
4-20
0006
-21-
2000
06-2
8-20
0007
-06-
2000
07-1
3-20
0007
-20-
2000
07-2
7-20
0008
-03-
2000
08-1
0-20
0008
-17-
2000
08-2
4-20
0008
-31-
2000
09-0
8-20
0009
-15-
2000
09-2
2-20
0009
-29-
2000
10-0
6-20
0010
-13-
2000
10-2
0-20
0010
-27-
2000
11-0
3-20
0011
-10-
2000
11-1
7-20
0011
-27-
2000
12-0
4-20
0012
-11-
2000
12-1
8-20
0012
-26-
2000
01-0
3-20
0101
-10-
2001
01-1
8-20
01
Sha
re P
rice
$
Source: Compiled from Chicago Research Center in Securities
Prices, accessed November 2008.
-
Online Pet Supply Retailing 809-117
17
Endnotes
1 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
2 Robert E. Litan, “The Internet Economy,” Foreign Policy, 123
(Mar – Apr. 2001): 18, and Stephen D. Oliner and Daniel E. Sichel,
“The Resurgence of Growth in the Late 1990s: Is Information
Technology the Story?” Journal of Economic Perspectives, Vol. 14,
No. 4, Fall 2000, pp. 3–22.
3 “Petstore.com Announces $97 Million in Funding and Strategic
Alliance with Discovery Communications,” Business Wire, November 3,
1999, via Factiva, accessed November 16, 2008.
4 Raymond Hennessey, “Pets.com Up Slightly Ahead of $11 Offer
Price After IPO,” Dow Jones Business News, February 11, 2000, via
Factiva, accessed November 16, 2008.
5 Anne D’Innocenzio, “Pets.com Folding After Failing To Find a
Backer,” Associated Press Newswires, November 7, 2000, via Factiva,
accessed November 15, 2008.
6 Nate Lanxon, “The Greatest Defunct Web Sites and Dotcom
Disasters,” Cnet UK, June 5, 2008,
http://crave.cnet.co.uk/gadgets/0,39029552,49296926-8,00.htm,
accessed November 17, 2008.
7 Michelle V. Rafter, “Pets.com, Acemepet.com Go Paw-To-Paw for
Pet Lovers’ Market,” Reuters, November 4, 1998, via Factiva,
accessed November 16, 2008.
8 “Former Reel.com CEO Joins Pets.com,” Business Wire, March 5,
1999, via Factiva, accessed November 15, 2008.
9 Jellyvision, “Company History,” Jellyvision Web site,
http://www.jellyvision.com/about.htm, accessed November 17,
2008.
10 Rachel Scheier, “Lights Out for Pets.com,” New York Daily
News, November 8, 2000, via Factiva, accessed November 15,
2008.
11 “Petstore.com Announces $10.5 Million Financing Round,”
Business Wire, April 13, 1999, via Factiva, accessed November 16,
2008.
12 Peter Sinton, “Startups Fetch Record Financing,” The San
Francisco Chronicle, August 11, 1999, via Factiva, accessed
November 15, 2008.
13 Peter Sinton, “Startups Fetch Record Financing,” The San
Francisco Chronicle, August 11, 1999, via Factiva, accessed
November 15, 2008.
14 “Pets.com Announces Re-launch of Leading Online Pet Site;
Celebrates with 50% Off Pet Food Offer,” Business Wire, August 2,
1999, via Factiva, accessed November 17, 2008.
15 Owen Thomas, “Pets.com Takes Pick of the Litter,” Redherring,
May 15, 1999, via Factiva, accessed November 15, 2008.
16 “Amazon.com Buys 50 pct Stake in Cyber Petstore,” Reuters,
March 29, 1999, via Factiva, accessed November 18, 2008.
17 “Amazon.com To Own 54 Percent Stake in Pets.com,” Reuters,
June 14, 1999, via Factiva, accessed November 15, 2008.
18 “Amazon.com To Own 54 Percent Stake in Pets.com,” Reuters,
June 14, 1999, via Factiva, accessed November 15, 2008.
19 Warburg Dillon Read, Pets.com Inc., March 23, 2000, via
Thomson Research/Investext, accessed November 20, 2008.
-
809-117 Online Pet Supply Retailing
18
20 Thomas Eisenmann, “Petstore.com,” HBS No. 801-044 (Boston:
Harvard Business School Publishing, 2000), p. 9.
21 Warburg Dillon Read, Pets.com Inc., March 23, 2000, via
Thomson Research/Investext, accessed November 20, 2008.
22 Thomas Eisenmann, “Petstore.com,” HBS No. 801-044 (Boston:
Harvard Business School Publishing, 2000), p. 16.
23 Thomas Eisenmann, “Petstore.com,” HBS No. 801-044 (Boston:
Harvard Business School Publishing, 2000), p. 5.
24 “Petopia.com Announces $9 Million Equity Investment from
Technology Crossover Ventures; Company Changes Name from paw.net to
Petopia.com,” PR Newswire, May 10, 1999, via Factiva, accessed
November 16, 2008.
25 “Petco Announces Strategic Partnership with Petopia.com To
Launch the Premier Online Pet Commerce Site,” Business Wire, July
13, 1999, via Factiva, accessed November 16, 2008.
26 “PETsMART, idealab! To Launch Cyber Petshop,” Reuters News,
May 13, 1999, via Factiva, accessed November 16, 2008.
27 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
28 “Petstore.com Offers 1,200 SKUs On-line,” Discount Store
News, May 24, 1999, via Factiva, accessed November 16, 2008.
29 “Petstore.com Offers 1,200 SKUs On-line,” Discount Store
News, May 24, 1999, via Factiva, accessed November 16, 2008.
30 Kitty Pilgrim, “Petstore.com – CEO,” Cnnfn: Entrepreneurs
Only, August 12, 1999, via Factiva, accessed November 16, 2008.
31 Kitty Pilgrim, “Petstore.com – CEO,” Cnnfn: Entrepreneurs
Only, August 12, 1999, via Factiva, accessed November 16, 2008.
32 “Petstore.com Announces Global Acquisition Strategy and
Retains the Internet; Practice Group at Emerge to Lead $100 Million
Acquisition Effort,” Business Wire, September 23, 1999, via
Factiva, accessed November 16, 2008.
33 “Pets.com Announces Re-Launch of Leading Pet Site,” Business
Wire, August 2, 1999, via Factiva, accessed November 16, 2008.
34 “Pets.com Announces Re-Launch of Leading Pet Site,” Business
Wire, August 2, 1999, via Factiva, accessed November 16, 2008.
35 “Pets.com Opens New California Distribution Center to Meet
Rapid Growth,” Business Wire, September 8, 1999, via Factiva,
accessed November 16, 2008.
36 “Pets.com Opens New California Distribution Center to Meet
Rapid Growth,” Business Wire, September 8, 1999, via Factiva,
accessed November 16, 2008.
37 “Internet Retailer Plans Major Distribution Center in
Greenwood,” Associated Press Newswires, December 14, 1999, via
Factiva, accessed November 15, 2008.
38 “Internet Retailer Plans Major Distribution Center in
Greenwood,” Associated Press Newswires, December 14, 1999, via
Factiva, accessed November 15, 2008.
39 “Petstore.com Opens 130,000 Foot Warehouse To Support Rapid
Growth,” Business Wire, October 19, 1999, via Factiva, accessed
November 17, 2008.
-
Online Pet Supply Retailing 809-117
19
40 “Petstore.com Opens 130,000 Foot Warehouse To Support Rapid
Growth,” Business Wire, October 19, 1999, via Factiva, accessed
November 17, 2008.
41 “Pets.com Raises $35 Million Third-Round Funding,” Dow Jones
News Service, November 3, 1999, via Factiva, accessed November 16,
2008.
42 “Pets.com Announces Web Site Redesign,” Business Wire,
November 8, 1999, via Factiva, accessed November 16, 2008.
43 “Petstore.com, Discovery Commun In Financing, Marketing
Pact,” Dow Jones News Service, November 3, 1999, via Factiva,
accessed November 16, 2008.
44 “Discovery Communications Inc. Announces Equity Investment in
Petstore.com,” PR Newswire, November 3, 1999, via Factiva, accessed
November 16, 2008.
45 Thomas Eisenmann, “Petstore.com,” HBS No. 801-044 (Boston:
Harvard Business School Publishing, 2000), p. 2.
46 Thomas Eisenmann, “Petstore.com,” HBS No. 801-044 (Boston:
Harvard Business School Publishing, 2000), pp. 2-3.
47 “PETSTORE.COM: Discovery Communications Is Now Biggest
Shareholder,” The Wall Street Journal, November 4, 1999, via
Factiva, accessed November 16, 2008.
48 Laurie Freeman, “Pets.com Socks It to Competitors,”
Advertising Age, November 29, 1999, via Factiva, accessed November
17, 2008.
49 Laurie Freeman, “Pets.com Socks It to Competitors,”
Advertising Age, November 29, 1999, via Factiva, accessed November
17, 2008.
50 Martin Renzhofer, “With Pets.com, ABC Has Become the Hand
Puppet of Disney,” The Salt Lake Tribune, March 31, 2000, via
Factiva, accessed November 16, 2008.
51 “Pets.com Puppet to Debut in 73rd Annual Macy’s Thanksgiving
Day Parade,” Business Wire, November 15, 999, via Factiva, accessed
November 16, 2008.
52 Tom McNichol, “A Startup’s Best Friend? Failure,” Business
2.0, March 1, 2007, via Factiva, accessed November 15, 20008.
53 Michael McCathy, “For Popular Ads, Agencies Go to the Dogs –
or the Ducks.” USA Today, November 20, 2000, via Factiva, accessed
November 16, 2008.
54 Laurie Freeman, “Pets.com Socks It to Competitors,”
Advertising Age, November 29, 1999, via Factiva, accessed November
17, 2008.
55 “Pets.com Launches Private Label Line of Dog and Cat Food,
Dog Biscuits and Cat Litter,” Business Wire, April 4, 2000, via
Factiva, accessed November 16, 2008.
56 “Pets.com Launches Multi-Million Dollar Charity foundation,”
Business Wire, October 4, 1999, via Factiva, accessed November 15,
2008.
57 Thomas Eisenmann, Speed Trap: The Risks and Rewards of
Accelerated Growth Strategies, book draft (Boston: Harvard Business
School Publishing), p. 2-11.
58 Thomas Eisenmann, “Petstore.com,” HBS No. 801-044 (Boston:
Harvard Business School Publishing, 2000), p. 2.
59 David Streitfeld, “Online Specials Bring in Buyers, Ring Up
Losses,” The Washington Post, via Factiva, accessed November 17,
2008.
-
809-117 Online Pet Supply Retailing
20
60 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
61 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
62 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
63 Information from this paragraph was derived from Thomas
Eisenmann, Speed Trap: The Risks and Rewards of Accelerated Growth
Strategies, book draft (Boston: Harvard Business School
Publishing), p. 8-11.
64 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
65 “Online Pet Supplier Pets.com Seeks $100 mln in IPO,”
Reuters, December 9, 1999, via Factiva, accessed November 18,
2008.
66 Pets.com, Prospectus (San Francisco: Pets.com, 2000), p. 6,
http://www.sec.gov/Archives/edgar/
data/1100683/0000891618-00-000749.txt, accessed November 25,
2008.
67 Pets.com, Prospectus (San Francisco: Pets.com, 2000), p. 7,
http://www.sec.gov/Archives/edgar/
data/1100683/0000891618-00-000749.txt, accessed November 25,
2008.
68 Laurie Freeman, “Pets.com Socks It to Competitors,”
Advertising Age, November 29, 1999, via Factiva, accessed November
17, 2008.
69 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
70 Raymond Hennessey, “Pets.com Up Slightly Ahead of $11 Offer
Price After IPO,” Dow Jones Business News, February 11, 2000, via
Factiva, accessed November 17, 2008.
71 Eli Ofek and Matthew Richardson, “Dot Com Mania: The Rise and
Fall of Internet Stock Prices”, Journal of Finance, 58(3), 2003,
p.1113.
72 Brent D. Goldfarb, David Kirsch and David A. Miller, “Was
There Too Little Entry During the Dot Com Era?”, Journal of
Financial Economics (forthcoming).
73 Zhu Wang, “Technological Innovation and Market Turbulence:
the Dot-Com Experience”, Review of Economic Dynamics, 10(1), 2007,
p.78.
74 Zhu Wang, “Technological Innovation and Market Turbulence:
the Dot-Com Experience”, Review of Economic Dynamics, 10(1), 2007,
p.79.
75 Tia O’Brien, “Rise, Fall of Online Pet-Supply Retailers
Mirrors Dot-Com Sector Boom, Bust,” Knight Ridder Tribune Business
News, May 27, 2001, via Factiva, accessed November 17, 2008.
76 Andrew Hill, “Pets.com Snaps Up Competitor in Online
Dog-Fight,” Financial Times, June 14, 2000, via Factiva, accessed
November 17, 2008.
77 Khanh T.L. Tran, “Pets.com To Acquire Petstore.com Assets In
Latest Consolidation of Web Retailers,” The Wall Street Journal,
June 14, 2000, via Factiva, accessed November 17, 2008.
78 Khanh T.L. Tran, “Pets.com To Acquire Petstore.com Assets In
Latest Consolidation of Web Retailers,” The Wall Street Journal,
June 14, 2000, via Factiva, accessed November 17, 2008.
79 Andrew Hill, “Pets.com Snaps Up Competitor in Online
Dog-Fight,” Financial Times, June 14, 2000, via Factiva, accessed
November 17, 2008.
-
Online Pet Supply Retailing 809-117
21
80 Anne D’Innocenzio, “Pets.com Folding After Failing To Find a
Backer,” Associated Press Newswires, November 7, 2000, via Factiva,
accessed November 15, 2008.
81 Anne D’Innocenzio, “Pets.com Folding After Failing To Find a
Backer,” Associated Press Newswires, November 7, 2000, via Factiva,
accessed November 15, 2008.
82 “Pets.com to Sell Domain Name,” Associated Press Newswires,
December 5, 2000, via Factiva, accessed November 18, 2008.
83 “Pets.com Shareholders OK Liquidation Plan,” Dow Jones News
Service, January 16, 2001, via Factiva, accessed November 18,
2008.
84 Mary Pemberton, “Failed Pets.com Donates 21 Tons of Food to
Save Alaskan Sled Dogs,” The Milwaukee Journal Sentinel, December
3, 2000, via Factiva, accessed November 15, 2008.
/ColorImageDict > /JPEG2000ColorACSImageDict >
/JPEG2000ColorImageDict > /AntiAliasGrayImages false
/CropGrayImages true /GrayImageMinResolution 150
/GrayImageMinResolutionPolicy /OK /DownsampleGrayImages false
/GrayImageDownsampleType /Bicubic /GrayImageResolution 600
/GrayImageDepth -1 /GrayImageMinDownsampleDepth 2
/GrayImageDownsampleThreshold 1.00000 /EncodeGrayImages false
/GrayImageFilter /DCTEncode /AutoFilterGrayImages true
/GrayImageAutoFilterStrategy /JPEG /GrayACSImageDict >
/GrayImageDict > /JPEG2000GrayACSImageDict >
/JPEG2000GrayImageDict > /AntiAliasMonoImages false
/CropMonoImages true /MonoImageMinResolution 1200
/MonoImageMinResolutionPolicy /OK /DownsampleMonoImages false
/MonoImageDownsampleType /Bicubic /MonoImageResolution 600
/MonoImageDepth -1 /MonoImageDownsampleThreshold 1.50000
/EncodeMonoImages false /MonoImageFilter /CCITTFaxEncode
/MonoImageDict > /AllowPSXObjects false /CheckCompliance [ /None
] /PDFX1aCheck false /PDFX3Check false /PDFXCompliantPDFOnly false
/PDFXNoTrimBoxError true /PDFXTrimBoxToMediaBoxOffset [ 0.00000
0.00000 0.00000 0.00000 ] /PDFXSetBleedBoxToMediaBox true
/PDFXBleedBoxToTrimBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ]
/PDFXOutputIntentProfile (None) /PDFXOutputConditionIdentifier ()
/PDFXOutputCondition () /PDFXRegistryName () /PDFXTrapped
/False
/Description >>> setdistillerparams>
setpagedevice