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Some Even Outperform’s Underperformance

Reston, Va. ( – Investors know Internet companies often can’t back up their promises, but one common boast has some dot-com executives crowing “I told you so.” Several online firms that once predicted they would be “the” of their markets have come through, Amazon-style, by laying off staff and watching their stock prices fall through the floor. A few have even exceeded expectations by closing up shop entirely.

These companies have met their promise

“I said we’d be the of our market, and just look at how close our numbers track,” beamed CEO Gabe Battista, who in November of 1998 told The Industry Standard his firm would be the of telecomm. “Right now, our stock is 74 percent off its high. Amazon’s is 70 percent off its high.

“I’m not saying I’m psychic,” he added, “but sometimes I scare myself.”

Arguably, no prediction was scarier than that of the ironically named, the online clothing retailer that folded less than a year after the Dallas Morning News noted its founders hoped to create “the of active sportswear.”

“We overshot a bit, but it’s always better to outperform than underperform,” remarked founder Ernst Malmsten, who said he will soon launch an online fashion marketplace that will be “the Hindenburg of the ready-to-wear market.”

Indeed, many of the companies making the pledge have, at least temporarily, outdone themselves., which Inc. called the “Amazon of the wellness industry,” is 93 percent off its high, while eToys – “the of toys” according to a November, 1998 Washington Post story – is down 94 percent. And as for

¤ “We want to be the of videos.” – CEO Stuart Skorman, Wired News, April 21, 1997.
¤ “ laid off its entire e-commerce staff earlier this month and turned over its e-tail operations to” – CNET, June 28, 2000.

While exceeding expectations is usually welcomed by investors, some executives are concerned they will lose investor trust if they don’t stick closer to Amazon. For instance, two years ago, CEO Donald Hackett told The Industry Standard his firm would be the of its market. Hackett now concedes he was too modest.

“We’re trading at about $2 a share, so we’re actually 94 percent off our high,” said Hackett. “I really don’t think we’re going up any, so we’re hoping comes down a bit.”

But Kevin Coelho, an analyst at Morgan Stanley Dean Witter, said that’s unlikely. “Amazon has fared poorly, but I don’t see them falling another 20 percent. Unless,” he added, “they themselves come out and say that they’re going to be the next Amazon. That could do it.”

Company Amazon Boast Media The Latest
CDNow “the of the sound biz” USA Today, 01/26/99 87% off its high “the of the software industry” E-Commerce Times, 01/11/99 94% off its high “the of horse racing” Forbes, 04/05/99 77% off its high
Egghead “what Amazon is to books, Egghead hopes to be for computers” Marketing Computers, 09/98 91% off its high
eToys “The Amazon of toys” Washington Post, 11/22/98 94% off its high
Deal-A-Day “I expect to be the of clothing” CEO Ed Mufson, Texas Technology 09/98 Sold to Cybershop, now GSV; stock price under $1 “We want to be the of baby products” Fortune, 11/98 bought by eToys; 80 laid off

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