[Salon] The Day Webvan and other Brands Died. (fwd)

[Eugene Leitl]

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---------- Forwarded message ----------
Date: Mon, 23 Jul 2001 12:21:30 -0700
From: Adam Rifkin <Adam@KnowNow.com>
To: FoRK@xent.com
Subject: [Salon] The Day Webvan and other Brands Died.

For the archive...

http://www.salon.com/tech/feature/2001/07/11/brands/print.html

The day the brands died
For their customers, the demise of the dot-coms has proved strangely
painful.

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By Ruth Shalit and Robin Danielson Hafitz

July 11, 2001 | In recent months, newspapers have devoted hundreds of column
inches to the economic, social and sartorial impact of the dot-com collapse.
Top-flight reporters have been dispatched to Silicon Valley to document the
pathos of the boarded-up lofts, the shuttered trattorias, the boy
millionaires who have gone back to working at Starbucks. But one aspect of
the crash has gone unexplored: the effect of the death of so many brands on
consumers themselves.

A year and a half ago, at the height of the e-commerce spending spree,
Internet companies invested enormous sums of money in making an impression
on the public. Over $3.1 billion was spent on offline advertising alone, a
land grab for consumer "mindshare" unprecedented in marketing history.
Unlike traditional companies, which build brands over time through a
combination of advertising, in-store experience and product quality, the
dot-coms attempted instant branding. As Brian Mulhern, advertising director
for Outpost.com, told the New York Times in 1999, "First and foremost, the
job of dot-com advertising is to gain top-of-mind awareness."

What happens when so many high-profile brands go from top of mind to the
bottom of the sea? Does the landscape of the consumer psyche change? To
explore that question, our advertising agency, Mad Dogs & Englishmen,
convened some focus groups in New York among people who had started making
these dot-coms part of their lives. They weren't venture capitalists,
information technologists or experience architects. They hadn't lost jobs.
They hadn't lost fortunes. They had just lost some of their favorite Web
sites.

These days, it's fashionable to ridicule the dot-gones as chimerical
ventures, a meaningless blur of great parties and overhyped press releases.
And indeed, almost everyone we talked to had read the stories about the
sheer profligacy of it all -- the on-site massages, the Herman Miller
chairs, the copious cocktails and piles of jumbo shrimp. But enough
grave-dancing, our respondents said. They liked these companies. They missed
these companies. They wished they'd come back. "It's like the people who
love to hate Gwyneth Paltrow," said a young man from Brooklyn. "The term
'dot-com' has become something that people love to hate. But you know, a lot
of those companies were great. And my life is worse now that they're gone."

What was particularly stunning, respondents said, was the unprecedented
speed of the meltdown. In ordinary times, high-visibility advertising is an
indicator of robust good health. Brands on life support don't advertise on
the Super Bowl. But suddenly, "there was no connection between a company's
marketing image and what was really going on," said one woman, a corporate
lawyer. "The month they went down, Eve.com [a beauty-products Web site] had
big two-page ads in all the women's magazines." She was left with a jar of
hair wax and 200 useless Eve points.

In hindsight, the respondents felt they should have seen the danger signs.
These companies weren't behaving the way companies are supposed to behave.
Like an overzealous suitor who shows up with diamonds and a string quartet
on the second date, the dot-coms were pathological in their munificence. One
respondent said she knew it was all over when she accidentally kept a DVD
from Kozmo two weeks past the due date. She called the company to ask what
she owed. They informed her they had no system for collecting late fees. "It
was great," she said. "But it also made me realize: Their days are
numbered." Others started biting their nails when Urbanfetch dropped by with
free cookies, or when Amazon started selling Palm Pilots below cost. "You
just wanted to say, 'Stop it!'" said one young man, a medical student. "It
was too much. There was something scary about that kind of transaction."

But though all the pampering made them uneasy, it didn't stop them from
taking advantage. And now, in the cold light of day, they blame themselves
for being so piggish. "There was a looting mentality going on," said one
respondent. "Now we all feel shame." Many loyalists of now-defunct Web
companies are convinced that their favorite sites would still be in business
-- if it weren't for their own selfish sense of entitlement. They wish
they'd shown more restraint. "I was one of those people who wanted a candy
bar, and had it delivered," said one man plaintively. "Now I feel depraved.
Those low-dollar items -- that was what killed Kozmo."

It's not surprising that, among beneficiaries of the bubble economy, fixing
culpability for "Who lost Kozmo?" has become a bit of an obsession. The
online delivery firm, which folded in April after spending more than $120
million trying to find a profitable way to deliver movies and ice cream to
couch potatoes, represented more to consumers than just a company. It was a
symbol of what life was going to be like for members of the Internet
generation. "We were already getting information and images in our homes, at
any hour, at any time," said one woman, a production manager. "Now, it was
three-dimensional stuff we were getting." Suddenly, life itself was as easy
as sending e-mail.

Even more than the silencing of the sock puppet, or the spectacular crash of
Boo.com, the death of Kozmo was a painful event, a watershed moment in the
psychology of the economy of diminished expectations. It meant an end to the
dot-com dream of instant gratification, constant connection and free stuff.
"After sitting at home in my bathrobe, and having some nice man hand me my
movie, how can I ever go back to Blockbusters?" asked one woman. "It's like
living in a Third World country." Said a young man, a retail clerk: "I'm
just so tired now. I'm tired all the time."

Will the death of all these brands be a momentary blip, or will it affect
the way people approach relationships with brands in the future? Among the
men and women we spoke to, there was a sense of deflated confidence in new
brands, and a neurotic anxiety about forming new habits they might have to
unlearn. "I'm paranoid about other companies now, and whether they're going
to make it," said a 30-year-old copywriter. "Particularly MyCornerDeli.com.
I've got to guess its days are numbered." Webvan? Napster? Which would be
the next to fall? (As it turned out, Webvan went out of business two weeks
after our focus groups.) The concerns went beyond the usual snarky
handicapping of the dot-com death watch. Our respondents were legitimately
concerned about losing urban perquisites they'd come to rely on. "Once you
incorporate these things into your everyday routine, it's really hard to see
them disappear," said a editorial assistant who works in Midtown. "When I
heard about Kozmo, I started worrying about Vindigo [an online service that
allows mobile device users to call up the location of the best restaurants,
coffee shops, bookstores, etc. in 20 cities]. Vindigo can't go away. It's a
public service. People won't be able to function."

Of all the companies on the endangered list, Amazon.com is a source of
particular worry. "I'm no real businessperson," said one participant, a
23-year-old graphic designer. "And I don't remember, two years ago,
wondering about business models, or any of that. But I do lie awake at
night, worrying about how Amazon stays in business."

She lies awake at night? Rarely have 20-somethings fretted about how
Wal-Mart makes money, or whether Brooks Brothers can scale. But the dot-com
psychodrama has enmeshed regular people in a morality play of capitalism.
These days, art students with mehndi armbands talk about companies with the
fevered earnestness of panelists on CNNfn. There is anxious talk of burn
rates and business models, and of whether or not a popular online shopping
site has blown through all its venture capital. And, to an unprecedented
degree, people's relationships with brands are linked to their perceptions
of these variables. "Every time I go onto eBay, I think to myself, 'This is
a model that makes sense,'" one woman told us. For the new, ultra-wary
consumer, a trip to eBay is a rewarding experience -- not just because it
may offer a Pez dispenser she likes, but because each visit confers a sense
of cozy complicity in a business model that works.

It's strangely appropriate, in fact, that in this age of business-model
fetishism, the last thriving Internet brand is not a brand in the
traditional sense, but a pure, naked business model, the aggregate of
millions of unbranded transactions. The antithesis of the classic dot-com
marketing model, eBay built its reputation not out of ad dollars or free
logo mugs, but out of users' actual experiences. It cultivated not
mindshare, but habituation. As a result, as the great Internet land grab
turns into a funeral march, this generic anti-brand is one of the last
brands standing.

Today, in addition to its galleries of action figures and etched-crystal
tumblers, eBay does a brisk business in the totems of dot-com bereavement.
The site now functions as a virtual reliquary for the detritus of such
heavily marketed ex-brands as Pets.com, eToys, and, yes, Kozmo. Distraught
consumers seeking memento mori can buy the messenger bags, the motor
scooters, the cycling jerseys, even a giant orange helmet. "This bright
helmet, with a green Kozmo running man on each side, is in excellent
condition," writes the seller, mth111@aol.com. "It is a thing of beauty for
a devout Kozmo fanatic to behold. This is, without question, the best Kozmo
souvenir I have ever come across. I doubt there are many in existence. Good
luck."

Bidding opened at $100. More mindshare for Kozmo. Another $2.99 for eBay.


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About the writer
Robin Danielson Hafit