Eric Bauer has seen popular opinion swing hard when it comes to Internet-related companies like his.
According to the chief financial officer at Costa Mesa-based Tickets.com Inc., two years ago “cool” companies couldn’t wait to tack a period and those three little letters on their names: “.com”
“Then all of a sudden the tide changed,” Bauer said. “Now being a dot-com is like being the antichrist.”
Companies that have survived the dot-com fallout so far are finding they’re stuck with an albatross that can send investors fleeing. Once a symbol of new economy promise, a dot-com suffix now is a scarlet letter.
Venture capitalists have sealed their wallets when it comes to providing more dot-com funding. The media have blanketed papers, magazines and Web sites with gloomy stories about the dot-com bubble that burst. A host of public Internet companies have watched in dismay as their once-lofty stock prices plummeted to pennies in some cases.
Meanwhile, many cash-starved dot-coms are racing against the clock. They’re fighting hard to be survivors and turn a profit, whether it means tweaking, shrinking or scrapping business plans.
And now Internet companies are grappling with the grade-school problem of name-calling,or, in this case, being labeled a “dot-com.”
The response to the suffix usually is a lot of sorrowful sighs, said Jim Ritchie, president and chief executive of Irvine-based Transportation.com, which provides small to midsize shippers with online transportation-related services.
“A year ago if you worked for a dot-com you were treated like a rock star,” Ritchie said.
Not anymore. The fallout has made it hard to recruit new employees and win clients, who are at first skeptical and suspicious of the “long-term viability of the business,” Ritchie said.
“If you have a dot-com behind your name you’re automatically grouped as a company that’s going out of business, whether it’s true or not,” he said.
Transportation.com, which is funded by Overland Park, Kan.-based Yellow Corp. and other investors, is weighing whether it should scratch the dot-com from its name, particularly because customers breathe a sigh of relief once they learn the company offers online and offline services, Ritchie said.
But it’s not that simple.
“If we change it, how do we justify the money spent on building the brand?” Ritchie said. “We’ve spent about $2.8 million to $3.5 million on purchasing a name and marketing. For a startup company that’s real money.”
Irvine-based LoanGenie.com, a 2-year-old mortgage brokerage firm, also toyed with dropping dot-com from its name after encountering fickle investors when trying to raise capital.
But co-founder James Creamer said he eventually decided against it, mainly on advice an investment banker gave him during LoanGenie’s early days.
“He said, ‘You can call the company DungGenie for all I care,as long as the business model is good,'” Creamer said. “I thought it was funny, but it stuck in my head.”
Watching Internet companies dance around a public perception minefield has made businesses once tempted to ride the dot-com name wave glad they didn’t.
James C. Madden, chief executive of Irvine-based Exult Inc., said people suggested to him early on that he call the company Exult.com. But since Exult,which provides electronic payroll, employee communications, and other services,is only partly related to the Internet, Madden said he decided against a dot-com moniker.
“That turned out to be the right decision,” he said.
Aliso Viejo-based LeadersOnline, an Internet-based search firm that fills middle management positions and is part of Chicago-based Heidrick & Struggles International Inc., faced a similar dilemma. But President Jim Quandt said the company isn’t dependent on the Internet, so a naming decision was clear when he discussed the topic with investment bankers.
“They too came to the conclusion that since you’re not a dot-com, don’t do it. And here we are a year later saying, ‘Wow, lucky call,'” Quandt said. “Dot-com, I might add unfairly, is working against a lot of companies and their positioning.”
The backlash has made Internet companies more aggressive in their fight to differentiate themselves in a sea of bobbing dot-coms.
“Companies like ours have to operate through these times by continuing to deliver on the expectations that have been put into the market and by making sure they really work hard to reach cash-flow break-even as quickly as possible,” said W. Thomas Gimple, chief executive of Tickets.com.
Tickets.com also is careful to point to different definitions of dot-coms and where it fits in. The company’s Bauer said some dot-coms solely rely on the Internet to transact, distribute and generate revenue, while Tickets.com provides online and offline ticketing services and software.
“At this point, the dot-com part of our name is probably a misnomer,” Bauer said. “The Internet is an important part of what we do but it’s not all we do. Unfortunately, people believe that if it’s a dot-com, the Internet is all you do.”
Still, Bauer said he can’t sit back and speculate whether the company should change its name, even though dot-com was “once revered and is now reviled.”
There is too much at stake, he said.
“This is a game of musical chairs,” Bauer said. “Each day a chair gets pulled away.”
One day, he said, the chairs will stop being pulled and the only online companies with seats will be those with “business models, management and tangible customers and revenue,” he predicted. n
