A Dot-Com Pantomime

The parable of the sock puppet.

By Michael S. Malone

It was the day the dog died.

The best known–and perhaps the only–enduring image of the e-commerce boom was the sock puppet, the frenzied star of numerous television commercials. So indelible was the puppet that it was reportedly’s best-selling product.

Of course, that should have been a warning. When your commercial mascot outsells your company’s actual products, you may need to rethink your business plan.

And so, following the hundreds of other recently demised dot-coms, (Nasdaq: IPET – news) announced it was shutting down operations last week, firing 255 of its 320 employees and selling its assets, including the rights to the sock puppet.

It seems that the company had been searching for a buyer since summer, but found only a few tire-kickers, much less suitors.

Smart young entrepreneurs should put their orders in right now for sock puppets, and display them on their desks for the next twenty years.

It’s an idea with a notable pedigree. For two decades, Intel (Nasdaq: INTC – news) co-founder Gordon Moore, the wise man of Silicon Valley, wore an ancient Microma LED digital watch on his wrist. He called it his “$30 million watch,” which was how much Intel burned in 1975, chasing the elusive world of retail goods.

He wore it, he said, to remind himself never to be dumb enough to ever take Intel into consumer products again.

A fading, dusty sock puppet on one’s desk in 2020 would offer a similar service. Already, as thousands of former dot-commies in San Francisco, Manhattan and L.A. are stumbling back to the old economy, the memory of the boom of 1999 is beginning to fade. But it should remain crystal clear.

We need to regularly look at the sock puppet and ask: What the hell were we thinking? That someone could sell dog food online and create a billion-dollar company? That this business idea was so great it deserved $110 million in venture capital investment?

But that’s exactly what the founders of believed. That’s what the venture capitalists who gave them a king’s ransom believed. And that’s what all of us shareholders–if not in, then in the entire wacky stock market–believed.

Now it’s the morning after, and we all have terrible hangovers. We don’t remember much of what happened last night…and what we do recall we don’t want to talk about.

But here’s what I do remember: I remember visiting venture capitalists (VCs) with a startup company and realizing that nobody in the room