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The sock puppet and the dot-com bubble
The fate of Pets.com is now a textbook lesson in the
need to have a business plan that is grounded in reality.
Pets.com was a company whose business was selling pet
accessories and supplies to consumers directly over the
web (
Fig. 11.30
). The company was launched in August
1998 and went public on the NASDAQ stock exchange in
1999. Despite the fact that its revenues were less than
$1 million in 1999, it spent nearly $12 million of its
start-up funding on a high-profile advertising campaign.
This included a popular Pets.com sock puppet that was
interviewed on the television show
Good Morning America
and an expensive TV commercial that ran during the
1999 Super Bowl. In the dot-com crash, Pets.com stock
fell from more than $11 per share in February 2000 to
$0.19 by 6 November 2000, the day it closed its doors
and sold its assets to pay its debts.
Fig. 11.30. The Pets.com sock puppet was symbolic of the
dot-com bubble. The company spent more than ten times
its annual revenue on advertising and their popular sock
puppet was even interviewed on the prime time TV show
Good Morning America
. The company went from a successful
IPO to liquidation in less than a year.
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