CYBERPUNK: Is Your Site Fucked?

Philip Kaplan knows the feeling. Though he's only 24, he's already been through the anxiety. It's a bad gut feeling, one more and more people working for Internet start-ups are getting these days. It's the anxiety of seeing your company's stock plummeting and its product not selling, of hearing investors grumbling about a lawsuit. You signed on to a dot-com business for the excitement of working in a revolutionary new medium and the thrill of getting rich through stock options. But now the rumors of impending layoffs are circulating the office, and you're idling at your desk, getting no work done, just waiting for the boss to come along to tell you to shut off the computer and hit the road.

New Yorker Kaplan is Webmaster for Fucked Company www.fuckedcompany.com, a "dot-com deadpool" charting the impending demise of the thousands of Internet start-up companies now struggling to survive. It's a macabre site for all those who bought the hype about the mad money to be had in e-commerce. Kaplan started the game in February as a way to pass the time with six friends, all of whom looked askance at the venture capital being invested in what seemed to them to be dubious business plans. And it would have remained a peer-group amusement--had not Kaplan, over the Memorial Day weekend, set up a pool page done up as spoof of the wired-world business magazine Fast Company, with actual news items detailing all the various start-ups that have hit hard times.

"Word of mouth caught on," Kaplan says, understating the matter considerably. Within a few days, he says, 20,000 people signed up for the monthly pool, within a few weeks, the number had risen to more than 70,000. Players pick five companies they think are having trouble making it and rack up points based on the severity of the news emanating from the flailing firms. According to Fucked Company's guidelines, a company is chosen for inclusion in the pool when it does "something that signals--or attempts to correct--impending doom." Points are assessed for a range of such signals, from "general bad news to minor layoffs to all-out corporate slayings."

Kaplan says the site gets a lot of visitors from people who work at "Web shops, dot-com start-ups, consulting firms," and other people in the Internet industry who are feeling anxious about their fates. Kaplan himself now runs his own e-commerce company, PK Interactive www.pkinteractive.com, but beforehand he worked for ex-MTV veejay Adam Curry's ill-fated THINK New Ideas, an advertising agency that specialized in interactive media.

The tide is shifting. The days of Web businesses living off investors' millions are coming to the end. Companies are hitting the bottom of cash funds; it's time for them to start turning a profit, and many aren't. Perhaps the first bad omen was Barron's March 20 cover story, "Burning Up," which set industry tongues wagging when it appeared. The magazine listed 207 Internet start-ups in order of "burn rate"--how fast they would go broke if they kept spending their investment capital at the rate they were doing so. It showed how such prominent online companies as CDNow and Medscape were already living dangerously.

The news section of Fucked Company confirms Barron's predictions with one tale of woe after another: The CEO of Fashion500.com cancels all employee vacation, personal, and sick time until the Web site's debut. The online music distributor and promoter SpinRecords.com lays off 40 employees. LookSmart.com employees are leaving en masse. And you're kidding yourself if you think their demise won't have an effect on the rest of our buoyant economy. As Barron's reports, "America's 371 publicly traded Internet companies have grown to the point that they are collectively valued at $1.3 trillion, which amounts to about 8 percent of the entire U.S. stock market. Any financial problems at these Internet firms would affect the myriad companies that supply them with equipment. . . . Another consideration is that a collapse in highflying Internet stocks could have a depressing effect on the overall market and on consumer confidence, too."

What's going wrong? Many see this as an inevitable shakeout. Kaplan likens the Web to a small-town market. "In a small town, there is really a need for only one or two stores," he says, and so it is in the online global village. "Once you have Amazon, you really don't need any more bookstores. They're the Wal-Mart of the town. So you only need one store. Of course, that store will make gazillions."

Not helping matters was that, in many cases, nobody involved was thinking clearly enough about precisely how these start-ups would actually make money. "It seems that the traditional rules of business do apply after all," Kaplan says. "We all look at these sites and wonder, Well, how do they make money? And that's the point--they don't."

Kaplan foresees a long and happy life for Fucked Company, though. In some weirdly aggressive, survival-of-the-fittest mindset, some dot-coms have agreed to sponsor the prizes for future "deadpool" rounds. Kaplan doesn't expect to profit from the site, but he figures it could be self-supporting; his expenses aren't that high. "I have," he explains, "a burn rate of $35 a month."

Joab Jackson can be reached at joabj@charm.net.

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