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Adam Lashinsky on the State of the Internet

Dan Colarusso on Internet Growth Projections

Katherine Hobson on E-tailers' Push for Profitability

Catherine Valenti on Ailing Internet Funds

Jamie Heller on Using the Net to Track Net Stocks


Tracy Byrnes on the Frenzy Next Time

George Mannes on Self-Hating Dot-Coms

K.C. Swanson on Old Economy Winners

David Gaffen on Measuring the Internet Economy


Ian McDonald on 'Butterfly' Companies

Justin Lahart on Real Net Valuations

Joe Bousquin on Building the Perfect Net Company

A Dan Gross Opinion Piece: Were the Old Guys Right?

TSC Roundtable on Predicting Six-Month Winners

Roland Jones on The Last Days of Daytrading

Eric Gillin on Working for a Dot-Com

It's no shock that dot-coms have become financial world scapegoats. But it is a surprise to see how quickly companies of the Internet, by the Internet and for the Internet are trying to distance themselves from their fallen comrades.

Instead of expressing sympathy for smaller, less successful dot-coms that have gotten bogged down in recent months, strong-performing Internet firms such as

America Online


are rubbing their faces in it. Instead of sticking up for companies with which they once were closely associated, they're sticking it to them.

Call it the self-hating dot-com syndrome. Driven in part by the market's revulsion toward once-stratospheric Internet stocks, the remaining Internet-based companies still enjoying double-digit stock prices are loudly proclaiming their independence from fellow Netcos. Furthermore, they're confiding that they never understood what the other Internet companies were thinking in the first place, despite a decent amount of evidence to the contrary.

Can't Buy Me Love

For a good analogy, think of the stereotypical nerd in high school who has somehow been adopted by the football hero/cheerleader crowd. When some of those jocks start badmouthing his old pals on the Mathletes team, does he stick up for them? No! He pretends he never really liked them at all. Substitute Netcos for nerds in this parable, and Wall Street for the varsity squad, and you pretty much get the idea.

Big Talkers
AOL vs. Internet Sector index

To see it in action, take a look at AOL. In a speech at the

Internet World

trade show in New York last week, AOL Interactive Services President Barry Schuler told his audience that he never really understood the "losses are king" strategy of so many dot-coms -- their fear of losing their valuation if they turned a profit. "I could never figure that out," he told his audience. "It always scared me."

At a

Jupiter Communications

conference in August, AOL Interactive Marketing President Myer Berlow railed against people who staked their hopes in big online advertising deals -- companies with mistaken ideas such as, "You buy one thing and everything's going to be successful." Berlow told a group of marketers, "There is not a magic bullet. ... Nobody would say, 'All I have to do is buy

advertising time on

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, and I've got a great business.'"

Changing Their Tune

These men are right, of course. But these comments sound a mite mean-spirited, considering how many press releases AOL has issued over the past two years about companies that have signed multiyear, multimillion-dollar advertising deals with the service.

The Sickness
drkoop's flagging stock

Those include companies such as


, which signed a four-year, $89 million agreement with AOL in July 1999 -- a deal that turned out to be so wrongheaded for the company that it had to negotiate its way out of it less than 10 months later.

Do casinos have to explain to their customers that odds are they'll lose money, not strike it rich? Do commercial real-estate agents explain to prospective tenants that their business is more likely to fail than succeed? No. But real estate agents don't make speeches about how dumb their tenants are.

And for all of the public scorn for money-losing dot-coms, other people at AOL were gleeful -- as vendors were at countless other companies -- to get a taste of the venture capital-funded gravy train of recent years, not caring too much about the losses their partners were incurring.

In early 1999, according to an entrepreneur who speaks on condition of anonymity, his small company was negotiating an advertising/content distribution deal on AOL -- a deal that was never completed. In the midst of discussions, an AOL executive gushed, "We


start-ups. You guys are


to lose money!"

Long-Distance Runaround

Now that the VC money has dried up, AOL isn't the only company trying to distance itself from the dot-com horde of 1999. On several earnings calls this quarter, Internet companies have been tripping over themselves to escape dot-com customers and affiliations -- and getting trampled by investors when they don't appear to be moving quickly enough.

Like other dot-com executives,



CEO David Peterschmidt announced in a recent conference call that many of his company's new customers were "enterprise" customers -- code word for nondot-coms. But Peterschmidt couldn't say this without taking a parting shot at Internet-only start-ups.

"Now that the flimsy business models and marginal product offerings of many dot-com companies have been exposed," he said, "companies with powerful business models and strong, deep, technology offerings are beginning to distance themselves."

Yes, it sounds as if Peterschmidt is grateful that these charlatans have been exposed for who they really are. It sounds like he'd put in this rogues' gallery a firm like

HotWired Network

, the online arm of


magazine parent

Wired Ventures

-- purveyor of a discredited business model that the market rejected, leading to a breakup of the firm.

Well, it seems a tad ungrateful of Peterschmidt to talk like that, given that the flimsily modeled Wired Networks was, in fact, the customer Inktomi proudly included in its press releases on the day back in May, 1996, when it first announced itself to the world. Good thing their business model wasn't exposed too early.

Dotting the I's

Another sad attempt to distance a dot-com from the dot-com world came at



meeting with investors in early October. Jon Callaghan, managing partner of the firm's venture capital arm, suggested investors should think better of certain business-to-business e-commerce companies in the company's fold because they, as he put it, worked with "customers whose names do not end in 'dot-com.'"

Yet you can hardly blame him.

Hard Hit
Yahoo! leading the plunge

After all,



stock took a hit after the firm's

third-quarter conference call, in part because the company acknowledged that 40% of its customers were dot-coms.


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-- a company that used to be known as -- certainly knows the way investor sentiment about dot-coms is heading. Before About's latest earnings call, says president Bill Day, "We knew absolutely it was going to be an issue." Says Day, "We had to work extraordinarily hard this call ... to show how you could play successfully with our current mix of clients."

About has tried to stand up for its maligned clients. On a Monday conference call following About's announcement that it was merging with



, About CEO Scott Kurnit reminded analysts, "Not all dot-coms are unable to pay their bills."

But that still doesn't make them popular. As Kurnit told analysts, the company's deal with Primedia will help the company "reduce our reliance on dot-coms at a faster pace."