Dotcom Die-off Nothing More than a Bump in the Road

New analysis from Kinetic Information concludes that the recent spate of dotcom failures should not have been shockingly unexpected, and that the recent roller-coaster performance of the leading stock exchanges should prove to be more of a financial speed bump than an economic sinkhole.

According to the company, which is a business intelligence agency specializing in the effective application of information technology, statistical evidence demonstrates that 50 percent to 80 percent of new ventures fail in their first five years, usually because they either are undercapitalized or lack market focus. "Dotcoms and pizza parlors are subject to the same fundamental needs to spend money to make money, and to serve their customers well," says Kinetic Information President Steve Weissman. "This being the case, why should the dot-com rate of success or failure be any different than anybody else's?"

Because most dotcoms have been "staggeringly" well financed, Kinetic Information does not believe lack of capital has been the issue lately. Instead, Weissman says, "the recent die-off likely reflects a poor market focus on the part of the ‘dot-gones,’ a condition that almost always leads to bankruptcy." Since this merely reflects the way a free-market economy works, Weissman notes, "the tech industry downturn will soon prove to be a financial speed bump."

"Our data shows that companies that understand the marketplaces they serve and can provide measurable solutions to real business problems will prosper, grow and remain in business for a long time," Weissman states.

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