Webvan: Just Another Dot-Com Crash

It's human nature to search for context, to try and put events, especially negative events, into perspective. And it's journalistic nature to see every event as a superlative: the biggest, the best, the last, the final proof.

So depending upon where you got your news about Webvan (Nasdaq: WBVN) closing up shop and filing for bankruptcy protection, it was either called the end of a dot-com era or proof positive that pure plays can't float in today's turbulent economic ocean.

But is Webvan's closure evidence of anything so grand? No. Not any more than the dozens of e-tailers to die before it. Webvan was a victim of its own circumstances and of bad timing. But drawing too many conclusions from its death is a murky business.

Conjecture Part I

We'll never know what would have happened to Webvan if the bottom didn't drop out of the Nasdaq. Even if Webvan shares were anywhere close to being above water, the e-grocer could have kept on chugging, kept on being a growth company for who knows how long.

Remember growth companies? That's what a lot of e-tailers set out to be in the early days, only to find that their growth period had been cut short by circumstances that were, in many cases, beyond their control.

If Webvan could have gotten its hands on another hundred million or so, who knows? It might have been able to turn the corner, and start to leverage its size to get the types of discounts from suppliers that it needed to make the math in its business model come out in real life.

Of course, we'll never know. A Webvan spokesperson says the company was too early. Maybe it was. Maybe it was too late. But the chances of another e-grocer taking a run at the same goal are slim to none.

Conjecture Part II

So what if Webvan hadn't been so, well, greedy. What if it had set out to be a pure play in a limited market, using the promise of truly outstanding customer service and convenience to make paying a little more -- maybe even a lot more -- worthwhile. Would that have worked?

There isn't any evidence that it would have. Even niche Internet grocers who targeted only high-rent suburbs and carried high-margin organic and natural foods have been falling by the wayside.

Nearly all of the survivors who have outlasted Webvan -- despite predictions that it would be the other way around -- have one thing in common. A connection to a brick-and-mortar supermarket.

Fast and Furious

Still, there is little doubt that the Webvan implosion has struck a nerve. The discussion board on the dot-com dead pool site F***edCompany.com had more than 440 postings about Webvan by early Tuesday. That comes out to almost 20 an hour since the news broke.

People knew Webvan. It was, indeed, a symbol of the new economy. Ambitious, unflinching in the face of widespread doubt. Free and easy with investor cash. And, above all, optimistic to a fault.

Not So Fast

But Webvan's demise isn't the death of anything other than Webvan (with the possible exception of George Shaheen's $375,000 per year golden parachute). It's not the death of e-commerce. It does not mark the end of pure plays any more than eToys' and Pets.com's closures did.

To view the Webvan shutdown as the end of anything else but Webvan is to give credit where it just isn't due. If Webvan had done everything right, had managed its growth better, had reacted more quickly in the face of growing doubts, then maybe a more thorough soul-searching would be in order.

But it didn't. In life, Webvan was all about Webvan and a singular, doomed philosophy. Let's not make it any more than that in death.

What do you think? Let's talk about it.