Can You Give Some Examples of Internet Businesses That Died as a Result of Poor Planning?

The Internet landscape is littered with the corpses of Internet businesses that went broke. It's hard to tell, from the outside of these businesses, whether their demises were the result of strategic planning failures, but it's a fair bet that looking at some of the situations, that strategic planning errors were major contributores to the failures.

Here's a large scale example: In the late 90's a company called Themestream created a website that invited "authors" to contribute articles to their site. In anticipation of high priced advertising, and with venture capital in hand, Themestream paid authors according to each VIEW of the articles they contributed. So, let's say a person's article was read 10 times. They receive $1.00.

By the time of their demise (bankruptcy) despite having made changes and solicit additional investor funds, it was clear that the company had not anticipated changes in the environment, and had misjudged the market place so badly that their business model was completely untenable. Of course, many people observing them knew it was not sustainable.

Finally, they hadn't seemed to do anything to mitigate financial risks as a result of potential fraud and gaming of the system. That kind of threat analysis as part of a SWOT process, would probably have resulted in a more realistic business model.

It's ironic that the basic concept -- getting articles from contributors -- has in fact returned to the Internet and for some webmasters has resulted in a sustainable business.

More recently, (July, 2006) Google changed some webmasters' minimum prices for advertising their websites. Regardless of the merit of these changes, it tipped some businesses over, at least temporarily, because they relied ONLY on the use of google adwords to try to generate website traffic, and they had relatively low profit margins. In effect, they put all their eggs in one basket, and when they couldn't afford to use that basket anymore, they had to manage a crisis, or go under.

Here's some quotes from webmasters:

I run an ecommerce site and my primary keyword CPC is now up 400%. I sell cheap widgets and cannot afford this new CPC. So what do I do now?

There isn't a single merchant in my entire industry that has a conversion rate that would justify those kinds of costs.

Sorry for sounding a little upset, but my entire business is working with my adwords traffic, so they just destroyed me if they keep their stance on the new quality scores.

Clearly, while one can have sympathy for business owners affected by changes beyond their control, it is the business owner that is responsible for planning properly so as to not be a victim of events that should have been anticipated. Simply put, bad or missing strategic planning.