The Dot-Com Bubble
In my last article, “The Pool Was Born”, I wrote about the formation of the first tanker pool in the industry. In this article, I will talk about the dot-com bubble and the launch of Q88.com.
I’m sure most of you remember the dot-com bubble. It was an exciting time, and the Internet’s potential seemed to be limitless. Back then, we had a Nokia or a Blackberry in our pockets and life couldn’t have been better. No one seemed to notice the insane amount of money being spent on Internet startups. Commercials during the Super Bowl were totally senseless, but it didn’t matter (or so people thought).
In the maritime industry, things were really heating up. New websites seemed to be launching every week. It was a novel frontier and everyone wanted to be part of the “gold rush”. I worked for my father back in those days. He ran a successful tanker pool company which I talked about in my last article. Numerous visitors came to the office to demonstrate their ideas that were going to revolutionize the industry. Most came with flashy presentations, not actual working, substantive websites to demonstrate. VC-backed silicon valley startups, wall street funded firms, and a plethora of industry veterans threw their hats into the ring with tech companies and each other alike. Ambitions were lofty and the maritime tech world was there for the taking. Companies like maritimedirect.com and levelseas.com were some that made the biggest splashes.
In February 2001, we had finished yet another meeting with a startup that was looking for investors and/or us to sign up for their service once it launched. I sat across the conference room table from my father after the pitch concluded. We pondered.
He said: “I don’t get it. What are they trying to solve?”
I responded: “I don’t think they have really figured it out either.”
Him: “So what do you think we should do”?
Me: “I’m convinced this Internet thing is going to be big. But these ideas are not it. We need to start simple. We need to start small and launch something everyone will find useful.”
Him: “Ok, what do you propose”?
Me: “We should launch our questionnaire tool to the industry. Our operations team loves using it and so do our pool partners.”
And with that, the idea was born. We didn’t have a budget, no sales targets, no roadmap, just an idea and that was all we needed. I spent the first couple of months transferring our questionnaire tool from the internal website used by our pool partners to a new website, which would be available to the industry. We launched the website (see Figure 1) in June 2001 and offered the service free for six months. By January 2002, we had 100 companies signed up and paying for the service.
(Figure 1) Screen-shot of Q88.com from May 2002
At this time, a firm was tracking all the startups – they counted 300 that had launched into the maritime industry. Everyone was talking about it and everyone wanted to get involved. I think there are several reasons the bubble burst so let’s focus on the reasons related to the maritime industry:
- Internet technologies were not mature enough for mission-critical applications.
- Mobile solutions were very crude.
- People had barely started to use online consumer services like Amazon and banking websites.
- A majority of the companies were trying to change processes and disintermediate players.
- Most of the companies wanted to migrate the entire process to the Internet.
- Board rooms drove these ideas and investments, not people on the front line doing the business.
Ironically, we are in a similar space today with a large number of startups in the maritime space. StartupWharf has been tracking them, over 300 and counting. So what’s going on here and how is it different this time around?
- Internet technologies and mobile technologies are now mature.
- People are very comfortable using online services.
- Most startups understand they can’t build a solution to cover everything.
- Disintermediation isn’t a focus.
So will they succeed? Time will tell but I predict that most will fail. It’s different this time but the maritime industry is built around relationships and trust, neither of which are easy to build or earn. Many companies have found and maintained success since before the dot-com bubble. Even those may not be around for much longer. Companies focused on their customers, their employees and innovation will be the ones that will survive and thrive.