A few days ago, with little disruption, a small Internet company called Iwon began operating the remains of the Web portal Excite.com. Iwon picked up Excite -- which was valued at US$6.7 billion just three years ago -- at the fire-sale price of under US$10 million, part of the messy bankruptcy of Excite@Home.
It was the latest sign that the Internet has entered a reconstruction phase similar to the ones that followed every other frenzied introduction of a new technology, from railroads to automobiles to PCs.
It's a predictable cycle of growth, collapse, rebirth: There is an initial land grab as people rush to get in first and get big fast. But then, as often as not, the leaders collapse of their own unsupportable weight and others pick up the pieces and turn the good ideas into real businesses.
Picking up the pieces
But the Internet is proving to be different in one way: Internet vultures have no interest in the sort of physical assets -- railroad tracks, factories or office buildings -- that were bought for a song out of bankruptcy court in earlier eras. Indeed, it is the things with three dimensions, and the bills to pay for them, that dragged down most Internet companies that have failed.
Instead, what is being valued most are the designs of the sites and the loyalty and traffic they developed before their demise. So KB Toys, for example, now operates an online store that has the name and colors of the defunct but popular E-toys that mirrors its own Web site. Amazon is similarly presenting the face of Egghead.com, which is no more.
Iwon, in the same way, has copied virtually all of Excite, using its own vastly less expensive systems.
Iwon started business only two years ago in this Hudson River suburb as a me-too entrant in an already crowded portal market. Its only distinction was that with every click, users were entered in a US$25 million sweepstakes.
At the time, it was of no concern to Excite, a Web pioneer with blue chip backers. But now Iwon is among a small group of Internet companies that have managed, by not overextending themselves, to survive and pick gems from the remains of the fallen dot-com giants.
"I feel like a guy who lived through a hurricane, got pounded and pounded, and managed to survive when everyone else was destroyed," said Bill Daugherty, Iwon's co-chief executive.
"Suddenly you walk outside, and because of the storm you have beachfront property. That's what Excite is to us," he said.
What makes one company a survivor and another extinct? It turns out that everything that Excite@Home seemed to have going for it -- like its early start, its rapid expansion and its powerful backers -- created an insurmountable drag as business slowed.
Combining one of the most popular portals with the leading provider of high-speed Internet access, it saw itself destined to topple America Online. At its peak, Excite@Home had 3,300 employees, 1,500 of them working on the Web portal.
It built a gleaming blue glass headquarters perched on Route 101, the main thoroughfare of California's Silicon Valley, with a two-story twisty slide for employees to let off steam.
Iwon, by contrast, was lucky to be late. It didn't go public and never has employed more than 230 workers.
With offices rented in a converted furnace factory here, Iwon gave employees free bagels and views of the Metro-North railroad tracks.
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