Some flashy travel dot-coms burn out quickly

In the dot-com world of today, some bright stars can burn out fast, and itå‘s been no exception for online travel.
When Savvio hit the market in September, its smart leaders and innovative business model made it seem a sure winner. In June it had received $14 million in financing from Pyramid Technology Ventures, Athena Technology Ventures, Charter Venture Capital and Draper Richards.
Savvio.com’s plan was to offer travelers discounted air and cruise fares through real time declining prices and full disclosure of itineraries on international and domestic travel, something many analysts saw as an improvement over Priceline’s blind-bidding model.
“Every thing was on track including the consumer reception,” says Savvio CEO Karen Ha, a partner of Athena Technology Ventures and a 13-year veteran of the software industry. “As we went out to the market to raise financing [we found that] a plan that was sufficient eight or nine months ago is not sufficient now.”
Few could have predicted that the company with such a seemingly bright future would close up shop after only four months. Savvio, which had expected to turn a profit in just about 18 months, has become just one of the many young dot-coms to fall victim to the volatile market.
“We expected a downturn, but the speed and force was greater than we anticipated,” Ha said. “A few good ones fall victim to circumstance. In this market timing is everything.”
And, the timing couldn’t have been worse for www.amisto.com.
When Monique Elwell started the adventure travel site in March 2000 she was no stranger to the Internet economy. With six years experience as an Internet equity research analyst at Merrill Lynch, Union Bank of Switzerland, Smith Barney and Wit Capital, she knew the ins and outs of the business and she knew the risks.
Her financial savvy, along with her love of adventurous travel in off-the-beaten path countries like Honduras, led her to start her own site where travelers could find and book lodging from large hotels to bed and breakfasts in countries not usually represented on travel Web sites. Elwell was trying to do more than just capitalize on the growing online market; she was attempting to promote through the Internet, travel to that places like Central America and South America that can benefit from tourism dollars.
Then, just one month after starting the site, the market took a sharp downturn, leaving Amisto to struggle for financing while its more mature competitors were successfully growing their businesses. “GORP and iExplore closed [their financing] before the market tanked,” Elwell said. Most people, Ha included, expected that the “over exuberance” that was rampant in the dot-com market would eventually face a reality check. But this was more than most people could have expected.
As the Internet grew and competition heated up, investors began to encourage dot-coms to spend and pour money into building a brand in a crowded market. Then, practically overnight, investors warned dot-coms to stop spending and show some profits.
“Too many investors did not have a risk profile,” Elwell said. “They expected to have 10 times the return but hey had 60 percent chance of losing money. They got scared. If they weren’t able to lose the money they shouldn’t have invested.”
Many venture capital firms—once practically throwing money out to anyone with a dot-com after its name—have become gun-shy and are leery about funding companies that are not already turning a profit. In such an environment, Elwell believes that in this market the only way a site can get off the ground is if it’s self funded.
“I think that there was a very small fleeting moment in history where people could raise large sums of early stage [financing],” Elwell said. “I think that window is shut. I don’t think your going to see the boom that we saw at the end of the 90s—that’s just not going to happen again.”
Ha believes it’s become almost impossible for new players to succeed in “a market gone from bad to worse.” “It’s not a good time at all,” she lamented.
Elwell added, “I’ve seen so many good companies with a good product, including Amisto, that just went under. It’s sad that we weren’t able to fulfill our mission. It’s such a shame that I couldn’t even get anyone to buy part of the whole thing that could [keep it alive].”
——-