Quiz time: What percentage of dot-com startups have failed?
If you are like most people we have informally surveyed, you probably estimated around 90 percent. A few people posit a slightly lower failure rate; some say the rate was 98 percent or more. Virtually no one assumes that the numbers of dot-com failures and successes have been roughly equal, but that’s what our research found. Of nearly 2,000 business-to-business (B2B) e-Marketplaces launched during the dot-com days, 55 percent remained active for at least two years after September 2002, when the Nasdaq hit its lowest point. (See “Through the Service Operations Looking Glass: An Empirical Model of B2B eMarketplace Failures,” by T. Laseter, E. Rosenzweig, and A. Roth, Darden School working paper.) We conducted a separate study of a random sample of companies seeking venture-capital funding in 1999 and found that the five-year survival rate was 48 percent.
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