The little-known deal that saved Amazon from the dot-com crash

The little-known deal that saved Amazon from the dot-com crash

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Amazon CEO Jeff Bezos is the world’s second richest person. Photo by Mark Wilson/Getty Images

The Dot-Com Bust

The day that all-time high was reached, the bubble popped, and one company after another imploded, fueling an internet sector freefall that lasted for the next two and a half years.

The index faltered until Oct. 9, 2002, having lost 78% of its value.

Businesses and investors were forced to acknowledge that venture capital largesse and an initial public offering did not guarantee income or make up for the lack of a sound business plan. With the spectacular rise and subsequent crash of many of the dot-com companies, few were left standing after the dust had settled.

1. Amazon.com (Nasdaq: AMZN)

Founded by Jeff Bezos in 1994, Amazon is now the largest online retailer in the world.

In 1995, Amazon made its online debut as a bookstore, eventually adding movies, music, electronics, computer software, and most other consumer goods to its diversified offerings.

Amazon’s initial public offering took place on May 15, 1997, at a price of $18 per share. It rose to more than $100 and subsequently dropped to less than $10 after the bubble burst.

Like other dotcoms, Amazon’s business plan focused more on brand recognition and less on income, and it did not turn a profit until the fourth quarter of 2001.

As of August 2021, Amazon trades at over $3,293 per share and employs more than 1.3 million people worldwide with reported annual net income of $21.3 billion.

2. eBay (Nasdaq: EBAY)

Founded by Pierre Omidyar in 1995, eBay is a popular online auction and retail presence.

eBay showed extraordinary growth early on, as the number of hosted auctions flew from 250,000 during 1996 to two million during just the first month of 1997.

On Sept. 21, 1998, eBay went public at an IPO price of $18; prices had no trouble topping $53 on the first day of trading.

eBay expanded its product categories to include practically anything that can sell. from antiques and gold coins to automobiles and real estate, and also incorporated new auction models and a “buy it now” set-price option.

These moves proved successful for eBay, which now has more than 12,700 employees with reported revenues topping $10.3 billion in 2020.

3. Booking Holdings (Formerly Priceline.com) (Nasdaq: BKNG)

Founded in 1997, Priceline was a travel-related website that helps users find discounts or name their own prices on hotels, car rentals, airfares, and vacation packages.

Priceline shares jumped from $16 to $86.25 during its first day of trading in March 1999, only to fall to less than $10 over the next couple of years.

Following the September 11, 2001, terrorist attacks, the entire travel industry faced challenges. In 2002, Priceline’s then-new CEO, Jeffery H. Boyd, rebuilt the Priceline brand around hotels rather than on airfares and expanded its market in Europe.

Priceline (now operating under the name Booking Holdings) currently works with a network of over 100,000 hotels in more than 90 countries and has enjoyed both revenue and net income growth over the last several years. Booking Holdings includes not only Priceline, but also former competitor travel sites Kayak, Booking.com, and Agoda, Open Table and RentalCars.com. As of August 2021, its shares trade at over $2200.

4. Shutterfly (Nasdaq: SFLY)

Shutterfly is an internet-based personal publishing service that allows users to create prints, calendars, photo books, cards, stationery, and photo-sharing websites.

Founded in 1999, Shutterfly survived the dot-com bust to go public on September 30, 2006, with an IPO share price of $15.55.

Shutterfly is up against big competitors, including Snapfish and Kodak. According to InfoTrends, the three companies together control approximately 85% of the online photo and merchandise market.

Today, Shutterfly trades above $60 per share.

5. Coupons.com (Privately Held)

Steve Boal founded Coupons.com in 1998 after realizing that the coupon business had yet to adapt to the new internet economy.

Three years later in April 2001, the company issued its first digital coupon. Two months later, it launched its own destination website.

In June 2011 Coupons.com attracted $200 million from institutional investors, money to expand services and increase hiring.

Now owned by Quotient Technology Inc. (QUOT), the website is currently valued at $1 billion. Coupons.com cites declining newspaper readership and increased grocery costs as factors in the growth of online couponing.

Better Sound

The sound quality on the single 1.6-inch driver is much, much better than the old Echo Dot. The old Echo Dot sounded abysmal, like a 1960s transistor radio. It was fine for Alexa’s voice, but music was extremely tinny. The new Echo Dot at least has some semblance of bass, and a much more rounded midrange. Take two Echo Dots, and you can even form them into a stereo pair.

The Dot now sounds noticeably better than the Google Home Mini. The Home Mini isn’t as painfully tinny as the old Dot, but it pushes voices far forward of any other sound when you’re playing music. Listening to your favorite singers is therefore entertaining, but you’re getting a very false idea of the background instrumentation. The new Dot brings things at least somewhat better together.

Now, this is still a small $50 speaker. The $99 standard Echo offers bass with much more room and shape compared with the Dot, for a noticeably better listening experience.

But I think this Dot finally vaults up into the realm of “good enough” for a lot of people, who don’t necessarily read dedicated speaker reviews. For everyone else, the Echo Dot still has a 3.5mm jack on the back, as well as Bluetooth, to connect to other speakers and audio sources.

Playing music, the new Dot gets up to a very noticeable 7dB louder than the old one, and about 2dB louder than the Google Home Mini at six inches. Interestingly, the new Dot is only 2dB quieter than the larger Echo. Where the larger Echo stands out is in the shape and quality of the sound—less compressed drums, and much better attack and decay with strings, for instance.

The Dot had no trouble hearing me, or being heard, at a 30 foot range in a quiet room. With music playing, you’ll have to speak up.

A Dot redesigned

Let’s start with the looks. Amazon began by replacing the plastic finish of before with a new, fabric-rimmed build. The result is a softer, homier-looking Dot that feels more like a premium device than last time around. The fact that it no longer has a big Amazon logo stamped on its side helps a lot, too.

I just wish Amazon hadn’t played it so conservative with the color choices. All of them — charcoal, heather gray and sandstone — look fine, but they’re also inoffensive to the point of being bland. At least one nongray option with a pop of personality would have been welcome.

The new Echo Dot, available in your choice of gray.

Up on top, you still get four buttons: two to bump the volume up and down, another to activate Alexa without saying the wake word, and a fourth that mutes the mic and keeps her from piping up at all. You get the same ring of light around the edge, too, and it’s still easier to see at a distance than the lights on the Google Home Mini, which is somewhat important given that those lights let you know that your assistant heard you — and that it’s recording what you’re saying.

Speaking of the microphones, the arrangement up top is slightly different than before, but they heard me just as well as the previous-gen Dot when I tested them out. I still needed to raise my voice to be heard during music playback, which is pretty much par for the course across the entire smart speaker category.

At about 4 inches (99 mm) wide and weighing in at over half a pound (300 grams), the new Dot is also noticeably bigger and heavier than before, and that’s because Amazon beefed up the speaker hardware inside for better-sounding audio. How much better, you ask?

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Qualidade de som

Os dois modelos são equipados com alto-falantes de 1,6 polegadas, o que deve ser suficiente apenas para ambientes menores e fechados. Os speakers não foram projetados com o objetivo de funcionar como uma caixa de som poderosa, voltada para ouvir músicas com uma alta qualidade. Apesar disso, as funcionalidades smart para ouvir músicas a partir de serviços de streaming é um ponto positivo, que facilita bastante o processo no dia a dia. O usuário pode ainda conectar um alto-falante via Bluetooth ou cabo de 3,5 mm, aumentando a potência e utilizando os recursos da Alexa.

Outra possibilidade é ligar mais aparelhos da linha Amazon Echo, aumentando a quantidade de caixas e, consequentemente, a potência. Dessa forma, os speakers funcionam em conjunto e distribuem o som por vários ambientes. Em relação à captação, são quatro microfones de longo alcance, o que deve permitir à Alexa ouvir a voz do usuário a distâncias maiores.

Funções e desempenho

No que diz respeito a comandos suportados e ações que podem ser realizadas, o Echo Dot com relógio traz praticamente as mesmas funções que já vimos na Alexa em outros produtos. Assim, você pode pedir para buscar músicas no seu serviço preferido, definir alarmar, registrar lembretes e outras funções.

De forma geral, a velocidade de resposta da Alexa é bem rápida e ela consegue interpretar a maioria dos comandos que são dados de forma natural. Entretanto, algo que preciso dizer que notei, é que a Alexa ainda falha na questão de acentuação. Por exemplo, ao pedir para buscar o nome de uma banda em inglês, eu tive que falar o nome da banda de forma “abrasileirada” e, mesmo assim, foram diversas tentativas até que o comando fosse registrado com sucesso. Já um problema menor, é que para dar algumas respostas, a Alexa ainda pronuncia algumas palavras em português de forma estranha, mas isso não compromete o seu funcionamento.

O seu display LED, que é uma das grandes novidades, além de mostrar a hora, também é capaz de interagir com alguns comandos dados para a Alexa. Assim, por exemplo, ao perguntar como está o clima, ao invés de mostrar a hora, o display mostrará a temperatura.

Por sua vez, ao definir um timer ou quando o alarme está prestes a despertar, esse display LED também mostra uma contagem regressiva. Pode parecer algo simples, mas isso pode ser útil para muita gente realizar pequenas tarefas.

Quem também realiza muitas compras na Amazon, gostará de saber que é possível, por exemplo, configurar a sua conta no dispositivo e saber qual o status de uma encomenda. Assim, você não precisa mais do computador ou do celular só para saber se o seu pedido está ou não a caminho de sua casa.

Além dos comandos dados por voz para a Alexa, apesar do celular não ser necessário para todos os momentos, é essencial que você mantenha o seu aplicativo instalado. Através dele, além de fazer a configuração inicial do Echo Dot com relógio, você também pode alterar itens como sons de alarmes, o que é algo que não pode ser feito ao interagir diretamente com o produto por voz.

Our review of Amazon Echo Dot (4th Gen)

Good Stuff

• Surprisingly good sound quality
• Good mics for picking up voice commands
• Can do all of the things Alexa does with other Echo models
• Low price

Bad Stuff

• New design makes it harder to mount on an outlet or wall
• Not as discreet as prior generation

The new Dot echoes the design of the new full-size Echo.

The 4th Gen Echo Dot is about twice as tall as the 3rd Gen model.

The most obvious update here is the Echo Dot’s new shape. Just like the full-size Echo, the new Dot is shaped like a ball that’s lost some air, so it has a flat side that prevents it from rolling off of a shelf. Half of the sphere is covered in fabric, with the bottom hemisphere a matte plastic. At about 3.5 inches tall, it’s about the size of a softball and twice as tall as the old, hockey puck design. (It appears that Amazon’s designers are inspired by sports equipment.)

That new design is a double-edged sword. It’s arguably more interesting to look at and shakes up the preconceptions of what a smart speaker can look like. It also provides slightly better sound performance from the same 1.6-inch speaker that’s mounted inside.

But the new model is definitely less discreet than the prior generation, and its taller size means it’s harder to mount on a wall. There’s a whole cottage industry of plastic mounts available (on Amazon, of course) that let you mount the older Echo Dots right to a wall outlet, which is ideal for rooms with limited shelf space, such as a bathroom. But the new model’s larger size means doing this will be much more awkward than before. Fortunately, it appears that the 3rd Gen model will be sticking around for a bit, so if you plan on mounting, that’s the one to go with.

Amazon Echo (2020) review: music of the sphere

You can get the standard new Dot in three different colors — dark gray, light gray, and a light blue — though for some reason all three colors come with a white power cord, which is annoying if you buy the darker model. You can use the power adapter from the 3rd Gen model if you are upgrading, however.

The Echo Dot with LED display is great for use as a nightstand alarm clock you can program by voice.

The LED display will show the time, current weather temperature, or the volume level when you adjust it.

Like on the new Echo, the signature LED light ring that illuminates when Alexa is listening is on the bottom of the Echo Dot, as opposed to the top in prior models. In practice, this hasn’t made much of a difference — I can still see it from across the room and it reflects off of most surfaces, so it’s plenty bright. The only challenge is the light ring can be hard to see when adjusting the volume using the buttons on top. The new Dot also maintains the 3.5mm line out that lets you hook it up to a larger speaker, though it doesn’t function as a line in for other audio sources like the full-size Echo offers.

In terms of sound quality, the new Dot is not as much of a leap forward as the new Echo. It is better-sounding than the 3rd Gen model, but only slightly — you really have to be comparing them side by side to notice the difference. The sound is a little more full and there is slightly better soundstage thanks to the dome-shaped design, but the speaker is the same size and power as before and it doesn’t support stereo like the Echo. You can pair two Dots into a stereo configuration, just like before, but you can’t do it across generations — you’ll need to buy two 4th Gen models for a stereo setup. The new Dot also doesn’t do the real-time room tuning of the larger model, nor does it have Dolby Audio processing.

The fact that the sound isn’t greatly improved is not a bad thing. The 3rd Gen model sounded shockingly good for its price and size, and the new model is much the same. It can get surprisingly loud; is pleasant to listen to for music, audiobooks, podcasts, and interacting with Alexa; and is ideal for smaller rooms. The obvious thing it’s lacking is bass response, but otherwise the Echo Dot sounds fantastic for what it is and I prefer it over Google’s similarly priced Nest Mini. We’ll have to see how well Apple’s more expensive but similarly sized HomePod mini compares when we get a chance to test it. The main takeaway, though, is that you shouldn’t upgrade from the 3rd Gen hoping for a significant leap in sound quality, it’s just not there.

The new Kids Edition Echo Dot is available in a tiger or panda design.

Of the new Echo Dot variations available, my favorite is the one that comes with the LED display built into it. It’s great for a nightstand, where you can use it as a smart alarm clock that you program by voice. The LEDs show the time by default, but they can also display the current outside temperature when you ask for it, or show the volume level from one to ten as you adjust it. It’s just enough information that it isn’t distracting in a bedroom and it doesn’t come with the added privacy concerns of a smart display that has a camera. (The privacy concerns that come with an always-listening microphone remain, of course.) You can even tap the top of the Dot to snooze the alarm, which I find easier to do on this than with the similar feature on Lenovo’s Smart Alarm Clock models. (All of the new Echo models support this, including the full-size Echo and the standard 4th Gen Echo Dot.)

The Kids Edition Echo Dot is by far the cutest smart speaker I’ve ever seen, with its tiger or panda designs and softball size. It comes with a year of Amazon’s Kids Plus service (formerly known as FreeTime Unlimited) that provides access to kid-friendly audiobooks, skills, and games, as well as an array of parental controls. Amazon will also replace the Kids Edition for free within two years of purchase if your kid decides to drop kick it or play baseball with it. I personally am not inclined to put a smart speaker in my kids’ bedrooms, but if I were to, the new Kids Edition Echo Dot would be the one to do it with.

The new Echo Dot comes in a variety of configurations and colors.

The Echo Dot remains my recommendation for an entry-level smart speaker. It provides excellent sound quality relative to its price and size; has access to all of the things Alexa is capable of, including playing music from a variety of streaming services, controlling smart home gadgets, setting timers and alarms, and even functioning as an intercom between rooms; and is easy to stick in most rooms. It’s also priced low enough that you can purchase multiple Dots and scatter them throughout your home or pair them in stereo configurations, especially when Amazon runs one of its frequent sales.

But I’m not happy with the regression in versatility compared to the prior model. Sure, the new version does sound slightly better thanks to its new design, but that design comes with some real compromises in where you can put the new Dot. While the 4th Gen Echo saw massive leaps in sound quality thanks to its spherical design, switching from a compact cylinder to an awkward orb doesn’t provide those returns here. This shape just makes less sense for the Dot.

If the new shape is a road block for how you plan to use the Dot, I’d recommend picking up the older model before it fully sells out. For everyone else, the new Echo Dot is the budget smart speaker to get.

Photography by Dan Seifert / The Verge

This story is part of a group of stories called

Where technology and economics collide

Last week, Jeff Bezos became the second-richest person in the world, with a net worth of $76 billion. If Amazon’s stock continues its meteoric rise, Bezos could soon surpass Bill Gates, whose fortune is worth $83 billion, to become the world’s wealthiest person.

Today Amazon is a powerhouse that sells everything from e-books to diapers, so it’s easy to think its rise was inevitable. But Amazon almost didn’t make it. During the dot-com boom of the 1990s, the company posted larger and larger losses, financed by investor funds that came pouring in. But the mood of the market turned abruptly in 2000, catching many companies off guard.

So how did Amazon survive the bust? History doesn’t necessarily point to having the best idea or the savviest management. To a large extent, Amazon got lucky by raising a ton of money right before the market crashed, giving the company the cushion it needed to ride out the turmoil of the early 2000s. It’s a good reminder that the fate of high-flying, money-losing startups like Uber or Snap may depend as much on luck as on the skill of their CEOs.

Bezos biographer Brad Stone explained in his 2013 book how close Amazon came to going bankrupt in the wake of the 2000 market crash:

Early in 2000, Warren Jenson, the fiscally conservative new chief financial officer from Delta and, before that, the NBC division of General Electric, decided that the company needed a stronger cash position as a hedge against the possibility that nervous suppliers might ask to be paid more quickly for the products amazon sold. Ruth Porat, co-head of Morgan Stanley’s global-technology group, advised him to tap into the European market, and so in February, Amazon sold $672 million in convertible bonds to overseas investors. This time, with the stock market fluctuating and the global economy tipping into recession, the process wasn’t as easy as the previous fund-raising had been. Amazon was forced to offer a far more generous 6.9 percent interest rate and flexible conversion terms — another sign that times were changing. The deal was completed just a month before the crash of the stock market, after which it became exceedingly difficult for any company to raise money. Without that cushion, Amazon would almost certainly have faced the prospect of insolvency over the next year.

If Bezos and his team had waited a few weeks longer to raise those extra funds, people today would lump Amazon in with other dot-com-era failures like Webvan, Kozmo, and Pets.com — big-spending companies with unworkable business models that collapsed under their own weight.

Interestingly, a lot of what ultimately made Amazon successful was invented only after the dot-com crash. For example, Bezos has tried to nurture innovation within Amazon by breaking the company into “two-pizza teams” — teams small enough to feed with two pizzas — that operated autonomously and were held accountable for their results. According to Stone, he only announced these ideas in 2002.

Another key insight that crystallized only after the dot-com crash was the idea that Amazon could be a platform to support others businesses. Marketplace, Amazon’s platform for third parties to sell used books (and later lots of other stuff), launched in November 2000. Amazon debuted Prime in 2005, and later opened up its two-day shipping technology to some third-party sellers. Amazon Web Services, which allow third parties to build websites using Amazon’s own infrastructure, didn’t launch until 2006.

This has interesting implications for Uber, a company that — like Amazon at the turn of the century — has suffered mounting losses as it has grown. There’s a lot of reason to be pessimistic about Uber, which has suffered a series of largely self-inflicted setbacks — from sexual harassment allegations to accusations of stolen technology — in recent months.

But fundamentally, Uber is the dominant company in a big market that’s likely to grow even more in the coming years. CEO Travis Kalanick has made a lot of mistakes, but with tenacity, time, and some luck, he may be able to — like Jeff Bezos 15 years ago — change the company’s culture and prove the doubters wrong. After all, Amazon wasn’t perfect either.

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Design

As caixinhas têm a mesma proposta de design. Ambas têm formato arredondado e acabamento em tecido nas laterais, enquanto a parte superior traz botões de volume, para desligar o microfone e um botão que ativa a Alexa. As medidas também são idênticas: 99 mm de diâmetro por 43 mm de altura, enquanto o peso é de 300 gramas. Há ainda um círculo em LED azul na parte superior que indica que a caixinha está escutando, e muda de cor em caso de problemas de conexão ou algo do tipo.

A tela de LED da Echo Dot com relógio é a principal mudança entre os produtos. De acordo com a Amazon, o painel ajusta seu brilho de acordo com a claridade do ambiente, facilitando sua visualização mesmo em quartos com muita luz. Além do relógio em si, é possível visualizar um timer, que deve ajudar na hora de cozinhar, além de indicar quando há um alarme programado. O novo modelo chegou apenas na cor branca, enquanto a versão original está à venda em branco, cinza, preto e rosa.

Display de LED da nova Amazon Echo Dot permite checar a temperatura, visualizar o relógio, alarme e timer — Foto: Divulgação/Amazon

The Bottom Line

In the last half of the 1990s, the Internet was a relatively new animal, and the businesses that sprung to life did so with ambition, hope, and, at times, shaky business plans.

While many of the companies experienced huge and rapid growth—its owners becoming instant millionaires—a significant proportion crashed and burned just as quickly. Some companies were able to adapt through reorganization, new leadership, and redefined business plans, making them the true survivors of the dot-com bubble.