The persistent gap between promise and performance in the online world has not narrowed. But investors don’t seem to learn from their mistakes, even six years after the dotcom bubble popped, and continue to be enticed by the sector. Look at Tom Online, the Chinese Internet and mobile multimedia company. Its shares are now a mere 5% of their peak levels, which they reached a year ago.
This is despite a high-profile deal with E-Bay in December 2006 to jointly get into e-commerce in the world’s most dynamic economy. The owners of Tom Online announced last week that they were taking the company private once again, and would pay $200 million to buy the 24.27% stake held by public investors. While other Internet companies from the emerging markets have not done as badly, the flame-out at Tom Online should be a warning to investors (including venture capitalists) that it is still very difficult to earn money from online ventures.