Pets.com (defunct)

Greg McLemore founded Pets.com in 1998 during the height of the dot-com boom with a simple premise: selling pet food and supplies online. The business model had a fundamental problem visible to anyone who examined it: Pets.com was selling 50-pound bags of dog food below cost and shipping them for free. Every sale lost money. The plan was to build market share first and figure out profitability later — a strategy that had worked for Amazon, and that Pets.com's investors apparently believed would work equally well for commodity pet supplies.

Amazon invested in Pets.com in 1999, lending the company enormous credibility. Venture capital followed. Pets.com raised $82.5 million across multiple funding rounds. The company launched a national advertising campaign featuring a sock puppet dog that became one of the most recognisable mascots in America — appearing on Good Morning America, in a Macy's Thanksgiving Parade balloon, and at the Super Bowl. The sock puppet was significantly more famous than the product it was advertising.

Pets.com spent $11.2 million on a Super Bowl XXXIV advertisement in January 2000 — one of the most expensive commercial buys in television history at the time. Three weeks later, the company raised $82.5 million in an IPO. On November 7, 2000 — exactly 268 days after the IPO — Pets.com announced it was shutting down. It had burned through its cash, could not raise additional funding as the dot-com bubble deflated, and had no path to profitability. The sock puppet mascot was sold at auction. The domain was eventually acquired by PetSmart.

The Pets.com collapse was used for years as a cautionary tale about irrational exuberance and the danger of growth-over-profit business models. Then, in 2011, Chewy.com was founded — another company that sold pet supplies online. Chewy focused obsessively on customer service, built genuine loyalty, and figured out how to make the economics work. It was acquired by PetSmart for $3.35 billion in 2017 and went public at an $8.8 billion valuation in 2019. The business model that Pets.com had failed to execute was viable. Pets.com had simply executed it very badly — and very publicly.