RealTime IT News

Stop the Music

EParties.com already sent out the invitations, blew up balloons, and wrapped the gifts. Only problem was, nobody showed. You've probably never heard about eParties until now, but this dot-com failure is a biggie. It just so happens that this smallish implosion falls on the doorstep of eCompanies. EParties was the first company hatched from the incubator's nest late last year.

ECompanies stands out from a crowd of me-too incubators by its sheer swagger and penchant for getting its name in the paper. Although this latest twist is showing some curious signs that the publicity hound is turning camera shy.

The incubator emerged on the scene during summer of last year armed with all the bells and whistles. ECompanies is the brainchild of crackerjack team Jake Winebaum and Sky Dayton. Winebaum was chairman of Buena Vista Internet Group, while Dayton boasted an even more impressive background as founder and chairman of pioneering ISP Earthlink .

The eCompanies venture fund was ready-made with an ambitious plan of attack and a newly minted $130 million cash infusion from blue chip backers like Disney, Goldman Sachs, and Accel. The only thing left was to start filling an empty portfolio with wildly successful start-up companies. And eParties was the first hatchling.

ECompanies unveiled its "highly-anticipated" first incubated company as a one-stop party portal. The proud parent announced that eParties was to be the first of its kind, aggregating all the resources and tools needed to throw a shindig for any occasion. To top things off, former Mattel exec David Haddad was named master of ceremonies.

ECompanies' co-chief Dayton threw in some cheerleading for good measure, "Far from child's play, the party industry is a lucrative, multi-billion dollar business desperately in need of the Internet."

Famous last words.

Well last week, eParties surprised its thirty employees with pink slips, and yesterday a spokeswoman for the start-up revealed that eParties had been auctioned off at a going-out-of-business sale to an undisclosed buyer, for an undisclosed sum. So what the heck went wrong?

To borrow from Dayton, "It takes three things to make a successful Internet company: a great idea, capital, and gutsy execution." Apparently not in that order. Without question, eCompanies has talent on board to turn out successful Net companies, but it's a crapshoot when you're looking to swing for the fences. It's one part skill, three parts luck.

EParties had modest capital, decent execution, and started with a so-so idea. But with Yahoo! adding party planning services a la carte, eCompanies walked away from competing with an 800-pound gorilla. Capital dried up, a fair idea turned bad, and execution was a moot point.

Since eCompanies' first baby steps, its portfolio companies have looked awfully plain vanilla B2C. Once market volatility tossed cash-strapped upstarts overboard, eParties got dragged out to sea by an anti-B2C undertow. Rather than throw good money after bad, this latest liquidation shows smart business acumen. But what eCompanies really needs is to get back to basics and focus on hatching companies founded on a great idea.

Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.