Since most of these Internet firms started off quickly and needed to grow even faster, they relied on borrowed money and venture capital funding before they even had major revenues. The goal is to build a strong brand and become the next AOL, Yahoo, or Amazon. These large run-ups and high valuations caused a dangerous mixture for companies with sketchy business models at best. Many of these Internet names were burning through huge amounts of money while still developing their business. There were of course companies with very good business models.
Sites are simple to make.
It seems these guys did not think it out as well as they thought. That coupled with low profit margins brought on by competition from everyone and their mother has left the company bleeding money. Yes, but it is all about hype. The problem here is that unlike offline media, online ad space is pretty much infinite. Another problem is that the Internet results in a logistical nightmare for companies with no distribution experience offline.