In June 2008, CNET hailed Pets.com as one of the greatest dotcom disasters in history.
After its start by Greg McLemore, the site and domain was purchased in early 1999 by leading venture capital firm Hummer Winblad and executive Julie Wainwright. Amazon.com was involved in pets.com's first round of venture funding. Pets.com would eventually buy out one online competitor, Petstore.com.
The company rolled out a regional advertising campaign using a variety of media (TV, print, radio and eventually a Pets.com magazine). It started with a five-city advertising campaign rollout and then expanded the campaign to 10 cities by Christmas, 1999. The company succeeded wildly in making its mascot, the Pets.com sock puppet, well known. The Pets.com site design was extremely well received, garnering several advertising awards. In January 2000, the company aired its first national commercial as a Super Bowl ad which cost the company $1.2 million and introduced the country to their answer as to why you should shop at an online pet store: "Because Pets Can't Drive!" That ad was ranked #1 by USA Today's Ad Meter and had the highest recall of any ad that ran during the Super Bowl. The company went public in February 2000; the former Nasdaq stock symbol was IPET. It was the last dot-com to go public before the bubble burst.
Pets.com did make significant investments in infrastructure such as their warehousing; these investments resulted in the company needing a critical mass of customers to break even. Pets.com management maintained that the company needed to get to a revenue run rate that supported this infrastructure buildout. They believed that the revenue target was close to $300 million to hit the breakeven point and that it would take a minimum of 4 to 5 years to hit that run rate. This time period was based on growth of Internet shopping and the percentage of pet owners that shopped on the Internet.
By fall of 2000, and in light of the venture capital situation after the bursting of the dot-com bubble, the Pets.com management and board realized that they would not be able to raise further capital. They aggressively undertook actions to sell the company. PetSmart offered less than the net cash value of the company, and Pets.com's board turned down that offer. The company announced they were closing their doors on the afternoon of November 6, 2000, mere hours before the 2000 United States presidential election. Pets.com stock had fallen from over $11 per share in February 2000 to $0.19 the day of its liquidation announcement. At its peak, the company had 320 employees, of which 250 were employed in the warehouses across the U.S. While the offer from PetSmart.com was declined, some assets, including its domain, were sold to PetSmart.com.
The Pets.com management stayed on to provide an orderly wind down of operations and liquidation of assets. During this period, CEO Julie Wainwright received $235,000 in severance on top of a $225,000 "retention payment" while overseeing the closure.
As the puppet's notoriety grew through 1999 and 2000, it gained almost cult status and widespread popularity. The puppet made an appearance on ABC's Good Morning America, Nightline, Live with Regis and Kathie Lee, and even had a balloon made in its image for the 1999 Macy's Thanksgiving Day Parade. In addition to the media appearances the Pets.com puppet made, merchandising was also done for the company including clothing, other trinkets, and a retail version of the sock puppet that delivered five of the puppet's famous lines (shown above).
As Pets.com's recognition began to grow, it attracted the attention of the creator of Triumph, the Insult Comic Dog. Representatives from Robert Smigel sent letters, including a cease and desist demand, to Pets.com claiming that the puppet was based on Triumph. Pets.com responded by suing Smigel in California, its home state, to prevent Smigel from suing in New York. The press mistakenly assumed that Pets.com had complained first, leading to negative publicity.
The publicity surrounding the Pets.com puppet, combined with the company's collapse, made it such a symbol of dot-com folly that E*TRADE referred to it in an advertisement during the 2001 Super Bowl. The commercial, which parodies the Crying Indian announcement, shows a chimpanzee riding on horseback through a ruined dot-com landscape. The chimpanzee comes across a company named "eSocks.com" that is being demolished and weeps when a discarded sock puppet lands at his feet.
After the company folded, Hakan and Associates and Bar None, Inc. purchased the rights to the puppet under a joint venture called Sock Puppet LLC. Bar None, Inc. an American automotive loan firm rebranded the microphone to say 1-800-BAR-NONE and gave the puppet a new slogan: "Everybody deserves a second chance." Bar None shot multiple commercials with the sock puppet, many of which still air today.