Pets.com spent a fortune on a sock-puppet mascot — and lost money on every sale

Pets.com, founded in 1998, was one of the most recognizable startups of the dot-com boom. Its sock-puppet mascot became famous, and the company spent heavily on advertising, including a Super Bowl spot, to build its brand as the place to buy pet supplies online. It raised about $300 million and went public in February 2000, at the height of the dot-com frenzy.

The problem was the business model. Pets.com sold pet supplies — heavy, bulky, low-margin goods like bags of dog food — and shipped them to customers at prices below what they cost to buy and deliver. It was losing money on every sale, betting that volume and brand recognition would eventually make it profitable. They never did.

When the dot-com bubble burst in 2000, the money dried up. With no path to profitability and burning cash on every order, Pets.com ran out of money and shut down in November 2000 — just nine months after its IPO. It became one of the most famous dot-com busts, a symbol of an era that confused a memorable brand and a lot of spending with a viable business.