Dotcom deity didn't have a prayer

Nowadays you will be pushed to find anyone who did not predict the dotcom bubble was bound to burst. The wisdom of hindsight is infallible. If you visit amazon.com, one of the internet retailers almost sure to survive, you will now find a plethora of books explaining how obvious it was all along that the dotcom explosion would implode. Three of these dotcom books even have the same title: Dot.bomb . But few of their explanations define with much precision the underlying reasons why the dotcoms bombed. They focus on the personalities of those involved, implying that different people would not have made such dumb mistakes. This may be true, but it does not go to the heart of the matter.

J. David Kuo's Dot.bomb tells the short sad saga of Value America. Value America was to be the paradigm internet retailer: a shop with no stock. Customers would order online, and their orders would be whizzed direct to the manufacturers, who would respond direct to the customers. Holding no stock, Value America would simultaneously be able both to offer a wider range of merchandise than traditional bricks-and-mortar outlets and to slash consumer prices. Bingo! Value America, as its founder Craig Winn intoned religiously to everyone he met, was the retailer of the future.

Kuo fingers Winn as both the hero and the villain of the piece: he gave birth to Value America then smothered it. But Winn's enthusiasm and drive never wavered. In good times and bad he was zealously evangelistic about his brainchild - literally evangelistic, for he believed the vision for Value America had come to him from on high. "We are awed by your genius," Winn claimed top Citibank honchos in New York had said to him. "We think you are sent by God." Winn held company prayer meetings at 7am each day, but being a saintly guy, he made it clear that promotion within Value America was not dependent on attendance.

Like all zealous evangelists, Winn had a supernatural gift of the gab. He could not only sell ice cream to Eskimos, he sold barrels of molten ice cream over the internet. The ice cream was not intended to be molten, of course. But like almost everything ordered from Value America, the ice cream got lost in cyber limbo and took months to arrive at the customer's door.

Having had his Damascene vision, Winn had no wish to get bogged down in organising deliveries. He employed minions to sort out such petty details. Then he constantly interrupted them with a flood of mini-visions, so the petty details never got sorted.

Kuo worked at Value America, which at its loony peak was valued at more than $3 billion (£2.07 billion) by the US stock market. Like a good cheap thriller, Kuo's story grabs you by the scruff of the neck and drags you through its labyrinthine plot. The plot is labyrinthine because, even with the benefit of hindsight, reality is not as tidy as fiction.

Characters inexplicably come and go, actions and events get started and lead nowhere. Doubtless this reflects exactly what life was like at Value America, but it makes for an occasionally confusing narrative. These diversions aside, however, the main thrust of the tale is gripping. Though Kuo's Californian prose can sometimes be embarrassingly hip, he tells the yarn well. What Kuo lacks is the wisdom of hindsight. He has the hindsight, but lacks the wisdom. In humping both the growth and the demise of Value America on to the less-than-angelic shoulders of Winn, Kuo fails to see why Value America and the vast majority of the other dotcoms were bound to bomb. It was not just Winn's mercurial personality. God-given or not; his vision was flawed. Like most of the dotcom companies, Value America was a lousy idea.

Online home shopping offers little that catalogue home shopping has not been offering for years. Anyone can invent a shop with no stock: a fat catalogue and credit from suppliers are all that is required. Nor is home shopping such a heaven-sent benefit as its evangelists believed. Somebody has to pay for the costs of delivery; somebody has to handle customer complaints; somebody has to bear inventory costs. If the retailer dumps all these overheads on the manufacturers - who are not equipped to cope with them - the manufacturers will charge the customers, overtly or covertly, and then cock up. That, roughly, is what happened. And you did not need divine foresight to see that it was inevitable.

Winston Fletcher is chairman, The Royal Institution.