The Dolores Project

By Janet Feldstein, H. Grousbeck
2001 | Case No. E104
Synopsis and situational context. (Do not reveal the solution of the case). This case tells the story of Nathaniel Durant, a charismatic young entrepreneur and recent graduate of Stanford’s Graduate School of Business, who starts an internet-based company in 1999. Nathaniel conceives the idea in the dot.com heyday, during a year spent post-MBA as a case writer at Stanford. Nathaniel forms a team and founds The Dolores Project soon after completing his ‘tenure’ at the GSB. Nathaniel and his team face a series of difficult decisions and situations in their attempts to raise funding for their company, a destination website providing consumers with a wide-array of personalized shopping services. In the company’s first round of fundraising, its confidence and enthusiasm is matched by the enthusiasm of the market, and the team raises close to $1 million. Having found investors almost immediately, Nathaniel and his team carefully plan to limit the outside investment to less than $1 million, preferring to rely on ‘bootstrapping’ their way to financial liquidity. Even in this time of free-flowing financing, and dot.com enthusiasm, Nathaniel and his team face a number of obstacles and critiques that could signal trouble down the line. Nevertheless, the team rallies round their charismatic captain and prepares to launch in the spring of 2000. Having launched an alpha version of the site – a marketing tool that allows local merchants to target potential shoppers with customized offers over the internet – the team assumes that achieving a second, more favorable round of financing will be simple. Unfortunately, the NASDAQ ‘correction’ shifts the behaviors and expectations of investors, and Nathaniel meets ongoing resistance from the venture community. By June 2000, the company is nearly out of cash and faces the reality of bankruptcy. Nathaniel comes to terms with the difficult process of closing down the company, and weighing the possible exit strategies, including accepting an acquisition offer from a competitor, or simply shutting the doors and liquidating any remaining assets to pay outstanding liabilities.
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