Josephine Monroe and Geraldine Billam, founders of the-bullet.com, are sitting dejectedly in their half-deserted, twin-roomed office in London's East End. It is the middle of the afternoon, and although they moved into the premises only four months ago, the phones are weirdly silent.

Three abandoned iMacs sit at empty desks in the room next door. Last Tuesday, the bullet suspended day-to-day maintenance of its three media websites to pursue what they call "new business opportunities". Three recently recruited staff were, very reluctantly, made redundant.

Only six months ago, Monroe and Billam were mentioned in Online as one of the bright prospects in dot.coms. They were riding high on the back of a valuation that priced their small internet company at £2m. It might sound a lot, but the pair had quickly cottoned on to what was then a virgin market of a daily news site catering for the TV industry. Pitching themselves as a "guerrilla force in UK media", they quickly developed an audience of key media executives that made them extremely lucrative to online advertisers.

But the last six months have proved a very, very long time for the e-conomy. They are learning the hard lesson that fortunes can fall just as quickly as they rise. Monroe says: "It really wasn't nice and it wasn't clever and I am ashamed of the fact that I have given people jobs and literally within months, I've had to take them away."

A month ago it was looking so good. The-bullet had just celebrated the launch of its third website. They had also hosted a handful of networking parties and ad revenue had increased significantly.

The pair insist that this is not another Boo.com; they haven't run out of money and are not about to file for bankcruptcy. Rather, they decided to take some very tough decisions about how to make a profit in the future. They say enough remains in the bank to operate until the end of the year and there are no immediate plans to vacate the offices in Old Street.

Since February, they had attracted an undisclosed amount of seed capital from a private investor, Tom Singh, of First Choice clothing group. This allowed The-bullet to expand and, for the first time, begin paying themselves a wage. They recruited quickly, poaching staff from Media Week and UK Press Gazette.

Monroe says: "Seed financing lets you get used to spending pretty large sums - ie five salaries, office costs, phone bills and other people's expenses. But it also forces you to be cautious. Now we've learnt how to spend money I don't think we'd be overawed by paying 20, or 50 salaries because we understand what you get for your money.

"Whereas if we'd been given £1m straight off I think it would have all been too much like playing Monopoly."

They are tight-lipped about their plans, although they stress that the website will only be one of many revenue streams.

What advice would they give to other dot.coms? Billam says: "The main thing is don't expect too much from other people and expect everything to take twice as long as you planned. Keep a close eye on what everyone is doing, and if you do trustpeople to do things for you, make sure you have got goals, and assess their progress. Also don't be afraid to question the experts."

"Yes," says Monroe, "because if we'd been clued up about business and finance at the launch, I think we'd be in a very strong position by now. But the upside is that it gave us a long time to get to know our product and our market - and I think that counted for a lot of our success. We lost a lot of 'first mover advantage' because we couldn't move quickly enough. It was also very, very hard being that skint for that long."

So The-bullet will definitely be having another shot at it. Next time a little tougher and a lot wiser. The websites are still live, and they will be adding new content.

The statement on their website simply reads more like a declaration that an epitaph: "We have not been shot dead, run out of ammo or bitten the bullet, but thanks for the headlines anyway."

But a message on a Chinwag talkboard read: "I really must say that The-bullet was second string in many ways (sorry guys) so again, it is far from a 'death knell for the industry'. Rather, it is a warning to all those who would try and profit from a poorly realised and/or shabbily executed concept."

While, Kris Jones, head of public affairs at Pact, a leading trade association for UK independent television, film and new media companies said: "It didn't always have a good enough grasp of the issues and I didn't find it a useful service. I guess its problem is that it is competing against sites that have much greater resources, and although it is a bold venture, I think it launched in a very difficult marketplace."