(FORTUNE Small Business) – Five years ago, iVillage was one of the first settlers in the urban frontier soon to be known as Silicon Alley. In its loftlike offices in New York City's Flatiron District, the space was wide open, with no interior partitions.

"We'd have races," recalls Nancy Evans, now 50, who founded the company with Candice Carpenter, now 48, in 1995. "We'd sit in our chairs and speed the whole length of the floor and crash into the wall."

Race. Speed. Crash. Such images work very tidily as metaphors for iVillage, the online network that offers a bazaar of services (from astrological charts to debt management) and advice (how to cope with breast cancer, nasty bosses, and bad haircuts) for women.

In March 1999, despite heavy losses, heavy turnover, and heavy competition, iVillage pulled off one of the most spectacular IPOs in financial history. By the end of the first day's trading, the company was worth $2 billion. A month later the stock traded, for a few head-spinning moments, at $130 a share. But then came the free fall; in December, it plummeted below $1. At press time, iVillage was trading at $1.71, its celebrated CEO had departed, and the company's future was clouded. The name now prompts a stream of second-guessing, and--depending on your perspective--gloom or glee.

A familiar tale of Web woe? Yes, but there are some plot twists that set this drama apart. The emotions stirred up seem more pitched, the scrutiny and schadenfreude more intense. It has something to do with the fact that iVillage was one of the first dot-coms to take off, that it helped set the sky-high expectations for a whole galaxy of IPO fantasies, and that it was a loud, large--okay, even annoying--presence. Many who followed the drama remember the big-ego picture in the New York Times of Evans, triumphantly smoking a stogie, the day iVillage went public.

But that gender-bending photo op was a tip-off to other reasons this tale resonates--and raises questions that are hard to answer. Although there were plenty of loudmouthed guys strutting around cyberspace, this CEO was, of course, a woman. More specifically, she was Candice Carpenter, an unapologetic, Versace-clad, sunglasses-wearing powerhouse. Her point? But no matter how good a business idea, execution is what counts. And when people judge execution, the bar is still higher for a woman. Carpenter was quickly dubbed a visionary and the Queen of the Internet--when she wasn't being called overbearing, manipulative, a black hat, and in over her head. More on this later.

One day some poetic soul will write a series of bedtime stories about the Enchanted Forest of the late 20th century, the Prince Charmings (venture capitalists), the villains (VCs), and the simpletons (VCs who kept investing last year). The tale of iVillage could begin this way: Once upon a time there was a woman named Candice who didn't have a computer, who didn't know from computers. A graduate of Stanford and Harvard universities, and a former Outward Bound leader, Carpenter worked for American Express and QV2, among others, before signing on as a consultant with AOL in 1995. (Editor's note: FSB is produced through a joint agreement between American Express and AOL Time Warner, FSB's parent company.) Carpenter says she immediately noticed the communities "under the surface'' of AOL's constituency--a gay community, a pet community, a quilting community--"things about people's lives that were just vibrant. That's what I felt the Internet would be," she says.

Community was not then the Internet cliche it has become. And Carpenter's insight was to take the idea and harness it to a media brand, which would become iVillage. She hired a team that included her old friend Nancy Evans, the former publisher of Doubleday, and they developed a plan for three linked online communities centered on family, health, and career. They called it iVillage--"i" because that was then the Internet prefix of choice, and "Village" to conjure up the notion of a village commons. In the summer of 1995, the team convened at Evans' New York City brownstone, unfurled a roll of her daughter's drawing paper, and started sketching the pages of Parent Soup, iVillage's first channel.

The women's market quickly became the iVillage sales story. While a few smaller competitors had begun by targeting women, "we weren't originally for women specifically," recalls Evans. "But because we're women, the material we put up was of interest to women, and our traffic was probably 80 percent women." Then as now, Evans, a purposeful woman with a carefully calibrated smile and a checkered history of blond hair, was the Pooh-Bah of content. Carpenter headed the department of ka-ching, wangling money from AOL, blue-chip advertisers, and, later, the king arbiters of Silicon virtue, the VC firm Kleiner, Perkins. By all accounts, Carpenter was the Scheherazade of the sales story. "There were other women's sites,'' iVillage investor Tom Mahoney told the New Yorker. "What set Candice's company apart was Candice."

If Carpenter and Evans impressed the wider Web communities, there was less enthusiasm about the community they were creating inside their offices. Young managers were given huge responsibilities and often didn't know what to do with it. "Managers were indecisive, and the decisions they did make, they changed," says a former employee, who, like many interviewed, requested anonymity. In its first three years, iVillage had net losses of $76 million. "This was probably one of the worst-run companies I've ever worked at," says a former producer and startup veteran.

Still, iVillage got plenty of encouragement from presumably cooler heads. The investment bankers behind the IPO were led by Goldman Sachs, which set the offering price in March 1999 at $24. When IVIL joined the ticker tape, the first offer was $95.88. But as the stock quickly cooled, internal problems became more obvious. Over four years, iVillage went through five chief financial officers. One of them, and two other executives, sued the company--in cases now settled--for fraud and breach of contract. Dozens of lower-level employees came, saw, and quickly got the hell out (or were summarily shown the door). The average tenure was seven months, said one report. "They hired a general manager for one project, and I came in and met her the first day," says a former iVillage consultant. "She was fired the next week."

Fixing the company culture became a time-consuming priority for Evans and Carpenter. But some people felt that Carpenter's technique was more salesmanship than substance. "She once got up [at a staff meeting] and did this cheerleader routine about why iVillage was so great, and asked people to deliver testimonials," one former producer recalls. But many were already feeling burned. "If Candice is angry, you will feel it coming off your skin," an ex-employee told the Industry Standard last year. Few were drinking the Kool-Aid.

According to a former--and admiring--iVillage executive, Carpenter didn't tone down her style to fit the shifting environment: "She was unwilling or unable to make it easier for people to hear what she had to say."

Last summer, with criticism at a new high and the stock at a new low, Carpenter resigned. Douglas McCormick, an iVillage board member and former head of Lifetime Television, with a relatively low-key style, took over as CEO. Carpenter denies speculation that she was ousted. She had said she didn't plan to run iVillage forever. "I have believed for a long time that these evolutions are essential in all businesses," she says. Either way, Carpenter clearly couldn't pull her company out of its slump.

Neither could plenty of other onetime Web heroes rescue their babies. Even some iVillage employees who were glad to leave believe that Carpenter has been judged too harshly, in part because she's a strong woman. "You don't hear people talking about [male CEOs] the way they do about Candice," says a former iVillage employee who is no particular Carpenter fan. "When people see a woman with attitude, still in this day and age, they're fearful."

Carpenter doesn't buy that. "It was just that iVillage symbolized how this new economy [was] crashing into the old one and stirring everything up," she says. "The whole thing riled up the Zeitgeist." Still, she feels that the criticism--now very familiar--is tiresome and unfair. "First of all, I didn't fire people left and right. I fired some people when appropriate," she says. "That's the job of a CEO, and we did not do any more of that than any other Internet companies in New York."

When you talk to folks at iVillage today, naturally you hear their carefully chosen numbers; 17 channels, 170 advertisers, among them Unilever and Johnson & Johnson. McCormick, a man of genial demeanor and strong aftershave, will tell you about the $67 million he's got in the bank--enough, he hints, for an acquisition--and how the company lost just under $7 million (Ebitda) in the third quarter of 2000, compared with, say, Women.com's $19.8 million loss.

In fact, Women.com and iVillage's other big competitor, Oxygen Media, are both struggling. Despite a $100 million infusion late last year, Oxygen has laid off employees, scaled back its Internet presence, and is suffering bad reviews that cast its own high-profile CEO, Geraldine Laybourne, as a disappointment. Women.com, too, is cutting jobs, and its stock has slid.

Analysts say that iVillage is sitting prettier than other women's sites, and they praise its decision to get out of e-commerce (as with the recent sale of ibaby, for an undisclosed amount). But they're skeptical about iVillage's prospects. If it doesn't narrow its focus, says Ekaterina Walsh of Forrester Research, "I don't see it surviving.'' Nor does it have enough real-world business, like Oxygen's cable programming or Women.com's magazines, warns Rachel Terrace of Jupiter Research.

Evans disagrees. "If offline were so crucial,'' she says, "Parent Soup [still a leading parenting site] should have been buried by Disney." (Disney shuttered a parenting site even before its other Internet operations faltered.) "They lost, and we won," Evans says. She and McCormick also cite iVillage programming on NBC news, new revenue from the sale of customer research, and a deal with the British retail giant Tesco to launch iVillage in the U.K. McCormick predicts that iVillage will be profitable this fall. He says, the company's SEC filings, projecting operating losses for the foreseeable future, are "just legal boilerplate."

Breaking into the black is the kind of news Carpenter likes to talk about. "These are our strongest days in terms of customers and advertisers and reduction of losses, virtually every hard metric you would use," says Carpenter. And she won't complain--at least to us--about her evaporated fortune (see chart). "iVillage is far better today, when our stock is whatever it is, than when it was at $130." But Carpenter's career is now thriving more off the village commons than on. She has no office there, and, as chairman of the board, no day-to-day role. She says she is working on long-term strategies for iVillage, as well as a CEO coaching business, a book, and a PBS special. And she's a hot commodity on the speaking circuit. It's hard to predict whether audiences will soon be asking about her latest success, or about the lessons of adversity for CEOs of any persuasion--especially for those who happen to be women.