The Biggest Failures of the dot com Bubble
Kibu.com
Products: Chat, message boards, original content Target Demographic: Teen Girls Summary: Kibu.com has one of the strangest stories from the dotcom era: Even as many women's content sites and portals were closing, Kibu was securing a great deal of funding and partnerships from major brands and companies, mainly due to the spending power of the site's target demographic. Meanwhile, the editorial leadership was virtually nonexistent, the backend was not being developed, and the top executives were M.I.A. By all appearances, there was very little actual work being done to justify the hype surrounding the site. After only 46 days, the site closed it's doors.
Pseudo.com
Products: Chat, Audio and Video content Founded: 1993
Summary: Before there was YouTube, there was Pseudo. It did not feature crowdsourced content like YouTube, but it did attempt to offer a wide variety of video content to it’s audience. Before it’s brief life as a video site, the company had a lucrative contract with Prodigy, which was one of only 2 ISPs serving the public in 1993. It followed by streaming audio-only shows, then video. It may well have become YouTube if the internet market had not nosedived between 1999 and 2000, when Pseudo’s lack of investors forced it to close its doors.
Webvan.com
Products: Chat, message boards, original content Founders: Stephan Paternot and Todd Krizleman Summary: Based partially on the Amazon model, Webvan’s mission was to deliver groceries to customers within 30 minutes of the order. The execution of the idea had two fatal flaws: none of the upper management had ever worked for a grocery-related business, and widespread overspending dried out investment monies before the company had a chance to spread beyond it’s initial area of coverage ten markets.
Yadayada.com
Products: Browser and portal technologies for PDAs and smartphones
Summary: Though it is not the most famous or highly monetized company on the list it is arguably the worst-managed and the only one with overtly fraudulent practices. The company pursued rapid growth and ambitious advertising even as they puffed up their total customer contracts to 12 times their actual number. Plagued by poor management, inadequate infrastructure, and numerous dissatisfied customers and cancelations, the company shut down in 2001. Reportedly, several laid-off employees never got their contractually-mandated severance, and the CEO fled to Canada to dodge them and the IRS.
Flooz.com
Products: Online currency Celebrity Spokesperson: Whoopie Goldberg
Summary: The concept is simple: buy online currency to give as gifts, so that friends and family can shop online without a credit card. However, Flooz made a lot of wrong turns in attempting to establish their online currency business. Their high-profile celebrity endorsement did not help them. Their limited partnerships made their online money nearly as useless as Monopoly money. There was not specific target demographic for their product. All this and rampant overspending sunk the company, leaving their customers with worthless fake money they couldn’t spend anywhere.
Boo.com
Products: Clothing Venture Capital: $135 million
Summary: The only non-American company on the list, Boo.com attempted to sell clothing and apparel to various countries worldwide. Though admirably ambitious, their pursuit of growth was engaged too quickly and fervently, burning through investors’ money at an amazing rate. The site was also laden down with Flash and Javascript, which was very slow to load over dialup connections, the norm at the time. Though the founders expected to continue growth via new rounds of investment, the money simply ceased flowing in 2000, and boo.com withered away.
Kozmo.com
Products: Home Delivery of various goods Employees: 1,100
Summary: Kozmo was certainly well-loved in the areas it serviced; it was a web-based delivery service that delivered videos, food and snacks, and various goods to their customers. They soon learned that with no minimum order and free delivery, their overhead far exceeded revenue, as orders were often very small (a single candy bar, for example). They attempted to shore up these problems by implementing a $10 minimum order policy, but by then they had spent too much of their investment capital to continue operations.
theglobe.com
Products: Chat, message boards, original content Founders: Stephan Paternot and Todd Krizleman Summary: Touted by some as the original social network, founder Stephan Paternot gained greater notoriety as the poster child for the excess and eccentricity of dotcom millionaires when he was filmed at a nightclub in leather pants, boasting about his success and wanton hedonism. The site grew on investment and market cap, but as investors became skeptical of the internet’s moneymaking power, stock prices dropped dramatically. Rightfully so: the company never once turned a profit.
Pets.com
Products: Chat, message boards, original content Mascot: Sock Puppet Dog Summary: Pets.com had one of the most visible branding campaigns of the dotcom era, advertising in a variety of media, including one Superbowl ad. The company did brisk business, but due to poor management, they lost money on most of those sales, creating an evergrowing deficit. The company was dismantled in 2000; two of the company's most desirable assets, the domain name and the mascot, were sold for several thousand dollars.