Hucksters, Suckers, and the Cue:Cat

Someone in the Know writes: "Now that it's almost completely over for Digital:Convergence, D Magazine (Dallas) unveiled the investments and the suckers surrounding the Cue:Cat and its creator J. Jovan Philyaw. I especially liked the Coca-Cola executive's observation: "... said listening to Philyaw made him feel like his hair was on fire". This was passed around ex-employees and we all got a kick out of it. The company is still alive, apparently, but not doing much anymore."

Comments

RIAA, take note

[AntiNorm]

The company is still alive, apparently, but not doing much anymore.

Just goes to show you what happens when a company tries to make its living by suing people.

symbols

[Frizzled]

the cue cat has to be one of the top five symbols of the dot-com era (or, atleast up there with razor scooters). you have to wonder who thought this gizmo up though ... who reads magazines in-front of the computer?

now - if there was a wireless version that worked in the bathroom, they'd be millionaires right now

_f

Re:symbols

[darsal]

now - if there was a wireless version that worked in the bathroom, they'd be millionaires right now

Oh but there is...

I got a Symbol 1502 keychain scanner for the cost of shipping from "VAR Reseller" magazine. Got the SDKs from Symbol's site, and now I'm scanning wherever I feel like it.

Turns out, I don't feel like it much. Could be 'cause it wasn't free (as in beer) so there hasn't been a groundswell of hackerly support, and I'm on my own figuring out how to hook it into existing databases.

Could be 'cause there just plain isn't all that much I want to scan in the bathroom.

(I -did- figure out that a buddy's dorky bar-code tattoo is the UPC off a box of tampons...)

I'm using my cue cat...

[hartsock]

as a door stop. It truly changed the way I used the internet... my office is cooler!

Re:I'm using my cue cat...

[Grape Shasta]

I use just a standard cat for this and it works perfectly well. I don't need one of these fancy hi-tech models!

Not every device is worth billions of dollars

[Faldgan]

One of the problems that a lot of the 'dot-bombs' have seen is that their product is just fine, but occupies a niche that just isn't a large market. I worked for a company that had a half-way decent product, and the revenue of this product could have supported a dozen people, or even twenty or so. But our CEO (who couldn't add 13 and 7 correctly) was hyped, and thought we needed a 100+ employee company, and millions of dollars in investment, and that we could make billions of dollars. NO. Not every product is a revolution. Not every product needs to have a "225-person workforce"
Advice to executives: Don't hire unless you need some work done that your current employees can't handle.

Re:Not every device is worth billions of dollars

[gwernol]

One of the problems that a lot of the 'dot-bombs' have seen is that their product is just fine, but occupies a niche that just isn't a large market. I worked for a company that had a half-way decent product, and the revenue of this product could have supported a dozen people, or even twenty or so. But our CEO (who couldn't add 13 and 7 correctly) was hyped, and thought we needed a 100+ employee company, and millions of dollars in investment, and that we could make billions of dollars. NO. Not every product is a revolution. Not every product needs to have a "225-person workforce" Advice to executives: Don't hire unless you need some work done that your current employees can't handle.

This is right on the money, but remember why the phenomenon has come about. Many, if not most, of the dot bombs were funded by venture capitalists. VCs gamble large sums of money on young comapnies, knowing that only 1 in 10 of them will ever make it to a "liquidity event" (i.e. an IPO or sellout to Microsoft). So those 10% of comapnies that make it have to be worth enough to cover the investments in the other 90% of companies, plus make a big return on the total investment. That, like it or not, is how VCs work.

The upshot is that VCs are not interested in, and won't invest in, companies that aren't going to rapidly (within 5 years) grow to a large size (at least $250 million a year in revenues). The only way to get VC money is to pitch your company as that kind of opportunity. If you go to a VC with a plan to build a small but profitable company, they will politely show you the door.

This is a major cause of ridiculous business plans that have no basis in reality.

If you want to build a small, niche business you can, just don't expect to get VC money to do it - you have to find your seed capital elsewhere; rich friends or parents, huge credit card bills or another mortgage on your house.

Re:Not every device is worth billions of dollars

[RobertFisher]

A lot of the scaling of companies was fed by the desire to obtain venture capital funds, and hence, on the way that venture capitalists operate. A large VC firm might receive say, $500M in funds to partition off to individual investors. They simply cannot manage 5,000 different investments of $100,000 apiece -- once you add up their overheads, and the typical failure rate of a startup, there is no way they could be profitable on such a small scale. So they typically fund a few tens of companies from anywhere from a few million to tens of millions of dollars apiece. The bigger, the better.

Of course, a lot of this had to do with the notion that one had to rush to market to get the most market share, which is an idea that has come to be closely scrutinized today.

Bob

Re:Not every device is worth billions of dollars

[gwernol]

All true, but, surely there is a way to start a company without VC money.

Absolutely there are, and I was trying to mention some at the end of my comment. A good way is to borrow enough money to start your company. Good if you have great credit or rich parents or friends. There are also government and bank small business loans you can apply for. Or you can simply try to live off any savings you have while you try to bootstrap your business. Or any combination of these and other methods.

It seems to me that the CEOs are just as culpable as the VCs. Both are looking to get rich quick. If the original posters CEO was willing to start small and build gradually, they might have survived.

Certainly some CEOs are guilty of this. Many others are genuinely trying to build a business but don't realise just what pressure they will come under from the VCs. And this isn't just about greed and trying to "get rich quick". Most of the CEOs and VCs I've met and worked with are genuinely interested in building strong, successful, viable businesses. But you have to understand the economics of this.

VCs are usually funded by limited partners - typically large institutional investors like pension funds and banks. These limited partners want at least a 100% return on their money, otherwise why not invest in stocks or bonds which have much less risk attached? If VCs invest $10 million in each company, then the 1 company in 10 that succeeds has to make the VCs at least $200 million when it is sold before the VCs get any money back at all. Not many companies command a $300 - $400 million valuation required to generate that return within a few years of being founded.

Only companies that have a real shot at growing that fast that quickly should go the VC funding route. Otherwise, find another way to get your business started.

I don't know whether to laugh or to cry

[Zen Mastuh]

From the article (emphasis added in italics...):

The Mark: David Edmondson
Title: President and COO, RadioShack Corp.
Invested: $30 million
Commitment: Manufactured CueCats and distributed them free at all RadioShack outlets.
Quote: "I went, 'Holy Toledo! This is big.'"

Sorry, Dave...

Re:I don't know whether to laugh or to cry

[Fear the Clam]

Laugh.

This is the same guy who thinks it's a Good Idea to ask for your address if you just want to buy batteries.

Re:I don't know whether to laugh or to cry

[geekoid]

haha
So dave thought "I'll invest 30 million in a product that we're going to give away"
I actualy had a money making idea, with experienced management,a business plan, and a succesfull marketing test, but I couldn't find an investor to save my life.
I really just don't understand business

Re:I don't know whether to laugh or to cry

[AndroidCat]

Quote: "I went, 'Holy Toledo! This is big.'"

Umm Dave, it only looks like a marital aid.

Great Quotes!

[Dr Caleb]

From the article:

Philyaw is a self-proclaimed "luminary figure in the world of direct marketing."

An executive of Coca-Cola said listening to Philyaw made him feel like his hair was on fire. --June 27, 2001, Wall Street Journal
"It fails to solve a problem which never existed." --Debbie Barham, The Evening Standard
"Are these folks kidding?" --Sandra Brown Kelly, Roanoke Times & World News
"You have to wonder about a business plan based on the notion that people want to interact with a soda can." --Jeff Salkowski, Chicago Tribune

Was this the "Edsel" of the Internet age or what!

Re:Great Quotes!

[Accipiter]

Personally, I liked this one:

• 
  "...not every project has a 100 percent success rate."
  

Well, if their plan was to get people into Radio Shack to take home a CueCat, they succeeded admirably. I have eight of them in a box in my closet.

Of course, their marketing effort failed miserably, considering they're going to be looking for "Robert April", "Christopher Pike", or "William Riker".

Who's to complain about free hardware?

[jcpii]

I, personally, am happy to have had the chance to see one of my _life's ambitions_ filled... Thanks to Mr. Philyaw, I now own a bar code scanner to catalog my music with.

I spent months trying to find a reasonably priced scanner, and eventually I gave up. But shortly there after, a trip to the local Radio Shack fixed that problem. I consider it a fair deal after all the times I've overpaid for items at that place, that I get a little something back.

Question

[ocie]

"listening to Philyaw made him feel like his hair was on fire"

Being an engineering type and not a marketing type, does having ones hair set on fire represent a good thing?

Re:Question

[sharkey]

does having ones hair set on fire represent a good thing?

Seemed to work for Pepsi. Or was it Coca-Cola? Go ask Michael Jackson to find out for sure.

Infomercials

[Accipiter]

Anyone remember those dumb-ass infomercials that Digital Convergence ran during the CueCat's inception days?

They were set in a classroom something like 200 years in the future. The teacher was telling the class about the wonderful beginnings of "convergence" - the era in human history (heh) that saw the merging of barcodes with the internet. It changed human existence forever, and made the world a happier place. The kids were asking questions like "What happened before 'convergence'?"

"Ha Ha, silly little student...They had to TYPE their URLs in...By HAND!"

The actual quote was something like "a long time ago, people had to get around on the Net by typing in each individual character of a Web address manually!"

Future's gonna be a bit different than expected, eh Jovan?

They had another infomercial with angels ranking the CueCat up there with the wheel and fire, but for the sake of good taste, I won't go there.

It never passed the "Wife Test" (tm)

[shreak]

All technology has to pass the "Wife Test"(tm) even if it's Open Source.

True Story:

[Wife is in office finishing up finances with Quicken]

[Enter Husband with "great" idea]

Husband: Hey, hon! Look at this stupid thing I just got from Wired. I found some software on the internet that will let us hack it to scan stuff and record the UPC codes.

[Wife's productive work preempted by husband interrupt. Wife visibly reworking priority tables while "listening"]

Wife: So?

Husband: Well, when we go grocery shopping we can scan all the stuff before we put it away and maintain an inventory so we know how much stuff we have and .... nevermind.

Re:It never passed the "Wife Test" (tm)

[Anonymous Coward]

Oh, that kind of "Wife Test". I thought you were just referring to the "marital aid" aspects of it.

CueCat is brilliant compared to their other ideas

[Anonymous Coward]

People always talk about how dumb the CueCat was. Did you guys notice these idiots' other thing, CUETV?!?!?

Here's their proposition:

You pick up this free cable and software from Radio Shack. (yes, they didn't learn from the cuecat debacle)

You bring your computer out of your study and set it up next to your TV (or TV next to your computer) and plug the audio out of your TV to the audio in of your computer using said cable.

Install crazy software on your PC.

Dial up your PC to the internet.

Tune your TV to NBC, and wait....

When a "CueTV Enhanced" commercial plays, at the end of the ad ther is a jarring burst of static. WHOA! My PC just went to the webpage for that ad! THIS IS SO WORTH ALL THE TROUBLE! GOD BLESS DIGITAL CONVERGENCE, THOSE MORONS!

Yes, NBC actually fell for this, for about a month or so this summer (I think June or July) they were broadcasting ads and other stuff with these annoying bursts of static that the CueTV software would pick up and decode and cause your browser to go to certain URLs. That was just about the same time D:C laid off all employees and folded up. It took NBC a few weeks to clean their programming up to get rid of the CueTV pollution after that.

Here's the URL that proves that as ridiculous as this sounds, I'm not making this up.


CueTV! Yay!

The last page: The Reviews

[Phrogz]

"It fails to solve a problem which never existed." --Debbie Barham, The Evening Standard
"Are these folks kidding?" --Sandra Brown Kelly, Roanoke Times & World News
"There's not enough benefit to the reader," says Jack Powers, director of the International Informatics Institute. "What's Forbes' proposition? 'Jerk around with your computer wiring and learn how to scan like a supermarket clerk so that we can send you more advertising.' No thanks." --Russell Shaw, Broadcasting & Cable
"...There's no need for it." --Sunday Times, London
"My first reaction upon receiving a complimentary "cat" from Wired: Why do I need this?" --Dave Plotnikoff, San Jose Mercury News
"You have to wonder about a business plan based on the notion that people want to interact with a soda can." --Jeff Salkowski, Chicago Tribune
"Just when you think the money truck has stopped making its rounds--that just any bunch of idiots can't get funded anymore--here comes Digital Convergence Corp., proving that small-timers with small ideas can still convince fools to part with their money." --David Coursey, ZDNet News
"Scanning bar codes in my apartment was a thrill for maybe 15 minutes, after which I decided I had better things to do with my time." --Edward Baig, USA Today
"Now I realized that CueCat did indeed have a use. It's for those times when you are 1) sitting by your computer 2) reading Forbes and 3) feeling an overwhelming sorrow that Forbes advertisers aren't getting enough attention. One swipe with the CueCat and you get another ad! Is America a great country or what?" --John Dorschner, Miami Herald
"The CueCat isn't worth installing and using, even though it's free." --Walter S. Mossberg, Wall Street Journal
"The CueCat is one of those clever gewgaws that would be brilliant if only it performed some useful function. But it doesn't."
--Richard Des Ruisseaux, Louisville Courier-Journal
"The CueCat is a cheapo bar-code scanner that looks like a marital aid." --Leander Kahney, Wired
"As I installed my CueCat, I found myself marveling at the weird assumptions that underpin the whole thing. Do we really need another tool to help us go to web sites? How hard is it to type in URLs, anyway? And for God's sake, who wants to be tethered to a computer while they read a magazine? What planet did these people come from?...The tool is almost impressively useless."
--Clive Thompson, Newsday

I remember back when i thought it was a neat idea.

[motherhead]

A friend of mine was showing me his new quecat, it was sent to him with a Wired subscription. I had asked him what it was good for. he told me me that at the moment not a whole lot, but then mentioned, "ever open up some ancient pentium system and see some old Seagate or Western Digital that has no model number or jumper settings, but it has a little bar code sticker? Wouldn't it be cool to just scan it and have the device page up in seconds?"

"Heh." I remember thinking, I thought that might be a cool little technology stunt.

but that never happened, what happened was they tried to re-educate me on how to watch TV and read a Magazine... hahahahahaha. No, thank you.

G'bye Que...

I don't get it.

[po_boy]

What's all this talk about no one using the Cue::Cat? I was just sitting here watching a video on Betamax, drinking an RC cola, and scanning stuff with my Cue::Cat. It seems pretty useful and timely to me!

Re:Linux support of the Cue Cat

[fishlet]

With the linux user base being notorious for not spending a dime, their concentrating on linux would have only brought them down faster

No Stupider than other late computer companies

[UltraBot2K1]

Okay, so we all knew Cue:Cat was a stupid idea. But there were plenty of stupider ideas. In the recently burst tech bubble, *everyone* was getting VC funding.

I've personally know of several even more ridiculous concepts that have received funding. Here are some of my (least) favorites:

• MyExtremeFuneral.com - This was a company that planned to profit from the demises of dot-com executives involved in extreme sports. They resold life-insurance at inflated prices and custom pre-designed funerals. In addition, one of their selling points was that they'd maintain a web-page/shrine to the deceased in perpetuity. Unfortunately(ha!) they laid off their 250(!) workers and went under 1 month after their $12 million first round funding came through.
  
• KittyLitterCorner.com - Yes, they sell (*sold*) just what you'd guess from their name -- but they did it over the internet! And they were there first, which earned them close to $20 mil in VC funding. KLC.com is no longer with us, needless to say.
  
• PHuMAss.com - Phumass (Personal Human Assistant) catered to the busy e-business executive with real, living, human assistants -- accessible via the web. Forget your PDA, with PHuMAss, you have a real live person (stationed in a cubicle in South Texas) to assist you, take care of your schedule, do your errands, etc.; all accessible through a convenient CGI interface anywhere you have a web connection; all for $299.95/month. RIP Phumass.
  
• VA Linux Systems - Rode the Linux bubble up with one of the biggest IPOs in history. Sold off their core money-maker (the hardware business) and instead acquired liabilities such as various linux-oriented community sites. Plans to make its money by selling a piece of software that can be downloaded free from the web. VA is currently on the verge of being delisted, and bankruptcy may soon follow.
  

These are just some of the cases I was personally involved in (I do due diligence for investment banks). As you can see, Cue:Cat is not that anomolous.

Re:No Stupider than other late computer companies

[technos]

I take it you've never owned a Dell?

Re:CueCat is brilliant compared to their other ide

[jms]

Here's an excerpt from the CueTV FAQ

Question: Why would you be using your computer and television at the same time.

Answer: You are probably watching a television program, and surfing the web during commercials.

Question: Why would I want to install CueTV?

Answer: After installing the CueTV software, you won't be able to use your computer during commercials,
because the software will keep interrupting what you are doing to send you to advertising sites.

What's really scary...

[Pollux]

the cue cat has to be one of the top five symbols of the dot-com era

I should have gotten one from Radio Shack. Not only would it have been free, but I could have probably sold it ten years from know on eBay for hundreds of dollars, when everyone else, who was too dumb to see it's true potential as a collector's item, threw it away.

Top five symbols.

[big.ears]

My personal top 5 favorite stupid ideas of the dot.com era:

• The CueCat
  
• Internet Time (A new universal time metric. Each 'beat' was about 80 seconds long, if I remember correctly. It was even on the titlebar of CNN.com for a while.
  
• Push technology, incarnations 1, 2, and 3.
  
• Voice-over-IP.
  
• Portals.
  

Re:Top five symbols.

[djrogers]

Voice-over-IP

Hate to burst your bubble, but VoIP is alive and well. Thousands of corps are saving millions of $$ by running their voice and data traffic side by side. It's not the clunky PC interface software you're probably thinking of though, I'm talking IP hardphones, digital and analog to IP gateways, and PBXs that trunk over IP. Heck, in all likelyhood, on or two of your recent phone calls went over IP and you didn't even know it...

Re:Interesting uses?

[StaticLimit]

The night "Enterprise" premiered, my TV was still in the garage, and we didn't have cable. My wife and I rushed to assemble a cabinet we got for the TV and hooked it up, but all we got was static.

"We need an antenna!", sez I. But we only had 15 minutes before it started, and where can we find something that will fit into the cable jack on the back and be a long, conductive thing...

We tried an old phone cable, but the wire inside was crap (one tiny strand braided with nylon or some crap), so I pulled out the CueCat... *snip* *snip* *strip* and I had a wire that fit right in, a long cord to act like an antenna... and a little cat-scanner-thing to set on top of the TV, which happened to be the position that gave us the best reception.

- StaticLimit

Re:Forbes sent out 800,000?

[Howie]

The part about the CueCat that amused me was that in thepack you got from Radio Shack (sent to me in the UK by a friend - hi Bob!), there was a subscription offer for Forbes, and some other magazine I don't remember. To get the offer, you go to a website, and type in a 10 digit number - you don't do it by scanning a barcode. If you do use your Great New Idea, then who the hell else is going to?

Re:It's not THAT bad...

[Roblimo]

The threats were silly. OSDN got some cease and desists from Digital Convergence about posting Cue:Cat hacking instructions on Slashdot and some of the bar code reader programs hosted on SourceForge.

Our lawyers and I looked at the whole thing (one lawyer got a Cue:Cat because of a Forbes subscription, no less), we talked about it, and in the end we farted it off.

In essence, these people were sending unsolicited out by mail, then trying to control how recipients used them. Try taking *that* one to court!

Hell, we figured 80% of the things were probably thrown away, and the comparatively few Slashdot and/or SourceForge readers who did something *useful* with theirs wouldn't make a noticeable dent in the world's Cue:Cat (over)supply, but might save a little landfill space.

- Robin

Re:I cannot find a better way to catalogue

[plover]

I use this URL
http://www.deBarcode.com/deBarcode/cgi-bin/deBarco de.cgi?barcode=%s&type=U.P.C.%%20A
(where you replace the %s with the UPC-A) to translate my UPC-A barcodes to product info.

However, if you're trying to get "book" information, you don't want to use the UPC at all. You want to use the ISBN, which is encoded in the "Bookland EAN" found on most books. (It's the other barcode, not the UPC barcode.)

Amazon.com makes a very effective ISBN to book catalog database. This URL
http://www.amazon.com/exec/obidos/ASIN/%s/
does a great job for me.

(Note, that the Bookland EAN is not the ISBN number straight up: you need to decode it. Strip the leading "978" from the EAN, then the last digit of the EAN (the check digit.) You're left with nine digits. Compute the ISBN check digit, and append it to these nine digits, and you're good to go.)

John

Re:Too bad.

[plover]

Someone else got "sold" on this neat technology:

IBM.

The catalogs I get from their enterprise group all have :CueCat barcodes on them.

Just when you thought IBM was going to grow a clue...

John