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Dot-com Boom's Biggest Duds, From Flooz to iSmell
Carl Bialik from WSJ writes "WSJ.com looks back on some of the boom's biggest busts, and catches up with once-optimistic inventors. A creator of the unfortunately named iSmell, a USB device meant to 'print' smells transmitted by websites or videogames, says, 'It was a heartbreaking experience, because we had put so much into it.' The digital currency known as Flooz crashed and burned when a ring of thieves defrauded the company out of $300,000 using stolen credit cards. Microsoft flushed iLoo down the crapper. CueCat, meanwhile, got a second life as a bar-code reader that doesn't pick up personal information. 'The cat got butchered, but it has spawned a cottage industry,' says the device's inventor."
How can they forget Boo.com? The way that management team burned money epitomized the dotcom era. It wasn't surprising at all that their site was an obnoxious, pretentious, bloated piece of junk. The good thing about the bust was that it shook out and humbled all these artsy "we know what's best for the user" types that ran Boo.com.
I miss the days when new product announcements read like jokes and saying "the Internet will make bricks and mortar obsolete" wasn't a joke. Now the best we've got is "Oh look, Google made a calendar that works with your email."
Online grocery ordering and delivery is doing quite well in the UK still. Though its generally provided by the existing companies off the back of their own stores, rather than new enterprises (maybe except for Waitrose, who are closely linked with a separate delivery company).
I originally had maybe half a dozen cuecats which were daisy-chained together and used to illuminate my desk at night. I never really went out of my way to get them, and I accumulated those few from magazines or friends who didn't know what to do with them. Several months after Digital:Convergance went out of business and stores stopped pushing the cuecats on consumers, I decided on a whim to ask a radio shack manger if he still had one or two. It turns out that there was an entire box of them in the back he was just itching to get rid of.
So, the obvious result of this was that I had a small christmas tree that year decorated with cuecats (it needed quite a bit of external power, and all the cords seemed to hide a lot of the tree anyway).
Oh, the college days...
I worked for Sprockets.com for a couple months as technical support while I learned web development elsewhere.
As best I could tell, Sprockets was completely fake. The goal was to build a new-media friendly collaboration tool. Emphasis was on appearance and real development work was outsourced to Israeli programmers who could barely keep up with...well they just sucked. I never saw a deliverable and never had any responsibilities.
We had four in-house developers, fresh college kids who mostly goofed around and laughed at their non-responsibilities. When I showed up to work at 11am, the infrastructure team bluntly offered me a free cellphone. They also threw stock at me like toilet paper.
I bailed on Sprockets to take a real development job at double salary, but about a year later I got a letter in the mail saying Sprockets was defunct and I could come to the office to take whatever I wanted. Fait accompli...venture capital=profit. I can't believe they got away with it, but my feeling is this was pre-planned from the start and they broke no actual laws. They knew what they were doing.
Call it VC raiding. Anybody who wasted venture capital should probably be jealous (and my future employer did exactly that.)
cyberrebate.com - "Distributions to creditors (including rebate claimants) are being mailed beginning April 22, 2005. Creditors will receive $.08802 per dollar of allowed claims" The check is in the mail!!
pets.com - Bounces you to petsmart.com. Wonder how much PetsMart had to pay for the DNS rights? I'm guessing 2 barks and a milkbone.
webvan.com - DNS error. Legend has it this company actually burned through $1 billion.
peapod.com - Still alive in ChiTown, Milwaukee, and SE Wisco. Go peapod!!
carsdirect.com - Still alive but appears to be simply a car dealer referral service, not the once vaunted "direct seller". Never hit that sweet IPO - it was withdrawn as the bubble burst.
imotors.com - They built small factories to refurbish and re-warranty used cars which were delivered to customers. The factories are gone - now they're just an information broker apparently.
flooz.com - WTF? Random placeholder page?
boo.com - A splash page lives on and claims a new site is launching in 2006. Register your email address to receive updates. "The boo is back! Shh..." Oh joy!
kozmo.com - DNS error.
priceline.com - Still around of course.
agillion.com - Essentially blank page save the link to blogger.com
sprockets.com - Now a musical composing, scoring, and production service.
cuecat.com - An online obituary. Are they hoping this gets search-engine-indexed into posterity?
i2 - Supply chain software. Still here, but stock price is at $17, down from the 5-year high of $643. Look out below!
eToys - Still around.
idealab - Famous incubator - carsdirect, petsmart.com, etoys, etc - still around.
eCompanies - Famous incubator - still around.
The Best of the Worst
By KATHERINE MEYER
May 3, 2006
What were they thinking?
The Internet spawned so many weird gizmos and bad business ideas that mocking dot-com duds became something of a sport in the post-bubble era. But some ideas still stand out for pure silliness. These are products and services that attracted lots of publicity -- and, in some cases, millions of dollars in funding -- before folding.
In the earlier days of the Web, "nobody seemed to care if there was a real business there," said Alan Meckler, chief executive of Jupitermedia Corp. and Internet industry pundit.
If It Seems Too Good to Be True
Take CyberRebate.com, which thought it could make money by giving stuff away for free. The online retailer, founded in 1998, sold an assortment of goods at heavily marked up prices (some items going for up to 10 times their retail values), but promised customers a hefty rebate that often amounted to 100% of the purchase price.
For example, CyberRebate charged about $1,100 for a 13-inch RCA television that normally retailed for a few hundred dollars. Buyers could get a full refund of the purchase price as long as they jumped through some hoops -- rebate forms had to be submitted by a deadline, and checks came 10 to 14 weeks later. CyberRebate banked on the idea that some percentage of buyers would forget to fill out the rebate form, or fail to do so in time, leaving the company to pocket the money.
But selling items at such wildly inflated prices just about guaranteed customers would go out of their way to get their rebates, quickly sinking CyberRebate into heavy debt. The company, founded by law school student Joel Granik, filed for Chapter 11 bankruptcy protection in May 2001, listing liabilities of $83.4 million. Much of that debt was owed to consumers who were promised rebates but hadn't received them.
Both Mr. Granik and his business partner, Joseph Lichter, settled with the Federal Trade Commission for $40,000 in August 2004 and were barred from running a rebate-based business. Some rebate claimants eventually received partial reimbursement of about nine cents for every dollar, according to a statement on CyberRebate's Web site.
Money Matters
Then there was Flooz.com, which tried to create a form of digital currency. Similar to the also-ill-fated Beenz.com, users could purchase "flooz" and give it to others as a sort of virtual gift certificate. Flooz could only be spent at participating online retailers, which included BarnesandNoble.com and J. Crew.
The company managed to raise over $50 million in funding from 1999-2001 and even signed on comedian Whoopi Goldberg as a celebrity spokeswoman before bad times hit.
According to Flooz founder and Chief Executive Robert Levitan, who previously co-founded women's Web site iVillage, the beginning of the end came in spring 2001. That's when Flooz's corporate clients began to cut back on orders for gift certificates to be used in promotional giveaways -- a revenue stream Flooz was counting on -- amid the softening economy. Then a ring of thieves in Russia and the Philippines charged about $300,000 in Flooz to stolen credit cards. The online piggy bank officially declared itself broke in August 2001.
Several other online-payment companies also failed, though PayPal survived, largely because it positioned itself as a money-transfer service. PayPal's offerings became particularly popular with online auction users, and that company was acquired by eBay Inc. in 2002.
"I would have wanted a different outcome," said Mr. Levitan, who has since moved on to start-up Pando Networks Inc., which aims to simplify the sending of email attachments. "But I am proud of what we accomplished."
The Sweet Smell of iSmell
The "iSmell," a product created by the now-defunct Digiscents Inc. in 1999, promised to enhance the Web surfing experience by engaging users' senses of smell.
By plugging iSmell into the computer through a USB port, the device would generate diffe