The technical school industry seems to have a predilection for generating businesses that spring up incredibly fast and then doss down and burn off spectacularly . In the late 1990s , there was an economic house of cards that interpret billions of dollar bill inventure capitalpoured into technology company ( mainly dot - coms ) in a sort of frenzy to latch on to the next big thing . Many of these starting line - ups went public and pick up even more investing money . More tending was paid to plug than to hearty business program . stock hang glide to incredible ( and inflated ) heights and everyone involve expect to become a millionaire . In some cases , early investors cashed out and pocketed some perfumed coin .
But in March 2000 , when the technical school house of cards explode , those who did n’t get out betimes enough were left with nothing but shattered dreams . A mass of the ship’s company busts followed a radiation diagram : The neophyte occupation received hundreds of millions through venture capital and initial public oblation ( IPOs ) , blew through most of it via rearing outlay and rapid enlargement , ran out of cash reserves when revenues did n’t contact expected level , failed to get additional funding because of marketplace conditions and went bankrupt within just a yr or two of launching .
The following are stories of 10 tech fiscal implosions . Most were drop by the battery-acid - com bust , straight or indirectly , although some were done in by inexpedient acquisitions , lawsuits or villainous doings . We can accredit these earlyentrepreneursfor lay the groundwork for our New wired 24/7 lives , and also for providing some worthful lesson on how not to run a tech company , but that ’s probably little consolation to those who were ruined in the backwash of cataclysm .
10: Boo.com
This U.K.-based retail site Boo.com , ground in 1998 by Swedish entrepreneur , intended to showcase trend and deliver fashion and sports clothing and accessories to customers all over the earth . one C of employees were hired and many were give perks likecell phonesand Palm pilots . Boo spend $ 42 million on an ad campaign that let in take Roman Coppola to aim its TV commercial message . The site was expected to go live in May 1999 , but it launched six months late in October 1999 . The site featured an animated assistant called Miss Boo , and the ability to drag wear onto models , zoom in on items and see them from all slant .
The technology behind the website was impressive , but it was too wearisome and gawky for most the great unwashed ’s computers and dial - up connections . Users also had to downloadsoftwareto scene merchandise , and it was unsuited with Macintosh computer . pot of would - be buyers had issues get to purchases . The site ’s costs were staggering – just photographing the product cost $ 200 per detail [ source : Chaffey ] . The site had to maintain rendering in multiple languages , and cope with currencies , taxes and shipping for regions all over the humankind . Boo.com could n’t turn a profit fast enough to remain solvent . Due to the dot - com crash , the planned IPO was put on handgrip , and the society failed to nurture enough capital via raw investments to keep the site going . It close down and went bankrupt in May 2000 . The technology behind the site was purchased and used by Venda , a company dedicated to getting retailers online , while the Boo.com web site itself was buy by Fashionmall and relaunched as a portal to other retail sites ( it ’s since disappeared ) . Boo.com spent $ 185 million before resolution , but the sale to Venda and Fashionmall brought in less than $ 2 million [ source : Sorkin ] .
9: The Learning Company
The Learning Company was an educational software package firm that created such democratic statute title as " Myst , " " Reader Rabbit " and " Where in the World is Carmen Sandiego?“Toycompany Mattel ’s $ 3.6 billion purchase of The Learning Company in May 1999 lives in infamy as one of the most disastrous acquisitions of all time . Mattel purchased it in hope of bellyache up its own software offerings , but The Learning Company , which had n’t developed a young striking in a few years , lose most $ 200 million within month of the sale . This turned Mattel ’s projected gains into a loss of $ 86 million that twelvemonth [ source : Doan ] . The company ’s store , which had reached a high school of around $ 46 a share the former year , plummet to around $ 12 a share [ rootage : Bannon ] .
Mattel ’s Chairman and Chief Executive Jill Barad was force to resign over the debacle . Barad had worked her way up from intersection director in the Barbie division , where she greatly meliorate sales . Mattelsold The Learning Company to Gores Technology Group in 2000 for what was believe to be about one - tenth of its purchase price . Gores spun off The Learning Company ’s entertainment sectionalisation to Ubi Soft Entertainment , and sell the educational division to Riverdeep , which later acquired Houghton Mifflin . The Learning Company is now a class of Houghton Mifflin Harcourt .
8: Webvan
Webvan , which launch in June 1999 , let customers to order their groceries online and have them drive home to their domicile . It was a pop estimate , but was in all likelihood ahead of its time given the lowInternetsaturation of the day . Webvan raised around $ 800 million in speculation capital and $ 375 million in an initial public offering in November 1999 . Its inventory reached $ 34 on the first 24-hour interval of trading [ sources : Stross , Delgado , Goldman ] . Webvan ’s trading operations started in San Francisco and expanded into eight other urban markets . It did n’t just peck up and deliver groceries , but warehouse all its own product – it had the issues of both a traditional food market store chain and a delivery service . It also required lashings of staff , and spent a massive amount on each warehouse for cutting - edge mechanization and servers to care orders . Rather than going for dim ontogeny , Webvan invested $ 1 billion in state - of - the - artistic creation warehouses for a be after elaboration into 26 cities to be fill in in 2001 [ source : Goldman ] .
Like many other dot - coms , the company fell dupe to severe overspending and hasty expansion . Before the remainder , Webvan conclude in its Dallas and Atlanta markets to reduce cost . It also made some rookie mistakes like cut produce quality in some areas to save money , which overturn guest . The caller had 750,000 customers in its remaining market place , but could n’t woo enough raw business organization to break even . Webvan ’s stemma finally dropped to 6 cents – it laid off around 2,000 proletarian , run low bankrupt and close down in July 2001 [ source : Lanxon ] . The company name , area and logotype seem to have been resurrected as anAmazon - power Web entrepot that sells non - perishable good .
7: Pets.com
Pets.com , found in 1998 , was an on-line vender of pet supply including nutrient and accessories . It receive more than $ 100 million in venture capital , and went public in February 2000 , raising another $ 82.5 million [ source : Wolverton , Tarsala ] . Its mascot was a cute and pop dog sock puppet that , incommercials , talked to positron emission tomography in the street , and the tricky tagline was , " Pets.com . Because pets ca n’t labor . " The company spent many zillion on marketing , including a multi - million buck Super Bowl ad , resulting in a much higher than normal per - client acquisition cost ( possibly as much as $ 300 ) [ source : Machan ] . Pets.com acquired its competition Petstore.com , and partner with Amazon , which in the end have a 30 percent stake in the company .
At their highest full stop , Pets.com caudex price were $ 14 a parcel , but leave out to less than a dollar mark , all within the same year [ source : Goldman , Wolverton ] . The internet site never managed to get beyond the period of lose more than it was stimulate on every sale . Pets.com posted a $ 147 million red ink in the first three fourth of 2000 , and after the acid - com female chest , it was unable to advance the further funds it needed to keep operate [ seed : Goldman ] . It closed down in November 2000 . Notably , after fail to rule a purchaser , the society declined to lodge for failure and or else decide to trade off its plus and give out the money to its shareowner so that they were n’t left with nothing .
6: Kozmo.com
Kozmo.com , started in March 1998 , offered various items like gadget food for thought , apothecary’s shop item and videogame andmovie rentalsonline , promising delivery within an hr with no delivery charge and no minimum order . You could get electronics like game systems and picture players ( to play the rentals ) , but you could also just govern a single coterie of gum or a confect ginmill , and a Kozmobicyclecourier would deliver it to your threshold for the face time value of the detail .
Amazon invested in Kozmo to the tune of $ 60 million , receiving a 31 percent post in the company [ source : Sandoval ] . Kozmo also partnered with Starbucks , paying them for the privilege of locating Kozmo telecasting drop boxes in their stores and supply a modified selection of Starbucks good for rescue . The inspection and repair was commodious and popular with client , but the business model prove unsustainable as most ordination cost more to deliver than they made back . Every marketplace required warehouse space and passel of prole , and they also stomach for expanding into multiple grocery store too quickly . Kozmo eventually implement a $ 10 delivery fee , and was beginning to make a profit in three of its nine urban locations , but it come too later to save the company . It postponed an IPO that had been planned for June 2000 due to the poor province of the grocery store , and finally close its doors in April 2001 . Chris Siragusa , Kozmo ’s former Chief Technology Officer , start a similar delivery divine service in 2005 called Max Delivery . It has dish out lower Manhattan for years , has reasonable delivery fee and is only now beginning to work on enlargement to other role of New York City . By center on a undivided localisation and slowly working out all the pricing , product oblation and customer service wrick , a small but profitable company sprang from the Kozmo idea .
5: Flooz
Flooz allow users to buy avirtual currency(also called flooz ) that could be used online in position of credit visiting card at dozens of retailers ' sites , such as J. Crew , Barnes & Noble , Restoration Hardware , Starbucks and Tower Records . It was like to a talent security that could be used at multiple online stores . Companies like American Express even leave out flooz as loyalty rewards . The society raised more than $ 43 million in investing monetary fund and was endorsed by Whoopi Goldberg , who was paid for a successful ad run with a stake in the caller [ informant : CNET , Trager ] . client buy around $ 28 million in Flooz over 1999 and 2000 . But Flooz shut down process abruptly , and from its customers ' point of view , unexpectedly , during August 2001 , and curtly thereafter filed forbankruptcy .
People who had purchased but not yet redeem their flooz were left in the stumble with retailer no longer accepting them as payment . Though things like the blue number of retailers accepting the currency and the dot - com bust probably kick in to the society ’s fiscal woes , it was also report that Flooz may have been crippled by criminal natural action . An overseas credit fraud ringing apparently bought $ 300,000 worth of Flooz with slip credit card , prompting Flooz ’s own deferred payment - card C.P.U. to freeze its report . Like many starting - ups , it did n’t have a lot of capital to fall back on , belike draw it hard for the society to pay out to retailers for customer purchases and expedite its death [ sources : Enos , Tedeschi , Wearden ] .
4: eToys
EToys , founded in 1997 , had every purpose of dominate the on-line plaything grocery store . When it went public in May 1999 , it enhance $ 166 million [ sources : Gentile , German ] . The company spent monolithic amounts onmarketingto endeavor to contend with retailers such as Toys R Us , Wal - Martand Amazon . It also signed deals with America Online , Discovery Toys and Gap Inc. to increase its exposure . EToys finagle to arrive at around 2 million customer and started a successful U.K. ramification . The company stomach a public congress blow due to a mass of late deliveries for the 1999 holiday time of year , but did tucker out Toys R Us ’s on-line sales . It then laid out $ 150 million to work up raw distribution centers in Virginia and California . Despite sale increases , eToys was losing tens of millions of dollars each quarter and had risky than externalise revenues during the 2000 vacation season . It had also accumulated $ 247 million in debt [ rootage : Goldman ] .
The eToys stock Mary Leontyne Price went from around $ 86 per share at its prime to 9 cent per part in the end [ generator : BBC News , Gentile ] . challenger toy R Us partnered with Amazon to bolster its on-line sale . In a familiar tale , eToys was unable to find enough new investment capital to keep things going after its spending spree and the dot - com went bust . It closed its U.K. site at the beginning of 2001 . The caller filed for bankruptcy in February 2001 , close down in March 2001 , and laid off around 1,000 worker between January and its end . KB Toys bought and resurrected eToys , paying $ 5.4 million for roughly $ 40 million in inventory , and an extra $ 3.35 million for the eToys site , name and logotype [ generator : Saliba ] . KB toy went under at a tardy particular date , but eToys.com is still around – under new ownership .
3: Napster
Napster was different : It was n’t the bust that killed it , and the land site re - emerged , albeit in an adapted signifier . launch in 1999,Napsterwas an former peer - to - peer music share facilitator that index sites of user who hosted music on the Web . It allowed user to easily search for and download all kinds of music for free . It was wildly democratic in its heyday , reaching 80 million users [ source : King ] . The fellowship run afoul of the music industry and its major business deal organisation , the Recording Industry Association of America ( RIAA ) , which tried to sue Napster out of existence for right of first publication infringement , but the company struggle on for a little while in litigation . A German medium company phone Bertelsmann paid millions to Napster for development of a unafraid music distribution organization , which led to Bertelsmann being embroiled in some of the anti - Napster lawsuits for helping to keep Napster operate . ( dry wrench : A euphony division of Bertelsmann was also suing to pour down Napster . )
Legal injunctions in the end made Napster exclude down in July 2001 . The company tried to continue afloat as a secure and legitimate file trading military service , and had a purchased offer from Bertelsmann for $ 20 million , but home political science nearly destroyed the fellowship and the deal never went through [ source : King ] . The company was relaunched by Roxio as a monthly subscription service in 2003 , and was purchased by Best Buy for $ 121 million in 2008 [ root : Pepitone , Reisinger ] . In 2011 , Best Buy sold Napster to Rhapsody , another music subscription military service . Napster co - founder Sean Parker is now an investor and board penis of Spotify , a Rhapsody competitor . Despite the fact that Napster grant for illegal download of music , it single - handedly popularized the ability to download songs online , something we take for granted today . Napster at long last helped usher in changes to the music industry that led the cyclosis and sale of medicine online through services like Rhapsody and Spotify , and retail internet site like the iTunes Store and Amazon .
2: GeoCities
GeoCities ' decline was more of a irksome flop than a fleet clangour , however . The site trudged along for a decade , but declined in popularity due to grow contender from newer , more user - favorable devoid hosting , blogging and societal networking sites that germinate over the years . Yahoo decide to quit the avail , encouraged remaining users to move to one of its paid entanglement host services , and cancel all GeoCities hosted sites in 2009 . gratefully , some kind soul call themselves the Archive Team saved a 650 Gigabyte copy of a good many of the GeoCities sites for historical purposes before the closing . Some other groups made similar effort , and you’re able to still peruse a lot of the old pages today .
1: InfoSpace
This last one ’s a short ill at ease . Today , InfoSpace is part of Blucora , which herald that it was acquiring HowStuffWorks on April 21 , 2014 . So , this one feels like airing out the menage ’s dirty washables … but InfoSpace ’s 2002 implosion was too dramatic to ignore .
But it turn out that the companionship ’s Charles Frederick Worth may have mostly been smoking and mirror . InfoSpace seemingly used account statement tricks and shady business deals to mislead investors and psychoanalyst into thinking it was doing well than it really was , while many of its executive were dumping their own stock [ origin : Heath and Chan ] . That ’s where InfoSpace ’s narrative diverges from most of our other technical school party implosions : Insider trading and other nefarious activity were going on behind the scene .
After Apocalypse come forth of how the companionship was really doing , its line plummeted to just a trivial more than $ 2.50 a share in June 2002 , wiping out a luck of investor and making employeestock optionsworthless . Microsoft co - founder Paul Allen lost hundreds of 1000000 of dollar because of his investment funds in Go2Net , which had merged with InfoSpace in October 2000 [ beginning : Heath and Chan ] . Despite all the apparent error , no one went to slammer . There were lawsuits over the insider trading , one of which Jain lost , but the judgement against him was drastically reduced on charm . Court records were sealed by the preside judge .
InfoSpace underwent a full housecleaning and restructuring starting in December 2002 , when the circuit board of directors terminated Jain as chairman and CEO , substitute him with Jim Voelker . It sprang back and became profitable under raw leaders and after deprive itself of many of its business . In its novel conformation , InfoSpace is still around as part of Blucora , providing hunt and monetization services .
Lots More Information
This article take back memories . We lived just outside of one of the urban locations that Webvan serviced . I remember thinking how expectant it would be if we could have our groceries delivered , and being sad when they cash in one’s chips under before expanding out to our area . Although it turns out that expansion hastened , or even make , their demise .
It ’s a pity that some of these coolheaded ideas did n’t come to realization , especially when hundreds of millions of dollars were thrown at them , and when , at least in some cases , they were doom by poor timing . But the boom and bust Hz is one of the perils of our economy .
The previous 1990s vision of online retail is finally hail to realization now . I can order dog food , toys , groceries ( at least the non - perishable variety ) and a keen many other thing on the Web . Even though most people still do the majority of their shopping in brick and mortar stores , a lot of them use the cyberspace to inform their choices . And those of us who are wired to the tooth are spending less time in the storehouse and more quality time with our beam screens .
