Boo! And the 100 Other Dumbest Moments in e-Business History
"Boo! And the 100 Other Dumbest Moments in e-Business History
By: eCompany Now Staff
Issue: May 2001
We've picked our top 101. But if you think we've missed a few, post your entries to our site.
1. Kajsa Leander is born in Lund, Sweden, in the summer of 1970. Several months later, Ernst Malmsten is born, also in Lund. Together, they go on to found an ill-fated multinational high-fashion e-tailer called Boo.com (to be continued...)
2. Mark Breier, CEO and president of computer-software e-tailer Beyond.com, appears on CNBC's Squawk Box in June 1999 wearing only boxer shorts, to demonstrate that the site's customers can buy from home in their underpants. He resigns seven months later, after Beyond's share price falls more than 75 percent.
3. E-business consultancy MarchFirst launches a national branding campaign in June 2000. The campaign's main goal, executives say, is not to bring in new business, but to enable them to recruit employees. Price tag: $50 million. The company has since laid off 2,100 employees.
4. In November 2000, the Internet Underground Music Archive -- a.k.a. IUMA.com -- posts the following on its website: "Ladies and Gentlemen, we are overjoyed to present you with the ten winners of our "Name Your Baby IUMA" Contest. Congratulations to these bold, beautiful babies -- Iuma Thornhill, Iuma Ross, Iuma Becht, Iuma Carlton, Iuma Farish, Iuma Devi, Iuma Godfrey, Iuma Daigre, Iuma Radnedge and Iuma Hebert!" Each baby is guaranteed $5,000 (and, presumably, a childhood full of schoolyard beatings).
5. Medicine Online launches its innovative new site, Bidforsurgery.com, in March 2000, allowing users to solicit bids on procedures such as tummy tucks, liposuction, and "phalloplasty (penile enlargement)." The site now promises that it will soon offer users the opportunity to name their own price for fertility services.
6. On Dec. 16, 1998, CIBC Oppenheimer analyst Henry Blodget predicts that the share price of Amazon.com, then $242.75 despite the company's losses of 90 cents per share in the most recent quarter, would reach $400 within a year. The self-fulfilling prophecy sparks a frenzy in which Amazon jumps $46.25 that day alone and to a split-adjusted price of nearly $600 12 months later. Alas, Blodget, now with Merrill Lynch, maintains his buy rating on Amazon until July 27, 2000, when the stock's split-adjusted price has dwindled to about $180.
7. Apparently attempting to out-Blodget Blodget, on Dec. 29, 1999, PaineWebber analyst Walter Piecyk places a 12-month target price of $1,000 on cell-phone component maker Qualcomm, then trading at $503. The stock reaches an intraday high of $740 the next day. Things, however, don't work out as well for Piecyk: Within 12 months the stock falls 35 percent; it now trades at a split-adjusted $227.50.
8. With prescience rivaling that of Piecyk, iVillage founder and CEO Candice Carpenter tells Fast Company in February 1998, "There isn't an Internet company in the world that's going to fail because of mistakes -- Internet companies make thousands of mistakes every week."
9. In January 2000, the town of Halfway, Ore., changes its name to Half.com for one year to promote the e-tailer of secondhand books, music, and videos.
10. Not to be outdone, Blodget writes the following in a column for News.com in January 1999: "Unlike with other famous bubbles ... the Internet bubble is riding on rock-solid fundamentals, perhaps stronger than any the market has seen before. Underlying the crazy price increases are the foundations of what could become the early 21st century's leading growth companies.... Just because the Internet stock phenomenon looks like a bubble, it isn't a given that the bubble will burst."
11. Settling matters once and for all, Carpenter proves herself -- if unintentionally -- to be the Internet's preeminent prognosticator in explaining her company's string of dotcom acquisitions to Fortune in June 1999: "This is a land grab. You want to put your stakes in the most valuable property you can as fast as you can because it's not going to be there tomorrow."
12. In October 1998, an e-commerce software vendor launches with the name Accompany, which, when said aloud, sounds exactly like "a company." As in "Hi, I'm calling from Accompany." "Which company?" "Accompany." And so forth. It changes its name to MobShop in March 2000.
13. Melanie Griffith, the star of Crazy in Alabama and the founder of MelanieGriffith.com, tells Paper Magazine, "I don't care if people think I'm a dumb blond or stupid or an overage actress or over the hill. I don't care because I'm gonna have a very successful Internet company, and I'm gonna have $100 million in the bank and I don't really give a shit what anybody thinks!"
14. In its prospectus, Buy.com unveils history's most elegant business model: "We sell a substantial portion of our products at very low prices. As a result, we have extremely low and sometimes negative gross margins on our product sales."
15. During Super Bowl XXXIII, Buy.com unveils history's least elegant TV commercial: It involves a man who's ... who's.... You'd better head to the newsstand to see the photos of this one.
16. Zapata, Part I: Houston-based fishmeal manufacturer Zapata -- which was started as an oil-drilling concern in the 1950s by the father of our current president -- attempts to reinvent itself yet again, buying online 'zines Word and Charged in April 1998 and making a $1.68 billion offer for Web portal Excite a month later. "When George Bush founded Zapata 40 years ago, he was in the cutting edge of technology in the oil-rig business. You can almost relate it to this point in the Internet," says CEO Avram Glazer to the New York Times ...
17. In its Nov. 27, 2000, issue, the New Yorker publishes "My Fake Job," a first-person account of author Rodney Rothman's infiltration of an unnamed Silicon Alley e-business consultancy. The article is greeted with hosannas -- which quickly evaporate when it is revealed that Rothman's mother worked at the firm in question (rumored to be Luminant) and that he had invented certain details in his account. Fake job, indeed. The magazine issues a correction.
18. A gentleman named Mitch Maddox legally changes his name to DotComGuy and spends a year living in a house filled with webcams, using only the Internet to interact with the outside world, an effort that conclusively proves ... um, nothing.
19. After raising $10 million in funding in May 1998, James Cramer, co-founder of TheStreet.com, issues a press release in which he exults, "The dead-tree boys must be shaking in their boots. We now have the money we need to complete our vision of crushing the old-line media behemoths." TheStreet.com now trades at about $2 a share. Meanwhile, many of our readers are holding a dead tree.
20. Boo, Part II: In the summer of 1998, Ernst Malmsten and Kajsa Leander persuade investment bank J.P. Morgan to invest in Boo.com. In all, its first round of financing brings the company $12.5 million, including investments from Luciano Benetton and Bernard Arnault, chairman of LVMH-Moet Hennessy Louis Vuitton. The company ultimately amasses venture capital totaling $135 million ...
21. In interviews in early 2000, PSINet CEO Bill Schrader dismisses the Baby Bells as "dinosaur carcasses" and announces, "There is no FDC -- former dominant carrier -- out there that can survive the Internet in the early stages of the 21st century." Ironically, the same can now be said of PSINet: The company said in a recent press release that, despite restructuring efforts, "it is likely that the common stock of the company will have no value."
22. Disney, Part I: In June 1998, the Walt Disney Co. buys a 43 percent stake in Web portal Infoseek in a deal valued at about $100% million. (Thirteen months later, the company announced that it would buy the remaining 57 percent in a deal reported to be worth $1.62 billion.) Explains Disney CEO Michael Eisner: "One reason we are in business with Infoseek ... is to have people who will turn to us and say, 'You guys are so old and so stupid' " ...
23. In September 2000, Standard Media International launches Grok, a spinoff of the Industry Standard devoted to one special topic each month; it folds after five issues.
24. In December 2000, Imagine Media launches Fuse, a spinoff of Business 2.0 devoted to the intersection of lifestyle and work; it folds after one issue.
25. eTour invites Mahir Cagri, the lovelorn Turkish gentleman whose "I Kiss You!" homepage became a Web phenomenon, to the United States in December 1999 to present him with a "key to cyberspace"; it then sends him on a media tour through New York, San Francisco, and Los Angeles.
26. March 1997: Wired places push technology on its cover and anoints it "the radical future of media," adding, "Kiss your browser goodbye."
27. May 1999: Forbes places Jay Walker on its cover and anoints him the "New Age Edison."
28. December 1999: Time places Jeff Bezos on its cover and anoints him "Person of the Year."
29. June 2000: eCompany Now places George Hamilton on its cover, for no discernible reason.
30. This look: cell phone (Nokia, in brushed metallic finish), goatee (testosterone), khakis (Gap), audaciously colored shirt (Banana Republic), scooter (Sharper Image)
31. Boo, Part III: Founders Ernst Malmsten and Kajsa Leander begin spending their venture capital booty. The New York Times later breaks down their expenditures, which include $150,000 annual salaries for the founders, plus $100,000 apiece to rent apartments in London and another $100,000 to redecorate them; $654,100 on promotional giveaways like disposable cameras and snow globes; $600,000 in public relations fees to the firm of Hill & Knowlton (mostly for setting up lunches with fashion editors); a $42 million ad campaign; a staff of 100% people, a.k.a the boocrew, housed in offices spanning from New York to Paris to Munich to Stockholm; and $5,000 per day to a crew of fashion consultants and hairstylists to perfect the look of Miss Boo, the site's computer-animated mascot ...
32. In October 1999, streaming-media company Pixelon launches with a legendary $16 million Las Vegas shindig -- eating up 80 percent of the company's latest round of financing -- featuring the Who, Tony Bennett, and the Dixie Chicks. Unbeknownst to the revelers, the company's CEO, Michael Fenne, is actually a fugitive con artist named David Kim Stanley; he is now serving an eight-year sentence in Virginia.
33. In August 2000, a company called Digital:Convergence introduces the :CueCat, a feline-shaped device that scans bar codes on products and in advertisements and then directs users to websites. Why this is quicker or easier than simply typing in URLs has yet to be satisfactorily explained.
34. Interactive consulting firm Agency.com accidentally e-mails staffers a spreadsheet containing the salary of every employee in its 250-person Manhattan office in September 1999. "It was a blunder, and it was painful," admits Kyle Shannon, the company's chief people officer, to the Wall Street Journal. (Shannon, for the record, pulled down $150,000 that year.)
35. Santa Monica-based incubator eCompanies pays $7.5 million for the domain name Business.com in November 1999; explaining the purchase, eCompanies co-founder Sky Dayton tells Internet World, "It is going to be the bargain of the century. It is going to look like we bought the island of Manhattan for $7.5 million and some beads."
36. Zapata, Part II: After being rebuffed in his attempt to purchase Excite, CEO Avram Glazer decides to buy up thousands of websites to create a massive portal called Zap.com. Glazer boasts that his site will become "the roach motel of the Internet" ...
37. After being given 300,000 shares of eToys in exchange for helping to design the company's site, Richard Hoefer of San Francisco watches as his stake plummets in value from approximately $25 million to precisely bupkes. Hoefer, who claims to have never previously bought or sold a common stock, then files suit against Banc of America Securities, alleging, among other charges, that his investment advisers "never adequately explained the concept of diversification."
38. eCompanies launches eParties, a party planning site, in October 1999. Its business rationale? The 9-year-old daughter of co-founder Jake Winebaum thinks it's a good idea. The company is later sold to eToys. For stock.
39. In November 2000, Oracle CEO Larry Ellison tells eCompany Now of his keen ability to track his company's sales using its own software. "Now we control the sales force," Ellison boasts. "It's all programmed." Three months later, the company warns investors that its applications business grew only 50 percent in its just-closed quarter, one-third less than previously expected. Ellison's sales-force control looks even more dubious two weeks later when actual figures are released, showing that the business in fact grew by a mere 25 percent. Oracle's stock price drops by nearly a third. (See "Trouble With Larry.")
40. To lure Robert Howe from his job at IBM, e-business consultancy Scient offers him 11.7 percent of the company to become its CEO, making him one of 12 CEOs recruited in 1998 and 1999 whose compensation packages were estimated by Forbes magazine to exceed $100 million.
41. On Nov. 13, 1998, its first day of trading, Theglobe.com's stock shoots from $9 to $97, momentarily giving it a market capitalization of nearly $1 billion -- approximately 370 times the amount of revenues the company has booked in its nine months of existence.
42. In January 2000, Stephan Paternot of Theglobe.com tells a writer for Vanity Fair just how appealing he and his co-founder, Todd Krizelman, are: "Todd and I are good material to be shown around. The downside is you get stalkers, proposals, love letters."
43. AllAdvantage offers to pay Web surfers 53 cents per hour to surf, plus more money for every friend they can entice to sign up for their service. In exchange, surfers agree to have an advertising banner reside on their desktops and to have ads beamed at them while they click. The company anticipates 30,000 sign-ups after four months, but is deluged by millions of customers; it pays out $40 million to its members in its first three months. (Meanwhile, advertisers are underwhelmed by the prospect of reaching AllAdvantage's customers -- who are, after all, desperate enough for cash that they sign up for a service that pays them 53 cents per hour.)
44. BBQ.com, born of nearly $2 million in venture-capital funding, launches in April 2000. In a press release, 26-year-old CEO Anthony Johndrow explains the rationale behind his business: "More than three-quarters of all American households own a grill, and more than $18 billion is spent annually on grills, accessories, food and sauces.... We created BBQ.com to bring together all of the many industries associated with this popular outdoor lifestyle." BBQ goes up in smoke two months later.
45. - 47. MVP.com: John Elway, Michael Jordan, Wayne Gretzky
48. Disney, Part II: In January 1999, Disney rolls its Internet operations into a portal called Go.com. The site launches with a traffic-light logo that looks uncannily like that for a competing portal, GoTo.com. Disney becomes entangled in a costly legal battle with GoTo.com, ultimately settling out of court for $21.5 million in May 2000 ...
49. Winning the David Caruso Career-Management Award, Lou Dobbs leaves his job as president of CNN Financial News and anchor of CNN's Moneyline to found Space.com, walking away from a reported $10 million contract.
50. Winning the Lou Dobbs Career-Management Award, Joe Galli decides to leave the number two job at Black & Decker to become CEO of PepsiCo's Frito-Lay division -- only to change his mind hours later and accept the job of president and COO of Amazon.com. Thirteen months later he leaves Amazon.com to become president and CEO of VerticalNet, where he lasts for six months. He now heads Newell Rubbermaid.
51. Feeling flush with a market capitalization of $14 billion, incubator CMGI pledges in August 2000 to pay $114 million over 15 years to have the New England Patriots' new stadium bear the name CMGI Field. The company's market cap now stands at $959.5 million, or approximately 8.4 times the amount of the field-naming rights.
52. In February 2000, Josh Harris, founder of streaming-media company Pseudo Programs, informs 60 Minutes II correspondent Bob Simon that his company is "in a race to take CBS out of business." Pseudo goes under nine months later.
53. Zapata, Part III: CEO Avram Glazer decides to split the company's Internet business from its core fishmeal operations. "The Internet people don't want to know about marine protein," he explains, "and marine protein people don't want to know about the Internet" ...
54. Joseph Preston, the CEO of Efox.net -- a site that features nude women, a stock ticker, sports scores, and a news feed from wire services -- explains the genius of his site as follows: "It's Victoria's Secret meets Playboy meets Car and Driver meets Sports Illustrated meets Fortune. We offer what I like to call the LASS factor: ladies, automobiles, sports, and stocks."
55. On Jan. 12, 2001, MGM releases AntiTrust, a movie about the high-stakes world of the software industry, starring Ryan Phillippe as a computer-programming genius.
56. PointCast turns down a reported $450 million offer from Rupert Murdoch's News Corp. in March 1997; two years later the company is purchased by Bill Gross's Idealab for $7 million.
57. Boo, Part IV: The company begins advertising on TV and in print in May 1999, in anticipation of its June 21 launch. The site, alas, isn't ready, and doesn't go live until November ...
58. Sequoia Capital invests $55 million in online grocer Webvan. When the company's share price dwindles from its high of $25 to about $6, Sequoia partner Mike Moritz shows no concern, saying that "the stock is an incidental sideshow." He'd better hope so: The company now trades at about 19 cents per share, meaning that the value of Sequoia's investment now stands at less than $8 million.
59. Utek, a business development company that finds, acquires, develops, and finances university technology for its customers, issues the following warning in its prospectus: "Our management has limited experience operating a business, has had no experience in managing and operating a business development company, and has little or no experience in corporate finance and corporate mergers."
60. Ten separate regions jostle to be called the Silicon Prairie. (Our favorite: Stillwater, Okla., home to precisely one publicly traded tech company.)
61. Disney, Part III: In January 2001, Disney announces that it is shutting down Go.com, laying off 400 workers, and taking a $790 million write-off on its Internet investments. Of the fired employees, Eisner says, "Like our other 120,000 cast members, they are a key source of the Disney 'magic,' which makes decisions such as this one particularly difficult" ...
62. An uninhabitable, fire-damaged Silicon Valley house sells for more than $1.5 million.
63. Disney, Part IV: Two months later Disney announces that Go will remain online, albeit with no staff, no offices, and no budget. Search requests on the slimmed-down site are now forwarded to its onetime nemesis, GoTo.com. Go figure.
64. In February 2000, Detroit's Big Three automakers create Covisint, a Web exchange devoted to auto parts and services, but are unable to find a suitable candidate who's willing to take the CEO job. Despite the position's many attractions -- not the least of which is the opportunity to spend all day, every day, dealing with three of the most bureaucratic organizations on the face of the earth -- as of this writing, it remains unfilled.
65. In a May 2000 interview with Fortune, Cisco CFO Larry Carter boasts of his company's ability to offer guidance to analysts. "We focus on communicating and being consistent. There is nothing Wall Street likes more than that," he says. Nine months later Cisco misses analysts' expectations by a penny; its stock has since tumbled 45 percent.
66. In that same Fortune story, then-Cisco executive VP Don Listwin brags about his company's access to its daily worldwide sales figures: "The information now on our network is invaluable," he boasts. Said information is not, however, sufficient to alert Cisco to a slowdown in demand: By year's end, the amount of inventory the company carries on its books more than doubles, from $1.2 billion to $2.5 billion.
67. Pets.com buys the assets of defunct rival Petstore.com for $13 million in stock in June 2000, acquiring a list of more than 100,000 Petstore.com customers, a marketing arrangement with Safeway, and a fish-delivery business. Pets.com is itself gutted five months later.
68. Zapata, Part IV: In October 1998, the company backs away from its Internet gambit. "If Goldman Sachs pulled their public offering," CEO Avram Glazer modestly declares, "you can't expect us to go ahead."
69. Scout Electromedia, the makers of Modo, a device that beams entertainment listings to its users, goes out of business just 50 days after launching. Nonetheless, it forges ahead with its previously scheduled launch party at Los Angeles's Les Deux Cafes, where celebrities including Drew Barrymore eat up the last of the company's $27 million in venture funding.
70. Microsoft's user-authentication service, Passport.com, shuts down after the company neglects to renew its domain-name registration. On Christmas Day 1999, a user from Nashville, Tenn., pays the $35 fee, and the site goes back online the following day.
71. Dallas Mavericks owner and Broadcast.com founder Mark Cuban sends a mass e-mailing to thousands of people asking them to "vote your Mavs onto the NBA All Star team." He fails to use the Bcc: header, which means that recipients who respond by hitting Reply All send their response to all other recipients. Weeks of flooded in-boxes -- and appropriately profane recriminations -- ensue. No Mavericks are voted onto the NBA All-Star team.
72. Zoodoo.com, still the Web's premier retailer of elephant and other exotic dung.
73. - 78. The following concepts: mind share, action item, infomediary, monetizing eyeballs, digerati, name your own price.
79. - 84. The following websites: Hamsterdance.com, YourCoffin.com, Mylackey.com, Gazoontite.com, iToke.co.uk, Priceline.com.
85. DoubleClick, a firm that serves ads to websites, buys Abacus Direct, which maintains databases on consumer habits, in November 1999. DoubleClick then quietly sets about wedding Abacus's information -- including people's names and addresses -- with its database of people's Web-surfing habits. It announces plans to offer profiles of 100,000 users to advertisers, and is startled to find that many people consider this an invasion of privacy. Soon after the FTC launches an investigation into whether DoubleClick had engaged in unfair and deceptive trade practices, the company scuttles the plan.
86. Boo, Part V: Boo.com launches on Nov. 3, 1999 -- and is riddled with technical glitches. Less than one week later, Federated Department Stores reportedly goes back on its pledge to invest $10 million in the company ...
87. In April 1998, K-Tel International announces plans to sell its cheesy oldies music compilations online. Net-drunk investors send its stock from $6.62 per share to nearly $68. Investors have since realized that K-Tel online is still, at the end of the day, K-Tel; the company is delisted by Nasdaq, in September 2000, and its U.S. music-distribution subsidiary files Chapter 7 six months later.
88. In the course of the Microsoft antitrust trial, Bill Gates engages in the following exchange with prosecutor David Boies:
Boies: What non-Microsoft browsers were you concerned about in January of 1996?
Gates: I don't know what you mean by "concerned."
Boies: What is it about the word "concerned" that you don't understand?
Gates: I'm not sure what you mean by it.
91. Amid much media hoopla, Britannica.com launches a free-content version of its website on Oct. 19, 1999. Millions visit, overloading Britannica's servers and crashing the site for nearly three weeks. Britannica.com CEO Don Yannias spins the fiasco expertly, saying, "We have truly been victims of our own success." Continuing to be victimized by success, Britannica.com has since laid off about half of its U.S. employees and announced plans to revert, in part, to a subscription-based model.
92. In a December 1995 column for InfoWorld, Bob Metcalfe, the inventor of Ethernet and founder of 3Com, proclaims that the Internet "will soon go spectacularly supernova and in 1996 catastrophically collapse.... CD-ROMs through Federal Express will emerge as the information superhighway." He later eats his words -- literally -- in front of a 1997 conference of Web engineers, blending his column with water and sampling the pulpy mass.
93. Y2K hysteria.
94. In February 2000, Internet Capital Group co-founder Ken Fox proclaims "a buying opportunity" for shares in ICG, adding, "Tell your grandma to buy shares." Sorry, Grandma: The stock has since lost about 98 percent of its value.
95. Ziff-Davis chairman Eric Hippeau launches ZDTV, proclaiming that ZDTV is "about a world where geek is chic." According to Webster's, geek means "a person, often of an intellectual bent, who is disliked." Tres chic, Monsieur Hippeau, tres chic.
96. In June 1999, Starbucks CEO Howard Schultz announces plans to create a housewares and home-furnishings e-tailing portal, into which he will herd his latte-swilling legions. "We're going, with great precision and discipline, to drive the physical community that exists in our stores to the Web," Schultz announces. Starbucks's shares drop nearly 30 percent on the news.
97. Pets.com spends millions to make a sock famous.
98. Idealab launches FreePC, NetZero, and Homepage.com, whose business models rely largely on giving away computers, Internet access, and Web hosting. Yes, giving away. As in "for free."
99. eCompany Now unveils the eCompany 40 in its March 2001 issue, touting its new portfolio as "Who Will Rise from the Ashes? 40 Stocks That Will Survive." Since then, the stocks have shed more than 50 percent of their value.
100. On March 23, 2001, CEO Bob Kohn announces the launch of Laugh.com, a digital-entertainment site featuring such hot, hot, hot comedians as the Jerky Boys and Jonathan Winters. "This is a perfect time to start a dotcom," Kohn says to News.com. "A year ago was the worst time to start it."
101. Boo, the Foregone Conclusion: Boo.com calls it quits in May 2000, selling its assets for less than $2 million (the name and trademarks are bought by Fashionmall.com, which relaunches the site as a content-driven fashion portal). "It's easy for the press to say that we spent $135 million on Concordes and Champagne," Malmsten says to the New York Times, "but we only drink vodka.""
<Note from JobFairy.com: Hard to believe the sheer scope of the excess. As of Summer 2002, I doubt total jobfairy.com expenditures have totalled $750. (Leave out your cracks about how it sure looks like it. Unlike any of these bozos, us Job Fairies actually have MADE almost $500K more between all of us than before we started. And all this without Accenture consultants @ $300/hour, foosball in the lobby, or sucking up millions in venture capital.) If you have paying customers, then you have a business. All else is fantasy.>