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Why Kozmo.com, Furniture.com, iHarvest.com, Swapit.com, and Myspace.com all failed.

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Why Kozmo.com, Furniture.com, iHarvest.com, Swapit.com, and Myspace.com all failed.

Old 03-22-02, 04:18 PM
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Why Kozmo.com, Furniture.com, iHarvest.com, Swapit.com, and Myspace.com all failed.

Here’s a funny article on the death of a few dot com companies: Kozmo, Furniture, iHarvest, Swapit, and Myspace. This is from a website called f**kedcompany.com (you have to insert the missing letters if you want to visit the site), which has been made into a book called “F’d Company”. This article was in the latest issue of Newsweek.

http://www.msnbc.com/news/725405.asp?0dm=-16AK

‘Fiercely Stupid’: The greatest flameout hits of ‘F’dcompany.com’

March 25 issue — In may 2000, just around the time tech stocks started to nose-dive, Philip J. Kaplan created a Web site called F—kedcompany.com. Its sole purpose was to track the layoffs and the bankruptcies of dot-com companies, and ridicule their business plans. The site was a hit, growing to attract more than 4 million visitors a month, and it still exists today (to find it, you’ll have to insert the characters we censored above). Kaplan has turned his research into a new book which chronicles the spectacular crash of that heady Silicon Valley era. In “F’d Companies,” Kaplan gives his take on more than 100 of his favorite failures. Some highlights:

KOZMO.COM
King of the single-movie-rental- messengered-to-your-door-with-no- tipping, decided a little too late to require a minimum order.

If Kozmo were really such a good idea in the first place, Domino’s would have been a $500 billion company ten years ago... Pizza delivery places make money cuz they make a pizza for $1 and sell it for $12. Hand-delivering pints of Ben & Jerry’s just ain’t the same.

Eventually Kozmo did instate a $10 minimum charge, but then they couldn’t find enough customers who wanted 10 bucks’ worth of Snickers and Fight Club... New York rival UrbanFetch.com died for pretty much the same reason—and incidentally didn’t have as good a porn selection.

Funny thing is that pretty much EVERY STORE in New York City manages to accomplish home delivery without burning through $250 million.

FURNITURE.COM
After spending $2.5 million on their domain name, Furniture.com discovered that UPS wouldn’t ship bulky items like sofas and tables, and they were forced to use more expensive shipping alternatives.

“There were many cases when we would get an order for a $200 end table and then spend $300 to ship it. We never could figure it out,” one former Furniture.com engineer told CNET’s News.com.

IHARVEST.COM
I don’t think I’ve ever seen a more useless company than iHarvest.com. Actually, I’m sure of it. Such a waste. Shame... shame...

iHarvest was a “storage and retrieval” service. It was a browser plug-in that allowed users to click a button and magically store copies of web pages on iHarvest’s server.

I’m serious, that’s what it did. No, really. $6.9 million was invested into this company by people who apparently weren’t aware that Internet Explorer and Netscape ALREADY DO THIS. THERE’S A “SAVE” OPTION UP ON THE TOP OF YOUR BROWSER, promise.

But WAIT, there’s MORE! If you just wanted to store the URL, and not the actual text and graphics, you could do that too! Amazing! I mean... why bother using your browser’s built-in FAVORITES or BOOKMARKS function when you can register on iHarvest.com and install their software? It’s FUN to install software!

SWAPIT.COM
So let me get this straight:
1) I send them a CD.
2) They give me useless “SwapIt Bucks.”
3) They go out of business.
4) I get nothing.
Great, sign me up!

SwapIt.com was a fiercely stupid idea. The premise was that people could trade used CDs and video games with one another by physically mailing their crap to SwapIt.com. Users would then be issued “SwapIt Bucks” that they could use to buy other people’s crap that had also been sent to the company.

SwapIt had the ol’ “don’t-make-a-profit-selling-stuff-but-make-money-from-shipping-and-handling” revenue model that was so prevalent among their peers. Get $3 in SwapIt Bucks, and you could buy another used CD for $3.

Okay, eBay’s entire success is based on the fact that they have NO INVENTORY. By dealing with all the inventory and fulfillment, SwapIt is like all of the crap with none of the benefit.

Not to mention a warehouse filled with old John Tesh and Yanni CDs.

MYSPACE.COM
What’s weirder than being in the “business” of giving away free disk space to over 9 million people? The fact that there was competition.

Driveway.com, Xdrive.com, Free way.com, and FreeDrive.com were just a few of the companies vying for the opportunity to give you FREE DISK SPACE on their file servers. Their brilliant plan to make money was from both the lucrative (ha) banner ad market, as well as going for the ol’ switch-a-roo—get you hooked then start charging... Anyway, what they found out was that pretty much everyone used their serv- ice for two things: (1) trading warez (pirated software), and (2) hiding porn from their wives.

Word is that out of their 9 million customers, only around 6,000 or so were willing to pay for the service. Why? I dunno... a 30GB Maxtor from Best Buy is what, $45? That should hold all the fake pics of Anna Kournikova’s [breasts] you could want.

Funded with $14.6 million, MySpace.com employed around thirty people and went out of business in May 2001—giving customers a three-day notice to download their files before they were permanently deleted.
Old 03-22-02, 05:31 PM
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Thanks, that was hilarious, and oh-so-true. It's just amazing how the mass hysteria of market greed or fear can drive things to such absurd levels.

This has been going on since cavemen started trading rocks. For some really classic historical "bubble" stories, check out "Extraordinary Popular Delusions and the Madness of Crowds", by Charles MacKay, which as I remember was first published in the 1840's. There's a reason that the tech frenzy and some of the absurd market valuations were compared to the famous "Tulipmania" of the early 17th century.

All those great deals on DVDs when the stock market was in its frenzy were paid for by all the mutual fund capital that went to "money heaven" when reality reared its ugly head. Hey, we just did an IPO for 500 million, I guess we can afford to give some absurd offers to savvy consumers that will never come back once we want to charge real prices. But then we can point to how large our "customer base" is and do a secondary offering to raise anther billion to burn through.

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