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F'd Companies: Spectacular Dot-com Flameouts
     

F'd Companies: Spectacular Dot-com Flameouts

4.4 7
by Philip J. Kaplan
 

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Not long ago, the world was awash with venture capital in search of the next Yahoo! or Amazon.com. No product, no experience, no technology, no business plan -- no problem. You could still get $40 million from investors to start up your dot-com. And you could get people to work around the clock for stock options and the promise of millions. Then, around April 2000, it

Overview

Not long ago, the world was awash with venture capital in search of the next Yahoo! or Amazon.com. No product, no experience, no technology, no business plan -- no problem. You could still get $40 million from investors to start up your dot-com. And you could get people to work around the clock for stock options and the promise of millions. Then, around April 2000, it all came crashing down.

Smart investors, esteemed analysts, and the business press found themselves asking:

• Who knew people wouldn't rush out to trade in their U.S. dollars for a virtual currency called Flooz?

• Who knew people wouldn't blow all their Flooz on a used car from the guys at iMotors.com?

• And who needed a used car from iMotors.com when they could just sit at home and have 40-lb. bags of dog food delivered to them by a sock puppet?

F'd Companies captures the waste, greed, and human stupidity of more than 100 dot-com companies. Written in Philip J. Kaplan's popular, cynical style, these profiles are filled with colorful anecdotes, factoids, and information unavailable anywhere else. Together they form a gleeful encyclopedia of how not to run a business. They also capture a truly remarkable period of history.

F'd Companies is required reading for everyone involved in the "new economy" -- assuming your severance check can cover the cost.

Editorial Reviews

From the Publisher
Yahoo! Internet Life Who are the latest casualties of the Dot-Bomb Era? Nobody knows better than this guy.

Joel Durham Jr. ex-Technical Editor, CNET Kaplan knew I was getting laid off before I did. Thanks for the heads up, asshole.

Jeff Dachis CO-Founder and ex-CEO, Razorfish When I think of FUCKED I think of Philip Kaplan.

Susan Callaghan ex-Human Resources, Rare Medium I laughed, I cried, I filed for unemployment.

The Washington Post Kaplan seems determined to make Microsoft Chairman Bill Gates — everyone's definition of the ultimate geek — look as suave as Cary Grant.

The New York Times Philip Kaplan is another one of those annoyingly young dot-com successes that no one with a real job wants to hear another word about. Except that his Web site is so perversely satisfying.

Timothy J. Seager Managing Director, Watermark Venture Partners If Blodget still had a job, he'd rate F'd Companies a strong buy.

Publishers Weekly
"I'm a computer programmer," Kaplan writes. "I'm that dude at your office in the dark cubicle who nobody listens or pays attention to (especially the hotties in marketing)." Kaplan's claim to fame is FuckedCompany.com, a Web site he built over Memorial Day weekend in 2000 to serve as a forum for bad news about Internet companies. His timing a few months after the Internet bubble began to deflate was perfect, and FuckedCompany became an immediate hit. Thousands of fired or about-to-be-fired dot-commers were more than willing to share their horror stories about the collapse of one Internet company after another. He has translated the material posted on the site into a book, offering brief vignettes of the demise of more than 150 Internet ventures. His basic formula includes a description of what the company purported to do (Mercata.com "customers would use the site to band together and purchase merchandise at wholesale prices"), how much money it blew through before going bankrupt and how many people were fired ("$89 million and 100 employees were burned"). Kaplan, 25, attempts to enliven each story with humor, which is often more crude than clever. That many of the stories sound the same is not Kaplan's fault, as most really are: someone comes up with an idea, finds a venture capitalist willing to pour funding into the company despite the flimsiest of business plans, and then goes broke when the money dries up. Although he tries, Kaplan delivers little more than an elegy for the Industry Standard, Pets.com, Contentville.com, Flooz.com, Bid.com and Kozmo.com, not to mention Zing.com, ProcessTree.com and MetalSpectrum.com. (Apr.) Forecast: Though a bit late to the scene, this book is a suitable gift for wised-up dot-commers. It should get play in hipper business venues and on Kaplan's site, too. Copyright 2002 Cahners Business Information.
Library Journal
As the dot-com boom ended, Kaplan established a web site, fuckedcompanies.com, to help keep track of the bankruptcies, massive layoffs, and sometimes ill-conceived ideas that failed. The site began as a joke but was chosen as "Site of the Year" by Yahoo! Internet Life in 2000 and as one of the year's best by Time. Kaplan, now the president of an e-commerce solutions firm, here chronicles the rise and rapid fall of numerous dot-coms. Written in an informal style and sprinkled with salty language, his book explains why each company was formed and why it was doomed to failure. At Pets.Com, for instance, pet owners could order food and supplies; "then I'll watch the dog starve and the cat shit all over the house while I wait for it to be delivered!" Several other dot-coms were fined because they failed to deliver items by the holidays as promised. Included in the sources section are web sites that the author consulted; future editions would do well to include a bibliography of articles and books for further reading. Both fascinating and instructive, this book is recommended for public and academic library collections. Lucy Heckman, St. John's Univ. Lib., NY Copyright 2002 Cahners Business Information.

Product Details

ISBN-13:
9781416577935
Publisher:
Simon & Schuster
Publication date:
09/21/2007
Pages:
208
Sales rank:
1,121,593
Product dimensions:
0.49(w) x 5.00(h) x 8.00(d)

Read an Excerpt

Chapter One: Tough Ship

PETS.COM

I'm out of dog food and my cat's box needs new litter. I know what I'll do: I'll order Dog Chow and Fresh Step online from a sock puppet and then I'll watch the dog starve and the cat shit all over the house while I wait for it to be delivered!

Waiting was just part of the problem. Pets.com assumed, probably correctly, that many potential customers would be turned away by high shipping costs. So...they only charged $5 shipping for a standard 40-lb. bag of pet food, when actual shipping costs were at least twice that. Similarly, small items like a $2.50 dog bone weren't worth shipping.

Amazon.com, one of Pets.com's major backers, thought they could use their muscle to make Pets.com succeed. Instead, they managed to blow through over $100 million with the help of brilliant purchases such as a $2 million Super Bowl ad and a float in the Macy's Thanksgiving Day Parade. Other investors included the infamous venture capital firms Idealab and Hummer Winblad — the same butt-plugs who brought us Rivals.com, Gazoontite.com, and TheKnot.com.

They should have sold actual pets and shipped them UPS — better margins...

WEBVAN

Look, I'm the laziest fucker on Earth. I buy tons of shit online, but I still go to the supermarket to buy my food. Although there have been times when I've fantasized about ordering from Webvan just to watch some poor sap unload my groceries while I sit there, watching TV and drinking a beer...

Uhh...okay so raising and burning through more than $1 BILLION (that's billion with a "B"), the online grocer Webvan gained notoriety as being one of the biggest dot-com failures of 'em all.

The grocery business is a penny operation. Margins are razor thin. The most successful grocery retailers are big chains that buy in bulk, sometimes directly from the manufacturer. Webvan just didn't have the buying power, infrastructure, or demand to compete.

Simply put, Webvan was a classic example of PAYING more for products than they were SELLING them for. There's really not much more to it.

One of the more interesting chapters in the Webvan story has to do with their president, George Shaheen. Shaheen was CEO of Andersen Consulting until the end of October 1999. At the time, companies like Andersen Consulting (now known as Accenture, pronounced "Ass-ENTER") had serious problems with employees leaving in droves to go work for COOL HIP Internet-dot-com-cyber-virtual-e-companies.

So...after trying to convince Andersen employees that it was a bad idea to leave and that dot-coms are stupid, THEIR OWN FUCKIN CEO QUITS to join Webvan. About eighteen months later, after realizing Webvan's bleak future (you didn't need a crystal ball...), he quit.

KOZMO.COM

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 FUCKING STORE in New York City manages to accomplish home delivery without burning through $250 million.

Kozmo's investors included Amazon.com, venture capital firm Flatiron Partners, and evil Starbucks.

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.

Another problem that hit Furniture.com was that some of the small furniture manufacturers they used couldn't keep up with the volume of orders, causing long shipping delays.

The Better Business Bureau in Worcester, Massachusetts, received over forty complaints about the furniture retailer in just two months. "This is an extraordinary number of complaints," said Barbara Sinnott, president of the local BBB, to The Boston Globe. "It makes me alarmed."

In total, $75 million was invested into this company. $27 million of it was last-minute venture capital reportedly swindled from investors by taking them on a tour of the facilities while having accountants and engineers pose as busy customer-service representatives, talking to imaginary customers on dead phone lines.

According to Furniture.com's IPO filing — a public offering that never happened — they lost $46.5 million in 1999 alone.

Copyright © 2002 by PK Interactive, LLC

Meet the Author

In May 2000, having nothing better to do with his Memorial Day weekend, Philip J. Kaplan created Fuckedcompany.com to track the layoffs, the bankruptcies, and the generally bad behavior of dot-com companies. The site became an immediate success and has grown into one of the most well-read news sources on the Web, attracting more than 4 million visitors a month. Fuckedcompany.com was named "Site of the Year" by Rolling Stone, Time, and Yahoo!, among others. Kaplan is also the president of PK Interactive, an e-commerce solutions firm. He lives in New York City and can be seen playing drums in smoky heavy metal clubs around town.

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F'd Companies: Spectacular Dot-COM Flameouts 5 out of 5 based on 0 ratings. 3 reviews.
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