10 Notable New York-based Dot Bombs

Startups come and go: some of them are spectacular successes, while others are fail equally spectacularly. It can happen anywhere and New York is and was no exception.

Here is our list of some notable – and some colossal – dot bombs, past and recent, and note that some were the result of ideas whose time had not yet come:

Kozmo.com (Photo credit: Wikipedia)

Kozmo.com

• Founded: 1998
• Dot bombed: 2001

The company raised $280 million and promised free, fast delivery of everything from movies (there was no Netflix back then) to late night snacks to a pack of gum. They didn’t require a minimum order until it was too late. “We’ll be right over,” they promised, and it was over before they even had a chance to do their long-promised IPO. Employees only found out that the company had shut down when they showed up for work one morning to the door locked.

Flooz.com

• Founded: 1999
• Dot bombed: 2001

Flooz was meant to be an online currency that would serve as an alternative to credit cards. After buying a certain amount of Flooz, you could then use it at a number of retail partners. ‘Disintermediation’ was the word of the day during Web 1.0, but did we really need to disrupt credit cards? Flooz was a classic Web 1.0 what-were-they-thinking story. The founder was an iVillage cofounder. The spokesperson was Whoopi Goldberg. No one asked if we needed a currency unique to the internet, which didn’t stop the company from raising/squandering $35 (some reports say $50) million. Retailers weren’t buying. Neither was the public. Flooz is long dot gone, but Whoopi Goldberg is still alive and well and not flacking for any dot coms there days. Have we all learned our lessons here?

Boo.com

• Founded: 1998
• Dot bombed: 2000

Ok, Boo.com was headquartered in London, but they did have an office in NYC and we had many a friend who worked there (not that you’re likely to find it on their linkedin profiels). Boo.com was an online fashion retailer who used flashy flash-based technology to dazzle their audience – which didn’t quite work in those early dial-up days of the web. Here was  a cautionary tale: know your market and know the limitations of your technology, which in boo’s case, proved fatal. They burned through $160 million in venture funds, and the global fashion company proved to be little more than a universal boo-boo. Or as Heidi Klum would now say, “You’re out.” Auf wiedersehen.

GovWorks (Photo credit: thetaxhaven)

GovWorks

• Founded: 1999
• Dot bombed: 2000

If you’re seen the documentary startup.com, you know the story of govworks. Founded by two childhood friends, one a Wall Streeter and the other a techie, the idea was to provide a website portal to allow citizens in local communities to access, pay or apply for city services, jobs or receive community information. Imagine being able to pay your parking tickets online! Good idea; the founders were overnight millionaires (they raised $60 million on Sand Hill Road); they took meetings with the politically powerful. Then everything that could go wrong, did go wrong. There was a robbery at their offices. The technology didn’t work. The two partners fought, then parted ways (one was ousted, actually). The money ran out and the hopeful awesome government vehicle was sold to a competitor for parts. Co-founder (the non-ousted one) Kaleil Isaza Tuzman did go on to found KIT Digital, which is a whole other story.

TheGlobe.com (Photo credit: Wikipedia)

theglobe.com          

• Founded: 1994
• Dot gone: 2008

If ever there was a company that typified the dot com bubble, it was theglobe.com. Founded by two newly-minted Cornell grads, the big news of the day was that at 23, they raised $20 million: The young were taking over this new medium and investors couldn’t throw money at them fast enough. The parties were legendary – and frequent. At one point, co-founder Stephan Paternot was filmed (by CNN) claiming, “Got the girl. Got the money. Now I’m ready to live a disgusting, frivolous life.” The inmates had taken over the asylum. When the social network went public, they enjoyed the largest first day gain of any IPO in history (the stock was up to $97 at one point), to that date (1998). Two years later, the young founders were ousted, and a year after that, the stock was worth less than .10 a share.

sixdegrees.com                

• Founded: 1997
• Sold: 2000

Founder Andrew Weinrich built this early social network that would set the stage for the facebooks and linkedins of the world. It was based on the concept that there are only six degrees of separation between people, when you get down to it, but we never did find out whether or not that was true: the site only had a million users at the height of its popularity. Members could see what other members they were connected to, via friends and family members. Members could send messages and post bulletin board items to people in their first, second, and third degrees, and see their connection to any other user on the site, And if you had a lot of connections, you made it into the Big Cloud. Which got you little more than bragging rights for about five minutes. The site was bought by YouthStream Media Networks in 2000 for $125 million, and was shut down soon afterwards. Web 1.0 made few dollars and absolutely no sense.

Pseudo.com (Photo credit: Wikipedia)

Pseudo.com

• Founded: 1994
• Dot bombed: 2000

One of the first live streaming video websites, all kinds of things went on at Pseudo. Pseudo produced its own content in a SoHo, NYC studio and streamed up to 7 hours of live programming a day from its website in a format divided into channels by topic. There were orgies. There were Quake and Doom contests. Madonna would show up to parties. Josh Harris fancied himself the Andy Warhol of the digital age, and had his fifteen minutes of fame, but the clock ran out and so did the money.

Image via CrunchBase

Monitor110

• Founded: 2004
• Dot bombed: 2008

The idea: to find, collect, organize and display – in real time – useful information to enable better investment decisions by institutional investors. The team was pedigree, as were their investors, who threw $16 million into the company. The problems were classic: too much money too early on; no clear leadership until it was too late; too much internal disagreement; too much PR, too soon – and not enough market adoption. A pretty good list of what not to do and that’s how Monitor110 got 86’d.

Silicon Alley Reporter

• Founded: 1996
• Dot bombed: 2001

We remember when Jason Calacanis, founder and publisher of Silicon Alley Reporter, was the CyberSurfer for Paper Magazine. SAR started as a small photocopied newsletter, until Joanne Wilson (@thegothamgal and Wife of Fred) took over as head of ad sales. With Rafat Ali as it’s Managing Editor, it wasn’t a bad publication, but Ali left to launch paidcontent, which was later bought by gigom (can anyone work with Jason for an extended amount of time?). The paper did blossom into a full-blown glossy and even spun off the Digital Coast Reporter and a daily email newsletter. Calacanis was offered a tidy sum for his little empire at one point, but considered it too paltry. To its credit, SAR did focus attention on the burgeoning New York tech community, which might otherwise have gone more or less unnoticed. But in order to get into its hallowed pages, you either had to be a FOJ or an advertiser. As the dot com bubble burst, so went the SAR. “We could sit around and pretend that the market for Internet startups is going to come back, “ Calacanis said as he was shutting down the publication back in 2001, “but the truth is that 90 percent of the innovation in the Internet space is going to come from the top three of four companies (AOL, Yahoo, Microsoft).” Opportunist maybe, but no one ever accused Calacanis of being a visionary.

Loosecubes

• Founded: 2010
• Dot bombed: 2012

The startup that wanted you to work anywhere didn’t quite work out the way they planned. Despite raising $1.23 M in seed and supposedly another $7.8 M in Series A, they shut their doors in over 60 countries around the world, leaving over 25,000 loosecubers out in the cold. Literally. So long, for now, says the website. We hope they do relaunch, and maybe even take a small payment for the much-appreciated service they provided, next time around.