From: Ian Andrew Bell (despot@ianbell.com)
Date: Thu May 04 2000 - 16:15:03 PDT
I can't remember posting anything about Boo.com to FOIB before, but I've
been watching their swan dive with a grin on my face for the last 18 months.
In the early going, BOO was positioned as high-fashion snob culture meets
geekdom and the twentysomething prodigies who founded it, with their black
ribbed turtleneck sweaters and oh-so-chic hipster glasses, were lauded as
icons of generation Vest. Behind it all, though, none of them had ever
done a startup before, let alone worked in the business, so they didn't
have a clue what they were doing. Without having the street sense to be
able to separate fact from fiction, you tend to believe whatever people
tell you.
For starters, they obviously took the advice of your typical art-snob
web-geeks who built a web site so technically complex that only the
uber-wired could use it without crashing their browser. Stupid
mistake. This just in... my mother has a Pentium 166. So do most of the
rest of us.
Next, they delayed their launch by six months for inexplicable
reasons. Ouch! This is probably because they took the advice of a bunch
of Andersen Consulting guys who expensed Concorde trips to New York for
"Business Development" purposes and failed to deliver an eCommerce solution
that scaled.
Third, they had basically loaded their whole ad budget into the first six
months (as most .com companies do), so that when their launch was delayed
they either had to pay kill fees (what you pay to radio/tv/magazines when
you pull your ads at the last minute) or let the ads run, pointing
potential new customers to a "coming soon" banner. Wow: Impressive
customer conversion strategy, guys!
Fourth, when they did launch, the honeymoon with the press was long over
and all of the articles had moved on to slamming them for the delays and
for their technical sins. They got virtually zero good PR, had no money to
spend on advertising, and couldn't generate the hype they needed to drive
any but the most anxious of customers back to the site.
Finally, the founders got out. Everybody got fired. The company's culture
was gutted. Now they're just another failed startup, though the corona
from this spectacular $120 million flameout is pretty impressive. That's
US Dollars, kids!
Proof that a bunch of euro-trash fashion victims posing as web geeks get
what they deserve. I love .comMunism!
-Ian.
> Boo's blues
> By Dianne See Morrison
> Redherring.com, May 04, 2000
> With a name like Boo.com, it was perhaps a star-crossed company from
> the very start. The Internet-only clothing retailer, backed by some
> of Europe's most prominent dot-com investors and savvy offline
> players, is seeking a buyer after burning through its cash six months
> after its launch.
> Investment banks familiar with the company's woes say Boo.com Group
> has contacted them seeking fresh funds to survive, most likely by
> selling itself outright. "The deal was going around to act for
> Boo.com to help them raise more money in any shape or form, including
> finding a buyer," said Gerard van Hamel Platerink, an Internet
> analyst at Salomon Smith Barney in London.
> Boo.com declined to comment on whether the company is up for sale,
> which was first reported today by the Wall Street Journal
> Europe, and would not disclose its funding situation. The company put
> a brave face in the possible problems it faces. "We're doing quite
> well," said Dina Cholack, the company's communications director, and
> pointed to Boo.com's $670,000 revenues for February, which she
> indicated was "in line with our internal goals."
> Yet Mr. van Hamel Platerink and a source at another investment bank
> both indicated that a sale was the most favored option. "But as far
> as I know, none of the banks would touch it," added Mr. van Hamel
> Platerink. Finding a buyer for Boo.com won't be easy, since there is
> speculation that a staff exodus is imminent due to the current
> problems.
> BOO HOO
> It's a big setback for the company, whose investors include the
> French millionaire Bernard Arnault, the Italian clothing company
> Benetton (NYSE: BNG), the London-based venture fund Zouk, the U.S.
> fund Bain Capital, as well as the U.S.-based investment banks J.P.
> Morgan (NYSE: JPM) and Goldman Sachs (NYSE: GS). Together, they
> ploughed a reported £75 million (British pounds; approximately $120
> million) into the company since its formal launch in November 1999,
> after many months of delays.
> An investment bank familiar with the matter said that potential
> buyers include Adidas-Salomon, Reebok (NYSE: RBK), and the U.S.
> sporting goods site Fogdog (Nasdaq: FOGD). The person noted that
> Adidas already shares an informal relationship with Boo.com: the Web
> site's former chief financial officer had previously come from the
> German shoe and sports equipment maker, although has since departed
> for a post at Chello Broadband, an Amsterdam-based Internet service
> provider.
> To be sure, many of Boo.com's troubles were self-inflicted. Although
> well-hyped, it failed to execute well. The company first formed in
> November 1998, yet took a year to launch -- for reasons the company
> never disclosed -- after a number of false starts. At launch,
> shoppers complained that the Flash-heavy site often crashed their
> browsers, and did not work at all on Apple (Nasdaq: AAPL) Macintosh
> computers.
> The launch delays themselves dealt a heavy blow. As the launch was
> pushed back farther and farther, media spots on TV had already
> booked, and the company had to shell out a hefty sum in kill fees,
> according to one media buyer familiar with the situation. More
> generally, the company's huge marketing spend depleted its cash. It
> went so far as to get film director Roman Coppola -- the high-profile
> music video director and son of Francis Ford Coppola -- to film
> Boo.com's television spots.
> In January, the site began discounting their products by 40 percent,
> though it originally had said it would never stoop to such measures.
> In February, its chairman and cofounder left the company. In the same
> month, it fired 70 staff.
> BOO SCARES EUROPE
> However, Boo.com's problems are a symbolic slap to the broader
> Internet economy in Europe. On the run-up to its launch, the company
> was regarded as an innovative and viable Internet player -- an
> example that a completely new brand could be established on the Net
> and one that played to Europe's traditional strength relative to the
> U.S.: clothing fashion and design.
> Yet it now seems likely to suffer the same fate of other suffering
> startups in Europe's fledgling Internet economy, such as
> Lastminute.com (Nasdaq: LMIN) and World Online, which both have
> failed to meet their original lofty expectations. "This is just what
> people don't want to hear right now," said Mr. van Hamel Platerink.
> "It's just more doom and gloom for the market -- maybe we should all
> jump off a tall building right now," he said.
> Part of the company's concerns might be attributed to the
> characteristics of the market sector and Boo.com's investors'
> impatience. Analysts note that in the competitive fashion world,
> retailers do not expect to make a profit until at least two years
> after starting. And competitors saw Boo.com's problems early on. Eva
> Pascoe, the UK managing director of Zoom.co.uk, a fashion site owned
> by the UK clothing group Arcadia, had already sounded Boo.com's
> warning bells.
> "Fashion is a long-term business," she said, commenting directly on
> Boo.com's business prospects during an interview in March. "You have
> to be in it for the long haul, not just for the next ten minutes,
> which is what the VCs are in it for," Ms. Pascoe said.
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