25 Internet Startups That Bombed Miserably

Prev1 of 5Next
Use your ← → (arrow) keys to browse

If the Internet could speak with one voice, it would probably groan “oh, not again!” That’s because every raving success story about Internet startups is tempered by dozens more that crashed and burned in a sea of wasted money, bad ideas, or unfulfilled hype. As venture capitalist Paul Graham writes, most of these failures are never written about. No one knew about them, so they were never really expected to go anywhere. But a select few had very public flame-outs – what Graham calls “the elite of failures.”

The list below celebrates not the failure of these companies, but presents us with a conservative reminder of a not-so-distant past and the lessons we can learn from it.

Save This Page

1. GovWorks

govworks.jpg

GovWorks may be the only startup failure compelling enough to have a movie made about it. The film “Startup.com” tells the tale of GovWorks’ tantalizing brush with mega-success as a website where everyday citizens could interact with their local governments. It had all the elements of a tear-jerking fall from grace: company is started by childhood friends (one of them a rainmaker, the other a technical wizard). Friends build multi-million dollar net worths only to lose it all to clashing egos and expectations. Throw in the obligatory theft of company technology and the departure of a crucial partner, and you’ve got all the ingredients for a storybook startup failure. GovWorks ultimately filed for bankruptcy in 2001.

2. Flooz.com

flooz.jpg

Flooz is a textbook example of a startup was pretty much doomed from the start. The idea was to create an alternative online-only currency (Flooz) that people would use instead of their credit cards. Once you acquired a hoard of Flooz, you were then free to use it at any number of retailers who had agreed, in advance, to accept it. There was only one problem. No one bothered to ask why someone would use a totally new and unproven currency instead of credit cards or gift cards, which were backed by trusted merchants. No one asking didn’t stop customers from answering, however, as lack of demand for Flooz plunged the company into bankruptcy in 2001. Apparently, dazzling TV commercials featuring Whoopi Goldberg couldn’t stop an astounding $35 million in venture money from being squandered.

3. Beenz

beenz.jpg

Beenz was a direct competitor to Flooze who was also forced to close up shop. Amazingly, Beenz raised $80 million over four rounds of venture funding, more than double what Flooz raised for the same, no-demand idea. Unlike Flooz, however, Beenz had the good sense to pull the plug before going under. Once Flooz announced that they were cutting their losses, Beenz followed suit by giving its customers a “spend your Beenz in 10 days or lose ’em” ultimatum. It is believed that the twin failures of Flooz and Beenz spelled the end of the nascent e-currency market. As C/Net writes, the “collapse of a high-profile trailblazer such as Beenz shows that the Old Economy credit card companies have probably won the online shopping battle.”

SEE ALSO:
The Rules of Success as Laid Down By Steve Jobs

4. WebVan

webvan.jpg

The online grocery shopping website didn’t fail for lack of a good idea. Rather, it was premature growth that dragged this company under the bus. WebVan’s deadly mistake was, as one Harvard professor wrote, “managing the company from the fiftieth floor when you only have a one-story building.” By creating a mammoth, $1 billion infrastructure of high-tech warehouses across the U.S., WebVan squandered the $375 million it raised at IPO on growth that its revenue simply could not justify. The other major problem facing WebVan was the already thin profit margins of the grocery business. All of this combined to deliver a decisive knock-out punch in the form of a 2001 bankruptcy filing that put over 2,000 people out of a job.

5. eToys

etoysflop.gif

eToys.com committed what has come to be known as a Cardinal Sin of 90’s-era dot coms: spending tons of money on advertising, regardless of whether there is a market for your product or service. Nevertheless, the mere idea of an online toy retailer was enough to propel the company to a $166 million IPO in May of 1999. All went well early on, with eToys’ stock trading at highs of $84 per share in October of that same year. But by February 2001 the company’s outrageous spending in spite of revenues had caught up to it, sending its stock to an appalling low of 9 cents per share. Their assets were later acquired by KayBee Toys and is currently reincarnated, although not nearly as successfully as first hoped.

Prev1 of 5Next
Use your ← → (arrow) keys to browse

  • This is a great list! It is a blueprint of what not to do in growing your online business! Should be a class at Wharton!

  • Note to the author: an opening parenthesis, (, eventually requires a closing parenthesis, ).

  • FWIW I wasn’t a founder on Kiko. I was their first employee (#3).

  • I remember Beenz, it was almost a good idea… for a 5 yearold!

  • This would probably take too much time, but what would really be great if you could find/compile a list of the founders of these companies, and what they’re doing now. We all know that most entrepreneurs fail the first time out of the gate, but many go on to do great things. How does “epic” vs. “quiet” failure affect future success?

  • Startup.com is an entertaining documentary. It’s actually on satellite again tomorrow morning. I’ve got my DVR set.

    Also:

    The main problem with Pets.com was the shipping costs for selling heavy, and relatively inexpensive, bags of dog food and cat litter. An online retailer needs a much lower ratio of shipping costs to product value to be profitable.

  • No Value America? The subject of Dot.bomb, Value America was a spectacular blow-up. The kicker is that Amazon now does what they set out to do: sell anything and everything.

  • eric

    as I understand it, friendster is quite popular in China…

  • Iso

    There was a documentary about kozmo.com too: e-dreams

    http://www.imdb.com/title/tt0262021/

  • Would you take the risk to work for a startup now? I don’t think I would…

  • JIm Jones

    Wow dude, I forgot about most of those sites. Good article!

    JT
    http://www.FireMe.To/udi

  • Zuma Marie

    another famous flop from 97-98 : iFusion.com

  • Wendy D

    I was a fan of both WebVan and Kozmo. Both delivered excellent product and great service. They were especially helpful because I was living in downtown Atlanta, which has very few stores open at night and no local grocery store, or didn’t at that time. It was fantastic! But I guess both were too good to be true.

  • Interesting post, but over 15 of those stories all occurred between 1998 and 2001. Of course there were a lot of flops during that time, I’d like to hear more start-up failures after 2001…follow up post?

  • What did Kibu (#9) do or sell? The article mentions that they began “to attract users from its target market” but never says who that is???

  • It’s probably misleading to say Go.com “acquired” content from ESPN and ABC, since those are both Disney-owned properties.

  • Adam

    What did Kibu do? And you should probably note that while Go.com partnered with ABC and ESPN, both of those companies are Disney brands as well.

  • LocoTx

    Great list! Now we need a list of dot.com companies that made it and what they felt was why they were successful.

    I think know what to do is just as important on knowing what not to do.

  • Startup.com was a great film. Too bad Govworks didn’t succeed. The idea is now in use all over the place.

  • rezzer

    No loser list should be without the miserable failure of …. smallbusiness.com

  • Anargeek77

    I think Friendster is still STRONG in numbers. Have you guys visited the site recently? To be honest its more user friendly than FACEBOOK or MYSPACE.

    You shouldn’t include friendster.com as one of the bombed sites. I still use it, they have APIs, WEB 2.0 and they are OPENSOCIAL.

    Being a SELLOUT doesn’t mean you bombed!!!

  • Just proves you can have a great idea, great intentions, etc … but you still need the right minds to push it forward. Great article.

  • Some people are just way into the future and it’s not their time to shine. We’re seeing another wave this time around too, even though only smaller players.

  • Funny selection!

  • A friend of mine use to work for friendster.
    What a pile of poo that company was.
    I can’t believe they didn’t sell when they could.

    I don’t know why kazaa was on this list..
    they didn’t fail because they were bad they failed
    because they were destroyed by the music industry.
    People liked kazaa, they didn’t like the free spyware tho.

    Also this list is real short.. there were no just 25 company’s who failed during the dot.com time frame there were 100’s that you may have or not have heard of.
    excite, inktomi, ariba, netscape the list go’s on and on.
    Befor you say that netscape is not out of business, I’ll
    clarify. After netscapes business started going down the tubes, the company was split up and sold off to sun and aol.
    100% of all of the employees quit withing the next 10 months if they were not let go when there managers quit.
    All that remains of “netscape” is it’s name.

  • Ron

    Wow, I remember when eToys was rocking on the stock market. Too bad they never survived the bubble burst… here’s a story of how they could of potentially changed their strategy and business tactics to surive (look at the excerpts)… http://www.readtheanswer.com/index.php?RTA=web2

  • don’t forget PODSHOW

  • Kevin

    Great read…enjoyed it. It seems as though PlanetRX is still up and running though. I even decided to call them directly and place an order and was able to do so.

  • This is a great collection. I have started my internet business few months and this article is a great input to my business decision.

    Great Job. Keep it up.

    -Thanga

  • Laura

    eve.com – I had quite a few friends involved with them. They gave a great severence package, though!

  • Kick ass list and a great example indeed. I forgot about eToys. Loved their jingle. I can’t believe Beenz raised 80MM dollars. WOW.

  • Thad

    Garden.com

    I knew I had wasted my money when the strategy was “kiosks in gardening centers” promptly followed with a 10 minute description of why it was a brilliant idea. Only minimal change in consumer mindset and spending patterns will make a ton of money.

  • Great list, I was a pretty prominent user on a number of those sites (particularly Altavista).

  • thermocline

    living.com

    $70 million burned in 12 months, and they took a family-owned furniture business with it.

    Context Magazine: http://tinyurl.com/5g7gff
    SF Chronicle: http://tinyurl.com/5akd6k

  • You would think the time is ripe for a WebVan service, with the gas prices so high right now.

    Safeway has been trying to deliver your groceries for a couple of years.

    Has anyone ever had their groceries delivered?

    Take care,
    Michael

  • fred

    I was bitten for almost $5g working for SoulMD.com. They went under and refused to pay for some work I did. Talking to the CEO on the phone, his answer was- quote- “Hey, you got screwed! Get over it!” My lawyer sent him a letter and it was returned unopened, and the little shit had carefully colored a box over the entire address with a ball point pen.

    Monte, we have unfinished business if I ever see you on the street.

  • ridge

    what? no garden.com ? sheez!

  • Antinous

    Sadly, my stock broker, the person who was giving me investment advice, sank all his money into eToys when it was at its peak price. I derive a little satisfaction from imagining that he’s living in a smaller refrigerator box than me.

  • SAD!!! they must have put in so much of hard work… :(

  • Jenn

    What about “powwow”? the downloaded program to “chat”…man that was awesome back then! *LOL*

  • There’s a lot of things to be learned from failure. Thanks for the reminder of some of the more fantastic failures out there.

  • This is great list and i think it shame such great ideas might fail , more research should have been done though i guess

  • This is a very good site, it will help me to know what not to do in starting my own business. Thanks for the info.

  • very informative…thanks for the post.

  • Wow…

    I guess they did bomb… because I haven’t heard of any of them!

  • i still use and love friendster!

  • Paul

    I worked for an online publisher during the 15 minutes that Beenz was alive.

    Beenz were desperate for us to jump on board. I remember one of their reps trying to convince me that eventually, currencies would be replaced by ‘Beenz’. I laughed so hard I almost wet myself.

    As laughable as their distorted ‘vision’ was, they somehow managed to convince some moron in our marketing dept that it was viable. We rolled it out across several million pages, only to roll back 4 weeks later when Beenz announced they’d pulled the pin.

    Beenz was yet another hair-brain idea sold by enthusiastic 20 somethings to greedy investors and marketing managers so wet behind the ears and desperate to make a buck, they couldn’t spot a stupid idea if it smacked them in the face!

    But having said that, if someone told me back in 2000, a site like Facebook would be worth billions, I’d have told them to get off the crack-pipe.

    Maybe they are the visionaries – maybe they know the odds are slim, but, if it works, then the sky is the limit. I guess it’s easy to take a chance when you’re using someone else’s money.

  • Ryan

    So, with all of these out of the way, where might someone get advice on starting yet another one? Maybe one with a useful purpose, cash flow, wide market, ect., ect.. I have an idea that I want to get off the ground, but don’t know where to go to get good advice before the “beenz” are spilled.

  • I wish there were 100 failures on this list. That was a great read.

  • Saad

    great read

  • I’d have added DEN to this, for sure…

  • Same comment with Todd. I don’t recall seeing what Kibu was about in the article. Also, IMHO, some of the companies don’t deserve to be in the “failed miserably” list. Other than that, it was a good read. ;)

  • Cal

    Interesting Read, jogging my memory to many, thinking “failed miserably” is in the amount of revenue lost. Ordering kitty litter, waiting for 2-3 days stinks to high heavens.

    OMG, Owners of company must not have ever owned a stinking Cat.

  • Christian

    The old ones like boo and webvan are wellknown but what about some more recent epic startup fails? It’s a dilemma that we won’t hear about any big fails unless the big next bubble explodes. Until that happens, the small fails won’t seem big and relevant enough to talk about.

    As Nassim Taleb puts it right in his book “The Black Swan”, people tend to look on the big and colorful successes (twitter, Facebook) but are ignorant when it comes to all the small failures that happen silently and alone.

  • Unfortunately, it sank and my stock broker, and the person who was giving me advice in the area of investment, all his money in the e-toys when prices were at their peak. I derived little satisfaction from the thought that living in a smaller square me the fridge.

  • I heard of Flooz and Beenz. I guess they were really popular and could have used the brand name to sell something that would sell.

  • friendster is still ok. Great read thnx.