42 Degrees - Business from a different angle

She was operating with her own money which meant she kept an iron grip on costs. She launched into a market that did not really exist yet so there was little virtual or real world competition but lots of opportunity for organic growth. Lastly the medium was perfect for its customers – men who were too embarrassed or lazy to walk into a cosmetics store and ask for a male shop assistant.

In stark contrast many of the losers listed below followed the Amazon model – huge capital investment in an attempt to dominate their markets, with little experience in logistics, lots of offline competition and poor cost control. No wonder they bombed!

• Webvan.com
  The online grocer launched in 1999, and raised $355m through an IPO (Initial Public Offering). But it had no real world stores and needed an immense investment in infrastructure (including $1bn on warehouses). With the slenderest of operating margins it also needed huge critical mass to work. It shut up shop just two years later in 2001.
• Pets.com
  Set up in 1998 to sell all sorts of pet ware and pet-related products. It spent millions on a highly successful advertising campaign which made a star out of the talking sock puppet that fronted it. But it had to subsidise delivery costs to compete and ended losing money on every transaction. Despite raising $82.5m in an IPO in February 2000, it collapsed nine months later.
• Kozmo.com
  Fancy a packet of peanuts? Forgotten to rent a video tonight? Just contact Kozmo.com and they’ll deliver it for free. It will come as no surprise to learn that despite instituting a $10 delivery charge, raising $280 million and securing a $150 million promotion deal with Starbucks, the concept of an online convenience store never really stacked up. It reached the grand old age of 3 before folding in 2001.
• Flooz.com
  The company opened in 1998 spotting, quite rightly, that the Internet needed an online currency, especially for smaller transactions. Perhaps it was too far ahead of its time. Despite raising $35 million from investors and signing up retail giants such as Tower Records, Flooz went bankrupt in August 2001.
• E-toys.com
  Was one of the earlier Internet businesses. It opened in 1997 and raised $166 million in a May 1999 IPO. But in the course of 16 months, its stock went from a high of $84 per share in October 1999 to a low of just 9 cents per share in February 2001. The company spent millions on advertising, marketing, technology and battled a host of competitors. But sadly it failed to generate sufficient sales. It closed in March 2001. Now it’s back for a second run under new ownership.
• Boo.com
  Founded in 1998 in the UK as an online fashion store, Boo.com suffered from huge financial and technical management problems. Its website was over complicated and slow. It was competing in too many markets and rather foolishly elected to pay postage on returns. But sales never hit predictions and the company famously ‘burned’ through £100m by the time it went into liquidation in May 2000. The phrase "to do a Boo" is now part of the language meaning to fecklessly mismanage a golden opportunity.
• MVP.com
  Was founded in 1999 to sell sports goods. Backed by various stars including Michael Jordan and £40m in funding, the company grew to employ more then 150 people. Somehow it just never generated enough cash and it closed its doors the very next year. The name is now used by CBS to sell sportswear.
• Kibu.com
  Despite its exotic sounding name, Kibu opened in 1999 as an online community for teenage girls. It raised £15m and launched with a celeb-studded party. Despite some early signs of success its backers got cold feet and pulled the plug just 46 days later.
• Go.com
  Launched in 1998 as a search engine that was primarily a way of fronting entertainment giant Disney’s online activities. Disney was never able to make Go.com popular enough to justify the millions spent on promotion. In January 2001, Go.com was shut down, and Disney wrote-off $790 million. Go.com still exists, but it carries only feeds from other Disney web properties.
• GovWorks.com
  Was initially set up in 1998 as a website for citizens to do business with municipal government, covering everything from paying for parking permits to skip licences. Great idea and at first the future seemed bright. Then everything that could go wrong soon did. Personalities and egos clashed during long work hours, one partner was ousted, technology was stolen, and they never got the software to work as it should have. A competitor eventually took over GovWorks.com in 2000.
• Clickmango.com
  Online health and beauty company Clickmango.com was best known for employing TV personality Joanna Lumley as its figurehead. It was founded in 2000 by Toby Rowland, son of the late tycoon Tiny Rowland, and his colleague Robert Norton. Despite easily raising £3m to launch, the company closed less than a year later after failing to raise a planned £300,000 of further funding.
• Toyzone
  Big name backing from PR guru Matthew Freud and chat show host Jonathan Ross, helped Toyzone raise £2m funding in 1999 to set up an online toy retailer. In its first year it turned over £2m and the company talked openly about a possible IPO for £200 million. But after failing to raise more operating capital the company closed for business just twenty months later, a week after US rival eToys announced it was filing for bankruptcy.
• Easier.co.uk
  Was one of the first UK property portals. It planned to make money by selling user data to financial institutions. The company spent £12 million promoting its site and its promise of "no commission, no estate agents, no hassle." A year after it was founded, Easier.co.uk had just over 15,000 properties on its books, but it made a loss of £6.7m. It closed in March 2001, a year and half after opening.