Brand Failures
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Brand Failures

Brand Failures Brand Failures

conmotsach.com
from conmotsach.com More from this publisher
28.12.2014 Views

252 Brand failures parties and high living centred around the boo headquarters in London’s Carnaby Street. Malmsten now maintains that the company’s extravagant reputation ‘masked the reality’ of the sheer amount of work that went on behind the scenes. Indeed, he reckons the 24/7 commitment his staff (or rather, ‘boo crew’) devoted to their task especially around the launch period, hadn’t been seen since World War II. ‘To understand this kind of total devotion to a cause you probably had to be in Britain in about 1940, when car factories were turning out aeroplanes or tanks overnight,’ he writes in boo hoo, with no apparent trace of irony. But however hard everyone in the company was working in November 1999, the atmosphere had changed by the following February. According to boo’s financial strategist Heidi Fitzpatrick morale was low. ‘We were out every lunchtime getting shit-faced. There was no management and we all went home at six instead of working all hours.’The reason for such low morale is represented by the figures. In a period of 18 months, the company had managed to get through approximately US $185 million that had been raised from high-profile investors such as Benetton, J P Morgan, Goldman Sachs, the French fashion conglomerate LVMH and the Lebanese Hariri family. How much of this money financed the first-class flights and Krug-swilling lifestyle boo was becoming increasingly famous for is impossible to say. One thing, however, is for sure. There simply weren’t enough customers. Deterred by a problematic Web site which concentrated on fancy design rather than straightforward product information, few people were willing to make the effort in any of the 18 countries where boo had a presence. In the first month after its November launch boo managed to sell around US $200,000 worth of stock, from which it profited half. Not bad by most e- commerce site’s standards. But then, most e-commerce sites aren’t capable of spending around US $20 million in a single month (as boo did that November). Although sales figures slowly increased, they weren’t doing as quickly as boo had anticipated. Between February and April 2000, total sales were US $1.1 million. Unable to raise any more money from its investors, in May 2000 boo.com shut down and filed for bankruptcy. In their final press release, one of the most famous statements of the dot.com era, Malmsten and Leander put their side of the story:

Internet and new technology failures 253 The senior management of boo.com has made strenuous efforts over the last few weeks to raise the additional funds that would have allowed the company to go forward with a clear plan. This plan involved a restructuring of the retail operations, the development of an e-fulfilment business using our unique advanced technology and operations platform, and the identification of strategic partners. It is disappointing to both the management and staff alike that we were not able to bring this plan to fruition against the background of steadily-improved trading. The release concluded by stating: ‘We believe very strongly that in boo.com there is a formula for a successful business.’ Unfortunately, not everyone agreed. Among the many dissenters was Philip Kaplan, a 24-year-old New Yorker who launched FuckedCompany.com in 2000 to highlight what he referred to as the ‘ridiculousness’ of many dot.coms. The site quickly attracted hundreds of thousands of visitors, wanting to see which companies were next in line for the scrap-heap. When boo.com failed, Kaplan’s response was, to say the least, cynical and his site put a rhetorical question to its visitors. ‘Can you possibly think of anything that is a more eloquent testimony to having your head three feet up your Calvin-Klein-covered ass than to spend tens of million dollars on a dot.com start up AND NOT HAVE THE WEB SITE WORK!’ There are others who take a kinder view though. Unlike the former staff at other doomed companies, many of the original boo team remain loyal to the memory and believe the company would have succeeded if only the investors had supplied more money. It is also important to realize the wider context. When the news about boo’s demise hit the headlines, the European dot.com community remained reasonably confident. This case was viewed as an isolated event, related only to the incompetence and extravagance within boo itself. The reality, however, was that boo.com’s failure to survive was not unique. Only months after the front-page headline in The Financial Times ‘Boo.com collapses as investors refuse funds’, many others had suffered similar fates. One of the journalists to have documented boo.com’s ill-fortune was the BBC’s Internet correspondent Rory Cellan-Jones. In his vivid account of dot.com Britain, Dot.bomb, he considers boo as part of a broader picture:

Internet and new technology failures 253<br />

The senior management of boo.com has made strenuous efforts over<br />

the last few weeks to raise the additional funds that would have allowed<br />

the company to go forward with a clear plan. This plan involved a restructuring<br />

of the retail operations, the development of an e-fulfilment<br />

business using our unique advanced technology and operations platform,<br />

and the identification of strategic partners. It is disappointing to<br />

both the management and staff alike that we were not able to bring this<br />

plan to fruition against the background of steadily-improved trading.<br />

The release concluded by stating: ‘We believe very strongly that in boo.com<br />

there is a formula for a successful business.’ Unfortunately, not everyone<br />

agreed. Among the many dissenters was Philip Kaplan, a 24-year-old New<br />

Yorker who launched FuckedCompany.com in 2000 to highlight what he<br />

referred to as the ‘ridiculousness’ of many dot.coms. The site quickly<br />

attracted hundreds of thousands of visitors, wanting to see which companies<br />

were next in line for the scrap-heap. When boo.com failed, Kaplan’s response<br />

was, to say the least, cynical and his site put a rhetorical question to its visitors.<br />

‘Can you possibly think of anything that is a more eloquent testimony to<br />

having your head three feet up your Calvin-Klein-covered ass than to spend<br />

tens of million dollars on a dot.com start up AND NOT HAVE THE WEB<br />

SITE WORK!’<br />

There are others who take a kinder view though. Unlike the former staff<br />

at other doomed companies, many of the original boo team remain loyal to<br />

the memory and believe the company would have succeeded if only the<br />

investors had supplied more money.<br />

It is also important to realize the wider context. When the news about boo’s<br />

demise hit the headlines, the European dot.com community remained<br />

reasonably confident. This case was viewed as an isolated event, related only<br />

to the incompetence and extravagance within boo itself. The reality, however,<br />

was that boo.com’s failure to survive was not unique. Only months after the<br />

front-page headline in The Financial Times ‘Boo.com collapses as investors<br />

refuse funds’, many others had suffered similar fates.<br />

One of the journalists to have documented boo.com’s ill-fortune was the<br />

BBC’s Internet correspondent Rory Cellan-Jones. In his vivid account of<br />

dot.com Britain, Dot.bomb, he considers boo as part of a broader picture:

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