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Start-Up Flops

START-UP FLOPS How some of the biggest new ventures crashed, and burned millions in the process. 10 MILLION 100 MILLION Time in business: <2 YEARS AMP'D MOBILE $360M BURNED Created to provide youth with entertainment through their cell phone provider, Amp'd Mobile advertised heavily from the beginning. Amp'd sponsored parties, festivals, as well as Snoop Dogg's football league. The company gained customers, but encountered problems with bill payment, with nearly half of their customers defaulting on bill payment. 1.5 YEARS WEBVAN $800M BURNED Despite lofty goals to automate and revolutionize grocery shopping, as well as hundreds of millions of invested dollars, Webvan could not find the customers it needed to stay in business. Though it pleased the customers it had, the com- pany burned through money quickly. Purchases included $1 billion for warehouses and over 100 Aeron chairs. 5 YEARS PROCKET $272M BURNED The Silicon Valley based company built network processors and core routers, which it claimed used less power and could handle higher volumes of traffic than industry leaders. However, the company could not stay afloat post-dot-com-bubble, and was acquired by Cisco for $89 million, a disappointment considering its previous valuation of $1.55 billion. 8 YEARS CASPIAN NETWORKS $300M BURNED Founded by an internet pioneer, Caspian Networks made unique routers to compete with the likes of Cisco. Despite 5 funding rounds, Caspian experienced many layoffs and various CEOS. The company closed in 2006 due to the unstable man- agement as well as an indecisive market position. 2 YEARS PETS.COM $150M BURNED The San-Francisco based company sold pet food and other supplies as part of an emerging internet retail trend. Despite having over half a million customers and an expensive Super Bowl ad, Pets.com could not find a profitable business model nor any more interested investors by the time its doors closed. 3 YEARS KOZMO.COM $250M BURNED Promising to bring movies, books, video games, and even food to your door with free delivery within one hour, Kozmo had operations in 11 major cities. However, the company was only profitable in four of those cities, partly due to a flawed busi- ness model based on providing costly home-delivery for free, even on small orders which could not turn a profit. 3 YEARS CUECAT.COM $185M BURNED This start-up offered a cat-shaped barcode reader connected to your computer, which would allow you to scan a barcode appear- ing in print or on a product which would launch a related web page. In a costly marketing move, CueCats were bulk mailed to every subscriber of Wired magazine, but reviews of the product were very critical. The company's servers also experienced a security breach, exposing 140,000 user's private information. 4 YEARS ETOYS.COM $100M BURNED This dot com retailing upstart had an $8 billion valuation in it's heyday, and competed directly with Toys 'R' Us. The company experienced setbacks when it botched christmas deliveries, and eventually fell victim to the collapsing bubble. KB Toys purchased a majority of eToy assets, but later sold them. eToys.com was recently acquired by Toys 'R' Us in February 2009. 2 YEARS ALLADVANTAGE $200M BURNED As an internet-based advertising company, AllAdvantage paid its users a portion of the advertising revenue garnered by their surf- ing, calling itself an "infomediary". AlIAdvantage become known for its slogan "Get Paid to Surf the Web". The company was another victim of the bursting dot-com bubble. Though by the time the company closed, the over $160 million it had paid its members didn't help cash flow either. 28 YEARS XOMA $700M BURNED The relatively small biotech company had few successes. Typically, only one in five drugs that are tested on humans gets to market, and for smaller companies like Xoma that only develop one or two drugs at a time, failures can restart the 7-8 year cycle of drug development. Xoma has had a few successes, and has laid off employees to save cash. Xoma hasn't failed yet, and is still gambling on new drugs that could make the company profitable- if the drugs succeed. 2 YEARS DIGISCENTS $20M BURNED Despite a strategic alliance with Procter & Gamble, Digiscents' ambitions of using smell in games and movies would not be real- ized. The company made a device you would plug into your com- puter to receive iSmell-digitized scents. The requirement of this peripheral was pegged as a reason for the company's failure. One critic said of Digiscents, "It's case of 'just because you can do something on the web doesn't mean you should'." 1 YEAR MVP.COM $65M BURNED Another online retailer, this time specializing in the sale of sporting goods. Even though MVP.com was backed by sports celebrities like Michael Jordan and Wayne Gretzky and had an $85 million dollar, four-year advertising agreement with CBS, the company could not succeed. Not even a year after signing the deal, MVP.com failed to pay $10 milion it owed CBS. The company failed shortly thereafter due to the declining online retail sector. 3 YEARS GO.COM $790M BURNED Launched by Disney as a web portal, Go.com also featured one of the internet's first web-based chat room networks. Go.com later integrated a search engine, but struggled with dropping visitor numbers. In January 2001, Go.com and its search engine closed and the tracking stock was retired. 46 DAYS KIBU.COM $22M BURNED In any early attempt to take advantage of online networking for teenagers, Kibu.com offered content and chat rooms for girls aged 13-18. However, the company fell victim to cold markets for internet companies, and closed up shop, returning it's remaining capital to investors.

Start-Up Flops

shared by Kristofferson on May 25
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Take a look at the piles of money burned and time wasted by some of the biggest start-up failures. Not every start-up leads to a billion dollar valuation; most die to make way for better attempts.

Publisher

Credit Loan

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E.J. Fox

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Business
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