In text with technology with tech Stuff from stuff works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm a senior writer with how stuff works dot com and as you guys know, I like to talk tech. This is part two of a two part episode about the companies that rose and fell during the dot com bubble crisis of one and where those folks are now, the people who launched those websites, what are they doing? And uh, We're going to continue on that train. Last episode we looked at web van, pets dot com, the search engine Excite, Broadcast dot com, and Boo dot com. But there are a lot of other companies that made a big name for themselves, at least briefly anyway, before burning out during the crash following the bubble's deflation. And there are also a couple of notable companies that they're the storm that I think we can look at and explore how it was that they survived when so many other companies didn't. So let's get started, and I think a good place to begin is the Globe dot com. This was one of the earliest social networking platforms on the web, predated the giants that would come later, like my Space, which of course isn't really a thing anymore, and Facebook, which is very much a thing still to this day. And the Globe dot Com was the brainchild of two Cornell students, Stefan Pattern and Todd Krisselman. The two were interested in computer programming and the commercial possibilities of the Worldwide Web, and they had also witnessed how compelling online chat rooms were, and they felt that there was probably a way they could monetize that. The two students raised fifteen thousand dollars from private investors and they used that money to buy computer servers and computer equipment to build out their idea. They worked on the design for several months and they launched the Globe dot Com in April nine. They formed a new company called web Genesis, and they hired on the staff of about a dozen people or so. And the site acted as part news aggregator, part message board, and part chat room. So if you went to the site, you would see a bunch of different categories of types of interests like sports and that kind of stuff, and you could go and click into that and read up on things. The chat room function was easily the most popular. When the site launched, they also launched software that could serve up polls and quizzes and surveys, so really the two students were way ahead of the curve on this one. As today those kind of features are wildly popular on social media, and they thought ahead to include it on their early social networking platform. The site was a success that had very passionate users, not an enormous user base, but they were very um frequent users, and in ninety the company made a decision to hold an i p O or initial public offering, is when a private company goes public and becomes a publicly traded company, and right around there is when things went a little bonkers. The global investment bank bear Sterns set the opening price at about nine dollars a share when the market opened. The demand for shares was such that the actual opening price ended up being eighties seven dollars per share, which is crazy, and at one point it even hit nine dollars per share. Now, by the end of the day, the price settled a little bit, but was still way over the opening price. It settled it around sixty three dollars fifty cents a share on paper, That meant that everyone who worked at the Globe dot Com became filthy rich, and some people started to behave that way. But as you guys know from this topic and the fact that no one has ever heard of this website these days, it was not meant to be. The site was not making money, and while millions of people were using the site, that just meant the costs of running the site remained high while there was no real way to or generate what revenue. So it was a sinking ship. People didn't shy away from blowing the whistle on the Globe dot Com. The company went public in the fall of A year later, The Street published a piece about the Globe dot Com that pulled no punches. Here is a direct quote from the Street. We're speaking, of course, of the Globe dot Com t g l O and essentially worthless business enterprise that has lost six of its value in the last five months, yet at its current price of barely thirteen dollars, still remains grotesquely overvalued. Ouch harsh words, but as it turns out, they were not entirely untrue. The Globe dot Com stock price continued its downward trend in nine and beyond and by January two thousand, pattern Not and Krizzleman stepped down from the company. They resigned. Pattern Out walked away with about a one and a half million dollars after selling off stock, much most of which he reportedly later lost in other investments. Krizzleman invested in some other companies and helped secure some of his wealth and more on those two in just a second. As for the site, it sputtered along for a while under new management, and in two thousand one the company had to lay off about half of its employees and the shares were trading at a dismal twenty five cents per share. It transitioned into a voice over Internet protocol company for a while, or voipe company, and it had some interests in the gaming industry as well, but despite those businesses being more stable than the initial website, the company ultimately had to shut down in two thousand seven for good. It had never fully recovered, and honestly, the social networking part of the Globe dot com had died around the time that the founders stepped down. Today, Todd Krizzleman is the CEO and co founder of a company called Media Radar, which is an ad sales application company and Stefan pattern Not is the chairman and CEO as well as the co founder of a company called Slated Incorporated, which is on an online film packaging, networking and investment marketplace. So they're doing just fine. Now let's stick to the topic of money. While we're chatting about these dot com companies, there were a couple of companies that rose up to try and become leaders in a brand new space, digital currency. So you might have thought that bitcoin was relatively new. This idea of digital currencies was new. Now, it's been around since the nineties. Shortly after the Web became a real entity. There were people who were thinking of ways of creating virtual online currencies. Now these were not cryptocurrencies. These didn't use the blockchain approach the way bitcoin and some other cryptocurrencies do, but they were virtual digital currencies. It's so back in the late nineties, a couple of different companies were trying to get this going. But they're they're really in some ways, we're behaving more like gift cards than outright currencies. So the two companies I want to talk about specifically are Flus and Beans. Flus is spelled f L o O Z and beans B e e b e e n Z. You started getting to the point where you're getting the e sound and you're thinking, have I said too many? Ease one, B two ease and in in a Z flus and beans. You just can't make this stuff up, guys. Oh, I guess technically you can, but you don't have to because someone already did it years ago. Now. Flus took its name from an Arabic word flus, meaning money, and Robert Levitan, who had a successful venture with I Village, launched Flus in nine. The idea was that customers would be able to buy flues credits that could be used at a couple of dozen different online retailers, and it was pretty easy to send those credits online to other people, like you could email essentially a gift certificate to someone else. So the idea was that you could buy flus for someone, give them the virtual currency which they could go and then spend on something they actually wanted rather than just receiving it another ugly Christmas sweater or whatever. Based on all the articles I looked over for this podcast, Flus may have best been known not for its method of business, but for its commercials, which kind of reminds me of pets dot com. Honestly, the company booked would be Goldberg as their spokesperson, and that move alone costs several million dollars. Meanwhile, Levitan was finding it challenging to get customers, both on the business side with retailers and on the consumers side with people who would actually use the product. Unlike many of the other companies I have covered in these two episod, Flus never held an I p O. It remained a privately held company throughout its existence. In two thousand one, it started to really struggle as the bubble was deflating and there was a report that the company may have been the victim of fraud. In addition to that, according to the story, there was a group of Russian thieves and hackers who were using stolen credit card numbers to purchase three hundred thousand dollars worth of FLUS credits. Now, if true, this could have been a real issue for FLUS because it would be a company left holding the bag when it's revealed that the purchases came from illegal sources. It would have caused real cash flow crunch at a critical time FLUS would have to cover the the expenses given to retailers, and meanwhile, it doesn't have any real money to hold onto because of the fact that the purchases came from criminal sources. Whether the fraud actually happened or not is a moot point. FLUS closed up shop in the summer of two thousand one, just two years after it had launched. People with FLUS credits found themselves out of luck just holding useless digital currency. And this is a valuable lesson in currency. And I'm talking about all currency, not just digital. Remember, your money is only worth something for as long as we collectively believe it to be. So if tomorrow we all woke up and said that dollars are worthless, dollars would be worthless because no one would accept them in return for anything. So the only reason this money has any value is because we have agreed upon it. Well, in the case of FLUS, people no longer had confidence in it, and therefore they no longer believed in the power of lows to be money, and ultimately it failed. Fortunately, most governments are on slightly more firm ground than FLUS was in two thousand one. Most sometimes you have a country like Greece that gets into some difficult economic times and there are a lot of tough questions at that point. As for Levitan, he went on to work with several other ventures. In two thousand four, he co founded Pando Networks. This was a peer to peer networking company that used that peer to peer approach to distribute software like games and videos. If you don't remember what peer to peer networking is, that's when you get a bunch of computers that are owned by various people out there. You run a specific type of peer to peer software and that allows those computers to essentially be their own little database network, and you can send files across the network. You can you can download stuff from multiple sources, which speeds up your download process, and it decentralizes it so if one computer goes down, there's still other computers on the network you can still get the stuff you need. It's a perfectly legitimate way to distribute information. It's just that peer to peer networks, over the course of the history of them, have often been used to pirate software and other material reels, and so it's gotten a bad rap. But there's nothing innately illegal about peer to peer. It's just the way some people have used it. Microsoft would purchase Pando Networks in two thousand thirteen, and then Levitan went on to co found the company Live in two thousand and fourteen. This is a company that is making a real time local events search app. I think I tried tracking it down, but I didn't actually have much success. I did find a web page where you can sign up for more information, but it just showed me a video that looked like a cross between Mad Max, Beyond Thunderdome and Fight Club, and I'm not sure I want to find that event in the first place. There you go. Uh, The actual event showed people riding bicycles and jousting with mops while a giant trash puppet was moving around in the background. I honestly don't know what it was supposed to tell me, apart from the fact that I guess if I had the app on my phone, I would know that that crazy stuff is going down, and maybe I could go the other way. As for Beans, that company was the brainchild of Charles Cohen, who's not the billionaire Charles Cohen, but a britt entrepreneur. At he was an Oxford graduate, he had an idea and he was a former speechwriter for the Liberal Democrats in the UK. He launched Beans in n and Cohen's approach was similar to Levitans in some ways. But beans was a virtual currency you could not only purchase with real money. You could also earn beans through various activities, so you could be paid in beans. I guess if you were selling account perhaps you could get paid in beans. For example, you might earn beans by clicking a specific link, or reading an article or watching a video. So it became an incentive to get engagement from users. You probably have encountered something like this online at some point, where you are allowed to do something like inner sweepstakes, but only after you watch a video. It's similar to that in many ways. So it wasn't just a gift certificate style program, but an actual currency you'd receive as a reward in return for specific actions. Now, each unit of beans, which was beans, whether it's plural or singular, was worth about half a penny. The idea seemed fairly solid. Businesses have been attracting customers and keeping them loyal with similar programs for years. I mean, there are tons of different companies out there that have loyalty programs. You know, you buy ten coffees and you get the eleventh one free, that kind of thing. So it's kind of along those lines, except it was meant to be something that would work across multiple companies. So maybe you buy a couple of T shirts at one retailer and then you have enough beans to buy a cup of coffee at a different retailer, or vice versa. You drink a lot of coffee and then you can buy some shirts. That was the idea, and it seemed like a pretty good one, and to this day we see multiple implementations of this idea, though they tend to be specific to a particular vendor or merchant. So in other words, you might have a Starbucks app that allows you to get loyalty points whenever you buy coffee from Starbucks, but you can't necessarily convert that into anything else, Like you can't use those credits to go and buy books at a bookstore or music or anything like that. Cohen ended up raising a great deal of money from investors in those early days. Articles give amounts in the eighty to one hundred million dollar range. That's a lot of cheddar and investors included Larry Ellison of Oracle fame. The tech of Beans depended pretty heavily on Oracle as well. Cohen wanted a currency that would work across borders, which meant that it had to take into account exchange rates, which are incredibly complex and change frequently. So the software that would allow for this kind of conversion lived on Oracle database servers and Sun Microsystems computers. It was pretty serious tech to run this in the background to make sure that you had the right prices uh converted into beans. Despite having the same problems that Flus did, which namely was getting online retailers to participate in the strategy in the first place, Beans chugged along for a short while. In July two thousand, Beans was big enough news to get extensive coverage and Info World magazine the articles pretty interesting. Cohen proclaimed that beans would become the universal currency of the future. There was even a partnership struck up with the credit card MasterCard. They had a thing called rewards the card with a Z after reward and it's all one word, so rewards the card from MasterCard, which would let you shift those beans to real life cash in businesses that accept master Card as a form of payment so you could earn Beans then use your credit card with Beans credits on it to make purchases. Everything seemed to be going really well for the company, and they scaled up to global operations with offices and numerous countries and cities cities like New York or Stockholm, Sydney, Hong Kong, and at its height they had about two fifty employees. And then things took a pretty sharp turn. Despite its presence and its heavy marketing campaigns, Beans failed to generate revenue. It would take a few more years before people began to use the Internet to really make purchases on a regular basis. There was this trust issue people had to get past. They were all worried about making, you know, purchases online and then having their identity stolen or money stolen from them, or maybe they would never get the thing they wanted to buy. No one was really eager to jump on the internet as a way of buying stuff yet, and most people still preferred to do their shopping in brick and mortar stores. For the most part, Beans just wasn't bulling in the beans as it were. According to c Net, Beans also ran into trouble with the law. Not all countries were cool with a company inventing its own global currency, and it got so serious that at one point the u K's Financial Service Authority Task Force rated Bean's offices in the UK. By two thousand one, the writing was on the wall. The company began to scale down, shutting down many of the thirteen offices across the world and laying off employees left and right. By May two thousand, employees had shrunk down to thirty and Beans was clearly trying to squeeze out as much money from its assets to pay back investors as it possibly could. By August two thousand one, it was all over. The company was finished. Charles Cohen went on to become the CEO of a company called Probability Plc, which designed and published gambling games for mobile devices. He left that company in May two thousand fourteen and became a vice president of Mobile at I G T for their North America Sporting Sports Betting division, and he works out of the Bay Area. I think Beings and Flus weren't necessarily bad ideas for the record, but I do think they were ahead of their time, and perhaps in another five or ten years they might have flourished, so it may have just been a case of a great idea at the wrong time. It's kind of sad because I actually like the idea of getting rewards points that are applicable across multiple vendors. I don't know how you make that arrangement so that not, you know, no single vendor gets harmed by this. I mean, if everyone is making their purchases at certain vendors and they're all cashing in their rewards points at another vendor, the rewards points vendors having a rough time of it, unless there's some other money exchange on the back end between the agency and the the the vendor. I don't know, but I would love it because it would really simplify all those loyalty cards. Instead of having to have multiple apps or multiple cards, you would have just one. Google. Google Wallet has tried something similar in the past, so maybe we'll see that rise up again in the future. I got a lot more to talk about with dot com companies that went belly up, but first let's take a quick break to thank our sponsor. Rolling right along, let's take a look at Cosmo dot com investment bankers Joseph Park and Yong Kang launched the company in n It was a fast delivery service. The company's pitch was that it could deliver lots of stuff like small stuff like coffee or DVDs or other small items in under an hour and there were no additional delivery charges. Cosmo landed a deal with Starbucks early on, and from a consumer side, it all looked really promising a man that you no longer had to wait. Whenever you ordered something online, you could get near instant gratification because within an hour it would show up at your door. Cosmo delivery agents rode around New York the first Cosmo market, on bicycles, and the service was gaining ground with consumers, but the company was losing money on every delivery. Now. Their hope was that they would be able to stay afloat in the early phases as they gathered a customer base before turning on some revenue generation generating streams. And it was a risky bet and it very nearly paid off. It. It wasn't like it was a bad idea. It almost worked. Cosmo was growing and by the end of nineteen it was in six markets in six locations, and by early two thousand it grew to eleven cities and twenty two locations, and after eighteen months in business they had three hundred thousand customers. By mid two thousand, that was up to four hundred thousand customers, and they employed more than twenty six hundred people, and all those employees were called Cosmo knots cute. Around that same time, publications such as Forbes were warning that Cosmo might be expanded too quickly and they didn't have enough revenue generation to keep this sustainable. It was going to end up collapsing in on itself if they weren't careful. An article in June two thousand and Forbes said that Cosmo had spent more than twenty six million dollars in and they only generated three and a half million dollars in revenue, so obviously that can't go on forever. The privately held company prepared to launch an initial public offering, but between the lead up and the launch, the dot com market began to crash, and the company also found that it was harder to penetrate some markets, such as Houston, which the company had abandoned after trying to make an impact there for five months. They just couldn't get enough of a customer base to justify the expense of operating in Houston, and so they pulled out of the city. While Cosmo operated at a profit in four of the cities that had a presence in that wasn't enough to satisfy ANTSI investors who were watching the world crumble around them with every other dot com company falling left right, and those profits that they were generating were not enough to keep the company going on its own while trying to make other locations become profitable. So Cosmo withdrew from the I p O. They canceled it, and by April two thousand one, all their money had run out and the company had to shut down. As for the founders, they went on to work on other big projects. Joseph Park founded a social networking platform called Askville, in which people could post questions to a community and they would get answers from other community members, and in two thousand nine, Amazon acquired Askville. Park then went on to join HarperCollins Publishers, and he became a senior vice president with the company and the president of their Bible Gateway division. In two thousand eleven, he left to become the CEO of blue Fly, a fashion apparel e commerce company. Another company called pe Firm scooped up blue Fly, So then Park goes on to become the VP of Global e Commerce at Forever To he won another fashion company and he stayed there for a couple of years. These days, he's the global Chief e Commerce Officer of Mattel Incorporated. Busy Guy Young Kang, the other co founder, worked at City Banks as an investment banking associate for a while, and he was vice president at Lehman Brothers for two years, then a director at Barclays Capital for another four years, and he founded a company called KPK Capital LLC, and equity and real estate company. These days, he's the VP of Finance and Business Development at Homer Logistics, which is a company that looks at last mile logistics, which makes sense. Cosmo was all about trying to solve that last mile problem of getting a product into consumers hands, and their logistics worked great. Their supply chain strategy was working very well. It was the revenue side that was the problem, not the supply side in this case. So let's contrast that last story with one phil with allegations of incompetence. Cosmo may well have been able to survive if it hadn't been for the fact that all the other dot com companies were starting to crumble because it made investors scared and they all started to pull out. And that was the rug getting pulled out from under cosmos feet. And while they had become profitable in four cities, they had yet to become profitable and the other ones, and they've never got the chance to change that. Meanwhile, you've got other stories where you've got all this crazy shenanigans going on. Like I said, there are allegations of incompetence, hubris, and mishandling of funds. And I'm talking about gov Works go O v W O r k S. I was founded by a former investor named is Saza Tusman. He was originally from Columbia, came over graduated Harvard magnum cum laude. He was a very very uh intelligent guy, still is very intelligent guy. We're to Goldman Sachs as an investor for quite some time. But he came up with the idea with for gov works after having a really irritating experience he got a parking ticket and he forgot to pay it and as a result, the eighty dollar fine that was on the original parking ticket bulked up to a five dred and forty dollar fine due to late fees. Tusman was talking with a former high school classmate named Tom Herman about this experience, and they began to brainstorm about a new business one if you build a business that would, for a small processing fee, pay customer parking fines for them, sort of like a line waiting service, but for government fines, so you, as a customer would actually pay the full fine. It's not like the company would pay the fine just out of altruistic love of you. You would pay the money for the fine, and on top of that you would have a processing fee you would add, but the company would take care of everything. For this idea, the idea got bigger, So why just stop at parking fines. The new company could act on behalf of citizens in several government citizen transactions, such as applying for a fishing license, or paying property taxes, or getting a building permit, or any of another another number of government activities you might have to engage in as a citizen, pretty much any mundane activity that would require someone to go in person to a government office could be handled by this service instead, with some obvious exceptions. You're not going to be able to get a driver's license this way or vote, but you'd be able to do a lot of other things. And that's how gov works was born. Tusman was able to get some really big investors on board early on, and in v works became a company. Before long, they started running into big problems, however, and according to CNN Money, many of those problems were the company's own fault. One of those problems was that Tusman really liked and restive strategy for entering into markets, so on more than one occasion, gov Works published notices that it would soon be working with various cities before any official agreements had actually been signed, and that rubbed some city officials the wrong way. On top of that, the marketing campaigns for gov works portrayed government as a hassle and it's inefficient and run by jerks, and that didn't help. When the company was trying to form relationships with various government entities, Tusman's team were concentrating on potential customers. They were looking to get people who would want to use the service, but they learned a little too late. That they also needed to get the trust and cooperation of government officials. So if you spend all your efforts winning over one group at the expense of alienating another group, and it turns out you need to depend on both of them at the same time for your business to succeed, that's not great. And that's kind of what one of the first problems of works right into Now. In that CNN Money piece, it sounds as though gov Works was a difficult client as well. The article states that Fallon New York, which was an advertising agency, walked away from a lucrative forty million dollar contract after producing a single TV spot for gov Works. So, in other words, they were hired to be the the advertising firm for this company, they produced one TV spot and then they say, yeah, we're kind of done here, despite a forty million dollar contract. Now, that same piece does cite a Fallon employee who said that it wasn't a bad parting, it wasn't on bad terms. Still, forty million dollars that's a big chunk of cash to back out of, so I'm curious what the full story is there. Meanwhile, over at gov Works, big chunks of cash were really running out pretty quickly. Several sources say that the company burned through close to sixty million dollars in venture capital without being able to become the profitable business. At one point, the company had two hundred fifty employees, and like many other dot com startups in this era, it ended up having to close down and start selling off assets. The rise and fall of the company was the focus of an independent film called Startup dot Com. Tusman went on to become the president of a company called Jump TV, which was an Internet TV venture. Later, he founded and became the managing partner of a company called Kit Capital k I T, and he went on to become the CEO of Kit Digital Incorporated until two thousand twelve. The company created a video asset management system that was cloud based, and it was in business in two thousand seven, although back then it was called the Rue Group r OO, and it stayed in business until two when it declared bankruptcy. So a year after Tusman left the company and these days Tusman's awaiting trial. Wait what Well, First of all, this has nothing to do with gov Works but rather Kit Digital. Basically, Tusman has been charged with some cases of conspiracy and fraud. In fact, he and some other executives at Kit Digital have been charged with inflating the value of the company by purchasing company shares with the company's own money, so essentially using the profits of a company to purchase shares in the company and drive up the share price. That money was allegedly flowing through an investment platform controlled by Tusman. In two thousand fifteen, a hedge fund manager named Stephen Maiden connected to these charges was sentenced to seven years in prison for securities fraud. Tuzman was arrested in twenty sixteen in Colombia. He was working on a luxury hotel project at the time, and apparently the conditions in that Colombian prison were notoriously awful um and it took some time, but he was then extradited to the United States in July. As of this recording, he has not yet gone to trial, but it is scheduled to start in early October. Seen he has entered a plea of not guilty. Two of his colleagues have pled guilty to the charges, so it'll be interesting to see where this goes. Now. I've got more to say about some of these dot com companies. But before I do, let's take another quick break and thank our sponsor. Hey, since we just talked about crime, how about we talk about an online crime news site that was the pitch of a p B news as an all points bulletin a p B news dot com. It was to serve up articles covering crime beats around the world. Two investment bankers named Matthew Cohen and Marshall Davidson partnered with a former investigative reporter and a captain in the army named Mark Salter on this venture. They raised more than a hundred million dollars in investments and they hired a lot of people, including a Pulitzer Prize winning reporter named Sidney Schanberg. The company took about two years to burn through all of that cash. Two years to burn through a hundred million dollars, it's incredible. So this company launched in and by mid two thousand it was done. It went dark. It was seven million dollars in debt and only had fifty thousand dollars in the bank. The company went bankrupt and eventually another company called safety Tips dot Com purchased a PB news dot com for the princely sum of five hundred seventy five thousand dollars. Now this was after safety tips dot Com had already looked to acquire the assets outright. They bought it at auction, but originally they were just looking to purchase a p B News straight without having it go to auction. It was gonna be a nine fifty thousand dollar price tag, and also they were going to back alone to allow the site to continue operating through the bankruptcy proceedings and perhaps emerge on the other side. But then before they could actually sign this n dollar deal, they got a look at the books of a p B news dot Com and they said, whoa, this is a total dumpster fire piece. I might be paraphrasing a little here, anyway, if you go to the u r L today, you'll see not much. As it turns out, that really isn't anything anymore. Mark Salter, the former reporter, went on to become the CEO of the Chesapeake Innovation Center, business accelerator firm focused on homeland security. He then became the managing director of Legend Merchant Group, another defense firm. These days, he's the president of or Or Sinus or or a Keenness Solutions O r C I n U S and I honestly don't know how I'm supposed to pronounce that, but this is a company that consults with many clients, including you guessed it, homeland security. He's also the managing director of Pickwick Capital Partners LLC, which is an invest investment firm. So a lot of these people, after they got out of building companies that didn't last, ended up becoming investors themselves. Marshall Davidson, one of the two investment bankers who co founded APB news dot com, is the operations manager of Avison Young, a real estate company. I have no idea where Matthew Cohen ended up, as my research couldn't definitively point me to the right person. I found a lot of Matthew Cohen's, but no one who was specifically the Matthew Cohen of a p B news dot com. So if you know what happened to Matthew Cohen, let me know. I'm kind of curious what turned how it turned out for him. And we've talked a lot about companies that went under as a result of the market instability of the dot com bubble crash, But what about the few that made it through. What makes them so special? Well, probably one of the biggest is Amazon, and it's one of the most high profile dot com companies of that era, and it was able to weather the storms of the dot com bubble, and Amazon itself was on shaky ground for a long time. Like other companies, it became clear that scaling a business and managing a large infrastructure is an expensive undertaking, and that finding the right balance of attracting and retaining customers while making sure you have sufficient inventory is not an easy task. It's a huge logistics problem now. Jeff Bezos founded Amazon in ur and the company debuted its online bookstore model. In these days, you can buy pretty much anything on Amazon, but at the heart of the company was its book business. Amazon held its initial public offering in May nine seven, just two years after it had gone live, and it had an opening price of eighteen dollars per share. That price rose up to more than one hundred dollars per share before the will burst. Once that happened, the price dropped down to less than ten dollars per share. The story here is that even companies that were big and had sold uh lots of stuff. They had a really solid revenue plan in place, They knew what their business was. They could tell you what their business was. Some of these companies, if you were to ask them, what is it that you actually do, people struggled to come up with an answer. Not the case with Amazon. It was pretty simple. Uh. But even a company like that wasn't was not immune to the effects of the dot com bubble. Investors had really lost confidence in the tech sector in general and anything connected to the web in particular. But Amazon was able to tough it out. They had not yet turned a profit when the dot com bubble burst, but that changed in the fourth quarter of two thousand one. That was the first time the company managed to turn a profit. While other companies were rapidly disappearing from our collective memory, Amazon kept plugging away to convert brand recognition strategies into revenue generating ones. And for one thing, Amazon had a really solid mission statement as to be the Earth's most customer centric company to build a place where people can come to find and discover anything they might want to buy online. That's a direct quote of Amazon's mission statement back in the day. The scaling process for Amazon meant that it didn't burn out of investment money before turning a profit, and so it succeeded where so many other companies failed. And not to get too warm and fuzzy here. Amazon was also able to secure its place because it became one of the leading authorities on customer behavior. They could track customer purchases and customer browsing, and the company could fine tune how it presented products to people, and it could provide helpful suggestions to shoppers and up sell them on additional items they didn't even know they needed. Like if you buy something that takes batteries and suddenly you get a suggestion, Hey, maybe you should buy some batteries. That's clever and it works. It's also kind of creepy in a way, but it really illustrates how we as human beings are predictable creatures. Maybe we have a little less free will than we thought. Another dot com that managed to make it through the chaos of the bubble was eBay. eBay launched in nine out of Pierre Almadyar's living room, and the original site was called auction Web. The whole concept was pretty simple. eBay was a platform for online auctions. Mark Frasier was the first person to buy anything on eBay, So here's your trivia. Mark Frasier, out of Canada bought a broken laser pointer on eBay as the first purchase ever across the site. By nine, goods were valued at seven point two million dollars that had been sold on auction Web, So that's a pretty incredible and Pierre ended up quitting his day job and brought on Jeff Scroll to become the president of the company. Auction Web would eventually become eBay. In September, the company had grown to the point that the two co founders felt they needed to bring in an expert in business and branding, and they hired Meg Whitman as president and CEO. Whitman led the company and attracted executives from multiple high profile organizations, including Disney. In September, eBay held its I p O, with initial shares trading at eighteen dollars. The price rose to fifty three dollars and fifty cents at one point on that first day of trading. Throughout nine and into two thousand, the company expanded into new offices across the world. So why did eBay survive the turmoil? Well, according to Whitman, it wasn't that they were able to see what was coming and then prepare for it. Instead, it was that the company wanted to keep a close eye on what customers wanted, and they worked hard to make sure that they were able to provide it quickly to those customers. Later, in two thousand eight, eBay would change dramatically. The company leadership was trying to head off this problem of people moving away from the site and a decline and online auctions, so the company reached out to foreign partnerships with retailers and created an online marketplace for those retailers products. Now that move upset some longtime eBay users, but it helped keep the site solvent. So I think the lesson there is sometimes you've got to really explore options you hadn't thought of in order to stay in business, and sometimes those decisions might be a little unpopular with your customer base. So you have to balance that out how much can you do to ensure that you stay in business versus how much are you going to alienate your customer base? Because if you do it too much, then you've shut yourself in the foot. So these are some of the interesting stories. I mean, Google obviously also survived the dot com bubble. Google in those days was already on its way to becoming a powerful search engine, but it wouldn't be until the early two thousand's that it truly began to become a juggernaut. And when it started in the mid two thousand's to become a publicly traded company, it became a force to be reckoned with. It was almost just small enough and nimble enough to survive the dot com bubble bursting to get away without being tanked by it the way so many other companies were. And there, of course tons of other companies that rose and fell during this time. I just touched on some of the ones that I thought had some of the most interesting stories, ones that often are associated with the dot com bubble burst. There are others that rose, fell and then re emerged as something else, and I didn't include those because in some ways I feel like it's just misleading, because the company that came out of it on the other side, is so different from the company that went into it that it's almost like two different entities in the first place. But this was fun, uh, you know, it's looking at companies that fail can never be fun. But it was interesting to go back and look at the past and see how these different companies uh grew, how they fell apart, and what happened to the people afterward. Because frequently you just hear the names of the companies, you don't really understand that most in most cases, the people who founded those companies are still very influential people, most of whom are still in the tech sector. There their leaders of various industries, and they continue to provide leadership. In many cases, you could argue that they perhaps learned some very valuable lessons from the dot com experience, painful lessons, but valuable ones, and that as a result they might be better leaders today than they would have been had they not gone through that experience. It's kind of hard to say. Obviously, we only have the one timeline to work with. We can't duck our heads in a parallel universe and see if it worked out some other way elsewhere. But I find it really fascinating to look at these types of companies. If there are any in that list that you specifically would like to hear a full episode about, maybe a deep dive on the history of eBay, for example, let me know it's send me a message. The email address is tech stuff at how stuff works dot com, or draw me a line on Twitter or Facebook the handle at both of those tech stuff hs W. Remember I stream live when I am podcasting. You can go to Twitch dot tv slash tech stuff and you can look at the schedule there. Join me when I'm streaming. I'm not doing it today, but that's because, as I record this, Twitch is actually experiencing technical difficulties. So it's not my fault this time. But most Wednesdays and Fridays you'll find me streaming live on Twitch dot tv. I'd love for you to join me. You can pop in the chat room. I'm happy to chat with you guys and learn about what you find interesting and what you want to hear about. And uh, that's all for today. I'll talk to you again really soon for more on this and thousands of other topics. Is it how stuff works dot com? Who wonder

In text with technology with tech Stuff from stuff works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm a senior writer with how stuff works dot com and as you guys know, I like to talk tech. This is part two of a two part episode about the companies that rose and fell during the dot com bubble crisis of one and where those folks are now, the people who launched those websites, what are they doing? And uh, We're going to continue on that train. Last episode we looked at web van, pets dot com, the search engine Excite, Broadcast dot com, and Boo dot com. But there are a lot of other companies that made a big name for themselves, at least briefly anyway, before burning out during the crash following the bubble's deflation. And there are also a couple of notable companies that they're the storm that I think we can look at and explore how it was that they survived when so many other companies didn't. So let's get started, and I think a good place to begin is the Globe dot com. This was one of the earliest social networking platforms on the web, predated the giants that would come later, like my Space, which of course isn't really a thing anymore, and Facebook, which is very much a thing still to this day. And the Globe dot Com was the brainchild of two Cornell students, Stefan Pattern and Todd Krisselman. The two were interested in computer programming and the commercial possibilities of the Worldwide Web, and they had also witnessed how compelling online chat rooms were, and they felt that there was probably a way they could monetize that. The two students raised fifteen thousand dollars from private investors and they used that money to buy computer servers and computer equipment to build out their idea. They worked on the design for several months and they launched the Globe dot Com in April nine. They formed a new company called web Genesis, and they hired on the staff of about a dozen people or so. And the site acted as part news aggregator, part message board, and part chat room. So if you went to the site, you would see a bunch of different categories of types of interests like sports and that kind of stuff, and you could go and click into that and read up on things. The chat room function was easily the most popular. When the site launched, they also launched software that could serve up polls and quizzes and surveys, so really the two students were way ahead of the curve on this one. As today those kind of features are wildly popular on social media, and they thought ahead to include it on their early social networking platform. The site was a success that had very passionate users, not an enormous user base, but they were very um frequent users, and in ninety the company made a decision to hold an i p O or initial public offering, is when a private company goes public and becomes a publicly traded company, and right around there is when things went a little bonkers. The global investment bank bear Sterns set the opening price at about nine dollars a share when the market opened. The demand for shares was such that the actual opening price ended up being eighties seven dollars per share, which is crazy, and at one point it even hit nine dollars per share. Now, by the end of the day, the price settled a little bit, but was still way over the opening price. It settled it around sixty three dollars fifty cents a share on paper, That meant that everyone who worked at the Globe dot Com became filthy rich, and some people started to behave that way. But as you guys know from this topic and the fact that no one has ever heard of this website these days, it was not meant to be. The site was not making money, and while millions of people were using the site, that just meant the costs of running the site remained high while there was no real way to or generate what revenue. So it was a sinking ship. People didn't shy away from blowing the whistle on the Globe dot Com. The company went public in the fall of A year later, The Street published a piece about the Globe dot Com that pulled no punches. Here is a direct quote from the Street. We're speaking, of course, of the Globe dot Com t g l O and essentially worthless business enterprise that has lost six of its value in the last five months, yet at its current price of barely thirteen dollars, still remains grotesquely overvalued. Ouch harsh words, but as it turns out, they were not entirely untrue. The Globe dot Com stock price continued its downward trend in nine and beyond and by January two thousand, pattern Not and Krizzleman stepped down from the company. They resigned. Pattern Out walked away with about a one and a half million dollars after selling off stock, much most of which he reportedly later lost in other investments. Krizzleman invested in some other companies and helped secure some of his wealth and more on those two in just a second. As for the site, it sputtered along for a while under new management, and in two thousand one the company had to lay off about half of its employees and the shares were trading at a dismal twenty five cents per share. It transitioned into a voice over Internet protocol company for a while, or voipe company, and it had some interests in the gaming industry as well, but despite those businesses being more stable than the initial website, the company ultimately had to shut down in two thousand seven for good. It had never fully recovered, and honestly, the social networking part of the Globe dot com had died around the time that the founders stepped down. Today, Todd Krizzleman is the CEO and co founder of a company called Media Radar, which is an ad sales application company and Stefan pattern Not is the chairman and CEO as well as the co founder of a company called Slated Incorporated, which is on an online film packaging, networking and investment marketplace. So they're doing just fine. Now let's stick to the topic of money. While we're chatting about these dot com companies, there were a couple of companies that rose up to try and become leaders in a brand new space, digital currency. So you might have thought that bitcoin was relatively new. This idea of digital currencies was new. Now, it's been around since the nineties. Shortly after the Web became a real entity. There were people who were thinking of ways of creating virtual online currencies. Now these were not cryptocurrencies. These didn't use the blockchain approach the way bitcoin and some other cryptocurrencies do, but they were virtual digital currencies. It's so back in the late nineties, a couple of different companies were trying to get this going. But they're they're really in some ways, we're behaving more like gift cards than outright currencies. So the two companies I want to talk about specifically are Flus and Beans. Flus is spelled f L o O Z and beans B e e b e e n Z. You started getting to the point where you're getting the e sound and you're thinking, have I said too many? Ease one, B two ease and in in a Z flus and beans. You just can't make this stuff up, guys. Oh, I guess technically you can, but you don't have to because someone already did it years ago. Now. Flus took its name from an Arabic word flus, meaning money, and Robert Levitan, who had a successful venture with I Village, launched Flus in nine. The idea was that customers would be able to buy flues credits that could be used at a couple of dozen different online retailers, and it was pretty easy to send those credits online to other people, like you could email essentially a gift certificate to someone else. So the idea was that you could buy flus for someone, give them the virtual currency which they could go and then spend on something they actually wanted rather than just receiving it another ugly Christmas sweater or whatever. Based on all the articles I looked over for this podcast, Flus may have best been known not for its method of business, but for its commercials, which kind of reminds me of pets dot com. Honestly, the company booked would be Goldberg as their spokesperson, and that move alone costs several million dollars. Meanwhile, Levitan was finding it challenging to get customers, both on the business side with retailers and on the consumers side with people who would actually use the product. Unlike many of the other companies I have covered in these two episod, Flus never held an I p O. It remained a privately held company throughout its existence. In two thousand one, it started to really struggle as the bubble was deflating and there was a report that the company may have been the victim of fraud. In addition to that, according to the story, there was a group of Russian thieves and hackers who were using stolen credit card numbers to purchase three hundred thousand dollars worth of FLUS credits. Now, if true, this could have been a real issue for FLUS because it would be a company left holding the bag when it's revealed that the purchases came from illegal sources. It would have caused real cash flow crunch at a critical time FLUS would have to cover the the expenses given to retailers, and meanwhile, it doesn't have any real money to hold onto because of the fact that the purchases came from criminal sources. Whether the fraud actually happened or not is a moot point. FLUS closed up shop in the summer of two thousand one, just two years after it had launched. People with FLUS credits found themselves out of luck just holding useless digital currency. And this is a valuable lesson in currency. And I'm talking about all currency, not just digital. Remember, your money is only worth something for as long as we collectively believe it to be. So if tomorrow we all woke up and said that dollars are worthless, dollars would be worthless because no one would accept them in return for anything. So the only reason this money has any value is because we have agreed upon it. Well, in the case of FLUS, people no longer had confidence in it, and therefore they no longer believed in the power of lows to be money, and ultimately it failed. Fortunately, most governments are on slightly more firm ground than FLUS was in two thousand one. Most sometimes you have a country like Greece that gets into some difficult economic times and there are a lot of tough questions at that point. As for Levitan, he went on to work with several other ventures. In two thousand four, he co founded Pando Networks. This was a peer to peer networking company that used that peer to peer approach to distribute software like games and videos. If you don't remember what peer to peer networking is, that's when you get a bunch of computers that are owned by various people out there. You run a specific type of peer to peer software and that allows those computers to essentially be their own little database network, and you can send files across the network. You can you can download stuff from multiple sources, which speeds up your download process, and it decentralizes it so if one computer goes down, there's still other computers on the network you can still get the stuff you need. It's a perfectly legitimate way to distribute information. It's just that peer to peer networks, over the course of the history of them, have often been used to pirate software and other material reels, and so it's gotten a bad rap. But there's nothing innately illegal about peer to peer. It's just the way some people have used it. Microsoft would purchase Pando Networks in two thousand thirteen, and then Levitan went on to co found the company Live in two thousand and fourteen. This is a company that is making a real time local events search app. I think I tried tracking it down, but I didn't actually have much success. I did find a web page where you can sign up for more information, but it just showed me a video that looked like a cross between Mad Max, Beyond Thunderdome and Fight Club, and I'm not sure I want to find that event in the first place. There you go. Uh, The actual event showed people riding bicycles and jousting with mops while a giant trash puppet was moving around in the background. I honestly don't know what it was supposed to tell me, apart from the fact that I guess if I had the app on my phone, I would know that that crazy stuff is going down, and maybe I could go the other way. As for Beans, that company was the brainchild of Charles Cohen, who's not the billionaire Charles Cohen, but a britt entrepreneur. At he was an Oxford graduate, he had an idea and he was a former speechwriter for the Liberal Democrats in the UK. He launched Beans in n and Cohen's approach was similar to Levitans in some ways. But beans was a virtual currency you could not only purchase with real money. You could also earn beans through various activities, so you could be paid in beans. I guess if you were selling account perhaps you could get paid in beans. For example, you might earn beans by clicking a specific link, or reading an article or watching a video. So it became an incentive to get engagement from users. You probably have encountered something like this online at some point, where you are allowed to do something like inner sweepstakes, but only after you watch a video. It's similar to that in many ways. So it wasn't just a gift certificate style program, but an actual currency you'd receive as a reward in return for specific actions. Now, each unit of beans, which was beans, whether it's plural or singular, was worth about half a penny. The idea seemed fairly solid. Businesses have been attracting customers and keeping them loyal with similar programs for years. I mean, there are tons of different companies out there that have loyalty programs. You know, you buy ten coffees and you get the eleventh one free, that kind of thing. So it's kind of along those lines, except it was meant to be something that would work across multiple companies. So maybe you buy a couple of T shirts at one retailer and then you have enough beans to buy a cup of coffee at a different retailer, or vice versa. You drink a lot of coffee and then you can buy some shirts. That was the idea, and it seemed like a pretty good one, and to this day we see multiple implementations of this idea, though they tend to be specific to a particular vendor or merchant. So in other words, you might have a Starbucks app that allows you to get loyalty points whenever you buy coffee from Starbucks, but you can't necessarily convert that into anything else, Like you can't use those credits to go and buy books at a bookstore or music or anything like that. Cohen ended up raising a great deal of money from investors in those early days. Articles give amounts in the eighty to one hundred million dollar range. That's a lot of cheddar and investors included Larry Ellison of Oracle fame. The tech of Beans depended pretty heavily on Oracle as well. Cohen wanted a currency that would work across borders, which meant that it had to take into account exchange rates, which are incredibly complex and change frequently. So the software that would allow for this kind of conversion lived on Oracle database servers and Sun Microsystems computers. It was pretty serious tech to run this in the background to make sure that you had the right prices uh converted into beans. Despite having the same problems that Flus did, which namely was getting online retailers to participate in the strategy in the first place, Beans chugged along for a short while. In July two thousand, Beans was big enough news to get extensive coverage and Info World magazine the articles pretty interesting. Cohen proclaimed that beans would become the universal currency of the future. There was even a partnership struck up with the credit card MasterCard. They had a thing called rewards the card with a Z after reward and it's all one word, so rewards the card from MasterCard, which would let you shift those beans to real life cash in businesses that accept master Card as a form of payment so you could earn Beans then use your credit card with Beans credits on it to make purchases. Everything seemed to be going really well for the company, and they scaled up to global operations with offices and numerous countries and cities cities like New York or Stockholm, Sydney, Hong Kong, and at its height they had about two fifty employees. And then things took a pretty sharp turn. Despite its presence and its heavy marketing campaigns, Beans failed to generate revenue. It would take a few more years before people began to use the Internet to really make purchases on a regular basis. There was this trust issue people had to get past. They were all worried about making, you know, purchases online and then having their identity stolen or money stolen from them, or maybe they would never get the thing they wanted to buy. No one was really eager to jump on the internet as a way of buying stuff yet, and most people still preferred to do their shopping in brick and mortar stores. For the most part, Beans just wasn't bulling in the beans as it were. According to c Net, Beans also ran into trouble with the law. Not all countries were cool with a company inventing its own global currency, and it got so serious that at one point the u K's Financial Service Authority Task Force rated Bean's offices in the UK. By two thousand one, the writing was on the wall. The company began to scale down, shutting down many of the thirteen offices across the world and laying off employees left and right. By May two thousand, employees had shrunk down to thirty and Beans was clearly trying to squeeze out as much money from its assets to pay back investors as it possibly could. By August two thousand one, it was all over. The company was finished. Charles Cohen went on to become the CEO of a company called Probability Plc, which designed and published gambling games for mobile devices. He left that company in May two thousand fourteen and became a vice president of Mobile at I G T for their North America Sporting Sports Betting division, and he works out of the Bay Area. I think Beings and Flus weren't necessarily bad ideas for the record, but I do think they were ahead of their time, and perhaps in another five or ten years they might have flourished, so it may have just been a case of a great idea at the wrong time. It's kind of sad because I actually like the idea of getting rewards points that are applicable across multiple vendors. I don't know how you make that arrangement so that not, you know, no single vendor gets harmed by this. I mean, if everyone is making their purchases at certain vendors and they're all cashing in their rewards points at another vendor, the rewards points vendors having a rough time of it, unless there's some other money exchange on the back end between the agency and the the the vendor. I don't know, but I would love it because it would really simplify all those loyalty cards. Instead of having to have multiple apps or multiple cards, you would have just one. Google. Google Wallet has tried something similar in the past, so maybe we'll see that rise up again in the future. I got a lot more to talk about with dot com companies that went belly up, but first let's take a quick break to thank our sponsor. Rolling right along, let's take a look at Cosmo dot com investment bankers Joseph Park and Yong Kang launched the company in n It was a fast delivery service. The company's pitch was that it could deliver lots of stuff like small stuff like coffee or DVDs or other small items in under an hour and there were no additional delivery charges. Cosmo landed a deal with Starbucks early on, and from a consumer side, it all looked really promising a man that you no longer had to wait. Whenever you ordered something online, you could get near instant gratification because within an hour it would show up at your door. Cosmo delivery agents rode around New York the first Cosmo market, on bicycles, and the service was gaining ground with consumers, but the company was losing money on every delivery. Now. Their hope was that they would be able to stay afloat in the early phases as they gathered a customer base before turning on some revenue generation generating streams. And it was a risky bet and it very nearly paid off. It. It wasn't like it was a bad idea. It almost worked. Cosmo was growing and by the end of nineteen it was in six markets in six locations, and by early two thousand it grew to eleven cities and twenty two locations, and after eighteen months in business they had three hundred thousand customers. By mid two thousand, that was up to four hundred thousand customers, and they employed more than twenty six hundred people, and all those employees were called Cosmo knots cute. Around that same time, publications such as Forbes were warning that Cosmo might be expanded too quickly and they didn't have enough revenue generation to keep this sustainable. It was going to end up collapsing in on itself if they weren't careful. An article in June two thousand and Forbes said that Cosmo had spent more than twenty six million dollars in and they only generated three and a half million dollars in revenue, so obviously that can't go on forever. The privately held company prepared to launch an initial public offering, but between the lead up and the launch, the dot com market began to crash, and the company also found that it was harder to penetrate some markets, such as Houston, which the company had abandoned after trying to make an impact there for five months. They just couldn't get enough of a customer base to justify the expense of operating in Houston, and so they pulled out of the city. While Cosmo operated at a profit in four of the cities that had a presence in that wasn't enough to satisfy ANTSI investors who were watching the world crumble around them with every other dot com company falling left right, and those profits that they were generating were not enough to keep the company going on its own while trying to make other locations become profitable. So Cosmo withdrew from the I p O. They canceled it, and by April two thousand one, all their money had run out and the company had to shut down. As for the founders, they went on to work on other big projects. Joseph Park founded a social networking platform called Askville, in which people could post questions to a community and they would get answers from other community members, and in two thousand nine, Amazon acquired Askville. Park then went on to join HarperCollins Publishers, and he became a senior vice president with the company and the president of their Bible Gateway division. In two thousand eleven, he left to become the CEO of blue Fly, a fashion apparel e commerce company. Another company called pe Firm scooped up blue Fly, So then Park goes on to become the VP of Global e Commerce at Forever To he won another fashion company and he stayed there for a couple of years. These days, he's the global Chief e Commerce Officer of Mattel Incorporated. Busy Guy Young Kang, the other co founder, worked at City Banks as an investment banking associate for a while, and he was vice president at Lehman Brothers for two years, then a director at Barclays Capital for another four years, and he founded a company called KPK Capital LLC, and equity and real estate company. These days, he's the VP of Finance and Business Development at Homer Logistics, which is a company that looks at last mile logistics, which makes sense. Cosmo was all about trying to solve that last mile problem of getting a product into consumers hands, and their logistics worked great. Their supply chain strategy was working very well. It was the revenue side that was the problem, not the supply side in this case. So let's contrast that last story with one phil with allegations of incompetence. Cosmo may well have been able to survive if it hadn't been for the fact that all the other dot com companies were starting to crumble because it made investors scared and they all started to pull out. And that was the rug getting pulled out from under cosmos feet. And while they had become profitable in four cities, they had yet to become profitable and the other ones, and they've never got the chance to change that. Meanwhile, you've got other stories where you've got all this crazy shenanigans going on. Like I said, there are allegations of incompetence, hubris, and mishandling of funds. And I'm talking about gov Works go O v W O r k S. I was founded by a former investor named is Saza Tusman. He was originally from Columbia, came over graduated Harvard magnum cum laude. He was a very very uh intelligent guy, still is very intelligent guy. We're to Goldman Sachs as an investor for quite some time. But he came up with the idea with for gov works after having a really irritating experience he got a parking ticket and he forgot to pay it and as a result, the eighty dollar fine that was on the original parking ticket bulked up to a five dred and forty dollar fine due to late fees. Tusman was talking with a former high school classmate named Tom Herman about this experience, and they began to brainstorm about a new business one if you build a business that would, for a small processing fee, pay customer parking fines for them, sort of like a line waiting service, but for government fines, so you, as a customer would actually pay the full fine. It's not like the company would pay the fine just out of altruistic love of you. You would pay the money for the fine, and on top of that you would have a processing fee you would add, but the company would take care of everything. For this idea, the idea got bigger, So why just stop at parking fines. The new company could act on behalf of citizens in several government citizen transactions, such as applying for a fishing license, or paying property taxes, or getting a building permit, or any of another another number of government activities you might have to engage in as a citizen, pretty much any mundane activity that would require someone to go in person to a government office could be handled by this service instead, with some obvious exceptions. You're not going to be able to get a driver's license this way or vote, but you'd be able to do a lot of other things. And that's how gov works was born. Tusman was able to get some really big investors on board early on, and in v works became a company. Before long, they started running into big problems, however, and according to CNN Money, many of those problems were the company's own fault. One of those problems was that Tusman really liked and restive strategy for entering into markets, so on more than one occasion, gov Works published notices that it would soon be working with various cities before any official agreements had actually been signed, and that rubbed some city officials the wrong way. On top of that, the marketing campaigns for gov works portrayed government as a hassle and it's inefficient and run by jerks, and that didn't help. When the company was trying to form relationships with various government entities, Tusman's team were concentrating on potential customers. They were looking to get people who would want to use the service, but they learned a little too late. That they also needed to get the trust and cooperation of government officials. So if you spend all your efforts winning over one group at the expense of alienating another group, and it turns out you need to depend on both of them at the same time for your business to succeed, that's not great. And that's kind of what one of the first problems of works right into Now. In that CNN Money piece, it sounds as though gov Works was a difficult client as well. The article states that Fallon New York, which was an advertising agency, walked away from a lucrative forty million dollar contract after producing a single TV spot for gov Works. So, in other words, they were hired to be the the advertising firm for this company, they produced one TV spot and then they say, yeah, we're kind of done here, despite a forty million dollar contract. Now, that same piece does cite a Fallon employee who said that it wasn't a bad parting, it wasn't on bad terms. Still, forty million dollars that's a big chunk of cash to back out of, so I'm curious what the full story is there. Meanwhile, over at gov Works, big chunks of cash were really running out pretty quickly. Several sources say that the company burned through close to sixty million dollars in venture capital without being able to become the profitable business. At one point, the company had two hundred fifty employees, and like many other dot com startups in this era, it ended up having to close down and start selling off assets. The rise and fall of the company was the focus of an independent film called Startup dot Com. Tusman went on to become the president of a company called Jump TV, which was an Internet TV venture. Later, he founded and became the managing partner of a company called Kit Capital k I T, and he went on to become the CEO of Kit Digital Incorporated until two thousand twelve. The company created a video asset management system that was cloud based, and it was in business in two thousand seven, although back then it was called the Rue Group r OO, and it stayed in business until two when it declared bankruptcy. So a year after Tusman left the company and these days Tusman's awaiting trial. Wait what Well, First of all, this has nothing to do with gov Works but rather Kit Digital. Basically, Tusman has been charged with some cases of conspiracy and fraud. In fact, he and some other executives at Kit Digital have been charged with inflating the value of the company by purchasing company shares with the company's own money, so essentially using the profits of a company to purchase shares in the company and drive up the share price. That money was allegedly flowing through an investment platform controlled by Tusman. In two thousand fifteen, a hedge fund manager named Stephen Maiden connected to these charges was sentenced to seven years in prison for securities fraud. Tuzman was arrested in twenty sixteen in Colombia. He was working on a luxury hotel project at the time, and apparently the conditions in that Colombian prison were notoriously awful um and it took some time, but he was then extradited to the United States in July. As of this recording, he has not yet gone to trial, but it is scheduled to start in early October. Seen he has entered a plea of not guilty. Two of his colleagues have pled guilty to the charges, so it'll be interesting to see where this goes. Now. I've got more to say about some of these dot com companies. But before I do, let's take another quick break and thank our sponsor. Hey, since we just talked about crime, how about we talk about an online crime news site that was the pitch of a p B news as an all points bulletin a p B news dot com. It was to serve up articles covering crime beats around the world. Two investment bankers named Matthew Cohen and Marshall Davidson partnered with a former investigative reporter and a captain in the army named Mark Salter on this venture. They raised more than a hundred million dollars in investments and they hired a lot of people, including a Pulitzer Prize winning reporter named Sidney Schanberg. The company took about two years to burn through all of that cash. Two years to burn through a hundred million dollars, it's incredible. So this company launched in and by mid two thousand it was done. It went dark. It was seven million dollars in debt and only had fifty thousand dollars in the bank. The company went bankrupt and eventually another company called safety Tips dot Com purchased a PB news dot com for the princely sum of five hundred seventy five thousand dollars. Now this was after safety tips dot Com had already looked to acquire the assets outright. They bought it at auction, but originally they were just looking to purchase a p B News straight without having it go to auction. It was gonna be a nine fifty thousand dollar price tag, and also they were going to back alone to allow the site to continue operating through the bankruptcy proceedings and perhaps emerge on the other side. But then before they could actually sign this n dollar deal, they got a look at the books of a p B news dot Com and they said, whoa, this is a total dumpster fire piece. I might be paraphrasing a little here, anyway, if you go to the u r L today, you'll see not much. As it turns out, that really isn't anything anymore. Mark Salter, the former reporter, went on to become the CEO of the Chesapeake Innovation Center, business accelerator firm focused on homeland security. He then became the managing director of Legend Merchant Group, another defense firm. These days, he's the president of or Or Sinus or or a Keenness Solutions O r C I n U S and I honestly don't know how I'm supposed to pronounce that, but this is a company that consults with many clients, including you guessed it, homeland security. He's also the managing director of Pickwick Capital Partners LLC, which is an invest investment firm. So a lot of these people, after they got out of building companies that didn't last, ended up becoming investors themselves. Marshall Davidson, one of the two investment bankers who co founded APB news dot com, is the operations manager of Avison Young, a real estate company. I have no idea where Matthew Cohen ended up, as my research couldn't definitively point me to the right person. I found a lot of Matthew Cohen's, but no one who was specifically the Matthew Cohen of a p B news dot com. So if you know what happened to Matthew Cohen, let me know. I'm kind of curious what turned how it turned out for him. And we've talked a lot about companies that went under as a result of the market instability of the dot com bubble crash, But what about the few that made it through. What makes them so special? Well, probably one of the biggest is Amazon, and it's one of the most high profile dot com companies of that era, and it was able to weather the storms of the dot com bubble, and Amazon itself was on shaky ground for a long time. Like other companies, it became clear that scaling a business and managing a large infrastructure is an expensive undertaking, and that finding the right balance of attracting and retaining customers while making sure you have sufficient inventory is not an easy task. It's a huge logistics problem now. Jeff Bezos founded Amazon in ur and the company debuted its online bookstore model. In these days, you can buy pretty much anything on Amazon, but at the heart of the company was its book business. Amazon held its initial public offering in May nine seven, just two years after it had gone live, and it had an opening price of eighteen dollars per share. That price rose up to more than one hundred dollars per share before the will burst. Once that happened, the price dropped down to less than ten dollars per share. The story here is that even companies that were big and had sold uh lots of stuff. They had a really solid revenue plan in place, They knew what their business was. They could tell you what their business was. Some of these companies, if you were to ask them, what is it that you actually do, people struggled to come up with an answer. Not the case with Amazon. It was pretty simple. Uh. But even a company like that wasn't was not immune to the effects of the dot com bubble. Investors had really lost confidence in the tech sector in general and anything connected to the web in particular. But Amazon was able to tough it out. They had not yet turned a profit when the dot com bubble burst, but that changed in the fourth quarter of two thousand one. That was the first time the company managed to turn a profit. While other companies were rapidly disappearing from our collective memory, Amazon kept plugging away to convert brand recognition strategies into revenue generating ones. And for one thing, Amazon had a really solid mission statement as to be the Earth's most customer centric company to build a place where people can come to find and discover anything they might want to buy online. That's a direct quote of Amazon's mission statement back in the day. The scaling process for Amazon meant that it didn't burn out of investment money before turning a profit, and so it succeeded where so many other companies failed. And not to get too warm and fuzzy here. Amazon was also able to secure its place because it became one of the leading authorities on customer behavior. They could track customer purchases and customer browsing, and the company could fine tune how it presented products to people, and it could provide helpful suggestions to shoppers and up sell them on additional items they didn't even know they needed. Like if you buy something that takes batteries and suddenly you get a suggestion, Hey, maybe you should buy some batteries. That's clever and it works. It's also kind of creepy in a way, but it really illustrates how we as human beings are predictable creatures. Maybe we have a little less free will than we thought. Another dot com that managed to make it through the chaos of the bubble was eBay. eBay launched in nine out of Pierre Almadyar's living room, and the original site was called auction Web. The whole concept was pretty simple. eBay was a platform for online auctions. Mark Frasier was the first person to buy anything on eBay, So here's your trivia. Mark Frasier, out of Canada bought a broken laser pointer on eBay as the first purchase ever across the site. By nine, goods were valued at seven point two million dollars that had been sold on auction Web, So that's a pretty incredible and Pierre ended up quitting his day job and brought on Jeff Scroll to become the president of the company. Auction Web would eventually become eBay. In September, the company had grown to the point that the two co founders felt they needed to bring in an expert in business and branding, and they hired Meg Whitman as president and CEO. Whitman led the company and attracted executives from multiple high profile organizations, including Disney. In September, eBay held its I p O, with initial shares trading at eighteen dollars. The price rose to fifty three dollars and fifty cents at one point on that first day of trading. Throughout nine and into two thousand, the company expanded into new offices across the world. So why did eBay survive the turmoil? Well, according to Whitman, it wasn't that they were able to see what was coming and then prepare for it. Instead, it was that the company wanted to keep a close eye on what customers wanted, and they worked hard to make sure that they were able to provide it quickly to those customers. Later, in two thousand eight, eBay would change dramatically. The company leadership was trying to head off this problem of people moving away from the site and a decline and online auctions, so the company reached out to foreign partnerships with retailers and created an online marketplace for those retailers products. Now that move upset some longtime eBay users, but it helped keep the site solvent. So I think the lesson there is sometimes you've got to really explore options you hadn't thought of in order to stay in business, and sometimes those decisions might be a little unpopular with your customer base. So you have to balance that out how much can you do to ensure that you stay in business versus how much are you going to alienate your customer base? Because if you do it too much, then you've shut yourself in the foot. So these are some of the interesting stories. I mean, Google obviously also survived the dot com bubble. Google in those days was already on its way to becoming a powerful search engine, but it wouldn't be until the early two thousand's that it truly began to become a juggernaut. And when it started in the mid two thousand's to become a publicly traded company, it became a force to be reckoned with. It was almost just small enough and nimble enough to survive the dot com bubble bursting to get away without being tanked by it the way so many other companies were. And there, of course tons of other companies that rose and fell during this time. I just touched on some of the ones that I thought had some of the most interesting stories, ones that often are associated with the dot com bubble burst. There are others that rose, fell and then re emerged as something else, and I didn't include those because in some ways I feel like it's just misleading, because the company that came out of it on the other side, is so different from the company that went into it that it's almost like two different entities in the first place. But this was fun, uh, you know, it's looking at companies that fail can never be fun. But it was interesting to go back and look at the past and see how these different companies uh grew, how they fell apart, and what happened to the people afterward. Because frequently you just hear the names of the companies, you don't really understand that most in most cases, the people who founded those companies are still very influential people, most of whom are still in the tech sector. There their leaders of various industries, and they continue to provide leadership. In many cases, you could argue that they perhaps learned some very valuable lessons from the dot com experience, painful lessons, but valuable ones, and that as a result they might be better leaders today than they would have been had they not gone through that experience. It's kind of hard to say. Obviously, we only have the one timeline to work with. We can't duck our heads in a parallel universe and see if it worked out some other way elsewhere. But I find it really fascinating to look at these types of companies. If there are any in that list that you specifically would like to hear a full episode about, maybe a deep dive on the history of eBay, for example, let me know it's send me a message. The email address is tech stuff at how stuff works dot com, or draw me a line on Twitter or Facebook the handle at both of those tech stuff hs W. Remember I stream live when I am podcasting. You can go to Twitch dot tv slash tech stuff and you can look at the schedule there. Join me when I'm streaming. I'm not doing it today, but that's because, as I record this, Twitch is actually experiencing technical difficulties. So it's not my fault this time. But most Wednesdays and Fridays you'll find me streaming live on Twitch dot tv. I'd love for you to join me. You can pop in the chat room. I'm happy to chat with you guys and learn about what you find interesting and what you want to hear about. And uh, that's all for today. I'll talk to you again really soon for more on this and thousands of other topics. Is it how stuff works dot com? Who wonder