1 00:00:04,360 --> 00:00:07,760 Speaker 1: In text with technology with tech Stuff from stuff works 2 00:00:07,800 --> 00:00:14,319 Speaker 1: dot com. Hey there, and welcome to tech Stuff. I'm 3 00:00:14,360 --> 00:00:17,160 Speaker 1: your host, Jonathan Strickland. I'm a senior writer with how 4 00:00:17,200 --> 00:00:19,640 Speaker 1: stuff works dot com and as you guys know, I 5 00:00:19,760 --> 00:00:23,000 Speaker 1: like to talk tech. This is part two of a 6 00:00:23,000 --> 00:00:27,120 Speaker 1: two part episode about the companies that rose and fell 7 00:00:27,280 --> 00:00:33,800 Speaker 1: during the dot com bubble crisis of one and where 8 00:00:33,800 --> 00:00:37,040 Speaker 1: those folks are now, the people who launched those websites, 9 00:00:37,040 --> 00:00:40,080 Speaker 1: what are they doing? And uh, We're going to continue 10 00:00:40,159 --> 00:00:42,560 Speaker 1: on that train. Last episode we looked at web van, 11 00:00:42,960 --> 00:00:46,960 Speaker 1: pets dot com, the search engine Excite, Broadcast dot com, 12 00:00:47,040 --> 00:00:49,960 Speaker 1: and Boo dot com. But there are a lot of 13 00:00:50,000 --> 00:00:52,040 Speaker 1: other companies that made a big name for themselves, at 14 00:00:52,120 --> 00:00:55,840 Speaker 1: least briefly anyway, before burning out during the crash following 15 00:00:55,880 --> 00:00:58,840 Speaker 1: the bubble's deflation. And there are also a couple of 16 00:00:58,880 --> 00:01:01,440 Speaker 1: notable companies that they're the storm that I think we 17 00:01:01,480 --> 00:01:04,600 Speaker 1: can look at and explore how it was that they 18 00:01:04,640 --> 00:01:08,560 Speaker 1: survived when so many other companies didn't. So let's get started, 19 00:01:09,080 --> 00:01:11,200 Speaker 1: and I think a good place to begin is the 20 00:01:11,240 --> 00:01:14,759 Speaker 1: Globe dot com. This was one of the earliest social 21 00:01:14,840 --> 00:01:19,120 Speaker 1: networking platforms on the web, predated the giants that would 22 00:01:19,160 --> 00:01:21,800 Speaker 1: come later, like my Space, which of course isn't really 23 00:01:21,840 --> 00:01:24,760 Speaker 1: a thing anymore, and Facebook, which is very much a 24 00:01:24,840 --> 00:01:28,119 Speaker 1: thing still to this day. And the Globe dot Com 25 00:01:28,160 --> 00:01:32,720 Speaker 1: was the brainchild of two Cornell students, Stefan Pattern and 26 00:01:32,840 --> 00:01:37,840 Speaker 1: Todd Krisselman. The two were interested in computer programming and 27 00:01:37,880 --> 00:01:40,720 Speaker 1: the commercial possibilities of the Worldwide Web, and they had 28 00:01:40,760 --> 00:01:44,000 Speaker 1: also witnessed how compelling online chat rooms were, and they 29 00:01:44,000 --> 00:01:46,600 Speaker 1: felt that there was probably a way they could monetize that. 30 00:01:48,920 --> 00:01:53,160 Speaker 1: The two students raised fifteen thousand dollars from private investors 31 00:01:53,160 --> 00:01:55,480 Speaker 1: and they used that money to buy computer servers and 32 00:01:55,560 --> 00:01:58,920 Speaker 1: computer equipment to build out their idea. They worked on 33 00:01:58,960 --> 00:02:02,280 Speaker 1: the design for several months and they launched the Globe 34 00:02:02,320 --> 00:02:06,480 Speaker 1: dot Com in April nine. They formed a new company 35 00:02:06,480 --> 00:02:09,320 Speaker 1: called web Genesis, and they hired on the staff of 36 00:02:09,360 --> 00:02:12,680 Speaker 1: about a dozen people or so. And the site acted 37 00:02:12,760 --> 00:02:17,280 Speaker 1: as part news aggregator, part message board, and part chat room. 38 00:02:17,320 --> 00:02:19,000 Speaker 1: So if you went to the site, you would see 39 00:02:19,040 --> 00:02:23,680 Speaker 1: a bunch of different categories of types of interests like 40 00:02:24,240 --> 00:02:26,080 Speaker 1: sports and that kind of stuff, and you could go 41 00:02:26,160 --> 00:02:29,040 Speaker 1: and click into that and read up on things. The 42 00:02:29,120 --> 00:02:31,360 Speaker 1: chat room function was easily the most popular. When the 43 00:02:31,400 --> 00:02:34,680 Speaker 1: site launched, they also launched software that could serve up 44 00:02:34,800 --> 00:02:38,480 Speaker 1: polls and quizzes and surveys, so really the two students 45 00:02:38,480 --> 00:02:40,600 Speaker 1: were way ahead of the curve on this one. As 46 00:02:40,639 --> 00:02:44,480 Speaker 1: today those kind of features are wildly popular on social media, 47 00:02:44,639 --> 00:02:48,160 Speaker 1: and they thought ahead to include it on their early 48 00:02:48,400 --> 00:02:52,560 Speaker 1: social networking platform. The site was a success that had 49 00:02:53,040 --> 00:02:56,120 Speaker 1: very passionate users, not an enormous user base, but they 50 00:02:56,120 --> 00:03:01,120 Speaker 1: were very um frequent users, and in ninety the company 51 00:03:01,120 --> 00:03:03,320 Speaker 1: made a decision to hold an i p O or 52 00:03:03,360 --> 00:03:07,239 Speaker 1: initial public offering, is when a private company goes public 53 00:03:07,280 --> 00:03:11,280 Speaker 1: and becomes a publicly traded company, and right around there 54 00:03:11,440 --> 00:03:14,680 Speaker 1: is when things went a little bonkers. The global investment 55 00:03:14,720 --> 00:03:18,960 Speaker 1: bank bear Sterns set the opening price at about nine 56 00:03:19,000 --> 00:03:22,120 Speaker 1: dollars a share when the market opened. The demand for 57 00:03:22,160 --> 00:03:24,960 Speaker 1: shares was such that the actual opening price ended up 58 00:03:25,000 --> 00:03:28,120 Speaker 1: being eighties seven dollars per share, which is crazy, and 59 00:03:28,160 --> 00:03:31,639 Speaker 1: at one point it even hit nine dollars per share. Now, 60 00:03:31,680 --> 00:03:34,480 Speaker 1: by the end of the day, the price settled a 61 00:03:34,560 --> 00:03:37,240 Speaker 1: little bit, but was still way over the opening price. 62 00:03:37,280 --> 00:03:40,000 Speaker 1: It settled it around sixty three dollars fifty cents a 63 00:03:40,160 --> 00:03:44,040 Speaker 1: share on paper, That meant that everyone who worked at 64 00:03:44,040 --> 00:03:48,200 Speaker 1: the Globe dot Com became filthy rich, and some people 65 00:03:48,240 --> 00:03:50,640 Speaker 1: started to behave that way. But as you guys know 66 00:03:50,760 --> 00:03:52,760 Speaker 1: from this topic and the fact that no one has 67 00:03:52,760 --> 00:03:55,600 Speaker 1: ever heard of this website these days, it was not 68 00:03:55,680 --> 00:03:59,000 Speaker 1: meant to be. The site was not making money, and 69 00:03:59,000 --> 00:04:01,320 Speaker 1: while millions of people were using the site, that just 70 00:04:01,480 --> 00:04:04,800 Speaker 1: meant the costs of running the site remained high while 71 00:04:04,840 --> 00:04:07,000 Speaker 1: there was no real way to or generate what revenue. 72 00:04:07,080 --> 00:04:10,840 Speaker 1: So it was a sinking ship. People didn't shy away 73 00:04:10,840 --> 00:04:13,640 Speaker 1: from blowing the whistle on the Globe dot Com. The 74 00:04:13,680 --> 00:04:16,640 Speaker 1: company went public in the fall of A year later, 75 00:04:16,760 --> 00:04:19,479 Speaker 1: The Street published a piece about the Globe dot Com 76 00:04:19,480 --> 00:04:23,240 Speaker 1: that pulled no punches. Here is a direct quote from 77 00:04:23,279 --> 00:04:26,840 Speaker 1: the Street. We're speaking, of course, of the Globe dot 78 00:04:26,880 --> 00:04:31,400 Speaker 1: Com t g l O and essentially worthless business enterprise 79 00:04:31,520 --> 00:04:34,760 Speaker 1: that has lost six of its value in the last 80 00:04:34,800 --> 00:04:39,120 Speaker 1: five months, yet at its current price of barely thirteen dollars, 81 00:04:39,160 --> 00:04:46,840 Speaker 1: still remains grotesquely overvalued. Ouch harsh words, but as it 82 00:04:46,839 --> 00:04:50,880 Speaker 1: turns out, they were not entirely untrue. The Globe dot 83 00:04:50,920 --> 00:04:55,039 Speaker 1: Com stock price continued its downward trend in nine and 84 00:04:55,120 --> 00:04:58,839 Speaker 1: beyond and by January two thousand, pattern Not and Krizzleman 85 00:04:59,000 --> 00:05:02,440 Speaker 1: stepped down from the company. They resigned. Pattern Out walked 86 00:05:02,440 --> 00:05:05,000 Speaker 1: away with about a one and a half million dollars 87 00:05:05,000 --> 00:05:07,599 Speaker 1: after selling off stock, much most of which he reportedly 88 00:05:08,120 --> 00:05:12,719 Speaker 1: later lost in other investments. Krizzleman invested in some other 89 00:05:12,800 --> 00:05:15,320 Speaker 1: companies and helped secure some of his wealth and more 90 00:05:15,360 --> 00:05:18,160 Speaker 1: on those two in just a second. As for the site, 91 00:05:18,600 --> 00:05:21,520 Speaker 1: it sputtered along for a while under new management, and 92 00:05:21,520 --> 00:05:23,360 Speaker 1: in two thousand one the company had to lay off 93 00:05:23,400 --> 00:05:27,000 Speaker 1: about half of its employees and the shares were trading 94 00:05:27,000 --> 00:05:30,960 Speaker 1: at a dismal twenty five cents per share. It transitioned 95 00:05:30,960 --> 00:05:34,119 Speaker 1: into a voice over Internet protocol company for a while, 96 00:05:34,320 --> 00:05:38,120 Speaker 1: or voipe company, and it had some interests in the 97 00:05:38,200 --> 00:05:42,080 Speaker 1: gaming industry as well, but despite those businesses being more 98 00:05:42,120 --> 00:05:45,000 Speaker 1: stable than the initial website, the company ultimately had to 99 00:05:45,040 --> 00:05:47,760 Speaker 1: shut down in two thousand seven for good. It had 100 00:05:47,800 --> 00:05:51,320 Speaker 1: never fully recovered, and honestly, the social networking part of 101 00:05:51,360 --> 00:05:54,520 Speaker 1: the Globe dot com had died around the time that 102 00:05:54,600 --> 00:05:59,360 Speaker 1: the founders stepped down. Today, Todd Krizzleman is the CEO 103 00:05:59,520 --> 00:06:03,000 Speaker 1: and co founder of a company called Media Radar, which 104 00:06:03,080 --> 00:06:07,400 Speaker 1: is an ad sales application company and Stefan pattern Not 105 00:06:07,680 --> 00:06:10,680 Speaker 1: is the chairman and CEO as well as the co 106 00:06:10,839 --> 00:06:14,800 Speaker 1: founder of a company called Slated Incorporated, which is on 107 00:06:15,040 --> 00:06:18,760 Speaker 1: an online film packaging, networking and investment marketplace. So they're 108 00:06:18,760 --> 00:06:23,920 Speaker 1: doing just fine. Now let's stick to the topic of money. 109 00:06:23,960 --> 00:06:27,040 Speaker 1: While we're chatting about these dot com companies, there were 110 00:06:27,040 --> 00:06:29,880 Speaker 1: a couple of companies that rose up to try and 111 00:06:29,960 --> 00:06:35,080 Speaker 1: become leaders in a brand new space, digital currency. So 112 00:06:35,160 --> 00:06:38,160 Speaker 1: you might have thought that bitcoin was relatively new. This 113 00:06:38,240 --> 00:06:41,360 Speaker 1: idea of digital currencies was new. Now, it's been around 114 00:06:41,360 --> 00:06:44,760 Speaker 1: since the nineties. Shortly after the Web became a real entity. 115 00:06:45,240 --> 00:06:47,320 Speaker 1: There were people who were thinking of ways of creating 116 00:06:47,440 --> 00:06:51,640 Speaker 1: virtual online currencies. Now these were not cryptocurrencies. These didn't 117 00:06:51,760 --> 00:06:54,520 Speaker 1: use the blockchain approach the way bitcoin and some other 118 00:06:54,560 --> 00:07:00,120 Speaker 1: cryptocurrencies do, but they were virtual digital currencies. It's so 119 00:07:00,880 --> 00:07:02,840 Speaker 1: back in the late nineties, a couple of different companies 120 00:07:02,839 --> 00:07:07,240 Speaker 1: were trying to get this going. But they're they're really 121 00:07:07,400 --> 00:07:11,480 Speaker 1: in some ways, we're behaving more like gift cards than 122 00:07:11,680 --> 00:07:15,720 Speaker 1: outright currencies. So the two companies I want to talk 123 00:07:15,760 --> 00:07:23,920 Speaker 1: about specifically are Flus and Beans. Flus is spelled f 124 00:07:24,200 --> 00:07:28,320 Speaker 1: L o O Z and beans B e e b 125 00:07:28,600 --> 00:07:31,640 Speaker 1: e e n Z. You started getting to the point 126 00:07:31,680 --> 00:07:33,960 Speaker 1: where you're getting the e sound and you're thinking, have 127 00:07:34,080 --> 00:07:37,000 Speaker 1: I said too many? Ease one, B two ease and 128 00:07:37,080 --> 00:07:40,840 Speaker 1: in in a Z flus and beans. You just can't 129 00:07:40,840 --> 00:07:43,720 Speaker 1: make this stuff up, guys. Oh, I guess technically you can, 130 00:07:43,920 --> 00:07:45,920 Speaker 1: but you don't have to because someone already did it 131 00:07:46,000 --> 00:07:49,800 Speaker 1: years ago. Now. Flus took its name from an Arabic 132 00:07:49,920 --> 00:07:55,000 Speaker 1: word flus, meaning money, and Robert Levitan, who had a 133 00:07:55,080 --> 00:08:00,760 Speaker 1: successful venture with I Village, launched Flus in nine. The 134 00:08:00,840 --> 00:08:03,160 Speaker 1: idea was that customers would be able to buy flues 135 00:08:03,240 --> 00:08:05,480 Speaker 1: credits that could be used at a couple of dozen 136 00:08:05,560 --> 00:08:08,920 Speaker 1: different online retailers, and it was pretty easy to send 137 00:08:08,920 --> 00:08:11,840 Speaker 1: those credits online to other people, like you could email 138 00:08:12,360 --> 00:08:15,559 Speaker 1: essentially a gift certificate to someone else. So the idea 139 00:08:15,600 --> 00:08:17,840 Speaker 1: was that you could buy flus for someone, give them 140 00:08:17,880 --> 00:08:20,560 Speaker 1: the virtual currency which they could go and then spend 141 00:08:20,560 --> 00:08:23,240 Speaker 1: on something they actually wanted rather than just receiving it 142 00:08:23,360 --> 00:08:27,280 Speaker 1: another ugly Christmas sweater or whatever. Based on all the 143 00:08:27,360 --> 00:08:31,080 Speaker 1: articles I looked over for this podcast, Flus may have 144 00:08:31,200 --> 00:08:34,400 Speaker 1: best been known not for its method of business, but 145 00:08:34,520 --> 00:08:37,000 Speaker 1: for its commercials, which kind of reminds me of pets 146 00:08:37,000 --> 00:08:41,160 Speaker 1: dot com. Honestly, the company booked would be Goldberg as 147 00:08:41,200 --> 00:08:45,680 Speaker 1: their spokesperson, and that move alone costs several million dollars. Meanwhile, 148 00:08:46,080 --> 00:08:49,719 Speaker 1: Levitan was finding it challenging to get customers, both on 149 00:08:49,760 --> 00:08:53,559 Speaker 1: the business side with retailers and on the consumers side 150 00:08:53,559 --> 00:08:57,199 Speaker 1: with people who would actually use the product. Unlike many 151 00:08:57,320 --> 00:08:59,959 Speaker 1: of the other companies I have covered in these two episod, 152 00:09:00,280 --> 00:09:02,800 Speaker 1: Flus never held an I p O. It remained a 153 00:09:02,840 --> 00:09:06,920 Speaker 1: privately held company throughout its existence. In two thousand one, 154 00:09:07,000 --> 00:09:10,199 Speaker 1: it started to really struggle as the bubble was deflating 155 00:09:10,320 --> 00:09:12,120 Speaker 1: and there was a report that the company may have 156 00:09:12,200 --> 00:09:16,079 Speaker 1: been the victim of fraud. In addition to that, according 157 00:09:16,120 --> 00:09:19,360 Speaker 1: to the story, there was a group of Russian thieves 158 00:09:19,400 --> 00:09:22,160 Speaker 1: and hackers who were using stolen credit card numbers to 159 00:09:22,200 --> 00:09:26,800 Speaker 1: purchase three hundred thousand dollars worth of FLUS credits. Now, 160 00:09:26,840 --> 00:09:28,960 Speaker 1: if true, this could have been a real issue for 161 00:09:29,000 --> 00:09:31,280 Speaker 1: FLUS because it would be a company left holding the 162 00:09:31,320 --> 00:09:34,560 Speaker 1: bag when it's revealed that the purchases came from illegal sources. 163 00:09:35,040 --> 00:09:37,080 Speaker 1: It would have caused real cash flow crunch at a 164 00:09:37,080 --> 00:09:40,400 Speaker 1: critical time FLUS would have to cover the the expenses 165 00:09:40,600 --> 00:09:44,080 Speaker 1: given to retailers, and meanwhile, it doesn't have any real 166 00:09:44,240 --> 00:09:47,640 Speaker 1: money to hold onto because of the fact that the 167 00:09:47,880 --> 00:09:52,559 Speaker 1: purchases came from criminal sources. Whether the fraud actually happened 168 00:09:52,640 --> 00:09:55,880 Speaker 1: or not is a moot point. FLUS closed up shop 169 00:09:55,920 --> 00:09:58,640 Speaker 1: in the summer of two thousand one, just two years 170 00:09:58,679 --> 00:10:02,240 Speaker 1: after it had launched. People with FLUS credits found themselves 171 00:10:02,360 --> 00:10:07,160 Speaker 1: out of luck just holding useless digital currency. And this 172 00:10:07,240 --> 00:10:10,400 Speaker 1: is a valuable lesson in currency. And I'm talking about 173 00:10:10,400 --> 00:10:14,320 Speaker 1: all currency, not just digital. Remember, your money is only 174 00:10:14,320 --> 00:10:17,280 Speaker 1: worth something for as long as we collectively believe it 175 00:10:17,360 --> 00:10:20,719 Speaker 1: to be. So if tomorrow we all woke up and 176 00:10:20,760 --> 00:10:25,079 Speaker 1: said that dollars are worthless, dollars would be worthless because 177 00:10:25,080 --> 00:10:28,240 Speaker 1: no one would accept them in return for anything. So 178 00:10:28,480 --> 00:10:31,360 Speaker 1: the only reason this money has any value is because 179 00:10:31,360 --> 00:10:34,760 Speaker 1: we have agreed upon it. Well, in the case of FLUS, 180 00:10:35,200 --> 00:10:37,760 Speaker 1: people no longer had confidence in it, and therefore they 181 00:10:37,760 --> 00:10:41,040 Speaker 1: no longer believed in the power of lows to be money, 182 00:10:41,240 --> 00:10:45,559 Speaker 1: and ultimately it failed. Fortunately, most governments are on slightly 183 00:10:45,600 --> 00:10:48,520 Speaker 1: more firm ground than FLUS was in two thousand one. 184 00:10:49,720 --> 00:10:54,840 Speaker 1: Most sometimes you have a country like Greece that gets 185 00:10:54,840 --> 00:10:57,840 Speaker 1: into some difficult economic times and there are a lot 186 00:10:57,840 --> 00:11:01,360 Speaker 1: of tough questions at that point. As for Levitan, he 187 00:11:01,520 --> 00:11:04,559 Speaker 1: went on to work with several other ventures. In two 188 00:11:04,600 --> 00:11:07,840 Speaker 1: thousand four, he co founded Pando Networks. This was a 189 00:11:07,880 --> 00:11:10,640 Speaker 1: peer to peer networking company that used that peer to 190 00:11:10,679 --> 00:11:14,440 Speaker 1: peer approach to distribute software like games and videos. If 191 00:11:14,440 --> 00:11:16,840 Speaker 1: you don't remember what peer to peer networking is, that's 192 00:11:16,880 --> 00:11:19,640 Speaker 1: when you get a bunch of computers that are owned 193 00:11:19,679 --> 00:11:22,880 Speaker 1: by various people out there. You run a specific type 194 00:11:22,880 --> 00:11:26,040 Speaker 1: of peer to peer software and that allows those computers 195 00:11:26,080 --> 00:11:29,920 Speaker 1: to essentially be their own little database network, and you 196 00:11:30,000 --> 00:11:34,520 Speaker 1: can send files across the network. You can you can 197 00:11:34,600 --> 00:11:39,680 Speaker 1: download stuff from multiple sources, which speeds up your download process, 198 00:11:39,720 --> 00:11:42,920 Speaker 1: and it decentralizes it so if one computer goes down, 199 00:11:43,000 --> 00:11:45,120 Speaker 1: there's still other computers on the network you can still 200 00:11:45,160 --> 00:11:48,440 Speaker 1: get the stuff you need. It's a perfectly legitimate way 201 00:11:48,440 --> 00:11:52,079 Speaker 1: to distribute information. It's just that peer to peer networks, 202 00:11:52,080 --> 00:11:56,280 Speaker 1: over the course of the history of them, have often 203 00:11:56,320 --> 00:12:01,000 Speaker 1: been used to pirate software and other material reels, and 204 00:12:01,080 --> 00:12:04,360 Speaker 1: so it's gotten a bad rap. But there's nothing innately 205 00:12:04,520 --> 00:12:07,240 Speaker 1: illegal about peer to peer. It's just the way some 206 00:12:07,280 --> 00:12:12,160 Speaker 1: people have used it. Microsoft would purchase Pando Networks in 207 00:12:12,200 --> 00:12:15,000 Speaker 1: two thousand thirteen, and then Levitan went on to co 208 00:12:15,160 --> 00:12:18,280 Speaker 1: found the company Live in two thousand and fourteen. This 209 00:12:18,360 --> 00:12:20,720 Speaker 1: is a company that is making a real time local 210 00:12:20,800 --> 00:12:24,959 Speaker 1: events search app. I think I tried tracking it down, 211 00:12:25,000 --> 00:12:27,800 Speaker 1: but I didn't actually have much success. I did find 212 00:12:27,800 --> 00:12:30,520 Speaker 1: a web page where you can sign up for more information, 213 00:12:31,200 --> 00:12:33,480 Speaker 1: but it just showed me a video that looked like 214 00:12:33,520 --> 00:12:36,920 Speaker 1: a cross between Mad Max, Beyond Thunderdome and Fight Club, 215 00:12:36,960 --> 00:12:38,800 Speaker 1: and I'm not sure I want to find that event 216 00:12:38,800 --> 00:12:43,200 Speaker 1: in the first place. There you go. Uh, The actual 217 00:12:43,240 --> 00:12:46,560 Speaker 1: event showed people riding bicycles and jousting with mops while 218 00:12:46,600 --> 00:12:49,800 Speaker 1: a giant trash puppet was moving around in the background. 219 00:12:49,840 --> 00:12:52,280 Speaker 1: I honestly don't know what it was supposed to tell me, 220 00:12:52,760 --> 00:12:54,559 Speaker 1: apart from the fact that I guess if I had 221 00:12:54,600 --> 00:12:56,520 Speaker 1: the app on my phone, I would know that that 222 00:12:56,600 --> 00:13:00,720 Speaker 1: crazy stuff is going down, and maybe I could go 223 00:13:00,760 --> 00:13:04,880 Speaker 1: the other way. As for Beans, that company was the 224 00:13:04,920 --> 00:13:09,600 Speaker 1: brainchild of Charles Cohen, who's not the billionaire Charles Cohen, 225 00:13:09,679 --> 00:13:14,800 Speaker 1: but a britt entrepreneur. At he was an Oxford graduate, 226 00:13:14,960 --> 00:13:18,079 Speaker 1: he had an idea and he was a former speechwriter 227 00:13:18,200 --> 00:13:21,520 Speaker 1: for the Liberal Democrats in the UK. He launched Beans 228 00:13:21,600 --> 00:13:25,200 Speaker 1: in n and Cohen's approach was similar to Levitans in 229 00:13:25,240 --> 00:13:28,120 Speaker 1: some ways. But beans was a virtual currency you could 230 00:13:28,120 --> 00:13:31,280 Speaker 1: not only purchase with real money. You could also earn 231 00:13:31,679 --> 00:13:36,240 Speaker 1: beans through various activities, so you could be paid in beans. 232 00:13:37,800 --> 00:13:41,400 Speaker 1: I guess if you were selling account perhaps you could 233 00:13:41,440 --> 00:13:45,079 Speaker 1: get paid in beans. For example, you might earn beans 234 00:13:45,120 --> 00:13:48,520 Speaker 1: by clicking a specific link, or reading an article or 235 00:13:48,559 --> 00:13:51,280 Speaker 1: watching a video. So it became an incentive to get 236 00:13:51,360 --> 00:13:55,760 Speaker 1: engagement from users. You probably have encountered something like this 237 00:13:55,920 --> 00:13:59,880 Speaker 1: online at some point, where you are allowed to do 238 00:14:00,080 --> 00:14:03,120 Speaker 1: something like inner sweepstakes, but only after you watch a video. 239 00:14:03,360 --> 00:14:06,520 Speaker 1: It's similar to that in many ways. So it wasn't 240 00:14:06,600 --> 00:14:09,960 Speaker 1: just a gift certificate style program, but an actual currency 241 00:14:10,000 --> 00:14:13,800 Speaker 1: you'd receive as a reward in return for specific actions. Now, 242 00:14:13,840 --> 00:14:17,760 Speaker 1: each unit of beans, which was beans, whether it's plural 243 00:14:17,880 --> 00:14:21,760 Speaker 1: or singular, was worth about half a penny. The idea 244 00:14:22,280 --> 00:14:25,600 Speaker 1: seemed fairly solid. Businesses have been attracting customers and keeping 245 00:14:25,600 --> 00:14:28,040 Speaker 1: them loyal with similar programs for years. I mean, there 246 00:14:28,040 --> 00:14:31,320 Speaker 1: are tons of different companies out there that have loyalty programs. 247 00:14:31,720 --> 00:14:34,160 Speaker 1: You know, you buy ten coffees and you get the 248 00:14:34,200 --> 00:14:36,960 Speaker 1: eleventh one free, that kind of thing. So it's kind 249 00:14:37,000 --> 00:14:39,200 Speaker 1: of along those lines, except it was meant to be 250 00:14:39,320 --> 00:14:44,040 Speaker 1: something that would work across multiple companies. So maybe you 251 00:14:44,080 --> 00:14:46,880 Speaker 1: buy a couple of T shirts at one retailer and 252 00:14:46,920 --> 00:14:48,600 Speaker 1: then you have enough beans to buy a cup of 253 00:14:48,600 --> 00:14:51,920 Speaker 1: coffee at a different retailer, or vice versa. You drink 254 00:14:51,960 --> 00:14:53,680 Speaker 1: a lot of coffee and then you can buy some shirts. 255 00:14:54,400 --> 00:14:56,440 Speaker 1: That was the idea, and it seemed like a pretty 256 00:14:56,440 --> 00:14:59,840 Speaker 1: good one, and to this day we see multiple implementations 257 00:15:00,040 --> 00:15:02,520 Speaker 1: of this idea, though they tend to be specific to 258 00:15:02,600 --> 00:15:06,280 Speaker 1: a particular vendor or merchant. So in other words, you 259 00:15:06,360 --> 00:15:08,960 Speaker 1: might have a Starbucks app that allows you to get 260 00:15:09,040 --> 00:15:12,000 Speaker 1: loyalty points whenever you buy coffee from Starbucks, but you 261 00:15:12,000 --> 00:15:15,040 Speaker 1: can't necessarily convert that into anything else, Like you can't 262 00:15:15,520 --> 00:15:18,640 Speaker 1: use those credits to go and buy books at a 263 00:15:18,680 --> 00:15:23,000 Speaker 1: bookstore or music or anything like that. Cohen ended up 264 00:15:23,080 --> 00:15:25,560 Speaker 1: raising a great deal of money from investors in those 265 00:15:25,600 --> 00:15:29,000 Speaker 1: early days. Articles give amounts in the eighty to one 266 00:15:29,080 --> 00:15:33,280 Speaker 1: hundred million dollar range. That's a lot of cheddar and 267 00:15:33,400 --> 00:15:37,720 Speaker 1: investors included Larry Ellison of Oracle fame. The tech of 268 00:15:37,800 --> 00:15:41,040 Speaker 1: Beans depended pretty heavily on Oracle as well. Cohen wanted 269 00:15:41,040 --> 00:15:44,600 Speaker 1: a currency that would work across borders, which meant that 270 00:15:44,640 --> 00:15:47,200 Speaker 1: it had to take into account exchange rates, which are 271 00:15:47,200 --> 00:15:52,320 Speaker 1: incredibly complex and change frequently. So the software that would 272 00:15:52,400 --> 00:15:56,120 Speaker 1: allow for this kind of conversion lived on Oracle database 273 00:15:56,200 --> 00:15:59,840 Speaker 1: servers and Sun Microsystems computers. It was pretty serious tech 274 00:16:00,240 --> 00:16:02,280 Speaker 1: to run this in the background to make sure that 275 00:16:02,320 --> 00:16:06,720 Speaker 1: you had the right prices uh converted into beans. Despite 276 00:16:06,720 --> 00:16:09,640 Speaker 1: having the same problems that Flus did, which namely was 277 00:16:09,720 --> 00:16:12,640 Speaker 1: getting online retailers to participate in the strategy in the 278 00:16:12,680 --> 00:16:16,040 Speaker 1: first place, Beans chugged along for a short while. In 279 00:16:16,160 --> 00:16:19,000 Speaker 1: July two thousand, Beans was big enough news to get 280 00:16:19,040 --> 00:16:23,240 Speaker 1: extensive coverage and Info World magazine the articles pretty interesting. 281 00:16:23,640 --> 00:16:27,080 Speaker 1: Cohen proclaimed that beans would become the universal currency of 282 00:16:27,080 --> 00:16:30,160 Speaker 1: the future. There was even a partnership struck up with 283 00:16:30,200 --> 00:16:34,360 Speaker 1: the credit card MasterCard. They had a thing called rewards 284 00:16:34,160 --> 00:16:38,640 Speaker 1: the card with a Z after reward and it's all 285 00:16:38,680 --> 00:16:42,120 Speaker 1: one word, so rewards the card from MasterCard, which would 286 00:16:42,200 --> 00:16:44,760 Speaker 1: let you shift those beans to real life cash in 287 00:16:44,840 --> 00:16:47,160 Speaker 1: businesses that accept master Card as a form of payment 288 00:16:47,800 --> 00:16:50,560 Speaker 1: so you could earn Beans then use your credit card 289 00:16:50,600 --> 00:16:54,120 Speaker 1: with Beans credits on it to make purchases. Everything seemed 290 00:16:54,120 --> 00:16:56,080 Speaker 1: to be going really well for the company, and they 291 00:16:56,120 --> 00:17:01,160 Speaker 1: scaled up to global operations with offices and numerous countries 292 00:17:01,200 --> 00:17:05,639 Speaker 1: and cities cities like New York or Stockholm, Sydney, Hong Kong, 293 00:17:06,119 --> 00:17:09,520 Speaker 1: and at its height they had about two fifty employees. 294 00:17:10,240 --> 00:17:14,840 Speaker 1: And then things took a pretty sharp turn. Despite its 295 00:17:14,880 --> 00:17:19,520 Speaker 1: presence and its heavy marketing campaigns, Beans failed to generate revenue. 296 00:17:19,880 --> 00:17:22,080 Speaker 1: It would take a few more years before people began 297 00:17:22,119 --> 00:17:25,239 Speaker 1: to use the Internet to really make purchases on a 298 00:17:25,280 --> 00:17:28,760 Speaker 1: regular basis. There was this trust issue people had to 299 00:17:28,800 --> 00:17:32,119 Speaker 1: get past. They were all worried about making, you know, 300 00:17:32,280 --> 00:17:36,119 Speaker 1: purchases online and then having their identity stolen or money 301 00:17:36,119 --> 00:17:38,320 Speaker 1: stolen from them, or maybe they would never get the 302 00:17:38,359 --> 00:17:41,440 Speaker 1: thing they wanted to buy. No one was really eager 303 00:17:41,480 --> 00:17:44,600 Speaker 1: to jump on the internet as a way of buying 304 00:17:44,680 --> 00:17:48,160 Speaker 1: stuff yet, and most people still preferred to do their 305 00:17:48,160 --> 00:17:50,400 Speaker 1: shopping in brick and mortar stores. For the most part, 306 00:17:50,560 --> 00:17:53,640 Speaker 1: Beans just wasn't bulling in the beans as it were. 307 00:17:55,000 --> 00:17:57,760 Speaker 1: According to c Net, Beans also ran into trouble with 308 00:17:57,840 --> 00:18:00,800 Speaker 1: the law. Not all countries were cool with a company 309 00:18:00,800 --> 00:18:04,200 Speaker 1: inventing its own global currency, and it got so serious 310 00:18:04,240 --> 00:18:07,200 Speaker 1: that at one point the u K's Financial Service Authority 311 00:18:07,280 --> 00:18:11,600 Speaker 1: Task Force rated Bean's offices in the UK. By two 312 00:18:11,640 --> 00:18:14,720 Speaker 1: thousand one, the writing was on the wall. The company 313 00:18:14,760 --> 00:18:17,879 Speaker 1: began to scale down, shutting down many of the thirteen 314 00:18:18,040 --> 00:18:21,240 Speaker 1: offices across the world and laying off employees left and right. 315 00:18:21,840 --> 00:18:25,840 Speaker 1: By May two thousand, employees had shrunk down to thirty 316 00:18:25,960 --> 00:18:28,280 Speaker 1: and Beans was clearly trying to squeeze out as much 317 00:18:28,280 --> 00:18:30,720 Speaker 1: money from its assets to pay back investors as it 318 00:18:30,760 --> 00:18:34,640 Speaker 1: possibly could. By August two thousand one, it was all over. 319 00:18:35,119 --> 00:18:38,399 Speaker 1: The company was finished. Charles Cohen went on to become 320 00:18:38,440 --> 00:18:42,880 Speaker 1: the CEO of a company called Probability Plc, which designed 321 00:18:42,880 --> 00:18:46,600 Speaker 1: and published gambling games for mobile devices. He left that 322 00:18:46,680 --> 00:18:49,560 Speaker 1: company in May two thousand fourteen and became a vice 323 00:18:49,600 --> 00:18:52,800 Speaker 1: president of Mobile at I G T for their North 324 00:18:52,800 --> 00:18:57,600 Speaker 1: America Sporting Sports Betting division, and he works out of 325 00:18:57,600 --> 00:19:01,719 Speaker 1: the Bay Area. I think Beings and Flus weren't necessarily 326 00:19:01,760 --> 00:19:04,280 Speaker 1: bad ideas for the record, but I do think they 327 00:19:04,280 --> 00:19:06,680 Speaker 1: were ahead of their time, and perhaps in another five 328 00:19:06,800 --> 00:19:09,679 Speaker 1: or ten years they might have flourished, so it may 329 00:19:09,720 --> 00:19:12,040 Speaker 1: have just been a case of a great idea at 330 00:19:12,080 --> 00:19:14,919 Speaker 1: the wrong time. It's kind of sad because I actually 331 00:19:14,920 --> 00:19:17,960 Speaker 1: like the idea of getting rewards points that are applicable 332 00:19:18,000 --> 00:19:21,800 Speaker 1: across multiple vendors. I don't know how you make that 333 00:19:21,920 --> 00:19:25,119 Speaker 1: arrangement so that not, you know, no single vendor gets 334 00:19:27,000 --> 00:19:29,680 Speaker 1: harmed by this. I mean, if everyone is making their 335 00:19:29,720 --> 00:19:32,560 Speaker 1: purchases at certain vendors and they're all cashing in their 336 00:19:32,560 --> 00:19:37,120 Speaker 1: rewards points at another vendor, the rewards points vendors having 337 00:19:37,160 --> 00:19:39,280 Speaker 1: a rough time of it, unless there's some other money 338 00:19:39,320 --> 00:19:43,520 Speaker 1: exchange on the back end between the agency and the 339 00:19:43,520 --> 00:19:47,640 Speaker 1: the the vendor. I don't know, but I would love 340 00:19:47,680 --> 00:19:51,520 Speaker 1: it because it would really simplify all those loyalty cards. 341 00:19:51,560 --> 00:19:54,800 Speaker 1: Instead of having to have multiple apps or multiple cards, 342 00:19:55,760 --> 00:19:59,320 Speaker 1: you would have just one. Google. Google Wallet has tried 343 00:19:59,400 --> 00:20:02,719 Speaker 1: something similar in the past, so maybe we'll see that 344 00:20:02,960 --> 00:20:05,680 Speaker 1: rise up again in the future. I got a lot 345 00:20:05,720 --> 00:20:08,680 Speaker 1: more to talk about with dot com companies that went 346 00:20:08,760 --> 00:20:11,159 Speaker 1: belly up, but first let's take a quick break to 347 00:20:11,280 --> 00:20:21,520 Speaker 1: thank our sponsor. Rolling right along, let's take a look 348 00:20:21,560 --> 00:20:25,520 Speaker 1: at Cosmo dot com investment bankers Joseph Park and Yong 349 00:20:25,720 --> 00:20:29,800 Speaker 1: Kang launched the company in n It was a fast 350 00:20:29,840 --> 00:20:33,280 Speaker 1: delivery service. The company's pitch was that it could deliver 351 00:20:33,440 --> 00:20:36,800 Speaker 1: lots of stuff like small stuff like coffee or DVDs 352 00:20:36,880 --> 00:20:40,000 Speaker 1: or other small items in under an hour and there 353 00:20:40,000 --> 00:20:43,600 Speaker 1: were no additional delivery charges. Cosmo landed a deal with 354 00:20:43,640 --> 00:20:46,119 Speaker 1: Starbucks early on, and from a consumer side, it all 355 00:20:46,119 --> 00:20:48,880 Speaker 1: looked really promising a man that you no longer had 356 00:20:48,920 --> 00:20:52,600 Speaker 1: to wait. Whenever you ordered something online, you could get 357 00:20:52,680 --> 00:20:55,720 Speaker 1: near instant gratification because within an hour it would show 358 00:20:55,800 --> 00:20:59,560 Speaker 1: up at your door. Cosmo delivery agents rode around New 359 00:20:59,640 --> 00:21:03,919 Speaker 1: York the first Cosmo market, on bicycles, and the service 360 00:21:03,960 --> 00:21:07,040 Speaker 1: was gaining ground with consumers, but the company was losing 361 00:21:07,080 --> 00:21:10,399 Speaker 1: money on every delivery. Now. Their hope was that they 362 00:21:10,400 --> 00:21:12,960 Speaker 1: would be able to stay afloat in the early phases 363 00:21:13,000 --> 00:21:15,840 Speaker 1: as they gathered a customer base before turning on some 364 00:21:15,920 --> 00:21:19,879 Speaker 1: revenue generation generating streams. And it was a risky bet 365 00:21:19,920 --> 00:21:23,720 Speaker 1: and it very nearly paid off. It. It wasn't like 366 00:21:23,760 --> 00:21:27,679 Speaker 1: it was a bad idea. It almost worked. Cosmo was 367 00:21:27,760 --> 00:21:30,199 Speaker 1: growing and by the end of nineteen it was in 368 00:21:30,280 --> 00:21:33,879 Speaker 1: six markets in six locations, and by early two thousand 369 00:21:34,280 --> 00:21:38,040 Speaker 1: it grew to eleven cities and twenty two locations, and 370 00:21:38,080 --> 00:21:42,000 Speaker 1: after eighteen months in business they had three hundred thousand customers. 371 00:21:42,720 --> 00:21:45,600 Speaker 1: By mid two thousand, that was up to four hundred 372 00:21:45,600 --> 00:21:49,879 Speaker 1: thousand customers, and they employed more than twenty six hundred people, 373 00:21:50,160 --> 00:21:55,480 Speaker 1: and all those employees were called Cosmo knots cute. Around 374 00:21:55,520 --> 00:21:58,720 Speaker 1: that same time, publications such as Forbes were warning that 375 00:21:58,760 --> 00:22:02,359 Speaker 1: Cosmo might be expanded too quickly and they didn't have 376 00:22:02,480 --> 00:22:06,880 Speaker 1: enough revenue generation to keep this sustainable. It was going 377 00:22:06,920 --> 00:22:09,359 Speaker 1: to end up collapsing in on itself if they weren't careful. 378 00:22:09,720 --> 00:22:11,919 Speaker 1: An article in June two thousand and Forbes said that 379 00:22:11,920 --> 00:22:14,840 Speaker 1: Cosmo had spent more than twenty six million dollars in 380 00:22:16,440 --> 00:22:19,160 Speaker 1: and they only generated three and a half million dollars 381 00:22:19,240 --> 00:22:22,520 Speaker 1: in revenue, so obviously that can't go on forever. The 382 00:22:22,560 --> 00:22:26,280 Speaker 1: privately held company prepared to launch an initial public offering, 383 00:22:26,400 --> 00:22:29,320 Speaker 1: but between the lead up and the launch, the dot 384 00:22:29,359 --> 00:22:33,280 Speaker 1: com market began to crash, and the company also found 385 00:22:33,320 --> 00:22:36,360 Speaker 1: that it was harder to penetrate some markets, such as Houston, 386 00:22:36,800 --> 00:22:39,280 Speaker 1: which the company had abandoned after trying to make an 387 00:22:39,320 --> 00:22:42,040 Speaker 1: impact there for five months. They just couldn't get enough 388 00:22:42,080 --> 00:22:44,760 Speaker 1: of a customer base to justify the expense of operating 389 00:22:44,760 --> 00:22:46,600 Speaker 1: in Houston, and so they pulled out of the city. 390 00:22:47,760 --> 00:22:50,639 Speaker 1: While Cosmo operated at a profit in four of the 391 00:22:50,640 --> 00:22:53,439 Speaker 1: cities that had a presence in that wasn't enough to 392 00:22:53,520 --> 00:22:57,080 Speaker 1: satisfy ANTSI investors who were watching the world crumble around 393 00:22:57,119 --> 00:23:00,360 Speaker 1: them with every other dot com company falling left right, 394 00:23:00,880 --> 00:23:03,840 Speaker 1: and those profits that they were generating were not enough 395 00:23:03,920 --> 00:23:06,200 Speaker 1: to keep the company going on its own while trying 396 00:23:06,200 --> 00:23:11,240 Speaker 1: to make other locations become profitable. So Cosmo withdrew from 397 00:23:11,320 --> 00:23:13,840 Speaker 1: the I p O. They canceled it, and by April 398 00:23:13,880 --> 00:23:17,240 Speaker 1: two thousand one, all their money had run out and 399 00:23:17,240 --> 00:23:20,600 Speaker 1: the company had to shut down. As for the founders, 400 00:23:20,840 --> 00:23:23,600 Speaker 1: they went on to work on other big projects. Joseph 401 00:23:23,640 --> 00:23:27,200 Speaker 1: Park founded a social networking platform called Askville, in which 402 00:23:27,200 --> 00:23:30,120 Speaker 1: people could post questions to a community and they would 403 00:23:30,160 --> 00:23:33,800 Speaker 1: get answers from other community members, and in two thousand nine, 404 00:23:34,119 --> 00:23:39,080 Speaker 1: Amazon acquired Askville. Park then went on to join HarperCollins Publishers, 405 00:23:39,320 --> 00:23:41,560 Speaker 1: and he became a senior vice president with the company 406 00:23:41,600 --> 00:23:45,440 Speaker 1: and the president of their Bible Gateway division. In two 407 00:23:45,480 --> 00:23:48,440 Speaker 1: thousand eleven, he left to become the CEO of blue Fly, 408 00:23:48,840 --> 00:23:53,359 Speaker 1: a fashion apparel e commerce company. Another company called pe 409 00:23:53,400 --> 00:23:56,840 Speaker 1: Firm scooped up blue Fly, So then Park goes on 410 00:23:56,880 --> 00:23:59,720 Speaker 1: to become the VP of Global e Commerce at Forever 411 00:23:59,760 --> 00:24:02,320 Speaker 1: To he won another fashion company and he stayed there 412 00:24:02,359 --> 00:24:05,400 Speaker 1: for a couple of years. These days, he's the global 413 00:24:05,480 --> 00:24:12,800 Speaker 1: Chief e Commerce Officer of Mattel Incorporated. Busy Guy Young Kang, 414 00:24:12,880 --> 00:24:15,680 Speaker 1: the other co founder, worked at City Banks as an 415 00:24:15,720 --> 00:24:18,800 Speaker 1: investment banking associate for a while, and he was vice 416 00:24:18,840 --> 00:24:22,120 Speaker 1: president at Lehman Brothers for two years, then a director 417 00:24:22,160 --> 00:24:25,600 Speaker 1: at Barclays Capital for another four years, and he founded 418 00:24:25,600 --> 00:24:30,720 Speaker 1: a company called KPK Capital LLC, and equity and real 419 00:24:30,840 --> 00:24:34,000 Speaker 1: estate company. These days, he's the VP of Finance and 420 00:24:34,000 --> 00:24:37,080 Speaker 1: Business Development at Homer Logistics, which is a company that 421 00:24:37,119 --> 00:24:40,720 Speaker 1: looks at last mile logistics, which makes sense. Cosmo was 422 00:24:40,720 --> 00:24:43,199 Speaker 1: all about trying to solve that last mile problem of 423 00:24:43,240 --> 00:24:47,600 Speaker 1: getting a product into consumers hands, and their logistics worked great. 424 00:24:47,720 --> 00:24:51,639 Speaker 1: Their supply chain strategy was working very well. It was 425 00:24:51,680 --> 00:24:54,199 Speaker 1: the revenue side that was the problem, not the supply 426 00:24:54,280 --> 00:24:58,679 Speaker 1: side in this case. So let's contrast that last story 427 00:24:59,119 --> 00:25:03,680 Speaker 1: with one phil with allegations of incompetence. Cosmo may well 428 00:25:03,800 --> 00:25:06,760 Speaker 1: have been able to survive if it hadn't been for 429 00:25:06,800 --> 00:25:08,919 Speaker 1: the fact that all the other dot com companies were 430 00:25:08,920 --> 00:25:12,679 Speaker 1: starting to crumble because it made investors scared and they 431 00:25:12,720 --> 00:25:16,520 Speaker 1: all started to pull out. And that was the rug 432 00:25:16,520 --> 00:25:18,800 Speaker 1: getting pulled out from under cosmos feet. And while they 433 00:25:18,840 --> 00:25:21,840 Speaker 1: had become profitable in four cities, they had yet to 434 00:25:21,880 --> 00:25:24,240 Speaker 1: become profitable and the other ones, and they've never got 435 00:25:24,280 --> 00:25:27,640 Speaker 1: the chance to change that. Meanwhile, you've got other stories 436 00:25:28,480 --> 00:25:33,439 Speaker 1: where you've got all this crazy shenanigans going on. Like 437 00:25:33,480 --> 00:25:36,639 Speaker 1: I said, there are allegations of incompetence, hubris, and mishandling 438 00:25:36,640 --> 00:25:40,040 Speaker 1: of funds. And I'm talking about gov Works go O 439 00:25:40,119 --> 00:25:44,439 Speaker 1: v W O r k S. I was founded by 440 00:25:44,440 --> 00:25:49,280 Speaker 1: a former investor named is Saza Tusman. He was originally 441 00:25:49,320 --> 00:25:53,280 Speaker 1: from Columbia, came over graduated Harvard magnum cum laude. He 442 00:25:53,359 --> 00:25:58,160 Speaker 1: was a very very uh intelligent guy, still is very 443 00:25:58,160 --> 00:26:02,199 Speaker 1: intelligent guy. We're to Goldman Sachs as an investor for 444 00:26:02,280 --> 00:26:05,880 Speaker 1: quite some time. But he came up with the idea 445 00:26:06,280 --> 00:26:09,760 Speaker 1: with for gov works after having a really irritating experience 446 00:26:10,000 --> 00:26:12,920 Speaker 1: he got a parking ticket and he forgot to pay 447 00:26:12,960 --> 00:26:16,119 Speaker 1: it and as a result, the eighty dollar fine that 448 00:26:16,160 --> 00:26:18,399 Speaker 1: was on the original parking ticket bulked up to a 449 00:26:18,480 --> 00:26:21,600 Speaker 1: five dred and forty dollar fine due to late fees. 450 00:26:22,119 --> 00:26:25,280 Speaker 1: Tusman was talking with a former high school classmate named 451 00:26:25,280 --> 00:26:29,840 Speaker 1: Tom Herman about this experience, and they began to brainstorm 452 00:26:29,880 --> 00:26:33,080 Speaker 1: about a new business one if you build a business 453 00:26:33,119 --> 00:26:37,160 Speaker 1: that would, for a small processing fee, pay customer parking 454 00:26:37,280 --> 00:26:41,000 Speaker 1: fines for them, sort of like a line waiting service, 455 00:26:41,040 --> 00:26:44,600 Speaker 1: but for government fines, so you, as a customer would 456 00:26:44,600 --> 00:26:46,760 Speaker 1: actually pay the full fine. It's not like the company 457 00:26:46,760 --> 00:26:51,800 Speaker 1: would pay the fine just out of altruistic love of you. 458 00:26:51,800 --> 00:26:54,560 Speaker 1: You would pay the money for the fine, and on 459 00:26:54,640 --> 00:26:56,439 Speaker 1: top of that you would have a processing fee you 460 00:26:56,440 --> 00:26:59,040 Speaker 1: would add, but the company would take care of everything. 461 00:26:59,800 --> 00:27:02,560 Speaker 1: For this idea, the idea got bigger, So why just 462 00:27:02,920 --> 00:27:05,639 Speaker 1: stop at parking fines. The new company could act on 463 00:27:05,680 --> 00:27:10,080 Speaker 1: behalf of citizens in several government citizen transactions, such as 464 00:27:10,119 --> 00:27:13,399 Speaker 1: applying for a fishing license, or paying property taxes, or 465 00:27:13,400 --> 00:27:17,119 Speaker 1: getting a building permit, or any of another another number 466 00:27:17,200 --> 00:27:21,440 Speaker 1: of government activities you might have to engage in as 467 00:27:21,440 --> 00:27:25,639 Speaker 1: a citizen, pretty much any mundane activity that would require 468 00:27:25,720 --> 00:27:27,800 Speaker 1: someone to go in person to a government office could 469 00:27:27,840 --> 00:27:31,359 Speaker 1: be handled by this service instead, with some obvious exceptions. 470 00:27:31,359 --> 00:27:32,880 Speaker 1: You're not going to be able to get a driver's 471 00:27:32,920 --> 00:27:36,199 Speaker 1: license this way or vote, but you'd be able to 472 00:27:36,240 --> 00:27:38,600 Speaker 1: do a lot of other things. And that's how gov 473 00:27:38,680 --> 00:27:42,040 Speaker 1: works was born. Tusman was able to get some really 474 00:27:42,080 --> 00:27:46,399 Speaker 1: big investors on board early on, and in v works 475 00:27:46,440 --> 00:27:50,720 Speaker 1: became a company. Before long, they started running into big problems, however, 476 00:27:50,800 --> 00:27:54,840 Speaker 1: and according to CNN Money, many of those problems were 477 00:27:54,880 --> 00:27:58,520 Speaker 1: the company's own fault. One of those problems was that 478 00:27:58,560 --> 00:28:02,480 Speaker 1: Tusman really liked and restive strategy for entering into markets, 479 00:28:03,160 --> 00:28:06,920 Speaker 1: so on more than one occasion, gov Works published notices 480 00:28:06,960 --> 00:28:09,760 Speaker 1: that it would soon be working with various cities before 481 00:28:09,800 --> 00:28:13,560 Speaker 1: any official agreements had actually been signed, and that rubbed 482 00:28:13,680 --> 00:28:16,800 Speaker 1: some city officials the wrong way. On top of that, 483 00:28:17,080 --> 00:28:20,040 Speaker 1: the marketing campaigns for gov works portrayed government as a 484 00:28:20,119 --> 00:28:24,120 Speaker 1: hassle and it's inefficient and run by jerks, and that 485 00:28:24,200 --> 00:28:27,240 Speaker 1: didn't help. When the company was trying to form relationships 486 00:28:27,280 --> 00:28:32,879 Speaker 1: with various government entities, Tusman's team were concentrating on potential customers. 487 00:28:32,880 --> 00:28:35,400 Speaker 1: They were looking to get people who would want to 488 00:28:35,520 --> 00:28:38,280 Speaker 1: use the service, but they learned a little too late. 489 00:28:38,320 --> 00:28:42,040 Speaker 1: That they also needed to get the trust and cooperation 490 00:28:42,400 --> 00:28:46,080 Speaker 1: of government officials. So if you spend all your efforts 491 00:28:46,080 --> 00:28:49,920 Speaker 1: winning over one group at the expense of alienating another group, 492 00:28:50,040 --> 00:28:51,920 Speaker 1: and it turns out you need to depend on both 493 00:28:51,920 --> 00:28:54,440 Speaker 1: of them at the same time for your business to succeed, 494 00:28:55,400 --> 00:28:58,960 Speaker 1: that's not great. And that's kind of what one of 495 00:28:59,000 --> 00:29:02,000 Speaker 1: the first problems of works right into Now. In that 496 00:29:02,120 --> 00:29:04,760 Speaker 1: CNN Money piece, it sounds as though gov Works was 497 00:29:04,800 --> 00:29:08,520 Speaker 1: a difficult client as well. The article states that Fallon 498 00:29:08,600 --> 00:29:12,240 Speaker 1: New York, which was an advertising agency, walked away from 499 00:29:12,240 --> 00:29:17,080 Speaker 1: a lucrative forty million dollar contract after producing a single 500 00:29:17,120 --> 00:29:20,640 Speaker 1: TV spot for gov Works. So, in other words, they 501 00:29:20,640 --> 00:29:26,080 Speaker 1: were hired to be the the advertising firm for this company, 502 00:29:26,120 --> 00:29:28,720 Speaker 1: they produced one TV spot and then they say, yeah, 503 00:29:29,000 --> 00:29:33,080 Speaker 1: we're kind of done here, despite a forty million dollar contract. Now, 504 00:29:33,120 --> 00:29:37,080 Speaker 1: that same piece does cite a Fallon employee who said 505 00:29:37,080 --> 00:29:41,800 Speaker 1: that it wasn't a bad parting, it wasn't on bad terms. Still, 506 00:29:42,160 --> 00:29:44,640 Speaker 1: forty million dollars that's a big chunk of cash to 507 00:29:44,680 --> 00:29:47,120 Speaker 1: back out of, so I'm curious what the full story 508 00:29:47,280 --> 00:29:50,840 Speaker 1: is there. Meanwhile, over at gov Works, big chunks of 509 00:29:50,920 --> 00:29:54,280 Speaker 1: cash were really running out pretty quickly. Several sources say 510 00:29:54,320 --> 00:29:57,400 Speaker 1: that the company burned through close to sixty million dollars 511 00:29:57,400 --> 00:30:01,240 Speaker 1: in venture capital without being able to become the profitable business. 512 00:30:01,600 --> 00:30:05,120 Speaker 1: At one point, the company had two hundred fifty employees, 513 00:30:05,560 --> 00:30:07,880 Speaker 1: and like many other dot com startups in this era, 514 00:30:08,000 --> 00:30:10,320 Speaker 1: it ended up having to close down and start selling 515 00:30:10,360 --> 00:30:13,280 Speaker 1: off assets. The rise and fall of the company was 516 00:30:13,320 --> 00:30:17,200 Speaker 1: the focus of an independent film called Startup dot Com. 517 00:30:17,320 --> 00:30:20,200 Speaker 1: Tusman went on to become the president of a company 518 00:30:20,240 --> 00:30:24,080 Speaker 1: called Jump TV, which was an Internet TV venture. Later, 519 00:30:24,200 --> 00:30:26,840 Speaker 1: he founded and became the managing partner of a company 520 00:30:26,840 --> 00:30:30,200 Speaker 1: called Kit Capital k I T, and he went on 521 00:30:30,280 --> 00:30:33,640 Speaker 1: to become the CEO of Kit Digital Incorporated until two 522 00:30:33,680 --> 00:30:37,840 Speaker 1: thousand twelve. The company created a video asset management system 523 00:30:37,880 --> 00:30:40,200 Speaker 1: that was cloud based, and it was in business in 524 00:30:40,240 --> 00:30:42,720 Speaker 1: two thousand seven, although back then it was called the 525 00:30:42,880 --> 00:30:46,760 Speaker 1: Rue Group r OO, and it stayed in business until 526 00:30:46,800 --> 00:30:50,480 Speaker 1: two when it declared bankruptcy. So a year after Tusman 527 00:30:50,640 --> 00:30:55,560 Speaker 1: left the company and these days Tusman's awaiting trial. Wait 528 00:30:55,560 --> 00:30:59,040 Speaker 1: what Well, First of all, this has nothing to do 529 00:30:59,080 --> 00:31:05,920 Speaker 1: with gov Works but rather Kit Digital. Basically, Tusman has 530 00:31:05,960 --> 00:31:12,400 Speaker 1: been charged with some cases of conspiracy and fraud. In fact, 531 00:31:12,440 --> 00:31:15,440 Speaker 1: he and some other executives at Kit Digital have been 532 00:31:15,560 --> 00:31:19,080 Speaker 1: charged with inflating the value of the company by purchasing 533 00:31:19,120 --> 00:31:23,480 Speaker 1: company shares with the company's own money, so essentially using 534 00:31:23,520 --> 00:31:25,880 Speaker 1: the profits of a company to purchase shares in the 535 00:31:25,920 --> 00:31:30,160 Speaker 1: company and drive up the share price. That money was 536 00:31:30,840 --> 00:31:35,880 Speaker 1: allegedly flowing through an investment platform controlled by Tusman. In 537 00:31:35,960 --> 00:31:39,880 Speaker 1: two thousand fifteen, a hedge fund manager named Stephen Maiden 538 00:31:40,080 --> 00:31:43,800 Speaker 1: connected to these charges was sentenced to seven years in 539 00:31:43,880 --> 00:31:48,560 Speaker 1: prison for securities fraud. Tuzman was arrested in twenty sixteen 540 00:31:48,600 --> 00:31:52,280 Speaker 1: in Colombia. He was working on a luxury hotel project 541 00:31:52,320 --> 00:31:55,800 Speaker 1: at the time, and apparently the conditions in that Colombian 542 00:31:55,840 --> 00:32:00,360 Speaker 1: prison were notoriously awful um and it took some time, 543 00:32:00,400 --> 00:32:03,640 Speaker 1: but he was then extradited to the United States in July. 544 00:32:05,200 --> 00:32:07,880 Speaker 1: As of this recording, he has not yet gone to trial, 545 00:32:08,000 --> 00:32:11,720 Speaker 1: but it is scheduled to start in early October. Seen 546 00:32:12,080 --> 00:32:14,600 Speaker 1: he has entered a plea of not guilty. Two of 547 00:32:14,680 --> 00:32:18,360 Speaker 1: his colleagues have pled guilty to the charges, so it'll 548 00:32:18,360 --> 00:32:21,760 Speaker 1: be interesting to see where this goes. Now. I've got 549 00:32:21,800 --> 00:32:24,800 Speaker 1: more to say about some of these dot com companies. 550 00:32:25,040 --> 00:32:27,880 Speaker 1: But before I do, let's take another quick break and 551 00:32:27,920 --> 00:32:37,520 Speaker 1: thank our sponsor. Hey, since we just talked about crime, 552 00:32:37,840 --> 00:32:41,920 Speaker 1: how about we talk about an online crime news site 553 00:32:42,560 --> 00:32:44,920 Speaker 1: that was the pitch of a p B news as 554 00:32:44,960 --> 00:32:48,520 Speaker 1: an all points bulletin a p B news dot com. 555 00:32:48,680 --> 00:32:51,360 Speaker 1: It was to serve up articles covering crime beats around 556 00:32:51,440 --> 00:32:55,440 Speaker 1: the world. Two investment bankers named Matthew Cohen and Marshall 557 00:32:55,520 --> 00:32:59,760 Speaker 1: Davidson partnered with a former investigative reporter and a captain 558 00:32:59,760 --> 00:33:03,200 Speaker 1: in the army named Mark Salter on this venture. They 559 00:33:03,280 --> 00:33:06,720 Speaker 1: raised more than a hundred million dollars in investments and 560 00:33:06,720 --> 00:33:10,080 Speaker 1: they hired a lot of people, including a Pulitzer Prize 561 00:33:10,120 --> 00:33:14,120 Speaker 1: winning reporter named Sidney Schanberg. The company took about two 562 00:33:14,200 --> 00:33:18,920 Speaker 1: years to burn through all of that cash. Two years 563 00:33:18,960 --> 00:33:22,680 Speaker 1: to burn through a hundred million dollars, it's incredible. So 564 00:33:22,960 --> 00:33:26,640 Speaker 1: this company launched in and by mid two thousand it 565 00:33:26,720 --> 00:33:29,720 Speaker 1: was done. It went dark. It was seven million dollars 566 00:33:29,720 --> 00:33:32,520 Speaker 1: in debt and only had fifty thousand dollars in the bank. 567 00:33:33,120 --> 00:33:36,280 Speaker 1: The company went bankrupt and eventually another company called safety 568 00:33:36,280 --> 00:33:39,120 Speaker 1: Tips dot Com purchased a PB news dot com for 569 00:33:39,160 --> 00:33:44,120 Speaker 1: the princely sum of five hundred seventy five thousand dollars. 570 00:33:45,080 --> 00:33:47,920 Speaker 1: Now this was after safety tips dot Com had already 571 00:33:47,960 --> 00:33:51,920 Speaker 1: looked to acquire the assets outright. They bought it at auction, 572 00:33:52,120 --> 00:33:54,760 Speaker 1: but originally they were just looking to purchase a p 573 00:33:54,920 --> 00:33:58,600 Speaker 1: B News straight without having it go to auction. It 574 00:33:58,600 --> 00:34:01,520 Speaker 1: was gonna be a nine fifty thousand dollar price tag, 575 00:34:02,440 --> 00:34:05,520 Speaker 1: and also they were going to back alone to allow 576 00:34:05,600 --> 00:34:09,359 Speaker 1: the site to continue operating through the bankruptcy proceedings and 577 00:34:09,440 --> 00:34:13,440 Speaker 1: perhaps emerge on the other side. But then before they 578 00:34:13,480 --> 00:34:17,000 Speaker 1: could actually sign this n dollar deal, they got a 579 00:34:17,040 --> 00:34:20,160 Speaker 1: look at the books of a p B news dot 580 00:34:20,200 --> 00:34:23,960 Speaker 1: Com and they said, whoa, this is a total dumpster 581 00:34:24,160 --> 00:34:30,000 Speaker 1: fire piece. I might be paraphrasing a little here, anyway, 582 00:34:30,000 --> 00:34:32,040 Speaker 1: if you go to the u r L today, you'll 583 00:34:32,080 --> 00:34:36,120 Speaker 1: see not much. As it turns out, that really isn't 584 00:34:36,160 --> 00:34:40,480 Speaker 1: anything anymore. Mark Salter, the former reporter, went on to 585 00:34:40,560 --> 00:34:45,560 Speaker 1: become the CEO of the Chesapeake Innovation Center, business accelerator 586 00:34:45,600 --> 00:34:48,800 Speaker 1: firm focused on homeland security. He then became the managing 587 00:34:48,800 --> 00:34:53,000 Speaker 1: director of Legend Merchant Group, another defense firm. These days, 588 00:34:53,000 --> 00:34:56,520 Speaker 1: he's the president of or Or Sinus or or a 589 00:34:56,600 --> 00:35:00,560 Speaker 1: Keenness Solutions O r C I n U S and 590 00:35:00,600 --> 00:35:02,840 Speaker 1: I honestly don't know how I'm supposed to pronounce that, 591 00:35:03,400 --> 00:35:05,520 Speaker 1: but this is a company that consults with many clients, 592 00:35:05,520 --> 00:35:09,160 Speaker 1: including you guessed it, homeland security. He's also the managing 593 00:35:09,200 --> 00:35:12,600 Speaker 1: director of Pickwick Capital Partners LLC, which is an invest 594 00:35:12,760 --> 00:35:16,279 Speaker 1: investment firm. So a lot of these people, after they 595 00:35:16,320 --> 00:35:20,880 Speaker 1: got out of building companies that didn't last, ended up 596 00:35:20,920 --> 00:35:25,560 Speaker 1: becoming investors themselves. Marshall Davidson, one of the two investment 597 00:35:25,560 --> 00:35:28,640 Speaker 1: bankers who co founded APB news dot com, is the 598 00:35:28,719 --> 00:35:32,880 Speaker 1: operations manager of Avison Young, a real estate company. I 599 00:35:32,920 --> 00:35:35,600 Speaker 1: have no idea where Matthew Cohen ended up, as my 600 00:35:35,640 --> 00:35:38,680 Speaker 1: research couldn't definitively point me to the right person. I 601 00:35:38,719 --> 00:35:41,160 Speaker 1: found a lot of Matthew Cohen's, but no one who 602 00:35:41,239 --> 00:35:44,000 Speaker 1: was specifically the Matthew Cohen of a p B news 603 00:35:44,040 --> 00:35:46,799 Speaker 1: dot com. So if you know what happened to Matthew Cohen, 604 00:35:47,160 --> 00:35:49,839 Speaker 1: let me know. I'm kind of curious what turned how 605 00:35:49,920 --> 00:35:52,319 Speaker 1: it turned out for him. And we've talked a lot 606 00:35:52,360 --> 00:35:54,360 Speaker 1: about companies that went under as a result of the 607 00:35:54,400 --> 00:35:56,920 Speaker 1: market instability of the dot com bubble crash, But what 608 00:35:57,000 --> 00:35:59,239 Speaker 1: about the few that made it through. What makes them 609 00:35:59,280 --> 00:36:03,160 Speaker 1: so special? Well, probably one of the biggest is Amazon, 610 00:36:04,000 --> 00:36:06,120 Speaker 1: and it's one of the most high profile dot com 611 00:36:06,200 --> 00:36:08,600 Speaker 1: companies of that era, and it was able to weather 612 00:36:08,680 --> 00:36:11,840 Speaker 1: the storms of the dot com bubble, and Amazon itself 613 00:36:11,880 --> 00:36:14,880 Speaker 1: was on shaky ground for a long time. Like other companies, 614 00:36:14,920 --> 00:36:17,640 Speaker 1: it became clear that scaling a business and managing a 615 00:36:17,719 --> 00:36:21,520 Speaker 1: large infrastructure is an expensive undertaking, and that finding the 616 00:36:21,600 --> 00:36:24,879 Speaker 1: right balance of attracting and retaining customers while making sure 617 00:36:24,880 --> 00:36:28,239 Speaker 1: you have sufficient inventory is not an easy task. It's 618 00:36:28,320 --> 00:36:33,080 Speaker 1: a huge logistics problem now. Jeff Bezos founded Amazon in 619 00:36:34,200 --> 00:36:39,680 Speaker 1: ur and the company debuted its online bookstore model. In 620 00:36:39,719 --> 00:36:41,960 Speaker 1: these days, you can buy pretty much anything on Amazon, 621 00:36:42,120 --> 00:36:45,320 Speaker 1: but at the heart of the company was its book business. 622 00:36:46,320 --> 00:36:50,480 Speaker 1: Amazon held its initial public offering in May nine seven, 623 00:36:50,560 --> 00:36:53,640 Speaker 1: just two years after it had gone live, and it 624 00:36:53,719 --> 00:36:56,799 Speaker 1: had an opening price of eighteen dollars per share. That 625 00:36:56,880 --> 00:36:59,279 Speaker 1: price rose up to more than one hundred dollars per 626 00:36:59,280 --> 00:37:03,040 Speaker 1: share before the will burst. Once that happened, the price 627 00:37:03,120 --> 00:37:06,440 Speaker 1: dropped down to less than ten dollars per share. The 628 00:37:06,480 --> 00:37:08,799 Speaker 1: story here is that even companies that were big and 629 00:37:08,840 --> 00:37:12,759 Speaker 1: had sold uh lots of stuff. They had a really 630 00:37:12,800 --> 00:37:16,319 Speaker 1: solid revenue plan in place, They knew what their business was. 631 00:37:16,400 --> 00:37:18,640 Speaker 1: They could tell you what their business was. Some of 632 00:37:18,680 --> 00:37:21,440 Speaker 1: these companies, if you were to ask them, what is 633 00:37:21,480 --> 00:37:25,400 Speaker 1: it that you actually do, people struggled to come up 634 00:37:25,440 --> 00:37:27,800 Speaker 1: with an answer. Not the case with Amazon. It was 635 00:37:27,840 --> 00:37:31,960 Speaker 1: pretty simple. Uh. But even a company like that wasn't 636 00:37:32,120 --> 00:37:34,400 Speaker 1: was not immune to the effects of the dot com bubble. 637 00:37:34,560 --> 00:37:37,200 Speaker 1: Investors had really lost confidence in the tech sector in 638 00:37:37,239 --> 00:37:40,160 Speaker 1: general and anything connected to the web in particular. But 639 00:37:40,239 --> 00:37:43,120 Speaker 1: Amazon was able to tough it out. They had not 640 00:37:43,239 --> 00:37:45,600 Speaker 1: yet turned a profit when the dot com bubble burst, 641 00:37:46,040 --> 00:37:48,520 Speaker 1: but that changed in the fourth quarter of two thousand one. 642 00:37:48,560 --> 00:37:50,759 Speaker 1: That was the first time the company managed to turn 643 00:37:50,760 --> 00:37:54,319 Speaker 1: a profit. While other companies were rapidly disappearing from our 644 00:37:54,360 --> 00:37:58,200 Speaker 1: collective memory, Amazon kept plugging away to convert brand recognition 645 00:37:58,239 --> 00:38:02,000 Speaker 1: strategies into revenue generating ones. And for one thing, Amazon 646 00:38:02,040 --> 00:38:04,879 Speaker 1: had a really solid mission statement as to be the 647 00:38:04,880 --> 00:38:09,000 Speaker 1: Earth's most customer centric company to build a place where 648 00:38:09,000 --> 00:38:11,759 Speaker 1: people can come to find and discover anything they might 649 00:38:11,840 --> 00:38:16,160 Speaker 1: want to buy online. That's a direct quote of Amazon's 650 00:38:16,160 --> 00:38:19,279 Speaker 1: mission statement back in the day. The scaling process for 651 00:38:19,320 --> 00:38:22,560 Speaker 1: Amazon meant that it didn't burn out of investment money 652 00:38:22,600 --> 00:38:25,440 Speaker 1: before turning a profit, and so it succeeded where so 653 00:38:25,480 --> 00:38:28,959 Speaker 1: many other companies failed. And not to get too warm 654 00:38:28,960 --> 00:38:31,439 Speaker 1: and fuzzy here. Amazon was also able to secure its 655 00:38:31,440 --> 00:38:34,319 Speaker 1: place because it became one of the leading authorities on 656 00:38:34,400 --> 00:38:39,080 Speaker 1: customer behavior. They could track customer purchases and customer browsing, 657 00:38:39,360 --> 00:38:42,120 Speaker 1: and the company could fine tune how it presented products 658 00:38:42,120 --> 00:38:45,360 Speaker 1: to people, and it could provide helpful suggestions to shoppers 659 00:38:45,400 --> 00:38:47,799 Speaker 1: and up sell them on additional items they didn't even 660 00:38:47,840 --> 00:38:50,680 Speaker 1: know they needed. Like if you buy something that takes 661 00:38:50,680 --> 00:38:52,960 Speaker 1: batteries and suddenly you get a suggestion, Hey, maybe you 662 00:38:52,960 --> 00:38:58,239 Speaker 1: should buy some batteries. That's clever and it works. It's 663 00:38:58,239 --> 00:39:00,400 Speaker 1: also kind of creepy in a way, but it really 664 00:39:00,440 --> 00:39:05,680 Speaker 1: illustrates how we as human beings are predictable creatures. Maybe 665 00:39:05,719 --> 00:39:07,600 Speaker 1: we have a little less free will than we thought. 666 00:39:08,800 --> 00:39:11,200 Speaker 1: Another dot com that managed to make it through the 667 00:39:11,280 --> 00:39:14,799 Speaker 1: chaos of the bubble was eBay. eBay launched in nine 668 00:39:15,719 --> 00:39:19,120 Speaker 1: out of Pierre Almadyar's living room, and the original site 669 00:39:19,160 --> 00:39:22,360 Speaker 1: was called auction Web. The whole concept was pretty simple. 670 00:39:22,600 --> 00:39:26,719 Speaker 1: eBay was a platform for online auctions. Mark Frasier was 671 00:39:26,800 --> 00:39:29,959 Speaker 1: the first person to buy anything on eBay, So here's 672 00:39:29,960 --> 00:39:34,040 Speaker 1: your trivia. Mark Frasier, out of Canada bought a broken 673 00:39:34,120 --> 00:39:37,920 Speaker 1: laser pointer on eBay as the first purchase ever across 674 00:39:37,960 --> 00:39:42,560 Speaker 1: the site. By nine, goods were valued at seven point 675 00:39:42,640 --> 00:39:46,120 Speaker 1: two million dollars that had been sold on auction Web, 676 00:39:46,760 --> 00:39:49,440 Speaker 1: So that's a pretty incredible and Pierre ended up quitting 677 00:39:49,440 --> 00:39:52,280 Speaker 1: his day job and brought on Jeff Scroll to become 678 00:39:52,280 --> 00:39:56,160 Speaker 1: the president of the company. Auction Web would eventually become eBay. 679 00:39:56,440 --> 00:40:01,319 Speaker 1: In September, the company had grown to the point that 680 00:40:01,360 --> 00:40:03,440 Speaker 1: the two co founders felt they needed to bring in 681 00:40:03,480 --> 00:40:06,359 Speaker 1: an expert in business and branding, and they hired Meg 682 00:40:06,440 --> 00:40:10,719 Speaker 1: Whitman as president and CEO. Whitman led the company and 683 00:40:10,760 --> 00:40:16,400 Speaker 1: attracted executives from multiple high profile organizations, including Disney. In September, 684 00:40:17,640 --> 00:40:20,560 Speaker 1: eBay held its I p O, with initial shares trading 685 00:40:20,600 --> 00:40:24,000 Speaker 1: at eighteen dollars. The price rose to fifty three dollars 686 00:40:24,000 --> 00:40:26,000 Speaker 1: and fifty cents at one point on that first day 687 00:40:26,040 --> 00:40:30,120 Speaker 1: of trading. Throughout nine and into two thousand, the company 688 00:40:30,120 --> 00:40:33,520 Speaker 1: expanded into new offices across the world. So why did 689 00:40:33,560 --> 00:40:37,800 Speaker 1: eBay survive the turmoil? Well, according to Whitman, it wasn't 690 00:40:37,840 --> 00:40:39,880 Speaker 1: that they were able to see what was coming and 691 00:40:39,880 --> 00:40:42,920 Speaker 1: then prepare for it. Instead, it was that the company 692 00:40:42,960 --> 00:40:45,520 Speaker 1: wanted to keep a close eye on what customers wanted, 693 00:40:45,840 --> 00:40:47,759 Speaker 1: and they worked hard to make sure that they were 694 00:40:47,800 --> 00:40:51,680 Speaker 1: able to provide it quickly to those customers. Later, in 695 00:40:51,719 --> 00:40:55,480 Speaker 1: two thousand eight, eBay would change dramatically. The company leadership 696 00:40:55,560 --> 00:40:57,880 Speaker 1: was trying to head off this problem of people moving 697 00:40:57,920 --> 00:41:01,160 Speaker 1: away from the site and a decline and online auctions, 698 00:41:01,640 --> 00:41:04,480 Speaker 1: so the company reached out to foreign partnerships with retailers 699 00:41:04,520 --> 00:41:08,279 Speaker 1: and created an online marketplace for those retailers products. Now 700 00:41:08,320 --> 00:41:11,320 Speaker 1: that move upset some longtime eBay users, but it helped 701 00:41:11,440 --> 00:41:14,560 Speaker 1: keep the site solvent. So I think the lesson there 702 00:41:14,840 --> 00:41:18,120 Speaker 1: is sometimes you've got to really explore options you hadn't 703 00:41:18,200 --> 00:41:22,200 Speaker 1: thought of in order to stay in business, and sometimes 704 00:41:22,280 --> 00:41:25,560 Speaker 1: those decisions might be a little unpopular with your customer base. 705 00:41:26,160 --> 00:41:29,000 Speaker 1: So you have to balance that out how much can 706 00:41:29,080 --> 00:41:32,960 Speaker 1: you do to ensure that you stay in business versus 707 00:41:33,000 --> 00:41:35,440 Speaker 1: how much are you going to alienate your customer base? 708 00:41:35,760 --> 00:41:37,560 Speaker 1: Because if you do it too much, then you've shut 709 00:41:37,600 --> 00:41:40,480 Speaker 1: yourself in the foot. So these are some of the 710 00:41:40,520 --> 00:41:43,520 Speaker 1: interesting stories. I mean, Google obviously also survived the dot 711 00:41:43,560 --> 00:41:47,319 Speaker 1: com bubble. Google in those days was already on its 712 00:41:47,320 --> 00:41:50,040 Speaker 1: way to becoming a powerful search engine, but it wouldn't 713 00:41:50,040 --> 00:41:53,280 Speaker 1: be until the early two thousand's that it truly began 714 00:41:53,440 --> 00:41:56,400 Speaker 1: to become a juggernaut. And when it started in the 715 00:41:56,440 --> 00:41:59,279 Speaker 1: mid two thousand's to become a publicly traded company, it 716 00:41:59,320 --> 00:42:01,640 Speaker 1: became a force to be reckoned with. It was almost 717 00:42:01,760 --> 00:42:04,239 Speaker 1: just small enough and nimble enough to survive the dot 718 00:42:04,239 --> 00:42:09,480 Speaker 1: com bubble bursting to get away without being tanked by 719 00:42:09,480 --> 00:42:12,000 Speaker 1: it the way so many other companies were. And there, 720 00:42:12,040 --> 00:42:14,959 Speaker 1: of course tons of other companies that rose and fell 721 00:42:15,120 --> 00:42:17,400 Speaker 1: during this time. I just touched on some of the 722 00:42:17,400 --> 00:42:20,120 Speaker 1: ones that I thought had some of the most interesting stories, 723 00:42:20,920 --> 00:42:24,080 Speaker 1: ones that often are associated with the dot com bubble burst. 724 00:42:24,120 --> 00:42:27,960 Speaker 1: There are others that rose, fell and then re emerged 725 00:42:28,000 --> 00:42:31,160 Speaker 1: as something else, and I didn't include those because in 726 00:42:31,200 --> 00:42:34,239 Speaker 1: some ways I feel like it's just misleading, because the 727 00:42:34,280 --> 00:42:36,320 Speaker 1: company that came out of it on the other side, 728 00:42:37,040 --> 00:42:39,520 Speaker 1: is so different from the company that went into it 729 00:42:39,920 --> 00:42:42,360 Speaker 1: that it's almost like two different entities in the first place. 730 00:42:43,200 --> 00:42:46,440 Speaker 1: But this was fun, uh, you know, it's looking at 731 00:42:46,480 --> 00:42:49,120 Speaker 1: companies that fail can never be fun. But it was 732 00:42:49,200 --> 00:42:51,759 Speaker 1: interesting to go back and look at the past and 733 00:42:51,840 --> 00:42:57,960 Speaker 1: see how these different companies uh grew, how they fell apart, 734 00:42:58,040 --> 00:43:01,120 Speaker 1: and what happened to the people afterward. Because frequently you 735 00:43:01,200 --> 00:43:03,560 Speaker 1: just hear the names of the companies, you don't really 736 00:43:03,640 --> 00:43:07,600 Speaker 1: understand that most in most cases, the people who founded 737 00:43:07,600 --> 00:43:11,759 Speaker 1: those companies are still very influential people, most of whom 738 00:43:11,800 --> 00:43:14,840 Speaker 1: are still in the tech sector. There their leaders of 739 00:43:14,920 --> 00:43:21,840 Speaker 1: various industries, and they continue to provide leadership. In many cases, 740 00:43:21,880 --> 00:43:24,840 Speaker 1: you could argue that they perhaps learned some very valuable 741 00:43:24,920 --> 00:43:29,760 Speaker 1: lessons from the dot com experience, painful lessons, but valuable ones, 742 00:43:30,400 --> 00:43:32,800 Speaker 1: and that as a result they might be better leaders 743 00:43:32,840 --> 00:43:35,280 Speaker 1: today than they would have been had they not gone 744 00:43:35,320 --> 00:43:37,960 Speaker 1: through that experience. It's kind of hard to say. Obviously, 745 00:43:38,000 --> 00:43:40,759 Speaker 1: we only have the one timeline to work with. We 746 00:43:40,800 --> 00:43:42,879 Speaker 1: can't duck our heads in a parallel universe and see 747 00:43:42,880 --> 00:43:45,719 Speaker 1: if it worked out some other way elsewhere. But I 748 00:43:45,760 --> 00:43:49,400 Speaker 1: find it really fascinating to look at these types of companies. 749 00:43:49,600 --> 00:43:52,120 Speaker 1: If there are any in that list that you specifically 750 00:43:52,120 --> 00:43:55,320 Speaker 1: would like to hear a full episode about, maybe a 751 00:43:55,360 --> 00:43:58,759 Speaker 1: deep dive on the history of eBay, for example, let 752 00:43:58,800 --> 00:44:01,600 Speaker 1: me know it's send me a message. The email address 753 00:44:01,680 --> 00:44:04,400 Speaker 1: is tech stuff at how stuff works dot com, or 754 00:44:04,480 --> 00:44:07,280 Speaker 1: draw me a line on Twitter or Facebook the handle 755 00:44:07,280 --> 00:44:11,120 Speaker 1: at both of those tech stuff hs W. Remember I 756 00:44:11,320 --> 00:44:14,400 Speaker 1: stream live when I am podcasting. You can go to 757 00:44:14,520 --> 00:44:17,520 Speaker 1: Twitch dot tv slash tech stuff and you can look 758 00:44:17,560 --> 00:44:20,239 Speaker 1: at the schedule there. Join me when I'm streaming. I'm 759 00:44:20,239 --> 00:44:22,799 Speaker 1: not doing it today, but that's because, as I record this, 760 00:44:23,000 --> 00:44:27,120 Speaker 1: Twitch is actually experiencing technical difficulties. So it's not my 761 00:44:27,200 --> 00:44:30,319 Speaker 1: fault this time. But most Wednesdays and Fridays you'll find 762 00:44:30,360 --> 00:44:33,239 Speaker 1: me streaming live on Twitch dot tv. I'd love for 763 00:44:33,280 --> 00:44:35,279 Speaker 1: you to join me. You can pop in the chat room. 764 00:44:35,280 --> 00:44:37,840 Speaker 1: I'm happy to chat with you guys and learn about 765 00:44:38,080 --> 00:44:41,080 Speaker 1: what you find interesting and what you want to hear about. 766 00:44:42,080 --> 00:44:45,960 Speaker 1: And uh, that's all for today. I'll talk to you 767 00:44:46,000 --> 00:44:55,719 Speaker 1: again really soon for more on this and thousands of 768 00:44:55,719 --> 00:45:01,439 Speaker 1: other topics. Is it how stuff works dot com? Who 769 00:45:03,239 --> 00:45:03,640 Speaker 1: wonder