WEBVTT - Dot Com Part 2 0:00:04.360 --> 0:00:07.760 In text with technology with tech Stuff from stuff works 0:00:07.800 --> 0:00:14.319 dot com. Hey there, and welcome to tech Stuff. I'm 0:00:14.360 --> 0:00:17.160 your host, Jonathan Strickland. I'm a senior writer with how 0:00:17.200 --> 0:00:19.640 stuff works dot com and as you guys know, I 0:00:19.760 --> 0:00:23.000 like to talk tech. This is part two of a 0:00:23.000 --> 0:00:27.120 two part episode about the companies that rose and fell 0:00:27.280 --> 0:00:33.800 during the dot com bubble crisis of one and where 0:00:33.800 --> 0:00:37.040 those folks are now, the people who launched those websites, 0:00:37.040 --> 0:00:40.080 what are they doing? And uh, We're going to continue 0:00:40.159 --> 0:00:42.560 on that train. Last episode we looked at web van, 0:00:42.960 --> 0:00:46.960 pets dot com, the search engine Excite, Broadcast dot com, 0:00:47.040 --> 0:00:49.960 and Boo dot com. But there are a lot of 0:00:50.000 --> 0:00:52.040 other companies that made a big name for themselves, at 0:00:52.120 --> 0:00:55.840 least briefly anyway, before burning out during the crash following 0:00:55.880 --> 0:00:58.840 the bubble's deflation. And there are also a couple of 0:00:58.880 --> 0:01:01.440 notable companies that they're the storm that I think we 0:01:01.480 --> 0:01:04.600 can look at and explore how it was that they 0:01:04.640 --> 0:01:08.560 survived when so many other companies didn't. So let's get started, 0:01:09.080 --> 0:01:11.200 and I think a good place to begin is the 0:01:11.240 --> 0:01:14.759 Globe dot com. This was one of the earliest social 0:01:14.840 --> 0:01:19.120 networking platforms on the web, predated the giants that would 0:01:19.160 --> 0:01:21.800 come later, like my Space, which of course isn't really 0:01:21.840 --> 0:01:24.760 a thing anymore, and Facebook, which is very much a 0:01:24.840 --> 0:01:28.119 thing still to this day. And the Globe dot Com 0:01:28.160 --> 0:01:32.720 was the brainchild of two Cornell students, Stefan Pattern and 0:01:32.840 --> 0:01:37.840 Todd Krisselman. The two were interested in computer programming and 0:01:37.880 --> 0:01:40.720 the commercial possibilities of the Worldwide Web, and they had 0:01:40.760 --> 0:01:44.000 also witnessed how compelling online chat rooms were, and they 0:01:44.000 --> 0:01:46.600 felt that there was probably a way they could monetize that. 0:01:48.920 --> 0:01:53.160 The two students raised fifteen thousand dollars from private investors 0:01:53.160 --> 0:01:55.480 and they used that money to buy computer servers and 0:01:55.560 --> 0:01:58.920 computer equipment to build out their idea. They worked on 0:01:58.960 --> 0:02:02.280 the design for several months and they launched the Globe 0:02:02.320 --> 0:02:06.480 dot Com in April nine. They formed a new company 0:02:06.480 --> 0:02:09.320 called web Genesis, and they hired on the staff of 0:02:09.360 --> 0:02:12.680 about a dozen people or so. And the site acted 0:02:12.760 --> 0:02:17.280 as part news aggregator, part message board, and part chat room. 0:02:17.320 --> 0:02:19.000 So if you went to the site, you would see 0:02:19.040 --> 0:02:23.680 a bunch of different categories of types of interests like 0:02:24.240 --> 0:02:26.080 sports and that kind of stuff, and you could go 0:02:26.160 --> 0:02:29.040 and click into that and read up on things. The 0:02:29.120 --> 0:02:31.360 chat room function was easily the most popular. When the 0:02:31.400 --> 0:02:34.680 site launched, they also launched software that could serve up 0:02:34.800 --> 0:02:38.480 polls and quizzes and surveys, so really the two students 0:02:38.480 --> 0:02:40.600 were way ahead of the curve on this one. As 0:02:40.639 --> 0:02:44.480 today those kind of features are wildly popular on social media, 0:02:44.639 --> 0:02:48.160 and they thought ahead to include it on their early 0:02:48.400 --> 0:02:52.560 social networking platform. The site was a success that had 0:02:53.040 --> 0:02:56.120 very passionate users, not an enormous user base, but they 0:02:56.120 --> 0:03:01.120 were very um frequent users, and in ninety the company 0:03:01.120 --> 0:03:03.320 made a decision to hold an i p O or 0:03:03.360 --> 0:03:07.239 initial public offering, is when a private company goes public 0:03:07.280 --> 0:03:11.280 and becomes a publicly traded company, and right around there 0:03:11.440 --> 0:03:14.680 is when things went a little bonkers. The global investment 0:03:14.720 --> 0:03:18.960 bank bear Sterns set the opening price at about nine 0:03:19.000 --> 0:03:22.120 dollars a share when the market opened. The demand for 0:03:22.160 --> 0:03:24.960 shares was such that the actual opening price ended up 0:03:25.000 --> 0:03:28.120 being eighties seven dollars per share, which is crazy, and 0:03:28.160 --> 0:03:31.639 at one point it even hit nine dollars per share. Now, 0:03:31.680 --> 0:03:34.480 by the end of the day, the price settled a 0:03:34.560 --> 0:03:37.240 little bit, but was still way over the opening price. 0:03:37.280 --> 0:03:40.000 It settled it around sixty three dollars fifty cents a 0:03:40.160 --> 0:03:44.040 share on paper, That meant that everyone who worked at 0:03:44.040 --> 0:03:48.200 the Globe dot Com became filthy rich, and some people 0:03:48.240 --> 0:03:50.640 started to behave that way. But as you guys know 0:03:50.760 --> 0:03:52.760 from this topic and the fact that no one has 0:03:52.760 --> 0:03:55.600 ever heard of this website these days, it was not 0:03:55.680 --> 0:03:59.000 meant to be. The site was not making money, and 0:03:59.000 --> 0:04:01.320 while millions of people were using the site, that just 0:04:01.480 --> 0:04:04.800 meant the costs of running the site remained high while 0:04:04.840 --> 0:04:07.000 there was no real way to or generate what revenue. 0:04:07.080 --> 0:04:10.840 So it was a sinking ship. People didn't shy away 0:04:10.840 --> 0:04:13.640 from blowing the whistle on the Globe dot Com. The 0:04:13.680 --> 0:04:16.640 company went public in the fall of A year later, 0:04:16.760 --> 0:04:19.479 The Street published a piece about the Globe dot Com 0:04:19.480 --> 0:04:23.240 that pulled no punches. Here is a direct quote from 0:04:23.279 --> 0:04:26.840 the Street. We're speaking, of course, of the Globe dot 0:04:26.880 --> 0:04:31.400 Com t g l O and essentially worthless business enterprise 0:04:31.520 --> 0:04:34.760 that has lost six of its value in the last 0:04:34.800 --> 0:04:39.120 five months, yet at its current price of barely thirteen dollars, 0:04:39.160 --> 0:04:46.840 still remains grotesquely overvalued. Ouch harsh words, but as it 0:04:46.839 --> 0:04:50.880 turns out, they were not entirely untrue. The Globe dot 0:04:50.920 --> 0:04:55.039 Com stock price continued its downward trend in nine and 0:04:55.120 --> 0:04:58.839 beyond and by January two thousand, pattern Not and Krizzleman 0:04:59.000 --> 0:05:02.440 stepped down from the company. They resigned. Pattern Out walked 0:05:02.440 --> 0:05:05.000 away with about a one and a half million dollars 0:05:05.000 --> 0:05:07.599 after selling off stock, much most of which he reportedly 0:05:08.120 --> 0:05:12.719 later lost in other investments. Krizzleman invested in some other 0:05:12.800 --> 0:05:15.320 companies and helped secure some of his wealth and more 0:05:15.360 --> 0:05:18.160 on those two in just a second. As for the site, 0:05:18.600 --> 0:05:21.520 it sputtered along for a while under new management, and 0:05:21.520 --> 0:05:23.360 in two thousand one the company had to lay off 0:05:23.400 --> 0:05:27.000 about half of its employees and the shares were trading 0:05:27.000 --> 0:05:30.960 at a dismal twenty five cents per share. It transitioned 0:05:30.960 --> 0:05:34.119 into a voice over Internet protocol company for a while, 0:05:34.320 --> 0:05:38.120 or voipe company, and it had some interests in the 0:05:38.200 --> 0:05:42.080 gaming industry as well, but despite those businesses being more 0:05:42.120 --> 0:05:45.000 stable than the initial website, the company ultimately had to 0:05:45.040 --> 0:05:47.760 shut down in two thousand seven for good. It had 0:05:47.800 --> 0:05:51.320 never fully recovered, and honestly, the social networking part of 0:05:51.360 --> 0:05:54.520 the Globe dot com had died around the time that 0:05:54.600 --> 0:05:59.360 the founders stepped down. Today, Todd Krizzleman is the CEO 0:05:59.520 --> 0:06:03.000 and co founder of a company called Media Radar, which 0:06:03.080 --> 0:06:07.400 is an ad sales application company and Stefan pattern Not 0:06:07.680 --> 0:06:10.680 is the chairman and CEO as well as the co 0:06:10.839 --> 0:06:14.800 founder of a company called Slated Incorporated, which is on 0:06:15.040 --> 0:06:18.760 an online film packaging, networking and investment marketplace. So they're 0:06:18.760 --> 0:06:23.920 doing just fine. Now let's stick to the topic of money. 0:06:23.960 --> 0:06:27.040 While we're chatting about these dot com companies, there were 0:06:27.040 --> 0:06:29.880 a couple of companies that rose up to try and 0:06:29.960 --> 0:06:35.080 become leaders in a brand new space, digital currency. So 0:06:35.160 --> 0:06:38.160 you might have thought that bitcoin was relatively new. This 0:06:38.240 --> 0:06:41.360 idea of digital currencies was new. Now, it's been around 0:06:41.360 --> 0:06:44.760 since the nineties. Shortly after the Web became a real entity. 0:06:45.240 --> 0:06:47.320 There were people who were thinking of ways of creating 0:06:47.440 --> 0:06:51.640 virtual online currencies. Now these were not cryptocurrencies. These didn't 0:06:51.760 --> 0:06:54.520 use the blockchain approach the way bitcoin and some other 0:06:54.560 --> 0:07:00.120 cryptocurrencies do, but they were virtual digital currencies. It's so 0:07:00.880 --> 0:07:02.840 back in the late nineties, a couple of different companies 0:07:02.839 --> 0:07:07.240 were trying to get this going. But they're they're really 0:07:07.400 --> 0:07:11.480 in some ways, we're behaving more like gift cards than 0:07:11.680 --> 0:07:15.720 outright currencies. So the two companies I want to talk 0:07:15.760 --> 0:07:23.920 about specifically are Flus and Beans. Flus is spelled f 0:07:24.200 --> 0:07:28.320 L o O Z and beans B e e b 0:07:28.600 --> 0:07:31.640 e e n Z. You started getting to the point 0:07:31.680 --> 0:07:33.960 where you're getting the e sound and you're thinking, have 0:07:34.080 --> 0:07:37.000 I said too many? Ease one, B two ease and 0:07:37.080 --> 0:07:40.840 in in a Z flus and beans. You just can't 0:07:40.840 --> 0:07:43.720 make this stuff up, guys. Oh, I guess technically you can, 0:07:43.920 --> 0:07:45.920 but you don't have to because someone already did it 0:07:46.000 --> 0:07:49.800 years ago. Now. Flus took its name from an Arabic 0:07:49.920 --> 0:07:55.000 word flus, meaning money, and Robert Levitan, who had a 0:07:55.080 --> 0:08:00.760 successful venture with I Village, launched Flus in nine. The 0:08:00.840 --> 0:08:03.160 idea was that customers would be able to buy flues 0:08:03.240 --> 0:08:05.480 credits that could be used at a couple of dozen 0:08:05.560 --> 0:08:08.920 different online retailers, and it was pretty easy to send 0:08:08.920 --> 0:08:11.840 those credits online to other people, like you could email 0:08:12.360 --> 0:08:15.559 essentially a gift certificate to someone else. So the idea 0:08:15.600 --> 0:08:17.840 was that you could buy flus for someone, give them 0:08:17.880 --> 0:08:20.560 the virtual currency which they could go and then spend 0:08:20.560 --> 0:08:23.240 on something they actually wanted rather than just receiving it 0:08:23.360 --> 0:08:27.280 another ugly Christmas sweater or whatever. Based on all the 0:08:27.360 --> 0:08:31.080 articles I looked over for this podcast, Flus may have 0:08:31.200 --> 0:08:34.400 best been known not for its method of business, but 0:08:34.520 --> 0:08:37.000 for its commercials, which kind of reminds me of pets 0:08:37.000 --> 0:08:41.160 dot com. Honestly, the company booked would be Goldberg as 0:08:41.200 --> 0:08:45.680 their spokesperson, and that move alone costs several million dollars. Meanwhile, 0:08:46.080 --> 0:08:49.719 Levitan was finding it challenging to get customers, both on 0:08:49.760 --> 0:08:53.559 the business side with retailers and on the consumers side 0:08:53.559 --> 0:08:57.199 with people who would actually use the product. Unlike many 0:08:57.320 --> 0:08:59.959 of the other companies I have covered in these two episod, 0:09:00.280 --> 0:09:02.800 Flus never held an I p O. It remained a 0:09:02.840 --> 0:09:06.920 privately held company throughout its existence. In two thousand one, 0:09:07.000 --> 0:09:10.199 it started to really struggle as the bubble was deflating 0:09:10.320 --> 0:09:12.120 and there was a report that the company may have 0:09:12.200 --> 0:09:16.079 been the victim of fraud. In addition to that, according 0:09:16.120 --> 0:09:19.360 to the story, there was a group of Russian thieves 0:09:19.400 --> 0:09:22.160 and hackers who were using stolen credit card numbers to 0:09:22.200 --> 0:09:26.800 purchase three hundred thousand dollars worth of FLUS credits. Now, 0:09:26.840 --> 0:09:28.960 if true, this could have been a real issue for 0:09:29.000 --> 0:09:31.280 FLUS because it would be a company left holding the 0:09:31.320 --> 0:09:34.560 bag when it's revealed that the purchases came from illegal sources. 0:09:35.040 --> 0:09:37.080 It would have caused real cash flow crunch at a 0:09:37.080 --> 0:09:40.400 critical time FLUS would have to cover the the expenses 0:09:40.600 --> 0:09:44.080 given to retailers, and meanwhile, it doesn't have any real 0:09:44.240 --> 0:09:47.640 money to hold onto because of the fact that the 0:09:47.880 --> 0:09:52.559 purchases came from criminal sources. Whether the fraud actually happened 0:09:52.640 --> 0:09:55.880 or not is a moot point. FLUS closed up shop 0:09:55.920 --> 0:09:58.640 in the summer of two thousand one, just two years 0:09:58.679 --> 0:10:02.240 after it had launched. People with FLUS credits found themselves 0:10:02.360 --> 0:10:07.160 out of luck just holding useless digital currency. And this 0:10:07.240 --> 0:10:10.400 is a valuable lesson in currency. And I'm talking about 0:10:10.400 --> 0:10:14.320 all currency, not just digital. Remember, your money is only 0:10:14.320 --> 0:10:17.280 worth something for as long as we collectively believe it 0:10:17.360 --> 0:10:20.719 to be. So if tomorrow we all woke up and 0:10:20.760 --> 0:10:25.079 said that dollars are worthless, dollars would be worthless because 0:10:25.080 --> 0:10:28.240 no one would accept them in return for anything. So 0:10:28.480 --> 0:10:31.360 the only reason this money has any value is because 0:10:31.360 --> 0:10:34.760 we have agreed upon it. Well, in the case of FLUS, 0:10:35.200 --> 0:10:37.760 people no longer had confidence in it, and therefore they 0:10:37.760 --> 0:10:41.040 no longer believed in the power of lows to be money, 0:10:41.240 --> 0:10:45.559 and ultimately it failed. Fortunately, most governments are on slightly 0:10:45.600 --> 0:10:48.520 more firm ground than FLUS was in two thousand one. 0:10:49.720 --> 0:10:54.840 Most sometimes you have a country like Greece that gets 0:10:54.840 --> 0:10:57.840 into some difficult economic times and there are a lot 0:10:57.840 --> 0:11:01.360 of tough questions at that point. As for Levitan, he 0:11:01.520 --> 0:11:04.559 went on to work with several other ventures. In two 0:11:04.600 --> 0:11:07.840 thousand four, he co founded Pando Networks. This was a 0:11:07.880 --> 0:11:10.640 peer to peer networking company that used that peer to 0:11:10.679 --> 0:11:14.440 peer approach to distribute software like games and videos. If 0:11:14.440 --> 0:11:16.840 you don't remember what peer to peer networking is, that's 0:11:16.880 --> 0:11:19.640 when you get a bunch of computers that are owned 0:11:19.679 --> 0:11:22.880 by various people out there. You run a specific type 0:11:22.880 --> 0:11:26.040 of peer to peer software and that allows those computers 0:11:26.080 --> 0:11:29.920 to essentially be their own little database network, and you 0:11:30.000 --> 0:11:34.520 can send files across the network. You can you can 0:11:34.600 --> 0:11:39.680 download stuff from multiple sources, which speeds up your download process, 0:11:39.720 --> 0:11:42.920 and it decentralizes it so if one computer goes down, 0:11:43.000 --> 0:11:45.120 there's still other computers on the network you can still 0:11:45.160 --> 0:11:48.440 get the stuff you need. It's a perfectly legitimate way 0:11:48.440 --> 0:11:52.079 to distribute information. It's just that peer to peer networks, 0:11:52.080 --> 0:11:56.280 over the course of the history of them, have often 0:11:56.320 --> 0:12:01.000 been used to pirate software and other material reels, and 0:12:01.080 --> 0:12:04.360 so it's gotten a bad rap. But there's nothing innately 0:12:04.520 --> 0:12:07.240 illegal about peer to peer. It's just the way some 0:12:07.280 --> 0:12:12.160 people have used it. Microsoft would purchase Pando Networks in 0:12:12.200 --> 0:12:15.000 two thousand thirteen, and then Levitan went on to co 0:12:15.160 --> 0:12:18.280 found the company Live in two thousand and fourteen. This 0:12:18.360 --> 0:12:20.720 is a company that is making a real time local 0:12:20.800 --> 0:12:24.959 events search app. I think I tried tracking it down, 0:12:25.000 --> 0:12:27.800 but I didn't actually have much success. I did find 0:12:27.800 --> 0:12:30.520 a web page where you can sign up for more information, 0:12:31.200 --> 0:12:33.480 but it just showed me a video that looked like 0:12:33.520 --> 0:12:36.920 a cross between Mad Max, Beyond Thunderdome and Fight Club, 0:12:36.960 --> 0:12:38.800 and I'm not sure I want to find that event 0:12:38.800 --> 0:12:43.200 in the first place. There you go. Uh, The actual 0:12:43.240 --> 0:12:46.560 event showed people riding bicycles and jousting with mops while 0:12:46.600 --> 0:12:49.800 a giant trash puppet was moving around in the background. 0:12:49.840 --> 0:12:52.280 I honestly don't know what it was supposed to tell me, 0:12:52.760 --> 0:12:54.559 apart from the fact that I guess if I had 0:12:54.600 --> 0:12:56.520 the app on my phone, I would know that that 0:12:56.600 --> 0:13:00.720 crazy stuff is going down, and maybe I could go 0:13:00.760 --> 0:13:04.880 the other way. As for Beans, that company was the 0:13:04.920 --> 0:13:09.600 brainchild of Charles Cohen, who's not the billionaire Charles Cohen, 0:13:09.679 --> 0:13:14.800 but a britt entrepreneur. At he was an Oxford graduate, 0:13:14.960 --> 0:13:18.079 he had an idea and he was a former speechwriter 0:13:18.200 --> 0:13:21.520 for the Liberal Democrats in the UK. He launched Beans 0:13:21.600 --> 0:13:25.200 in n and Cohen's approach was similar to Levitans in 0:13:25.240 --> 0:13:28.120 some ways. But beans was a virtual currency you could 0:13:28.120 --> 0:13:31.280 not only purchase with real money. You could also earn 0:13:31.679 --> 0:13:36.240 beans through various activities, so you could be paid in beans. 0:13:37.800 --> 0:13:41.400 I guess if you were selling account perhaps you could 0:13:41.440 --> 0:13:45.079 get paid in beans. For example, you might earn beans 0:13:45.120 --> 0:13:48.520 by clicking a specific link, or reading an article or 0:13:48.559 --> 0:13:51.280 watching a video. So it became an incentive to get 0:13:51.360 --> 0:13:55.760 engagement from users. You probably have encountered something like this 0:13:55.920 --> 0:13:59.880 online at some point, where you are allowed to do 0:14:00.080 --> 0:14:03.120 something like inner sweepstakes, but only after you watch a video. 0:14:03.360 --> 0:14:06.520 It's similar to that in many ways. So it wasn't 0:14:06.600 --> 0:14:09.960 just a gift certificate style program, but an actual currency 0:14:10.000 --> 0:14:13.800 you'd receive as a reward in return for specific actions. Now, 0:14:13.840 --> 0:14:17.760 each unit of beans, which was beans, whether it's plural 0:14:17.880 --> 0:14:21.760 or singular, was worth about half a penny. The idea 0:14:22.280 --> 0:14:25.600 seemed fairly solid. Businesses have been attracting customers and keeping 0:14:25.600 --> 0:14:28.040 them loyal with similar programs for years. I mean, there 0:14:28.040 --> 0:14:31.320 are tons of different companies out there that have loyalty programs. 0:14:31.720 --> 0:14:34.160 You know, you buy ten coffees and you get the 0:14:34.200 --> 0:14:36.960 eleventh one free, that kind of thing. So it's kind 0:14:37.000 --> 0:14:39.200 of along those lines, except it was meant to be 0:14:39.320 --> 0:14:44.040 something that would work across multiple companies. So maybe you 0:14:44.080 --> 0:14:46.880 buy a couple of T shirts at one retailer and 0:14:46.920 --> 0:14:48.600 then you have enough beans to buy a cup of 0:14:48.600 --> 0:14:51.920 coffee at a different retailer, or vice versa. You drink 0:14:51.960 --> 0:14:53.680 a lot of coffee and then you can buy some shirts. 0:14:54.400 --> 0:14:56.440 That was the idea, and it seemed like a pretty 0:14:56.440 --> 0:14:59.840 good one, and to this day we see multiple implementations 0:15:00.040 --> 0:15:02.520 of this idea, though they tend to be specific to 0:15:02.600 --> 0:15:06.280 a particular vendor or merchant. So in other words, you 0:15:06.360 --> 0:15:08.960 might have a Starbucks app that allows you to get 0:15:09.040 --> 0:15:12.000 loyalty points whenever you buy coffee from Starbucks, but you 0:15:12.000 --> 0:15:15.040 can't necessarily convert that into anything else, Like you can't 0:15:15.520 --> 0:15:18.640 use those credits to go and buy books at a 0:15:18.680 --> 0:15:23.000 bookstore or music or anything like that. Cohen ended up 0:15:23.080 --> 0:15:25.560 raising a great deal of money from investors in those 0:15:25.600 --> 0:15:29.000 early days. Articles give amounts in the eighty to one 0:15:29.080 --> 0:15:33.280 hundred million dollar range. That's a lot of cheddar and 0:15:33.400 --> 0:15:37.720 investors included Larry Ellison of Oracle fame. The tech of 0:15:37.800 --> 0:15:41.040 Beans depended pretty heavily on Oracle as well. Cohen wanted 0:15:41.040 --> 0:15:44.600 a currency that would work across borders, which meant that 0:15:44.640 --> 0:15:47.200 it had to take into account exchange rates, which are 0:15:47.200 --> 0:15:52.320 incredibly complex and change frequently. So the software that would 0:15:52.400 --> 0:15:56.120 allow for this kind of conversion lived on Oracle database 0:15:56.200 --> 0:15:59.840 servers and Sun Microsystems computers. It was pretty serious tech 0:16:00.240 --> 0:16:02.280 to run this in the background to make sure that 0:16:02.320 --> 0:16:06.720 you had the right prices uh converted into beans. Despite 0:16:06.720 --> 0:16:09.640 having the same problems that Flus did, which namely was 0:16:09.720 --> 0:16:12.640 getting online retailers to participate in the strategy in the 0:16:12.680 --> 0:16:16.040 first place, Beans chugged along for a short while. In 0:16:16.160 --> 0:16:19.000 July two thousand, Beans was big enough news to get 0:16:19.040 --> 0:16:23.240 extensive coverage and Info World magazine the articles pretty interesting. 0:16:23.640 --> 0:16:27.080 Cohen proclaimed that beans would become the universal currency of 0:16:27.080 --> 0:16:30.160 the future. There was even a partnership struck up with 0:16:30.200 --> 0:16:34.360 the credit card MasterCard. They had a thing called rewards 0:16:34.160 --> 0:16:38.640 the card with a Z after reward and it's all 0:16:38.680 --> 0:16:42.120 one word, so rewards the card from MasterCard, which would 0:16:42.200 --> 0:16:44.760 let you shift those beans to real life cash in 0:16:44.840 --> 0:16:47.160 businesses that accept master Card as a form of payment 0:16:47.800 --> 0:16:50.560 so you could earn Beans then use your credit card 0:16:50.600 --> 0:16:54.120 with Beans credits on it to make purchases. Everything seemed 0:16:54.120 --> 0:16:56.080 to be going really well for the company, and they 0:16:56.120 --> 0:17:01.160 scaled up to global operations with offices and numerous countries 0:17:01.200 --> 0:17:05.639 and cities cities like New York or Stockholm, Sydney, Hong Kong, 0:17:06.119 --> 0:17:09.520 and at its height they had about two fifty employees. 0:17:10.240 --> 0:17:14.840 And then things took a pretty sharp turn. Despite its 0:17:14.880 --> 0:17:19.520 presence and its heavy marketing campaigns, Beans failed to generate revenue. 0:17:19.880 --> 0:17:22.080 It would take a few more years before people began 0:17:22.119 --> 0:17:25.239 to use the Internet to really make purchases on a 0:17:25.280 --> 0:17:28.760 regular basis. There was this trust issue people had to 0:17:28.800 --> 0:17:32.119 get past. They were all worried about making, you know, 0:17:32.280 --> 0:17:36.119 purchases online and then having their identity stolen or money 0:17:36.119 --> 0:17:38.320 stolen from them, or maybe they would never get the 0:17:38.359 --> 0:17:41.440 thing they wanted to buy. No one was really eager 0:17:41.480 --> 0:17:44.600 to jump on the internet as a way of buying 0:17:44.680 --> 0:17:48.160 stuff yet, and most people still preferred to do their 0:17:48.160 --> 0:17:50.400 shopping in brick and mortar stores. For the most part, 0:17:50.560 --> 0:17:53.640 Beans just wasn't bulling in the beans as it were. 0:17:55.000 --> 0:17:57.760 According to c Net, Beans also ran into trouble with 0:17:57.840 --> 0:18:00.800 the law. Not all countries were cool with a company 0:18:00.800 --> 0:18:04.200 inventing its own global currency, and it got so serious 0:18:04.240 --> 0:18:07.200 that at one point the u K's Financial Service Authority 0:18:07.280 --> 0:18:11.600 Task Force rated Bean's offices in the UK. By two 0:18:11.640 --> 0:18:14.720 thousand one, the writing was on the wall. The company 0:18:14.760 --> 0:18:17.879 began to scale down, shutting down many of the thirteen 0:18:18.040 --> 0:18:21.240 offices across the world and laying off employees left and right. 0:18:21.840 --> 0:18:25.840 By May two thousand, employees had shrunk down to thirty 0:18:25.960 --> 0:18:28.280 and Beans was clearly trying to squeeze out as much 0:18:28.280 --> 0:18:30.720 money from its assets to pay back investors as it 0:18:30.760 --> 0:18:34.640 possibly could. By August two thousand one, it was all over. 0:18:35.119 --> 0:18:38.399 The company was finished. Charles Cohen went on to become 0:18:38.440 --> 0:18:42.880 the CEO of a company called Probability Plc, which designed 0:18:42.880 --> 0:18:46.600 and published gambling games for mobile devices. He left that 0:18:46.680 --> 0:18:49.560 company in May two thousand fourteen and became a vice 0:18:49.600 --> 0:18:52.800 president of Mobile at I G T for their North 0:18:52.800 --> 0:18:57.600 America Sporting Sports Betting division, and he works out of 0:18:57.600 --> 0:19:01.719 the Bay Area. I think Beings and Flus weren't necessarily 0:19:01.760 --> 0:19:04.280 bad ideas for the record, but I do think they 0:19:04.280 --> 0:19:06.680 were ahead of their time, and perhaps in another five 0:19:06.800 --> 0:19:09.679 or ten years they might have flourished, so it may 0:19:09.720 --> 0:19:12.040 have just been a case of a great idea at 0:19:12.080 --> 0:19:14.919 the wrong time. It's kind of sad because I actually 0:19:14.920 --> 0:19:17.960 like the idea of getting rewards points that are applicable 0:19:18.000 --> 0:19:21.800 across multiple vendors. I don't know how you make that 0:19:21.920 --> 0:19:25.119 arrangement so that not, you know, no single vendor gets 0:19:27.000 --> 0:19:29.680 harmed by this. I mean, if everyone is making their 0:19:29.720 --> 0:19:32.560 purchases at certain vendors and they're all cashing in their 0:19:32.560 --> 0:19:37.120 rewards points at another vendor, the rewards points vendors having 0:19:37.160 --> 0:19:39.280 a rough time of it, unless there's some other money 0:19:39.320 --> 0:19:43.520 exchange on the back end between the agency and the 0:19:43.520 --> 0:19:47.640 the the vendor. I don't know, but I would love 0:19:47.680 --> 0:19:51.520 it because it would really simplify all those loyalty cards. 0:19:51.560 --> 0:19:54.800 Instead of having to have multiple apps or multiple cards, 0:19:55.760 --> 0:19:59.320 you would have just one. Google. Google Wallet has tried 0:19:59.400 --> 0:20:02.719 something similar in the past, so maybe we'll see that 0:20:02.960 --> 0:20:05.680 rise up again in the future. I got a lot 0:20:05.720 --> 0:20:08.680 more to talk about with dot com companies that went 0:20:08.760 --> 0:20:11.159 belly up, but first let's take a quick break to 0:20:11.280 --> 0:20:21.520 thank our sponsor. Rolling right along, let's take a look 0:20:21.560 --> 0:20:25.520 at Cosmo dot com investment bankers Joseph Park and Yong 0:20:25.720 --> 0:20:29.800 Kang launched the company in n It was a fast 0:20:29.840 --> 0:20:33.280 delivery service. The company's pitch was that it could deliver 0:20:33.440 --> 0:20:36.800 lots of stuff like small stuff like coffee or DVDs 0:20:36.880 --> 0:20:40.000 or other small items in under an hour and there 0:20:40.000 --> 0:20:43.600 were no additional delivery charges. Cosmo landed a deal with 0:20:43.640 --> 0:20:46.119 Starbucks early on, and from a consumer side, it all 0:20:46.119 --> 0:20:48.880 looked really promising a man that you no longer had 0:20:48.920 --> 0:20:52.600 to wait. Whenever you ordered something online, you could get 0:20:52.680 --> 0:20:55.720 near instant gratification because within an hour it would show 0:20:55.800 --> 0:20:59.560 up at your door. Cosmo delivery agents rode around New 0:20:59.640 --> 0:21:03.919 York the first Cosmo market, on bicycles, and the service 0:21:03.960 --> 0:21:07.040 was gaining ground with consumers, but the company was losing 0:21:07.080 --> 0:21:10.399 money on every delivery. Now. Their hope was that they 0:21:10.400 --> 0:21:12.960 would be able to stay afloat in the early phases 0:21:13.000 --> 0:21:15.840 as they gathered a customer base before turning on some 0:21:15.920 --> 0:21:19.879 revenue generation generating streams. And it was a risky bet 0:21:19.920 --> 0:21:23.720 and it very nearly paid off. It. It wasn't like 0:21:23.760 --> 0:21:27.679 it was a bad idea. It almost worked. Cosmo was 0:21:27.760 --> 0:21:30.199 growing and by the end of nineteen it was in 0:21:30.280 --> 0:21:33.879 six markets in six locations, and by early two thousand 0:21:34.280 --> 0:21:38.040 it grew to eleven cities and twenty two locations, and 0:21:38.080 --> 0:21:42.000 after eighteen months in business they had three hundred thousand customers. 0:21:42.720 --> 0:21:45.600 By mid two thousand, that was up to four hundred 0:21:45.600 --> 0:21:49.879 thousand customers, and they employed more than twenty six hundred people, 0:21:50.160 --> 0:21:55.480 and all those employees were called Cosmo knots cute. Around 0:21:55.520 --> 0:21:58.720 that same time, publications such as Forbes were warning that 0:21:58.760 --> 0:22:02.359 Cosmo might be expanded too quickly and they didn't have 0:22:02.480 --> 0:22:06.880 enough revenue generation to keep this sustainable. It was going 0:22:06.920 --> 0:22:09.359 to end up collapsing in on itself if they weren't careful. 0:22:09.720 --> 0:22:11.919 An article in June two thousand and Forbes said that 0:22:11.920 --> 0:22:14.840 Cosmo had spent more than twenty six million dollars in 0:22:16.440 --> 0:22:19.160 and they only generated three and a half million dollars 0:22:19.240 --> 0:22:22.520 in revenue, so obviously that can't go on forever. The 0:22:22.560 --> 0:22:26.280 privately held company prepared to launch an initial public offering, 0:22:26.400 --> 0:22:29.320 but between the lead up and the launch, the dot 0:22:29.359 --> 0:22:33.280 com market began to crash, and the company also found 0:22:33.320 --> 0:22:36.360 that it was harder to penetrate some markets, such as Houston, 0:22:36.800 --> 0:22:39.280 which the company had abandoned after trying to make an 0:22:39.320 --> 0:22:42.040 impact there for five months. They just couldn't get enough 0:22:42.080 --> 0:22:44.760 of a customer base to justify the expense of operating 0:22:44.760 --> 0:22:46.600 in Houston, and so they pulled out of the city. 0:22:47.760 --> 0:22:50.639 While Cosmo operated at a profit in four of the 0:22:50.640 --> 0:22:53.439 cities that had a presence in that wasn't enough to 0:22:53.520 --> 0:22:57.080 satisfy ANTSI investors who were watching the world crumble around 0:22:57.119 --> 0:23:00.360 them with every other dot com company falling left right, 0:23:00.880 --> 0:23:03.840 and those profits that they were generating were not enough 0:23:03.920 --> 0:23:06.200 to keep the company going on its own while trying 0:23:06.200 --> 0:23:11.240 to make other locations become profitable. So Cosmo withdrew from 0:23:11.320 --> 0:23:13.840 the I p O. They canceled it, and by April 0:23:13.880 --> 0:23:17.240 two thousand one, all their money had run out and 0:23:17.240 --> 0:23:20.600 the company had to shut down. As for the founders, 0:23:20.840 --> 0:23:23.600 they went on to work on other big projects. Joseph 0:23:23.640 --> 0:23:27.200