WEBVTT 00:00:00.000 --> 00:00:02.060 Okay, let's unpack this. We talk about failure 00:00:02.060 --> 00:00:04.500 in business a lot on this show. We talk about 00:00:04.500 --> 00:00:06.559 pivoting. We talk about the lean startup methodology, 00:00:06.900 --> 00:00:11.400 you know, failing fast. But today, today we are 00:00:11.400 --> 00:00:13.359 not talking about a normal failure. We aren't 00:00:13.359 --> 00:00:15.820 talking about a lemonade stand that didn't quite 00:00:15.820 --> 00:00:18.019 work out. We're definitely not. This is a different 00:00:18.019 --> 00:00:20.379 category altogether. Today we are talking about 00:00:20.379 --> 00:00:23.640 a failure so spectacular, so expensive, and just 00:00:23.640 --> 00:00:27.550 so incredibly fast that it became a legend. It's 00:00:27.550 --> 00:00:29.469 the kind of story that business schools use to 00:00:29.469 --> 00:00:34.189 scare freshmen. We are talking about Boo .com. 00:00:34.310 --> 00:00:37.090 That name, for anyone who lived through the dot 00:00:37.090 --> 00:00:39.570 -com bubble of the late 90s, it just instantly 00:00:39.570 --> 00:00:42.189 conjures up a very specific feeling. Right. What 00:00:42.189 --> 00:00:45.609 is that feeling? It's a mix of nostalgia, disbelief, 00:00:45.609 --> 00:00:47.390 and maybe a little bit of secondhand embarrassment. 00:00:47.509 --> 00:00:50.250 It's just iconic. Exactly. It's synonymous with 00:00:50.250 --> 00:00:53.740 the dot -com bubble bursting. But here is the 00:00:53.740 --> 00:00:56.119 mission for this deep dive. And I want everyone 00:00:56.119 --> 00:00:58.280 to really listen to this number because it just, 00:00:58.299 --> 00:01:01.560 it defies the laws of physics. We are going to 00:01:01.560 --> 00:01:04.560 figure out how a single company managed to burn 00:01:04.560 --> 00:01:10.280 through $135 million of venture capital. $135 00:01:10.280 --> 00:01:13.799 million. In just 18 months. It is a staggering 00:01:13.799 --> 00:01:15.439 figure. And you have to remember, this is late 00:01:15.439 --> 00:01:18.200 90s money with inflation that's significantly 00:01:18.200 --> 00:01:22.280 more today. But even then, just raw cash. That 00:01:22.280 --> 00:01:25.099 is a mountain of money to just, you know, vaporize. 00:01:25.099 --> 00:01:27.599 In 18 months. That is. I mean, I've done the 00:01:27.599 --> 00:01:29.480 math and we will get to the specific burn rates 00:01:29.480 --> 00:01:32.159 later. But just on the surface, that is financial 00:01:32.159 --> 00:01:34.579 immolation. It is. It's not just a business closing 00:01:34.579 --> 00:01:36.879 its doors. It's a catastrophe. Yeah. It's like 00:01:36.879 --> 00:01:39.079 watching a train wreck. But the train is made 00:01:39.079 --> 00:01:41.739 of gold bars. It is. But I think it's really 00:01:41.739 --> 00:01:43.879 important to frame this correctly before we dive 00:01:43.879 --> 00:01:46.239 in. Because if we just look at it as stupid people 00:01:46.239 --> 00:01:49.519 spending money, we miss the actual lesson here. 00:01:49.700 --> 00:01:52.299 This is a case study in what the. economist Robert 00:01:52.299 --> 00:01:55.879 Shiller called irrational exuberance. It's a 00:01:55.879 --> 00:01:59.060 story about timing, about the disconnect between 00:01:59.060 --> 00:02:03.000 technological ambition and the actual, you know, 00:02:03.000 --> 00:02:04.939 the infrastructure that existed at the time. 00:02:05.040 --> 00:02:07.159 Right. It's about trying to build a Ferrari when 00:02:07.159 --> 00:02:09.319 the roads are still made of dirt. Precisely. 00:02:09.319 --> 00:02:12.060 That's a perfect analogy. And to guide us through 00:02:12.060 --> 00:02:14.800 this, we are looking at a stack of historical 00:02:14.800 --> 00:02:17.560 records, various postmortems written by people 00:02:17.560 --> 00:02:19.699 who were actually there, and specifically the 00:02:19.699 --> 00:02:21.659 founder's own account from their book, Boo Hoo. 00:02:21.780 --> 00:02:25.000 Boo Hoo. Great title. Chuckles. It is. So we're 00:02:25.000 --> 00:02:27.539 piecing together the rise and fall of this British 00:02:27.539 --> 00:02:30.719 e -commerce business to understand not just what 00:02:30.719 --> 00:02:33.400 went wrong, but why everyone, and I mean everyone, 00:02:33.520 --> 00:02:35.539 thought it was going so right until the very 00:02:35.539 --> 00:02:38.139 last second. So let's rewind. Let's go back to 00:02:38.139 --> 00:02:40.740 the late 90s. The internet is the Wild West. 00:02:40.979 --> 00:02:43.379 Money is falling from the sky for anyone with 00:02:43.379 --> 00:02:45.520 a dot com in their name. And the sound of a dial 00:02:45.520 --> 00:02:48.659 -up modem is in every home. That screech. And 00:02:48.659 --> 00:02:50.759 onto this stage walk are three protagonists. 00:02:50.960 --> 00:02:53.099 The golden children, as they were called. Who 00:02:53.099 --> 00:02:56.370 were they? At the center of the storm, you have 00:02:56.370 --> 00:03:00.710 a Swedish trio, Ernst Malmsten, Kajsa Leander, 00:03:00.889 --> 00:03:04.060 and Patrick Hedelin. And here is where it gets 00:03:04.060 --> 00:03:06.900 really interesting. And this is crucial for understanding 00:03:06.900 --> 00:03:09.879 why they got so much money. They weren't novices. 00:03:09.939 --> 00:03:11.960 They weren't just three kids in a garage with 00:03:11.960 --> 00:03:14.139 a big idea. They weren't just random kids with 00:03:14.139 --> 00:03:16.800 a PowerPoint presentation and a dream. No, not 00:03:16.800 --> 00:03:20.099 at all. In the eyes of investors, they were sophisticated 00:03:20.099 --> 00:03:23.099 Internet entrepreneurs. And that's because before 00:03:23.099 --> 00:03:25.460 Boo .com, they had already built a company called 00:03:25.460 --> 00:03:28.620 Bocas .com. Bocas .com. I'm sensing a branding 00:03:28.620 --> 00:03:32.349 theme here. The dot com was the key. Very similar 00:03:32.349 --> 00:03:35.050 branding approach. Yeah. Bocas .com was an online 00:03:35.050 --> 00:03:36.650 bookstore. You can think of it as the Amazon 00:03:36.650 --> 00:03:39.530 of Scandinavia. And was it successful? Very. 00:03:39.650 --> 00:03:43.370 In 1997, it became the third largest book e -retailer. 00:03:43.389 --> 00:03:45.909 They built it. It was a success. And they sold 00:03:45.909 --> 00:03:48.349 it. They had an exit. OK, so that explains a 00:03:48.349 --> 00:03:50.469 lot. That's everything. They walk into a boardroom. 00:03:50.509 --> 00:03:52.030 They put their resume on the table. And they 00:03:52.030 --> 00:03:53.650 can say, look, we've already done this. We beat 00:03:53.650 --> 00:03:56.430 the odds once. Give us more money for a bigger 00:03:56.430 --> 00:03:59.439 idea. Exactly. They had a proven track record 00:03:59.439 --> 00:04:01.680 in a world where investors were throwing money 00:04:01.680 --> 00:04:03.840 at people who just had a vague idea written on 00:04:03.840 --> 00:04:07.560 a napkin. These three had a real tangible success 00:04:07.560 --> 00:04:10.240 story under their belts. Right. That credibility 00:04:10.240 --> 00:04:12.520 is what unlocked the vault. You have to put yourself 00:04:12.520 --> 00:04:15.060 in the mindset of a venture capitalist in 1998 00:04:15.060 --> 00:04:19.459 or 1999. Their biggest fear is not losing money. 00:04:19.600 --> 00:04:22.079 Their biggest fear is missing the next big thing. 00:04:22.220 --> 00:04:26.259 It's FOMO. Fear of missing out. Massive FOMO. 00:04:26.339 --> 00:04:28.939 So when these three walk in looking cool, looking 00:04:28.939 --> 00:04:31.800 European, fashionable with a success story already 00:04:31.800 --> 00:04:34.759 finished, the checkbooks just opened almost automatically. 00:04:34.759 --> 00:04:36.939 So they have the credibility. What was the vision 00:04:36.939 --> 00:04:38.860 this time? Because they didn't want to sell books 00:04:38.860 --> 00:04:41.569 again. They wanted something, I guess. sexier. 00:04:41.689 --> 00:04:44.189 No, books were too small, too utilitarian. I 00:04:44.189 --> 00:04:45.750 mean, books are easy to ship. They don't spoil. 00:04:46.110 --> 00:04:48.209 They don't have sizes. They're simple. A solved 00:04:48.209 --> 00:04:50.850 problem almost. Right. The vision for Boo .com 00:04:50.850 --> 00:04:54.209 was to become the premier global online sports 00:04:54.209 --> 00:04:57.009 and fashion retailer. They didn't want to be 00:04:57.009 --> 00:04:59.649 a digital catalog. They wanted to build a lifestyle 00:04:59.649 --> 00:05:01.930 brand. And who were they targeting with this? 00:05:01.970 --> 00:05:04.360 Who was the customer? The demographic was very, 00:05:04.480 --> 00:05:07.519 very specific. Young, wealthy, fashionable people. 00:05:08.220 --> 00:05:11.560 Basically, the 18 to 24 year old crowd who had 00:05:11.560 --> 00:05:14.019 disposable income and cared deeply about looking 00:05:14.019 --> 00:05:17.250 good. The cool kids. It sounds less like a store 00:05:17.250 --> 00:05:19.689 and more like an exclusive club. That was 100 00:05:19.689 --> 00:05:21.810 percent the vibe they were going for. They wanted 00:05:21.810 --> 00:05:24.209 to be the place where the cool kids shopped online. 00:05:24.629 --> 00:05:27.170 But here is the kicker. And this is one of the 00:05:27.170 --> 00:05:30.949 first major strategic decisions that arguably 00:05:30.949 --> 00:05:34.220 set them on the path to ruin. Think about Amazon 00:05:34.220 --> 00:05:36.860 for a second. We mentioned them. How did Amazon 00:05:36.860 --> 00:05:40.180 start? Books. Just books. And mostly just in 00:05:40.180 --> 00:05:42.040 the U .S. initially, right? It was a very focused 00:05:42.040 --> 00:05:44.980 launch. Exactly. Jeff Bezos was obsessed with 00:05:44.980 --> 00:05:47.360 logistics. He started with books because they 00:05:47.360 --> 00:05:50.279 were a simple, uniform product. He mastered the 00:05:50.279 --> 00:05:52.259 U .S. market before he even thought about crossing 00:05:52.259 --> 00:05:55.519 the Atlantic. It was slow. It was methodical 00:05:55.519 --> 00:05:58.360 expansion. So what did Boo .com do? They decided 00:05:58.360 --> 00:06:00.600 to launch in Europe and America simultaneously. 00:06:00.899 --> 00:06:04.279 On day one. On day one. Global domination from 00:06:04.279 --> 00:06:06.519 the opening bell. That is, that's beyond ambitious. 00:06:06.680 --> 00:06:08.939 Yeah. That sounds almost impossible. It's incredibly 00:06:08.939 --> 00:06:11.220 difficult. Let's just, you know, break down what 00:06:11.220 --> 00:06:13.699 that actually means. If you decide to launch 00:06:13.699 --> 00:06:16.740 in the U .S., the U .K., Germany, France, Sweden, 00:06:16.839 --> 00:06:20.579 and Finland all on the same day, what are you 00:06:20.579 --> 00:06:23.600 actually dealing with operationally? Well, languages 00:06:23.600 --> 00:06:26.040 for one. The site has to work in German, French, 00:06:26.199 --> 00:06:28.360 English, Swedish. That's a huge translation job. 00:06:28.699 --> 00:06:31.500 Correct. But that's just the interface, the easy 00:06:31.500 --> 00:06:34.600 part. Think about the back end. Currencies. Right. 00:06:34.699 --> 00:06:36.860 The euro wasn't in physical circulation yet. 00:06:37.079 --> 00:06:40.040 Exactly. The euro exists as a financial concept, 00:06:40.139 --> 00:06:42.439 but people in France are spending francs. People 00:06:42.439 --> 00:06:44.540 in Germany are spending Deutsche Marks. People 00:06:44.540 --> 00:06:47.000 in Italy are spending lira. You need a payment 00:06:47.000 --> 00:06:49.000 processing system that handles all of that in 00:06:49.000 --> 00:06:52.399 real time. And taxes. VAT, value added tax. Every 00:06:52.399 --> 00:06:54.399 single country in Europe has different tax rules, 00:06:54.459 --> 00:06:56.980 different rates. And then you have consumer protection 00:06:56.980 --> 00:07:00.480 laws. The return policy required by law in Germany 00:07:00.480 --> 00:07:02.399 is completely different from the one in the U 00:07:02.399 --> 00:07:05.250 .S. So by saying day one global. They didn't 00:07:05.250 --> 00:07:07.389 just build one company. They effectively tried 00:07:07.389 --> 00:07:09.730 to launch, what, six or seven different startups 00:07:09.730 --> 00:07:12.430 on the same day, all tied together by a website 00:07:12.430 --> 00:07:14.769 that didn't even exist yet. That is the perfect 00:07:14.769 --> 00:07:16.829 way to put it. They multiplied their complexity 00:07:16.829 --> 00:07:20.089 by a factor of 10, maybe more, just for the vanity 00:07:20.089 --> 00:07:22.709 of being able to say, we are a global company 00:07:22.709 --> 00:07:25.529 from day one. It was an operational nightmare 00:07:25.529 --> 00:07:27.870 from the jump. And speaking of vanity, let's 00:07:27.870 --> 00:07:30.399 talk about the name. I found this little nugget 00:07:30.399 --> 00:07:33.259 in the research hilarious. They didn't even want 00:07:33.259 --> 00:07:35.839 boo .com originally, did they? No, not at all. 00:07:35.920 --> 00:07:39.560 The original heart's desire was bow .com. B -O 00:07:39.560 --> 00:07:43.240 -O dot com. As in, inspired by Bo Derek, the 00:07:43.240 --> 00:07:45.680 actress. That's the story. They wanted that Hollywood 00:07:45.680 --> 00:07:47.660 glamour. They wanted a name that sounded like 00:07:47.660 --> 00:07:50.399 a supermodel. Short, chic. But I'm guessing Bo 00:07:50.399 --> 00:07:52.600 .com was already taken. It was. And the owner 00:07:52.600 --> 00:07:54.759 probably wanted a fortune for it, even back then. 00:07:54.839 --> 00:07:57.759 So they pivoted. They just, you know, added a 00:07:57.759 --> 00:08:01.019 note. They found a dealer selling Boo .com. And 00:08:01.019 --> 00:08:03.379 they bought it for $2 ,500. Which, honestly, 00:08:03.519 --> 00:08:07.259 for a three -letter domain name, even then. $2 00:08:07.259 --> 00:08:10.079 ,500 is a steal compared to what they spent on 00:08:10.079 --> 00:08:12.480 everything else. It was probably the most efficient 00:08:12.480 --> 00:08:14.720 money they ever spent in the entire 18 months. 00:08:15.000 --> 00:08:17.319 In today's market, a three -letter domain like 00:08:17.319 --> 00:08:19.720 that could be hundreds of thousands, maybe millions. 00:08:19.959 --> 00:08:22.500 So, yeah, good deal there. Okay, so they have 00:08:22.500 --> 00:08:24.839 the name. They have the famous founders. They 00:08:24.839 --> 00:08:28.100 have this insane global ambition. Now, let's 00:08:28.100 --> 00:08:31.339 talk about the execution, or more accurately, 00:08:31.420 --> 00:08:33.840 the spending. We have to talk about... The burn. 00:08:33.940 --> 00:08:36.700 The burn is legendary. It's what makes Boo .com 00:08:36.700 --> 00:08:39.220 a business school case study. It's just mind 00:08:39.220 --> 00:08:40.700 boggling. Let's start with the headquarters. 00:08:41.059 --> 00:08:43.580 If you're a scrappy startup, where do you set 00:08:43.580 --> 00:08:47.419 up shop? A garage? A cheap office park, maybe 00:08:47.419 --> 00:08:49.759 a sublet basement somewhere. If you are Amazon, 00:08:49.980 --> 00:08:52.860 you famously use a door on sawhorses as a desk 00:08:52.860 --> 00:08:55.559 to save money. If you are Boo .com, you set up 00:08:55.559 --> 00:08:57.539 your global headquarters on Carnaby Street in 00:08:57.539 --> 00:08:59.700 London. Carnaby Street. That's not a tech hub. 00:08:59.759 --> 00:09:01.620 That's the historic heart of swinging London 00:09:01.620 --> 00:09:04.539 fashion. That is prime expensive real estate. 00:09:04.820 --> 00:09:07.559 Exactly. It was a statement, a fashionable address 00:09:07.559 --> 00:09:09.720 for a fashionable company. They weren't building 00:09:09.720 --> 00:09:12.259 a tech utility. They were building a brand. And 00:09:12.259 --> 00:09:14.559 the office culture, by all accounts, reflected 00:09:14.559 --> 00:09:17.490 that. There are stories about the guru room. 00:09:17.610 --> 00:09:20.389 The guru room? What's that? A dedicated meditation 00:09:20.389 --> 00:09:23.509 space in the office. They had fresh fruit delivered 00:09:23.509 --> 00:09:26.850 daily for everyone. They had a concierge service 00:09:26.850 --> 00:09:29.289 for employees to help them book, you know, theater 00:09:29.289 --> 00:09:31.730 tickets and dinner reservations. Concierge? Yeah. 00:09:31.980 --> 00:09:34.759 For startup employees? Yes. It was the absolute 00:09:34.759 --> 00:09:37.559 height of dot -com excess. They were spending 00:09:37.559 --> 00:09:40.220 money to project an image of success before they 00:09:40.220 --> 00:09:42.679 had earned a single dollar of profit. It sounds 00:09:42.679 --> 00:09:44.639 like they were playing business rather than actually 00:09:44.639 --> 00:09:46.879 doing business. In a way, yes. It was about the 00:09:46.879 --> 00:09:49.080 image. And the staffing reflected that explosion. 00:09:49.299 --> 00:09:52.039 They started with about 40 employees. A tight 00:09:52.039 --> 00:09:55.059 ship. Manageable. Normal. But by October 1999, 00:09:55.340 --> 00:09:57.259 just as they were ramping up to launch, they 00:09:57.259 --> 00:10:01.139 had 400 employees. 400. Across how many offices? 00:10:01.659 --> 00:10:04.860 Eight offices, London, Amsterdam, Munich, New 00:10:04.860 --> 00:10:08.340 York, Paris, Stockholm. They were staffing up 00:10:08.340 --> 00:10:10.419 these global hubs before they had even sold a 00:10:10.419 --> 00:10:13.879 single pair of sneakers. That is a massive, massive 00:10:13.879 --> 00:10:16.860 overhead. You're paying rent in midtown Manhattan 00:10:16.860 --> 00:10:20.580 and central Paris with no revenue. And salaries. 00:10:20.919 --> 00:10:23.700 And not just minimum wage. They were hiring cool 00:10:23.700 --> 00:10:26.960 people. They were poaching editors from top fashion 00:10:26.960 --> 00:10:29.919 magazines, photographers, stylists. People who 00:10:29.919 --> 00:10:32.179 expected a certain lifestyle and a certain salary. 00:10:32.259 --> 00:10:34.639 But the thing that really blew my mind, the statistic 00:10:34.639 --> 00:10:36.620 that I had to read three times, just to make 00:10:36.620 --> 00:10:39.039 sure I wasn't hallucinating, was the marketing 00:10:39.039 --> 00:10:42.019 spend. The pre -launch marketing. How much did 00:10:42.019 --> 00:10:45.159 they spend on advertising and PR before the website 00:10:45.159 --> 00:10:47.259 was even live and able to take an order? $25 00:10:47.259 --> 00:10:53.059 million. $25 million. Before they sold a product, 00:10:53.120 --> 00:10:55.970 before the doors even opened. That is just, I 00:10:55.970 --> 00:10:57.470 can't wrap my head around that. Think about the 00:10:57.470 --> 00:10:59.970 psychology of that. You are creating this immense 00:10:59.970 --> 00:11:03.690 global hype. You have glossy full -page ads in 00:11:03.690 --> 00:11:06.450 Vanity Fair and Vogue. You have TV spots directed 00:11:06.450 --> 00:11:08.929 by Roman Coppola. Francis Ford Coppola's son. 00:11:09.149 --> 00:11:11.529 Yeah. They hired Hollywood royalty to make commercials 00:11:11.529 --> 00:11:14.059 for a website. Yes. And the commercials were 00:11:14.059 --> 00:11:16.360 completely abstract. They were just vibes. They 00:11:16.360 --> 00:11:18.039 didn't really show the website. They just showed 00:11:18.039 --> 00:11:21.080 beautiful people and beautiful locations doing 00:11:21.080 --> 00:11:23.480 beautiful things. They were selling a membership 00:11:23.480 --> 00:11:26.259 to a club that didn't exist yet. So imagine you're 00:11:26.259 --> 00:11:28.759 the target customer. You see an ad for the coolest 00:11:28.759 --> 00:11:31.000 store in the world. You get all excited. And 00:11:31.000 --> 00:11:33.259 then you realize you can't actually go in yet. 00:11:33.320 --> 00:11:36.309 It's not open. That was the experience for months, 00:11:36.450 --> 00:11:39.870 and it was all based on this land grab mentality. 00:11:40.210 --> 00:11:42.509 You have to remember the era. The prevailing 00:11:42.509 --> 00:11:45.470 wisdom of the dot -com bubble was get big fast. 00:11:45.730 --> 00:11:48.289 The idea was that the Internet is a winner -take 00:11:48.289 --> 00:11:50.129 -all market. So if you can establish the brand 00:11:50.129 --> 00:11:52.970 first, you win everything. Profits. That's a 00:11:52.970 --> 00:11:55.929 problem for, you know, 2005. The only thing that 00:11:55.929 --> 00:11:57.850 matters right now is capturing the mind share 00:11:57.850 --> 00:12:01.009 first. That's spending $25 million. That puts 00:12:01.009 --> 00:12:03.230 a ticking clock on your back that has to be deafening. 00:12:03.750 --> 00:12:06.129 If you spend that much telling people you are 00:12:06.129 --> 00:12:08.549 amazing, you better be absolutely perfect on 00:12:08.549 --> 00:12:10.970 day one. Exactly. You are writing a check that 00:12:10.970 --> 00:12:13.669 your technology has to cash. If you tell me you 00:12:13.669 --> 00:12:16.250 are the greatest store on Earth for six months 00:12:16.250 --> 00:12:18.570 and then I finally log on and I get a generic 00:12:18.570 --> 00:12:21.629 error message or a loading screen, the disappointment. 00:12:22.460 --> 00:12:25.279 is 10 times worse than if you had just been humble. 00:12:25.460 --> 00:12:28.399 It creates this massive expectation gap. A chasm. 00:12:28.639 --> 00:12:31.200 And that brings us to the overall financial picture. 00:12:31.320 --> 00:12:34.720 We mentioned the $135 million total burn in 18 00:12:34.720 --> 00:12:37.940 months, but let's look at the velocity of that 00:12:37.940 --> 00:12:40.799 burn. Okay. In just six months, one six -month 00:12:40.799 --> 00:12:44.299 period, they burned through 125 million pounds. 00:12:44.639 --> 00:12:46.820 Wait, pounds. So that's even more in dollars. 00:12:46.980 --> 00:12:49.980 Yes. So that's what? About $170 million at the 00:12:49.980 --> 00:12:52.460 time in six months. I don't even know how you 00:12:52.460 --> 00:12:55.320 physically write checks that fast. Did they have 00:12:55.320 --> 00:12:57.559 a bonfire in the Carnaby Street office and just 00:12:57.559 --> 00:12:59.919 throw cash in it? It comes down to operational 00:12:59.919 --> 00:13:02.500 excess and just chaos. It wasn't just the ads. 00:13:02.539 --> 00:13:05.259 It was the out -of -control payroll. The postmortem 00:13:05.259 --> 00:13:07.220 suggests there was a total lack of direction 00:13:07.220 --> 00:13:09.519 regarding how many staff were actually needed. 00:13:09.779 --> 00:13:12.080 It was hiring for the sake of hiring. We are 00:13:12.080 --> 00:13:14.240 a big global company. Therefore, we need 400 00:13:14.240 --> 00:13:16.960 people. That was the logic. Plus, terrible communication 00:13:16.960 --> 00:13:19.120 between departments meant money was just leaking 00:13:19.120 --> 00:13:21.379 everywhere. Different offices buying their own 00:13:21.379 --> 00:13:24.519 software, duplicating work. It was a mess. So, 00:13:24.600 --> 00:13:27.360 you have a massive staff, a massive ad budget, 00:13:27.440 --> 00:13:30.100 and massive office rent. But you're an e -commerce 00:13:30.100 --> 00:13:32.860 company. The one thing you really, really need 00:13:32.860 --> 00:13:35.379 to nail, the only thing you really need to nail, 00:13:35.460 --> 00:13:38.879 is the website. The technology. And this is where 00:13:38.879 --> 00:13:41.080 the tragedy really sets in. This is the heart 00:13:41.080 --> 00:13:43.659 of the failure. We call this the technology trap. 00:13:44.039 --> 00:13:46.399 The outline calls it ambition versus reality. 00:13:46.779 --> 00:13:49.940 And I think that is perfect because their ambition 00:13:49.940 --> 00:13:54.000 was Star Trek. And the reality was. Well, 1999. 00:13:54.179 --> 00:13:57.519 Yes. Tell me about Miss Boo. Ah, Miss Boo. She 00:13:57.519 --> 00:13:59.860 was the mascot, but she was more than that. She 00:13:59.860 --> 00:14:01.960 was conceived as a sales assistant -style avatar 00:14:01.960 --> 00:14:04.059 designed to guide users through the site. She 00:14:04.059 --> 00:14:06.320 was animated. She had a personality. Like a digital 00:14:06.320 --> 00:14:08.500 personal shopper. A much cooler version. A version 00:14:08.500 --> 00:14:10.639 of Clippy the paperclip from Microsoft Word. 00:14:10.879 --> 00:14:14.059 Yes, a fashion -forward Clippy, exactly. And 00:14:14.059 --> 00:14:17.259 alongside her, they developed this... revolutionary 00:14:17.259 --> 00:14:20.059 3D dressing room technology. The idea was that 00:14:20.059 --> 00:14:22.539 you could literally drag and drop clothes onto 00:14:22.539 --> 00:14:25.059 a 3D model and inspect them from any angle. So 00:14:25.059 --> 00:14:26.940 you could zoom in on the stitching, spin the 00:14:26.940 --> 00:14:29.519 shoe around to see the heel. Exactly. All of 00:14:29.519 --> 00:14:32.039 that. Which, to be fair, sounds awesome. In 2025, 00:14:32.360 --> 00:14:33.940 we have that. I use that all the time on retail 00:14:33.940 --> 00:14:36.179 sites. It's great. We do. It's standard now, 00:14:36.320 --> 00:14:38.779 but we did not have that in 1999. They were trying 00:14:38.779 --> 00:14:42.659 to build 2025 technology using 1999 tools and 00:14:42.659 --> 00:14:46.049 for a 1999 audience. Talk to me about the cost 00:14:46.049 --> 00:14:48.509 of this coolness. What did it cost to build this? 00:14:48.830 --> 00:14:51.370 The development costs for this proprietary virtual 00:14:51.370 --> 00:14:54.769 technology was over $6 million. They built their 00:14:54.769 --> 00:14:57.429 own 3D rendering engine from scratch. $6 million 00:14:57.429 --> 00:15:00.850 just for the code? Yes, but the maintenance cost. 00:15:01.129 --> 00:15:03.629 This is the kicker. It cost half a million dollars 00:15:03.629 --> 00:15:06.029 every single month just to keep that 3D tech 00:15:06.029 --> 00:15:08.009 running. Wait, let me just pause you there. $500 00:15:08.009 --> 00:15:10.330 ,000 a month just to keep the virtual dressing 00:15:10.330 --> 00:15:13.580 room open. For a month, yes, because this wasn't 00:15:13.580 --> 00:15:16.539 simple HTML code. This was incredibly server 00:15:16.539 --> 00:15:20.019 intensive. Every time a single user spun a shoe, 00:15:20.240 --> 00:15:23.379 a server somewhere in London had to crunch a 00:15:23.379 --> 00:15:26.379 huge amount of numbers and send a stream of images 00:15:26.379 --> 00:15:29.399 back to them. They needed a massive bank of servers 00:15:29.399 --> 00:15:32.539 and a team of very specialized, very expensive 00:15:32.539 --> 00:15:35.279 engineers just to keep it online. Put that in 00:15:35.279 --> 00:15:37.039 context for me. If I'm a traditional retailer 00:15:37.039 --> 00:15:40.039 in 1999, what does half a million dollars a month 00:15:40.039 --> 00:15:42.279 get me? That's the lease on a flagship store 00:15:42.279 --> 00:15:45.120 on Fifth Avenue in New York City and the staff 00:15:45.120 --> 00:15:47.379 to run it. And Boo .com was spending that on 00:15:47.379 --> 00:15:49.779 a single digital feature that, and this is the 00:15:49.779 --> 00:15:52.120 most fruitful part, most of their customers couldn't 00:15:52.120 --> 00:15:54.059 even load. And this is where we had to get technical 00:15:54.059 --> 00:15:55.539 for a second. We have to talk about the pipe. 00:15:55.679 --> 00:15:58.519 We do. We have to talk about bandwidth. The fundamental 00:15:58.519 --> 00:16:01.019 limitation of the era. For our younger listeners, 00:16:01.159 --> 00:16:03.039 or for anyone who has blocked out the trauma, 00:16:03.360 --> 00:16:05.639 can you please describe the internet experience 00:16:05.639 --> 00:16:10.360 in 1999? Okay, so you didn't have Wi -Fi. You 00:16:10.360 --> 00:16:12.720 didn't have fiber. You had a beige box in the 00:16:12.720 --> 00:16:14.679 corner of the room, your desktop computer. You 00:16:14.679 --> 00:16:17.240 plugged a phone cord from the computer into the 00:16:17.240 --> 00:16:19.720 phone jack on the wall, your only phone line. 00:16:19.940 --> 00:16:21.600 So no one could call the house while you were 00:16:21.600 --> 00:16:24.860 online? No one. You clicked connect and you heard 00:16:24.860 --> 00:16:28.879 a sound, a very specific sound. song of my people 00:16:28.879 --> 00:16:31.519 i can hear it now that sound is the sound of 00:16:31.519 --> 00:16:35.399 a 56k modem establishing a connection 56 kilobits 00:16:35.399 --> 00:16:38.379 per second to put that in modern terms downloading 00:16:38.379 --> 00:16:41.039 a single high quality photo from instagram today 00:16:41.039 --> 00:16:43.919 would take you about 30 to 40 seconds on that 00:16:43.919 --> 00:16:46.440 correction painful Absolutely painful. Now, Boo 00:16:46.440 --> 00:16:50.519 .com built a site that was 100 % reliant on heavy 00:16:50.519 --> 00:16:53.720 code, specifically JavaScript and Flash. Flash 00:16:53.720 --> 00:16:55.840 was this animation software that was notorious 00:16:55.840 --> 00:16:58.100 for being incredibly heavy and slow to load. 00:16:58.279 --> 00:17:01.059 To load just the front page of Boo .com, you 00:17:01.059 --> 00:17:04.240 were downloading megabytes of data. So I'm at 00:17:04.240 --> 00:17:06.619 home. I hear the ad on the radio. I type in Boo 00:17:06.619 --> 00:17:09.779 .com. And then what happens? You wait. You just 00:17:09.779 --> 00:17:12.140 see a loading bar. Maybe you go make a cup of 00:17:12.140 --> 00:17:14.779 tea. You come back, it's still loading. We're 00:17:14.779 --> 00:17:16.960 talking minutes, not seconds. And they knew this 00:17:16.960 --> 00:17:18.759 was a problem, right? There was literally a warning 00:17:18.759 --> 00:17:22.119 on the site. Yes. Right on the front page, in 00:17:22.119 --> 00:17:25.680 small text, it had a warning. This site is designed 00:17:25.680 --> 00:17:29.740 for 56K modems and above. And above. It's very 00:17:29.740 --> 00:17:32.579 optimistic for 1999. It was excluding anyone 00:17:32.579 --> 00:17:35.279 with an older, slower connection, which was still 00:17:35.279 --> 00:17:38.259 a lot of people. But even if you had the top 00:17:38.259 --> 00:17:42.240 -of -the -line 56K modem, it was unbearably sluggish. 00:17:42.440 --> 00:17:44.680 Imagine standing outside a gap and the doors 00:17:44.680 --> 00:17:46.700 locked for five minutes while they load the store 00:17:46.700 --> 00:17:49.200 layout inside. You'd just walk away. You would, 00:17:49.299 --> 00:17:51.720 and people did. The bounce rates were huge. And 00:17:51.720 --> 00:17:53.339 even if you were patient enough to get in, the 00:17:53.339 --> 00:17:55.819 interface itself was deeply flawed. Because they 00:17:55.819 --> 00:17:58.359 wanted to control the look so precisely, they 00:17:58.359 --> 00:18:00.660 used a fixed -size window. What does that mean, 00:18:00.740 --> 00:18:03.480 a fixed -size window? It means the website didn't 00:18:03.480 --> 00:18:06.200 fill your whole screen. It popped up in this 00:18:06.200 --> 00:18:09.299 little designated square, maybe 800 by 600 pixels. 00:18:09.720 --> 00:18:12.200 And because they filled that tiny square with 00:18:12.200 --> 00:18:14.579 Miss Boo and the 3D dressing room and all this 00:18:14.579 --> 00:18:17.799 branding, there was almost no room left for the 00:18:17.799 --> 00:18:20.839 actual product information. The price, the description, 00:18:21.079 --> 00:18:23.779 the sizes, it was all crammed into a tiny corner. 00:18:24.000 --> 00:18:26.160 So I'm waiting five minutes to see a tiny picture 00:18:26.160 --> 00:18:28.660 of a shoe with no information next to it. Pretty 00:18:28.660 --> 00:18:31.660 much. And the navigation. It was a nightmare. 00:18:31.839 --> 00:18:34.720 It was a hierarchical system that forced you 00:18:34.720 --> 00:18:37.759 to click through multiple menus. Give me an example. 00:18:37.819 --> 00:18:40.000 Walk me through buying something. Okay, so say 00:18:40.000 --> 00:18:42.680 you want a running vest. You click sport. Wait 00:18:42.680 --> 00:18:44.460 for the page to load. You click running. Wait 00:18:44.460 --> 00:18:46.599 for it to load. Click apparel. Wait again. Click 00:18:46.599 --> 00:18:48.900 vests. Wait again. I'm already bored just listening 00:18:48.900 --> 00:18:51.240 to this. And here's the punchline. You finally 00:18:51.240 --> 00:18:53.079 get to the page with the vest. Yeah. You find 00:18:53.079 --> 00:18:55.220 your size in a drop -down menu. You select it. 00:18:55.339 --> 00:18:58.180 And only then, after all those clicks, does the 00:18:58.180 --> 00:19:00.700 system check the inventory database. Well, no. 00:19:00.839 --> 00:19:03.460 And it comes back with a message, out of stock. 00:19:03.839 --> 00:19:06.619 And then, what do I do then? You have to start 00:19:06.619 --> 00:19:09.180 over. Go all the way back to the sport category 00:19:09.180 --> 00:19:11.220 and begin the whole process again. There was 00:19:11.220 --> 00:19:13.980 no back button that worked properly. That is 00:19:13.980 --> 00:19:17.200 user hostile. That is actively fighting your 00:19:17.200 --> 00:19:19.359 customer who is trying to give you money. It 00:19:19.359 --> 00:19:22.920 violated every basic rule of usability. It truly 00:19:22.920 --> 00:19:25.140 sounds like they built a website for the computers 00:19:25.140 --> 00:19:28.039 and Internet speeds of 2005, but they launched 00:19:28.039 --> 00:19:31.380 it on the infrastructure of 1999. They ignored 00:19:31.380 --> 00:19:34.259 the reality of the last mile into people's homes. 00:19:34.420 --> 00:19:37.279 They built a beautiful 3D interactive swimming 00:19:37.279 --> 00:19:40.460 pool. But they forgot that everyone coming to 00:19:40.460 --> 00:19:42.579 visit only had a drinking straw to experience 00:19:42.579 --> 00:19:44.579 it with. That's it. That's the perfect summary 00:19:44.579 --> 00:19:46.599 of the tech failure. So we have the insane burn 00:19:46.599 --> 00:19:48.480 rate. We have the terrible technology. We have 00:19:48.480 --> 00:19:51.700 frustrated users. Now we get to the crash. The 00:19:51.700 --> 00:19:54.839 launch finally happens. Autumn 1999. And it happens 00:19:54.839 --> 00:19:57.079 after what the press called highly publicized 00:19:57.079 --> 00:19:59.380 delays, which already makes people nervous. It 00:19:59.380 --> 00:20:01.039 makes investors nervous. And because of those 00:20:01.039 --> 00:20:03.779 delays, that massive ad campaign, remember that 00:20:03.779 --> 00:20:07.119 $25 million spend? A lot of it ran while the 00:20:07.119 --> 00:20:10.079 site wasn't even ready. Yes. This is a classic 00:20:10.079 --> 00:20:13.339 coordination failure. The marketing team booked 00:20:13.339 --> 00:20:15.920 the magazine spreads and the TV spots months 00:20:15.920 --> 00:20:18.279 in advance. The tech team slipped the deadline 00:20:18.279 --> 00:20:21.640 by months. So the ads run. People see the ad, 00:20:21.720 --> 00:20:23.980 they get curious, they go to the URL, and they 00:20:23.980 --> 00:20:27.420 see a holding page. A coming soon sign. That's 00:20:27.420 --> 00:20:30.400 money literally set on fire. You paid millions 00:20:30.400 --> 00:20:32.740 of dollars to send people to a closed door. And 00:20:32.740 --> 00:20:34.920 by the time the site actually launched, a lot 00:20:34.920 --> 00:20:36.859 of that initial buzz had started to turn into 00:20:36.859 --> 00:20:39.519 skepticism. The press started asking, so what's 00:20:39.519 --> 00:20:41.380 the problem? Does this thing actually work? And 00:20:41.380 --> 00:20:44.480 then the world turned. The entire macroeconomic 00:20:44.480 --> 00:20:46.420 environment shifted under their feet. The dot 00:20:46.420 --> 00:20:51.369 crash. Q2 of 2000, April specifically, the NASDAQ, 00:20:51.609 --> 00:20:53.470 which is the stock market index where all these 00:20:53.470 --> 00:20:55.609 tech stocks live, just fell off a cliff. The 00:20:55.609 --> 00:20:57.589 bubble burst. Why does that matter so much for 00:20:57.589 --> 00:20:59.569 a private company like Boo? They weren't on the 00:20:59.569 --> 00:21:02.619 stock market yet. Because their entire business 00:21:02.619 --> 00:21:06.039 plan, their entire philosophy relied on an endless 00:21:06.039 --> 00:21:09.099 supply of venture capital. They were losing money 00:21:09.099 --> 00:21:11.500 on every single sale, burning millions a month 00:21:11.500 --> 00:21:13.680 in overhead. They assumed that they could just 00:21:13.680 --> 00:21:15.559 keep raising more money, a Series B, a Series 00:21:15.559 --> 00:21:17.960 C, a Series D, until they eventually went public 00:21:17.960 --> 00:21:20.779 in an IPO and everyone got rich. So they're basically 00:21:20.779 --> 00:21:24.200 a patient hooked up to a money IV drip. And the 00:21:24.200 --> 00:21:26.920 Nasdaq Q crash ripped the IV out of their arm. 00:21:27.700 --> 00:21:30.420 Investors suddenly got terrified. They looked 00:21:30.420 --> 00:21:32.700 at their portfolios, saw they were down 50 % 00:21:32.700 --> 00:21:35.539 in a month, and said, no more risky bets, no 00:21:35.539 --> 00:21:38.420 more companies with zero profits and a crazy 00:21:38.420 --> 00:21:41.299 burn rate. The funding freeze hit Boo instantly. 00:21:42.119 --> 00:21:43.980 But were they selling anything? I mean, with 00:21:43.980 --> 00:21:45.559 all these problems, was there any revenue coming 00:21:45.559 --> 00:21:47.720 in at all? They were. And that's the real tragic 00:21:47.720 --> 00:21:50.059 irony of the story. The sales were actually growing 00:21:50.059 --> 00:21:52.920 rapidly. In the final fortnight before they closed 00:21:52.920 --> 00:21:54.940 their doors, they sold half a million dollars 00:21:54.940 --> 00:21:57.420 worth of product. Wow. So that's a million dollar 00:21:57.420 --> 00:22:00.119 a month run rate. That's not nothing. That proves 00:22:00.119 --> 00:22:02.839 the core idea that people wanted to buy clothes 00:22:02.839 --> 00:22:06.059 online. It does. The concept was right. But the 00:22:06.059 --> 00:22:09.079 expenses were eating them alive. And there was 00:22:09.079 --> 00:22:11.200 one specific killer in the logistics that was 00:22:11.200 --> 00:22:14.500 bleeding them dry. Returns. Returns are always 00:22:14.500 --> 00:22:17.500 a headache in retail, especially fashion. Boo 00:22:17.500 --> 00:22:20.519 offered free returns for customers. Which is 00:22:20.519 --> 00:22:22.799 great for the user, right? It builds trust. But 00:22:22.799 --> 00:22:25.779 Boo was paying their logistics supplier, Deutsche 00:22:25.779 --> 00:22:28.420 Post, for every single one of those returns. 00:22:28.819 --> 00:22:31.039 And because people couldn't really see the product 00:22:31.039 --> 00:22:33.859 well on the site because the 3D model was blurry 00:22:33.859 --> 00:22:36.980 or the color was off on their old CRT monitor. 00:22:37.279 --> 00:22:39.519 The return rate was much higher than they expected. 00:22:39.759 --> 00:22:41.920 So every time someone sent a jacket back, Boo 00:22:41.920 --> 00:22:44.079 paid for the shipping both ways and lost the 00:22:44.079 --> 00:22:46.799 sale. Every single return was just cash bleeding 00:22:46.799 --> 00:22:48.839 out of the company. It's the classic unit economics 00:22:48.839 --> 00:22:51.480 problem. old joke we lose money on every sale 00:22:51.480 --> 00:22:53.420 but we'll make it up in volume and as that joke 00:22:53.420 --> 00:22:56.619 proves that never ever works so the money runs 00:22:56.619 --> 00:23:00.460 out may 18 2000 receivership liquidation it was 00:23:00.460 --> 00:23:03.680 over 18 months yeah 135 million dollars yeah 00:23:03.680 --> 00:23:06.460 gone gone up in smoke so let's look at the aftermath 00:23:06.460 --> 00:23:09.130 the dust settles who got hurt the most here Well, 00:23:09.210 --> 00:23:12.069 the list of losers is very long. The biggest 00:23:12.069 --> 00:23:15.329 single financial loser was a fund called Omnia, 00:23:15.490 --> 00:23:17.470 which was backed by the wealthy Hariri family. 00:23:17.869 --> 00:23:22.190 They invested nearly 20 million pounds. Poof. 00:23:22.329 --> 00:23:24.829 Gone. Completely wiped out. Then you have the 00:23:24.829 --> 00:23:27.049 creditors. Who were they? Mostly the ad agencies. 00:23:27.369 --> 00:23:29.549 They were owed about 12 million pounds. I never 00:23:29.549 --> 00:23:32.130 saw most of that money, which is just deeply 00:23:32.130 --> 00:23:35.230 ironic. The very people who built the hype were 00:23:35.230 --> 00:23:37.869 the ones left holding the bag at the end. And 00:23:37.869 --> 00:23:40.690 the people. The 400 staff members. Made redundant 00:23:40.690 --> 00:23:43.549 immediately. And the reports from the Times say 00:23:43.549 --> 00:23:45.710 many of them hadn't been paid in the last couple 00:23:45.710 --> 00:23:47.670 of months leading up to the crash. They were 00:23:47.670 --> 00:23:50.849 working on promises and hope. Wow. Imagine showing 00:23:50.849 --> 00:23:53.089 up to that fancy Carnaby Street office every 00:23:53.089 --> 00:23:55.430 day, seeing the fresh fruit bowls and the guru 00:23:55.430 --> 00:23:58.150 room, but your own bank account is empty because 00:23:58.150 --> 00:24:00.630 your paycheck hasn't come. That is just devastating. 00:24:01.009 --> 00:24:03.220 Then came the fire sale. This is where the numbers 00:24:03.220 --> 00:24:05.400 get truly, truly depressing. Yeah. They had to 00:24:05.400 --> 00:24:07.400 sell off the parts of the carcass to pay back 00:24:07.400 --> 00:24:09.700 whatever tiny fraction they could. Right. So 00:24:09.700 --> 00:24:12.720 another company, fashionmall .com, swooped in 00:24:12.720 --> 00:24:16.059 and bought the brand, the URL, and Ms. Boo. Yes, 00:24:16.059 --> 00:24:18.670 they got the brand assets. But the technology, 00:24:18.869 --> 00:24:21.150 the thing they spent millions and millions building, 00:24:21.289 --> 00:24:24.170 that proprietary 3D engine. Who bought that? 00:24:24.309 --> 00:24:27.329 A company called BrightStation, which was led 00:24:27.329 --> 00:24:30.250 by an entrepreneur named Dan Wagner. And do you 00:24:30.250 --> 00:24:32.089 know how much they paid for it? I have a feeling 00:24:32.089 --> 00:24:35.410 it's a shockingly low number. $250 ,000. Wait, 00:24:35.529 --> 00:24:39.730 pause. They spent over $6 million developing 00:24:39.730 --> 00:24:43.009 it? They spend half a million a month maintaining 00:24:43.009 --> 00:24:45.369 it. And they sold it for a quarter of a million 00:24:45.369 --> 00:24:47.769 dollars. Yes. Pennies on the dollar. It was basically 00:24:47.769 --> 00:24:49.630 a rounding error. That has to be one of the worst 00:24:49.630 --> 00:24:51.910 depreciation events in the history of technology. 00:24:52.250 --> 00:24:55.240 But here's the supreme irony. Dan Wagner took 00:24:55.240 --> 00:24:57.660 that technology, he stripped away all the bloated 00:24:57.660 --> 00:24:59.859 Miss Boo stuff and the terrible user interface, 00:25:00.119 --> 00:25:02.680 and he used the core rendering engine to build 00:25:02.680 --> 00:25:05.880 a new company called Venda Inc. Okay. Venda provided 00:25:05.880 --> 00:25:09.000 e -commerce backend technology to other big retailers, 00:25:09.059 --> 00:25:11.720 and Venda was later acquired by NetSuite for 00:25:11.720 --> 00:25:15.869 $50 million. Oh, that hurts. That hurts physically 00:25:15.869 --> 00:25:18.410 to hear. It proves that the technology, the core 00:25:18.410 --> 00:25:21.529 of it, was good. It was valuable. But the business 00:25:21.529 --> 00:25:24.150 model they wrapped around it, the huge staff, 00:25:24.450 --> 00:25:26.910 the insane ads, the immediate global launch, 00:25:26.970 --> 00:25:29.650 it was all toxic. The engine was a Ferrari engine, 00:25:29.690 --> 00:25:32.109 but they put it in a bus made of solid gold and 00:25:32.109 --> 00:25:34.170 tried to drive it through a swamp. So what was 00:25:34.170 --> 00:25:36.789 the total earned from selling off all the assets? 00:25:37.109 --> 00:25:40.109 Less than $2 million. They burned through $135 00:25:40.109 --> 00:25:42.650 million and recovered less than $2 million. Wow. 00:25:43.359 --> 00:25:45.259 And the postmortems started appearing pretty 00:25:45.259 --> 00:25:46.779 much immediately, right? People wanted to know 00:25:46.779 --> 00:25:49.680 what happened. They did. Tristan Louie, who is 00:25:49.680 --> 00:25:52.660 the former interim CTO, wrote one of the first 00:25:52.660 --> 00:25:55.839 big online postmortems of a tech company. It 00:25:55.839 --> 00:25:57.519 was fascinating because it was one of the first 00:25:57.519 --> 00:26:00.099 times we saw a tech insider just dismantle a 00:26:00.099 --> 00:26:02.440 failure in public like that. He laid out all 00:26:02.440 --> 00:26:04.940 the technical arrogance. And the founder, Ernst 00:26:04.940 --> 00:26:07.880 Malmsten, he didn't hide either. No, to his credit, 00:26:07.980 --> 00:26:11.980 he wrote that book, Boo Hoo. a dot .com story 00:26:11.980 --> 00:26:15.579 from concept to catastrophe in 2001. At least 00:26:15.579 --> 00:26:18.079 he owned the catastrophe part of the title. He 00:26:18.079 --> 00:26:21.180 did. And CNET later ranked Boo .com as one of 00:26:21.180 --> 00:26:24.559 the greatest dot .com busts in history. It cemented 00:26:24.559 --> 00:26:26.799 its place in the Hall of Shame. Before we wrap 00:26:26.799 --> 00:26:29.079 up and try to find the big lesson here, what 00:26:29.079 --> 00:26:32.049 happened to the domain itself? Boo .com is a 00:26:32.049 --> 00:26:34.730 catchy URL. It went on a strange journey. In 00:26:34.730 --> 00:26:37.569 2007, a company called Web Reservations International 00:26:37.569 --> 00:26:41.269 turned it into a travel site with hotel and hostel 00:26:41.269 --> 00:26:44.069 reviews. That lasted for about three years. And 00:26:44.069 --> 00:26:47.150 today, if I type boo .com into my browser right 00:26:47.150 --> 00:26:49.829 now, where do I go? As of the last check in July 00:26:49.829 --> 00:26:53.190 2020, it redirects to hostelworld .com. From 00:26:53.190 --> 00:26:56.210 high fashion to hostels. From champagne on Carnaby 00:26:56.210 --> 00:26:59.009 Street to a bunk bed in a shared room. That is 00:26:59.009 --> 00:27:01.230 a humbling journey for a domain name. It is indeed. 00:27:01.490 --> 00:27:03.869 And the people. Did anyone survive the wreckage? 00:27:04.009 --> 00:27:06.930 A few. Interestingly, only one original Sev member, 00:27:07.109 --> 00:27:09.170 a guy named Bill Burley, worked for both the 00:27:09.170 --> 00:27:11.630 original Boo and the Fashion Mall relaunch. And 00:27:11.630 --> 00:27:13.970 Kate Boogalm, who was an executive from Bloomingdale's, 00:27:13.990 --> 00:27:16.390 tried to relaunch it in autumn 2000, but the 00:27:16.390 --> 00:27:19.130 magic, or maybe the curse, was gone by then. 00:27:19.230 --> 00:27:22.529 So here we are, decades later. Why are we still 00:27:22.529 --> 00:27:25.720 talking about Boo .com? Why do I or why should 00:27:25.720 --> 00:27:28.359 anyone listening care about a company that died 00:27:28.359 --> 00:27:31.160 almost 25 years ago? Because it is the perfect 00:27:31.160 --> 00:27:34.480 storm. It explains the entire era in one neat, 00:27:34.539 --> 00:27:38.019 disastrous package. It had the right idea. Fashion 00:27:38.019 --> 00:27:40.960 e -commerce is a massive trillion dollar industry 00:27:40.960 --> 00:27:43.740 today. We all buy clothes online now. Companies 00:27:43.740 --> 00:27:46.500 like ASOS, Zalando, Net -A -Porter, they are 00:27:46.500 --> 00:27:49.200 all living the dream that Boo had. So they weren't 00:27:49.200 --> 00:27:50.920 wrong about the what. People will buy clothes 00:27:50.920 --> 00:27:53.039 online. They were just catastrophically wrong 00:27:53.039 --> 00:27:56.079 about the when and the how. It was terrible execution 00:27:56.079 --> 00:27:58.660 paired with a level of hubris that is just off 00:27:58.660 --> 00:28:01.180 the charts. They failed to respect the technical 00:28:01.180 --> 00:28:03.980 limitations of their era. You cannot force 2025 00:28:03.980 --> 00:28:07.180 technology through a 1999 straw. It just doesn't 00:28:07.180 --> 00:28:09.420 work. And the cash flow. The basic rules. The 00:28:09.420 --> 00:28:11.599 basic rules of business always apply, even on 00:28:11.599 --> 00:28:13.880 the Internet. You cannot spend $25 million on 00:28:13.880 --> 00:28:16.799 ads when you have zero revenue and insane fixed 00:28:16.799 --> 00:28:19.119 costs, assuming the venture capital tap will 00:28:19.119 --> 00:28:21.420 never, ever run dry. It's a lesson in humility. 00:28:21.960 --> 00:28:23.960 Hubris kills companies. It does, every time. 00:28:24.119 --> 00:28:25.940 Okay, here's my final thought, and it's something 00:28:25.940 --> 00:28:27.759 I want everyone to think about as we sign off. 00:28:28.700 --> 00:28:31.910 If Boo .com had launched five years later. Just 00:28:31.910 --> 00:28:35.289 five years. Let's say 2004, 2005. Broadband is 00:28:35.289 --> 00:28:37.789 becoming common. The iPhone is just around the 00:28:37.789 --> 00:28:40.490 corner. Social media is starting to bubble up. 00:28:40.589 --> 00:28:43.690 Would Miss Boo be an Amazon -sized giant today? 00:28:44.410 --> 00:28:46.829 Or was that management style, that spend now, 00:28:46.970 --> 00:28:49.789 think later attitude, destined to fail regardless 00:28:49.789 --> 00:28:52.230 of the internet speed? That is the ultimate question, 00:28:52.329 --> 00:28:54.430 isn't it? Was it the modem or was it the management? 00:28:54.690 --> 00:28:56.630 My gut says a management team that spends $25 00:28:56.630 --> 00:28:58.930 million before opening the doors would have probably 00:28:58.930 --> 00:29:01.569 found a new and exciting way to fail in any era. 00:29:01.769 --> 00:29:04.130 But we will never really know. A fascinating 00:29:04.130 --> 00:29:06.390 story. Thanks for joining us on this deep dive 00:29:06.390 --> 00:29:08.809 into a true dot -com spectacular. My pleasure. 00:29:08.990 --> 00:29:09.690 See you next time.