ROAR Resources

Two More Unbelievable Internet Disasters

Here are two more extraordinary Internet disasters involving mind crushingly large sums of money evaporating into thin air – they’ll make you smile.

BOO.COM

Total Spend $135 million (in just 18 months!)

At last the Brits make it into the hit list of disasters and utterly outclass the competition for the award of “Customer, what Customer?”.

Boo was a fashion business selling clothes online and it was, to be fair, both amazing and ridiculous. Brilliant because it really pushed the technological boundaries of the day. They used JavaScript and Flash extensively to show 3D representations of their stock and even created an animated avatar called Miss Boo who would help you choose your clothes (the implication being that a computer could dress you better than you could).

All this impressive technology meant that the web pages were so big the customer had to wait several minutes just to get the home page started. Back then we were all still on dial–up connections running at 333 times slower than today’s average UK broadband connection. Unfortunately, Boo hadn’t noticed that.

Needless to say not enough people hung around to see the home page let alone actually buy anything.

It’s astonishing that no one at Boo bothered to test how the site ran on their customer’s computers.  

Their financial ruin was sealed by a series of the most crazy business decisions imaginable like asking staff to put off holidays by offering them 1st Class flights and 5–star hotels. Eventually they went from Boo to bust!

LESSON: Take the time to understand your customer, their circumstances, what they want and how they want it presented.  The simplest way to do this is to ask them.

 

WEBVAN.COM

Total Spend $1 billion (in 1095 days or $913,242.01 per day!)

Actually, this was a sensible idea, essentially an online grocery store which delivered to your door (a precursor to Wallmart.com and Tesco.com). What was less than sensible was that none of the senior executives or investors had any experience in the supermarket business.

What killed them off was the misjudged desire to grow at a supercharged rate. Everyone looked to Amazon as a model online business and saw how quickly they had created their infrastructure and assumed that was the way to go. Unfortunately, this worked for Amazon but with fatal consequences for almost everybody else that tried.

Put simply, Webvan expanded itself out of existence.

Webvan’s problems were not about technology, infrastructure or how clever they were, it was the simple fact that they had far too few customers. (Only 2% of web users were buying groceries online at that time.) They filed for bankruptcy in 2001 and disappeared in a blaze of banknotes.

LESSON: Even the best idea’s success rests on how well it is marketed. It’s no accident that the top entrepreneurs spend about 50% of their time marketing. 

 

No matter how meteoric the rise or impressive the investment there are simple laws of success that govern every business online or offline. Really we should thank these businesses since they went through the pain so we could learn the lessons.

If you'd like to check out a couple more Internet disasters check out Two Unbelievable Internet Disasters.

Have fun.

 

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