Boo.com
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Boo.com was a United Kingdom Internet company founded by Ernst Malmsten, Kajsa Leander and Patrik Hedelin that famously went bust during the dot-com boom of the late 1990s. Boo.com's intention was to sell branded fashion wear over the Internet; however, after spending vast sums of its venture capital, it eventually had to liquidate and was placed into receivership on May 18, 2000.
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Reasons for failure
Website design
The boo.com website was widely criticised as poorly designed for its target audience, going against many usability conventions. The site relied heavily on JavaScript and Flash technology to generate pseudo-3D views of wares as well as Miss Boo, a sales-assistant style avatar. The first publically released version of the site was fairly hefty - the home page alone was several hundred kilobytes which meant that the vast majority of users had to wait minutes for the site to load (as broadband technologies were still only in their testing phase at this time). The designers had forgotten that getting people to use the website and purchase items outweighed the 'sexiness' of the design. The warning on their front page—"this site is designed for 56K modems and above"—apparently did not appease their would-be customers.
The complicated design required the site to be displayed in a fixed size window, which limited the space available to display product information to the customer. Navigation techniques changed as the customer moved around the site, which appealed to those who were visiting to see the website but frustrated those who simply wanted to buy clothes. As a result, although the boo.com brand received a lot of press coverage, potential customers were quickly turned off when they visited.
Interestingly, there was an unreleased site that not many know about. This site was ready early 1999, and had been created by Boo.com's original technology partners. The design was sleek, and simple - the balance between bandwidth and customers was carefully calculated. It did have Miss Boo, and the pseudo-3D flash - neither of which were that heavy in terms of bandwidth. However, Boo.com's executive slowly transitioned away from the technology partners to their own, growing, team of contractors and staff. There was a decision early on by the new team that they wanted to put their own stamp on the project - so the executive decided that they could redesign. Months later the new site launched as the first publically released site. Some say, within certain circles, that if they had launched with the original site they may still be here today.
Burn rate
Boo.com's Swedish founders famously spent their way through nearly $160 million during its numerous startup delays and brief existence. While some companies like Amazon.com were spending a lot, but basing it on future savings and growth returns, Boo.com's sales didn't match expectations, due partly to the very high number of products returned by the customer (a service that was offered for free, but charged for by their logistics supplier Deutsche Post). Poor management and a lack of communication between departments resulted in costs spiralling unchecked — the effectiveness of an eye-catching (and expensive) ad campaign was limited because the website wasn't ready in time, resulting in curious visitors being greeted with a holding page — and the results were inevitable.
Staff and contractors were recruited in large numbers, with a lack of direction and executive decision about how many and what was required. This resulted in a crippling pay-roll cost. One contractor alone was reputed to be earning over £100 an hour - and Boo.com had asked them to put off holidays by offering 5-Star hotels and first class flights. It seemed everyone wanted a piece of Boo.com, even the employees - whether it meant that the business crippled.
Aftermath
The biggest loser among boo.com's investors is Omnia, a fund backed by members of Lebanon's wealthy Hariri family, which put nearly $40 million into the company.
Creditors, most of whom are advertising agencies, are owed around $25 million. Over 400 staff and contractors were made redundant in London and around the world, and many had not been paid for several months.
Fashionmall, which has been operating in the US since 1995, reportedly paid £0.25m for the Boo name and the Miss Boo character. Boo's main assets, its software, went to United Kingdom company Bright Station.
External links
- "Boo Hoo: A Dot Com Story" (http://www.amazon.co.uk/exec/obidos/ASIN/0099418371/qid=1118850921/sr=8-1/ref=sr_8_xs_ap_i1_xgl/026-2460690-2003611) is a book written/edited by Ernst Malmsten, Erik Portanger and Charles Drazin. Fact or fiction? You decide. Most of the important stuff was removed by the lawyers.
- Archived versions of boo.com (http://web.archive.org/web/*/http://www.boo.com/) at the Internet Archive (to see the website, look for archives dated before November 1, 2000).
- An angry creditor of Boo.com's founder Malmsten (http://www.ernstmalmsten.com)
- Jakob Nielsen's mini-review of Boo.com (http://www.useit.com/alertbox/20000528_boo.html) - A design/usability perspective
- Boo.com Goes Bust (http://www.tnl.net/blog/entry/Boo.com_Goes_Bust) - An insider's perspective
- Boo.com (http://boo.com), now a redirect to FashionMall.com