Internet and new technology failures: boo.com

The party’s over

A magazine ad depicting a man vomiting into a dustbin may not be the most conventional tactic to use in order to sell sportswear, but then boo.com was hardly the most conventional company. The September 1999 advertising campaign, in which this image appeared, was designed to let everyone know that the first global sportswear site had arrived, in style, and that it was about to take the world by storm. Of course, the reality was rather different.

On 18 May 2000, less than a year after its launch, liquidators from theaccounting firm KPMG were called in to the company’s London headquarters.

After spending millions and attracting relatively few customers, boo.com became what The Financial Times referred to as ‘the highest profile casualty among European e-tailing start-ups’.

Although boo.com is one of the most obvious and spectacular brand failures of the dot.com era – if not all time – it was founded on reasonably secure marketing logic. As Al and Laura Ries write in The 22 Immutable Laws of Branding, ‘the most efficient, most productive, most useful aspect of branding is creating a new category.’ There is no denying that ever since boo.com’s Swedish founders Ernst Malmsten and Kajsa Leander had visited Amazon in 1997, they believed this was the key to dot.com success. As Malmsten writes in the best selling account of the boo phenomenon, boo hoo:

If we were really to achieve the global impact we hoped for then we had to exploit ‘first mover’ advantage. If you’re first, then you achieve vital recognition as you become identified with whatever you’re selling. You get a lot of free publicity and customer confidence because you’re the leader. It’s then very difficult for the second wave to compete. Amazon.com was a shining example of that. Here was a company that spent almost nothing on marketing before its IPO, but still managed to create one of the best known brands in the world.

When boo.com became public knowledge in May 1999, via an article in The Financial Times, Kasja Leander announced the company in these terms:

‘Sportswear is an international market and there are a lot of people in Europe who read about products in US magazines but can’t go over to buy them. This is one of the few sectors of Internet retailing that no one’s done on a large scale and we want boo to be the number one brand.’

So neither Malmsten nor Leander can be accused of ignoring branding. The idea, from the start, was to create a ‘fully branded shopping experience on the Net,’ an online equivalent of high fashion department stores such as London’s Harvey Nichols or New York’s Bloomingdales, only with the main focus on urban and sportswear from hip brands such as Adidas, New Balance and North Face.

However, the brand that really mattered was boo itself. As Malmsten has explained, the aim was to make ‘the name of the store itself as significant as anything you could buy in it.’ Again, this displays solid brand-thinking, and marked boo apart from many other dot.coms that had sprung from the minds of technologists. But the problem was that whatever it can represent, the Internet is technology.

If you are going to create what Malmsten referred to as ‘a gateway to world cool’ (as quoted in a June 2000 Industry Standard article), you need software to make sure people can access the gateway in the first place. In other words, your Web site has to work.

On the first day of its eventual launch, 4 November 1999 (two months after the premature advertising campaign featuring the man vomiting into a dustbin) the problems with the boo.com Web site soon became apparent. The site crashed seconds after it went live. And then, when people could finally access the site, the real headaches, both for boo and its customers, began.

One of these headaches related to the heavy use of Flash software, which enabled the site to be animated. Indeed, one of the key features of the site was the virtual shop assistant Miss Boo who was only able to come to life through the use of Flash. However, many Internet users did not have a Web browser that could support this technology. Furthermore, in 1999 most PCs had a 56k (or slower) modem. This meant that the graphics-intensive site, which, as well as the attraction of Miss Boo offered visitors the chance to ‘rotate’ items before making a purchase, was going to be somewhat slow. How slow? Well, on an average computer the home page could take around three minutes to load and that was after having to sit through a lengthy animated introduction. Oh, and if you had a Mac you couldn’t access the site at all.

Small wonder that the leading Internet usability experts, such as the highprofile author and Web engineer Jakob Nielsen, quickly pounced on boo.com as the archetypal example of how not to build a Web site. When he first reviewed the site for his Alertbox newsletter in December 1999, Nielsen could hardly believe what he saw:

Instead of making it easy to shop, the site insists on getting in your face with a clumsy interface. It’s as if the site is more intent on making you notice the design than on selling products. Furthermore, it is simply slow and unpleasant. All product information is squeezed into a tiny window, with only about one square inch allocated to the product description. Since most products require more text than would fit in this hole, boo requires the user to use a set of non-standard scroll widgets to expose the rest of the text. Getting to a product requires precise manipulation of hierarchical menus followed by pointing to minuscule icons and horizontal scrolling. Not nice.

Not nice indeed. But then, Alertbox was only distributed to ‘techies’, not the highly fashion-conscious affluent consumers boo wanted to reach. So why worry too much when they had already managed to secure complementary articles in the UK and US editions of Vogue, alongside various newspapers?

Ironically, the company founders’ undeniable talent for publicity was starting to turn against them. Having spent millions on advertising and having generated thousands of column inches in the press, expectations had been inevitably high. While the company succeeded in creating a young and hip image (in 1999 Fortune magazine picked it as one of its ‘Cool Companies’ of the year) it had also placed itself under too bright a spotlight. Alongside attacks in the Internet media regarding the site’s functionality – or rather, lack of functionality – the mainstream press was also starting to pick up on the parties and high living centred around the boo headquarters in London’s Carnaby Street.

Malmsten now maintains that the company’s extravagant reputation ‘masked the reality’ of the sheer amount of work that went on behind the scenes. Indeed, he reckons the 24/7 commitment his staff (or rather, ‘boo crew’) devoted to their task especially around the launch period, hadn’t been seen since World War II. ‘To understand this kind of total devotion to a cause you probably had to be in Britain in about 1940, when car factories were turning out aeroplanes or tanks overnight,’ he writes in boo hoo, with no apparent trace of irony. But however hard everyone in the company was working in November 1999, the atmosphere had changed by the following February.

According to boo’s financial strategist Heidi Fitzpatrick morale was low. ‘We were out every lunchtime getting shit-faced. There was no management and we all went home at six instead of working all hours.’ The reason for such low morale is represented by the figures. In a period of 18 months, the company had managed to get through approximately US $185 million that had been raised from high-profile investors such as Benetton, J P Morgan, Goldman Sachs, the French fashion conglomerate LVMH and the Lebanese Hariri family. How much of this money financed the first-class flights and Krug-swilling lifestyle boo was becoming increasingly famous for is impossible to say.

One thing, however, is for sure. There simply weren’t enough customers. Deterred by a problematic Web site which concentrated on fancy design rather than straightforward product information, few people were willing to make the effort in any of the 18 countries where boo had a presence. In the first month after its November launch boo managed to sell around US $200,000 worth of stock, from which it profited half. Not bad by most ecommerce site’s standards. But then, most e-commerce sites aren’t capable of spending around US $20 million in a single month (as boo did that November). Although sales figures slowly increased, they weren’t doing as quickly as boo had anticipated. Between February and April 2000, total sales were US $1.1 million. Unable to raise any more money from its investors, in May 2000 boo.com shut down and filed for bankruptcy.

In their final press release, one of the most famous statements of the dot.com era, Malmsten and Leander put their side of the story:

The senior management of boo.com has made strenuous efforts over the last few weeks to raise the additional funds that would have allowed the company to go forward with a clear plan. This plan involved a restructuring of the retail operations, the development of an e-fulfilment business using our unique advanced technology and operations platform, and the identification of strategic partners. It is disappointing to both the management and staff alike that we were not able to bring this plan to fruition against the background of steadily-improved trading.

The release concluded by stating: ‘We believe very strongly that in boo.com there is a formula for a successful business.’ Unfortunately, not everyone agreed. Among the many dissenters was Philip Kaplan, a 24-year-old New Yorker who launched FuckedCompany.com in 2000 to highlight what he referred to as the ‘ridiculousness’ of many dot.coms. The site quickly attracted hundreds of thousands of visitors, wanting to see which companies were next in line for the scrap-heap. When boo.com failed, Kaplan’s response was, to say the least, cynical and his site put a rhetorical question to its visitors.

‘Can you possibly think of anything that is a more eloquent testimony to having your head three feet up your Calvin-Klein-covered ass than to spend tens of million dollars on a dot.com start up AND NOT HAVE THE WEB SITE WORK?!’

There are others who take a kinder view though. Unlike the former staff at other doomed companies, many of the original boo team remain loyal to the memory and believe the company would have succeeded if only the investors had supplied more money.

It is also important to realize the wider context. When the news about boo’s demise hit the headlines, the European dot.com community remained reasonably confident. This case was viewed as an isolated event, related only to the incompetence and extravagance within boo itself. The reality, however, was that boo.com’s failure to survive was not unique. Only months after the front-page headline in The Financial Times ‘Boo.com collapses as investors refuse funds’, many others had suffered similar fates.

One of the journalists to have documented boo.com’s ill-fortune was the BBC’s Internet correspondent Rory Cellan-Jones. In his vivid account of dot.com Britain, Dot.bomb, he considers boo as part of a broader picture:

As other, less flamboyant companies also began to fail, it became clear that boo’s problem was one of timing. Its vision of online retailing had won the support of investors, but neither the consumers nor the suppliers were yet ready to adopt it in significant numbers. When the investors lost faith in that vision, plenty of companies founded on the promise of the revolution were bound to fail. Boo simply got there first because it spent its money more quickly.

The medium was therefore becoming the message, and that message was increasingly one of failure. But boo’s downfall cannot simply be attributed to the delusional late-1990s attitude towards the Internet which only hindsight has amended. Even if boo had been an offline company many of its mistakes would have been near-fatal. For instance, blowing millions of dollars on a risky launch campaign two months before the actual launch would always be a bad move.

Another mistake, ironically enough, could be put down to the company’s obsession with the brand identity itself. The marketing people were often able to overrule the technical team, particularly with regard to crucial decisions regarding the Web site. As a result, the company created one of the most fabulous-looking sites on the Web, with the poorest functionality.

On the surface, boo was a great brand. But branding is about more than looking good. It is about fulfilling promises. The promises boo made – both to its investors and its customers – were ultimately undeliverable. And now boo’s significance is not, as was intended, that of a global brand. Rather, through its negative example, it has helped us to learn the true value of the Internet for branding. It has highlighted the fact that whereas customers may require information and interaction, they want to access these benefits quickly and with minimal hassle.

That boo failed to realize that substance comes before style means that somebody, somewhere is probably still sitting at his or her computer waiting for the site’s homepage to download.

Lessons from boo.com

• Hire the right people. ‘The wrong people were hired – too many fresh faced consultants, too few wrinkled old retailers, and far too many warring factions,’ says the BBC’s Rory Cellan-Jones.
• Understand the importance of timing. A September launch campaign for a November launch was an inevitable waste of money.
• Go for cost-effective marketing. Towards the end of boo’s lifespan the company promoted a money-off scheme. ‘By far the most effective means of advertising the scheme turned out to be not expensive online banners or newspaper advertising by emails,’ says boo co-founder Ernst Malmsten. This unsurprising realization came rather too late.
• Make sure your Web site works. With any Web site, particularly one with an e-commerce facility, it is best to go for a lowest common denominator approach. In other words, make sure it works on every customer’s computer.
• Appreciate that publicity works both ways. If you put your brand under the media spotlight too early, every mistake you make will be noticed. Remember that publicity is good only when it is justified. Unless you can back it up with a solid brand performance it will turn against you.
• Don’t run a business with a crystal ball. Running any business can be expensive, but if your sales figures are in the thousands, you probably shouldn’t be spending millions in the hope that sales will improve in the future. Leave overly optimistic and unsupportable predictions to fortunetellers and concentrate on the present reality.
• Don’t spread yourself too thin. One of the main factors that contributed to boo’s speedy demise was the decision to launch in 18 different countries simultaneously. A similar advertising campaign and identical Web site for each national market may have seemed like a good way to unify a global brand identity, but this costly and misguided strategy has subsequently become the archetypal ‘how not to’ example for businesses seeking to attract global audiences.

Internet and new technology failures: IBM’s Linux graffiti

One of the best ways to generate publicity for a brand is to deploy unconventional tactics. For instance, when London nightclub the Ministry of Sound projected its logo onto the side of the Houses of Parliament, the media attention was immense. Indeed, it was considered such a successful trick that a few years later FHM promoted its ‘100 Sexiest Women of the Year’ campaign with the same tactic, beaming the image of an almost naked Gail Porter (one of the contenders for the number one spot) onto the side of the historic building.

Such outlandish techniques are generally referred to as ‘guerrilla marketing’. The logic behind guerrilla marketing is straightforward: if a company promotes itself in such a unique fashion it will not only be able to gain press coverage, but will also stick in people’s minds and encourage word-of-mouth publicity. Furthermore, guerrilla marketing is usually cheap. When the online portal and search engine Yahoo! wanted to promote its Yahoo! Mail services, it didn’t decide to invest in hundreds of magazine ads. No. It built a couple of cows.

The company took part in an event called the Cow Parade in which cows were decorated according to different themes. Yahoo!’s ‘udderly moovelous’ (as it put it in a press release) pair of purple plastic cows were installed with an Internet facility that enabled members of the New York crowd to send ‘moomail’ messages to each other. Although this tactic was undeniably ‘out there’, it succeeded because it was relevant to the service it was promoting.

However, some guerrilla techniques have had considerably less success. For example, when IBM hired an innovative advertising agency to promote its Linux-based software, the campaign involved employing graffiti artists to scribble the words ‘Peace, love and Linux’ on pavements and walls throughout San Francisco and Chicago. Unfortunately, the bio-degradable chalk used to create the marketing messages turned out not to be so bio-degradable.

Subsequently, IBM was charged with violation of city ordinance and had to pay a US $18,000 fine.

Lesson from IBM’s Linux campaign

• Think of the legal implications of any advertising campaign. Marketers should plan and consider all repercussions for any campaign. After all, court appearances rarely help to positively boost a brand identity.

Internet and new technology failures: Intel’s Pentium chip

Problem? What problem?

In 1997, a professor of mathematics found a glitch in Intel’s Pentium chip. He discovered that the mathematical functions for the chip’s complicated formula were not consistently accurate. The professor decided to send an article about his findings to a small academic newsgroup. Word spread through the university community and the editor of a trade title caught hold of the story. The general press then reported the professor’s findings and sought Intel’s response. Intel denied any major problem, declaring it would only affect a ‘tiny percentage’ of customers. They failed to take responsibility or replace the affected chips.

The issue grew online, as it became a key topic in an increasing number of online discussion groups, which kept on feeding the offline media. Intel’s share value dropped by over 20 points. It was only when IBM’s declaration that it would not use Intel chips in its computers made the front page of the New York Times that Intel went back on its previous position and agreed to replace the chips. Even today, evidence can be found of how Intel’s poor response to online criticism has affected its reputation on the Net. The ‘Intel Secrets’ site at www.x86.org, which was set up at the time of the media’s damning coverage of Intel’s unhealthy chip, still emphasizes the faults to be found in various Intel products.


Lessons from Intel’s Pentium chip

• Remember that bad news makes the front page – whereas good news is relegated to page 17 of the Sunday supplement; it’s as simple as that. As Lord Northcliffe, the founder of the Daily Mail, once said: ‘News is what somebody somewhere wants to suppress; all the rest is advertising.’
• Don’t ignore online criticism. Alongside Intel, McDonald’s, Shell, Apple,Netscape and, most frequently, Microsoft, have suffered as a result of letting negative issues develop online until the offline media pick them up and transform them into a crisis.
• Respond quickly. While the Internet may give people who have a grudge against your firm an attentive audience of similarly aggrieved individuals, it also gives businesses the opportunity to respond quickly and effectively to the spread of misinformation.
• Monitor your critics. Trouble builds-up slowly over time and, in all but the rarest cases, it is only poor management that transforms an ‘issue’ into a ‘crisis’. Although cyberspace gives your e-critics a voice they may not have elsewhere, it also allows you to predict, locate and respond to negative publicity.

Internet and new technology failures: Dell’s Web PC

Not quite a net gain

In late 1999, computer manufacturer Dell launched the Web PC. The computer was small (a mere ten inches in height) and came in five different colours. The aim of the computer was to simplify the experience of surfing the Internet, while at the same time being attractive. ‘The quality of the customer’s experience will be the defining source of loyalty in the Internet era,’ Michael Dell told the press at the time. ‘The Web PC is breaking new ground for our industry as we take our one-on-one relationships with customers to a new level of helpfulness.’

One of the key features of the product was an ‘e-support button’, that instantly launched a self-diagnostic programme. The button could also connect users directly to Dell’s award-winning online technical support team.

The PC also included a ‘sleep mode’ designed to eliminate the time spent booting up the computer for Internet access. Users could simply push a button to instantly ‘wake up’ the computer.

‘Many of these benefits are made possible by the ‘legacy-free’ design of the Web PC,’ explained John Medica, the vice president and general manager of Dell’s Web Products Group. ‘We hand picked every piece of technology that went into the Web PC without carrying over any technology from previous PC designs that doesn’t contribute to a pure Internet experience.’

The product was heavily marketed through a multi-media advertising campaign, centred around the slogan ‘Born to Web’, which drove customers to a Web PC Web site and free phone number, both of which acted as direct sales channels. In addition, Dell offered different peripheral products for the Web PC, including such devices as a digital scanner, a joy stick and a digital camera.

The press heaped praise on the product, although most journalists saw it as an attempt to echo Apple’s iMac strategy, with its emphasis on an eyecatching design, and user-friendly hardware. In his review for the Washington Post¸ Alan Kay said that although it ‘focuses more on style than computing,’ the Web PC is ‘a decent PC that’ll do most things you want.’

However, despite the number of benefits it offered, the Web PC was a flop. Dell pulled the machine from the market in June 2002, just six months after its release. Why? A number of reasons. Firstly, the emphasis on design was misguided. Sure, the iMac had been a success. But Apple had always been about design, and Dell hadn’t. Dell’s core customers wanted good value and functionality, not groundbreaking design.

Dell’s Web PC was good-looking, but its looks were ultimately irrelevant. Whereas Dell usually uses its own in-house design team, for this project the company gave the job to a radical San Francisco-based design firm called Pentagram. ‘I’ve designed great things that have been failures,’ the chief designer told Business 2.0 magazine. ‘The product didn’t fit what Dell is about.’

Computer User magazine noted another problem. ‘Oddly, Dell is targeting its Web PC toward home or home-office markets where users would generally be better off with an expandable upgradeable system,’ commented the reviewer. Dell’s core market was traditionally business-orientated.

Then there was the price tag. Although it was billed as ‘low cost’, the price of US $999 was more expensive than many competing models. ‘Consumers are looking at price first, then styling,’ said Stephen Baker, a PC analyst at research firm PC Data. ‘No-one aside from Apple has been able to crack that styling thing.’
Furthermore, Dell was selling in a completely new way. By offering a complete package, the world’s number two computer maker was breaking with its typical practice of offering à la carte pricing that allows customers to mix-and-match computer chips and other components to create a customized PC. If the Dell brand signified anything it signified customization and functionality over design. The Web PC failed to offer either one of these values.


Lessons from Dell’s Web PC

• It’s not about the product, it’s about the brand. The Web PC was not a bad product, as the plethora of positive reviews testifies. However, it did not fit well with the Dell brand.
• A low-cost product needs to be perceived as such. Although the Web PC was good value, because the price covered a complete package, it appeared too expensive.
• Imitating the competition was a mistake. When computer manufacturers saw the success of the iMac, they inevitably wanted a bite of the apple. This proved to be a misguided strategy for Dell, a company normally associated with ‘beige and boxy’ computers.

Internet and new technology failures: WAP

Why another protocol?

In order to gain public awareness new technologies are now promoted as brands, by technological companies and organizations. However, often those technologies that receive the most hype die an early death while those that are launched with no fanfare gain mass acceptance.

Nowhere has this been more evident than with mobile phone technology. In Europe, the major mobile phone companies were unable to anticipate the success of SMS (short messaging service) text messaging. Indeed, some even failed to mention their phones included an SMS facility. As I explored in my previous book Mobile Marketing, mobile phone users were left to discover SMS for themselves – and discover it they did. In the UK alone, over 1 billion text messages are sent and received every single month.

In Mobile Marketing, I provided an overview of the technology’s popularity:

SMS, or the Short Messaging Service, was the first mainstream technology to enable short text messages to be sent from one mobile device to another. Devoid of colour, graphics, audio, video, and confined to 160 characters per message, SMS hardly seemed the most radical of new media technologies. Furthermore, people wanting to send an SMS text message had to work with small, fiddly mobile keypads and tiny grey screens.

Yet, for all its evident shortcomings, SMS became hugely popular and has inspired a whole generation of ‘textheads’, who have even conjured up their own SMS shorthand to overcome the character limit. Even among older users, SMS text messaging has proved to be a popular, less-intrusive and often cost-effective alternative to voice calls. While the mobile companies initially ignored this unassuming technology, they were very excited indeed about another three letter acronym: WAP.

WAP (wireless application protocol) was heralded as the first major global technology to make the mobile Internet a reality. And it was, although excessively slow download times and frequent connection failure along with many other usability shortcomings started to make people wonder if the wireless Web would be such a great thing anyway.

In 1999, the year WAP was being tweaked for launch in many countries, not a bad word could be found about this technology. Two years later headlines such as ‘The Great WAP flop’ and ‘RIP WAP’ were not uncommon in the European technology press.

One survey conducted in summer 2001 in the UK was especially telling. The BRMB study found that of the two-thirds of the population who owned a mobile phone, 85 per cent believed they had an SMS texting facility, while only 13 per cent said they had a WAP-enabled phone. Of that small number, only 37 per cent had used the WAP facility within the last month. Therefore most of those who were aware they were using a WAP device still didn’t believe the WAP facility was worth using. As Simon Rogers commented in the Guardian at around the same time (July 2001) ‘accessing a breaking news service using WAP just doesn’t replicate the usefulness of the net and is little more than another incremental improvement on your phone.’

WAP’s rough ride has been made even worse by the remarkable, and generally unpredicted, success of SMS. While WAP had been touted as a ‘killer app’ for wireless devices, the considerably less flashy SMS received little attention. When it suddenly emerged that in many parts of the world there were ten SMS users for every one WAP user, and that those SMS users were considerably more devoted than their weary WAP counterparts, it inevitably ruffled a few feathers.

The rumours regarding the death of WAP have been greatly exaggerated though as effective WAP applications have finally emerged. For most marketers however, WAP was something of a no-go area. The Financial Times has dubbed WAP marketing ‘the least interesting type of wireless marketing.’ To be fair, many of the problems with WAP are not really its fault. After all WAP is only a protocol, and not a bad one at that. However, the term WAP has extended to encompass the entire mobile Internet experience via WAP-enabled devices. And, up until now, that experience has been patchy to say the least.

As any brand strategist would agree, the success of a product or service depends not simply on its value, but rather its perceived value. So, whatever WAP will be able to offer mobile users in the future, the negative perception will take a while to erase. Even the WAP evangelists started to realize that it suffers from a certain public image problem. For instance, in 2002 the staunchly pro-WAP Web site WAPInsight (www.wapinsight.com) conceded that ‘the signs are increasing that WAP as a brand name is dying’. The site reported the demise of the UK chain of retail stores run by MPC Telecom, called TheWAPStore, and said the ‘WAP’ element of the name sparked off negative associations among the public.

Whether WAP will disappear for good still remains to be seen and as more powerful mobile phones emerge the mobile Internet seems to have a positive future. However, the negative connotations of the WAP name means that a new acronym may have to be developed.

Lessons from WAP

• Be useful. WAP has suffered from a distinct lack of content mobile users could find useful on a WAP-based wireless Web. Although many companies have experimented with WAP sites, information underload remained a problem.
• Be simple. WAP has also suffered from comparisons with the more straightforward SMS. Unfavourable comparisons to Japanese I-mode technology have also added salt to WAP’s wounds.
• Don’t overstate your case. The initial WAP hype, which reached its hyperbolic peak in 1999–2000, overstated its case. One UK operator’s campaign featuring a WAP-enabled surfboard, and many others like it, gave the impression of a mobile Internet ‘surfer’s paradise’. The protocol clearly couldn’t deliver on this promise.
• Be user-friendly. Jakob Nielsen, ex-Sun Microsystems engineer and ‘guru of Web usability’ highlighted WAP’s ‘miserable usability’. In 2000, Nielsen advised businesses to ‘skip the current generation of WAP’. Slow connections and downloads for the first wave of WAP meant that mobile users downloading WAP sites (particularly those with graphics) had a lot of spare time on their hands.

Internet and new technology failures: VoicePod

Failing to be heard

Technology company Altec Lansing learned the importance of marketing with its failed VoicePod digital recorder. As the leading maker of computer speakers, Altec was sure it had a hit on its hands with its innovative recorder that attached audio messages to e-mail.

PC World magazine said the VoicePod looked like ‘a mouse on steroids – a lot of steroids – and promised to make your voice dramatically more helpful as a tool for the PC.’ Gone, said Altec, are the days of unnecessary typing and fumbling for multimedia controls as its device offered the benefits of simple installation and use. VoicePod let users record and attach voice files to

documents and e-mail messages with a few simple pushes of a button. There was another handy feature of the VoicePod: personal to-do lists. Users could dictate a short message to themselves and then save it.

The design was also technologically advanced as it exploited the company’s ‘signal processing technologies’ that used noise removal filters and other technology to allow for minimum background noise and clear recording.

‘With these features, the VoicePod could be a sound investment,’ reckoned PC World. Not enough computer users agreed.

The trouble was, poor marketing had led to a lack of interest and awareness.

The company was so confident that consumers would snatch the product off the shelves that it spent little money and effort on promotion.

As a result sales were so poor that the company pulled the VoicePod from the market after just one month.

Lesson from Voice Pod

• Don’t ignore marketing. ‘Next time,’ Altec president and CEO Mark Lucas told Business 2.0 magazine at the time of the failure, ‘we’re making a huge marketing push.’

Internet and new technology failures: Pets.com

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Internet and new technology failures: Excite@Home

Bad branding @ work

There was a time when Excite@Home was considered to be one of the ‘safe bets’ of the Internet revolution. Based around one simple service offering – the delivery of high-speed net access – investors were quick to see its potential.

Then, bolstered by investment dollars, Excite@Home decided it wanted to be something bigger, and purchased a variety of online media properties including the Excite Web portal and Blue Mountain Arts in an attempt to build on AOL-style empire.

Although the company was once the leading cable Internet access provider, it fell behind the competition once it had broadened its ambitions. According to CNET journalist Ben Haskett, the demise of Excite@Home ‘bordered on Greek tragedy,’ with a history filled with tense boardroom skirmishes, illconceived acquisitions and executives who governed the operations from afar.

‘Excite@Home was largely a victim of its own grandiose ambitions, as well as of a convoluted ownership structure that kept too many cooks in the kitchen,’ Haskett wrote in his post-mortem of the company.

The merger of Excite and @Home (which was originally called just that) has been viewed as a critical mistake, although the motives were clear.

William Hearst III, one of the Silicon Valley venture capitalists who helped to found the company, said:

I felt the merger was a good idea at the time because I thought that when you’re building a consumer marketplace, you need to have one-stop shopping. One of the promises of the @Home idea was that you’d have a national brand, not a different brand in every marketplace. And as AOL has proven, if you have an e-mail product and a content product and a telecommunications product and a software product all under one single point of responsibility, you can build a very big company.

That, I think, was the motive for the Excite merger: to build a company trying to produce a uniform consumer experience but on broadband instead of dial-up.

The merger didn’t work though. Disputes between the telecom and media divisions meant that many management staff walked out. In addition, the company’s CEO was running the business from Boston, more than 3,000 miles away from the Silicon Valley operation, which inevitably caused difficulties. It should also be noted that although Excite@Home offered cable Internet access, it offered this access over another company’s cable lines, those of AT&T. Indeed, AT&T were the controlling shareholders, a fact which created further friction and conflicts of interest. For instance, according to Hearst, AT&T ‘didn’t share the content vision.’ The problem was also one of timing. The dot.com collapsed once the company started to diversify. ‘By the time the company decided to look at spinning off Excite, the marketplace had deteriorated,’ explains Hearst. ‘And meanwhile, the demand for broadband was growing so rapidly that the capital was needed to sustain the quality of service of the business.’

Perhaps the biggest problem, however, was marketing. Following the merger, Excite@Home simply wasn’t able to differentiate itself or provide Internet users with a valid enough incentive to switch to their service.

In January 2000 Red Herring magazine reflected:

Excite@Home hasn’t exactly lived up to its name. Continual rotation of its advertising and messaging has sent this portal’s brand identity into big-time obscurity. The company was on to something with its witty ‘anyone can do it’ TV campaign, but it disappeared in a blink. Yahoo is our whimsical guide; Infoseek our all-knowing soothsayer. Excite@Home is more like a politician on the fence.

Lessons from Excite@Home

• Avoid too many cooks. Hearst says: One of the lessons is that you can gain a tremendous advantage by partnering with big, well-established companies, and people are going to continue to do that. But those companies are going to find it very difficult to put their new start-up venture ahead of their own corporate responsibilities. So when you have a start-up controlled by big, established companies, it’s going to be a little different than a real, standalone start-up.
• Don’t over-reach. Excite@Home’s ambition to become the next AOL meant that it over-reached itself, spending money it couldn’t afford.
• Differentiate the brand. Ultimately, consumers didn’t have a clear idea of what the Excite@Home brand stood for. It meant everything and nothing, and as a result it failed.