Founding: Kozmo.com was founded in 1997 by investment bankers Joseph Park and Yong Kang with $4.5 million in early financing from private investors including grocer Bob Miller and Taco Bell co-founder Rob McKay.
History: The company began as a service that delivered videos by bicycle messenger to Manhattan customers who ordered them online. The company boasted “from the Internet to your door in under an hour” and its attractive rates helped rapidly draw thousands of customers.
As it expanded to several cities and began offering a convenient, store-like inventory of deliverable goods, Kozmo also garnered a prominence few other dot-coms could match, including being profiled in the documentary film e-Dreams.
What Happened: Kozmo.com's aura helped it raise more than $250 million, but the company was unable to generate enough revenue to cover costs. In 1999, it had $3.5 million in revenue, compared to $26.4 million in net losses. Basic problems with its business model included offering a costly home-delivery service for free, even on very small orders on which it was impossible to turn a profit. Last-ditch efforts to boost orders and stop the delivery losses by charging $1.99 for orders under $30 helped, but couldn't deliver the company.
Mounting losses led to Park’s ouster in 2000. The new leadership couldn’t turns things around or pull off the long-delayed IPO. In April 2001 the company ran out of money, shut down operations and laid off its employees.
“We built out a delivery system that worked,” recalls former Chief Operating Officer Skip Trevathan, who came to the job with experience as managing director of logistics for delivery goliath FedEx. “We were profitable in four of our cities. But we had seven more that we couldn’t make profitable, and then the funding dried up.”
Where Are They Now? Park co-founded Askville, an Amazon.com website where users ask and answer questions. A LinkedIn profile lists Yong Kang's current occupation as investment banking at Lehman Brothers.
Trevathan is executive vice president of worldwide production and engineering for Memphis-based on-demand document printing and distribution company Mimeo.com. In an unexpected coda, former Chief Technical Officer Chris Siragusa started a New York City-based company, MaxDelivery, that delivers DVDs, food, and other goods to addresses in lower Manhattan.
Today the Kozmo.com website is inactive.
Were you an employee, customer, or client of this service? Then share your memories below! What did you like about the company? What didn't work? What other factors contributed to its success or failure?
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Comments
I loved kozmo when they started and used them a lot. Then UrbanFetch started delivering the same stuff while refusing tips and giving away a ton of sweet free stuff with each order. It was an unsustainable business and everyone knew it but I sure did take advantage of it while it lasted :) Rest in peace UrbanFetch and thank you for all the cookies and swag.
I loved Kozmo and was so disappointed when they finally pulled up their roots and closed. I still have some of their swag (along with webvan's) in my office as a memento to the dotcom era. it was so convenient to be able to get cds, ice cream and magazines delivered to my workplace, especially on those weeks where I barely left the office!
Kozmo was legendary. I remember one time i had a dj gig and my CDjs were still not returned to me from a previous event. So i logged onto Kozmo and ordered 2 discmans that showed up in under an hour. it was awesome. To this day, i really wish someone in the seattle area would pick up this idea and run with it.
the only thing Kozmo was good at was stealing money from its investors.
LOL at Kosmo and Urbanfetch, I remember getting cheap goods delivered to my door in manhattan with no handling charges and free crap thrown in and thinking "No way am I buying this IPO, these guys are just batshiat crazy".
I stopped using them once I realized I was just taking money from some institutional investors pension portfolio.
I remember a good way to tick them off was to order a pack of skittles delivered to the top floor of a high rise. Every day.
I remember them in NYC. I used to work overnight shifts at a DataCenter during which I would back up an ancient HP3000 MPEiX system. My girlfriend would place a Kozmo order for me before she went to bed. It was a much needed care package delivered at 1 in the morning (candy, dvd, microwave popcorn).
Kozmo and Urbanfetch were awesome, and one of those things that make you ask "man, how can they make money at this?" It was the ultimate in instant gratification, and something which I would use if it came back. I hope these types of services return someday (e.g. as "Amazon Express" or something), at least in places with a dense enough population to make it a sustainable business proposition.
At the very least, considering that rapid food (e.g. pizza, chinese) delivery works and is highly profitable, why can't convenience store/bookstore/video store item delivery work as well? Can I get a PS3 game, a DVD, and a magazine with my large pizza? Please?
Interesting that Kozmo still has so many fans that remember it after all of the years. Kind of surprising that MaxDelivery or one of the other companies hasn't bought the URL and the brand ...
What's funny is a worked at a local dollar store back in 2000 to like 2003. We got most of the bags / sacks from kozmo.com and sold them for like $10 each. I still have one myself, and it makes a great xbox360 holder for going to friend's houses.
Anyone tried Maxdelivery or FreshDirect or Peapod (outside NYC) and have an opinion?
I worked for Kozmo.com - I still have two jackets and a shirt with the company logo. I enjoyed being able to use the company's services for free (for video rentals).
We were all anxiously anticipating the big IPO which never came. They constantly announced successes, but apparently the bottom line didn't agree with that. I was laid off in the first big round of cuts, in June 2000.
My wife and I were heavy users of Kozmo.com for videos in NY and DC. We even stayed with them went they went to a $5 minimum order, getting fat on all the Ben & Jerry's we were ordering with every movie. We actually had one of their videotapes in our possession when they went under.
Kozmo was awesome, but in the end, unsustainable.
I, too, ordered sandwiches all the time from Kozmo.
Great heydays of the year 2000.
http://movies.nytimes.com/movie/345221/The-Genius-Club/overview
I loved Kozmo. Manhattan Sunday mornings, the Times, a movie, coffee and Ben & Jerry's.... ahhhh the good old days!!
I worked at Kozmo right from the beginning when they had double digit employees. I worked in the corporate office and there was a lot of work to be done. I was putting in 12 hours everday for 6 days for a year. The new CEO brought in some lazy bums from his old job at Ethan Allen. One of them, Jeff Sullivan, was the worst controller I have ever worked for. It was frustrating seeing these guys taking credit for all the hard work that a couple of us had done from the beginning. I was eventually laid off in the first round. The CEO and the owners are probably enjoying venture capital money somewhere.
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