Where are they now: Kozmo.com

Mark Henricks — Thu, 29 May 2008 15:28:08 -0700

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?