Learning From Boo's Scare

Last year, Amely Greeven was a true believer in the new Internet economy.

"There was a feeling of great optimism that great things could unfold," she says.

The 27-year-old, formerly a writer for Vogue, quit the magazine grind and chose instead to fulfill her dreams with a company called Boo.com. Correspondent Anthony Mason reports on her experience.

The company was to be a billion-dollar fashion empire, selling trendy clothing over the Internet.

"It was a bridge for these people who were stuck in the old school of working in magazines. You know, how old fashioned is that?" she asks.

But in July, Greeven fled the canyons of New York for the mountains of Montana to work as a ranch hand.

"I'm as far from home as I could ever hope to be," she said.

What happened? Like a number of other promising Internet companies, hers went down in flames. Greeven got burned.

Boo.com came along in 1998 when every Internet idea had the potential to be the next big thing, another pot of gold at the end of the IPO rainbow.

"When Boo.com was launched, those were kind of the champagne days of the Internet," says reporter Katie Hobson, who covers the retail market for an online financial service.

"I like to think my pet hamster could have gone out to Silicon Valley and got millions of dollars in funding for hamster.com. And it was just that kind of time," she says.

"This was a time when you could spin hay into gold. And this wasn't hay," says Ben Narasin, president of fashionmall.com, which had been one of Boo's competitors.

"This was a great concept. This was a visionary thing, and the markets were very receptive," he adds.

Investors showered the company with nearly $200 million.

"I could see how people bought into this very realistic long-term vision," Narasin adds.

"If you say the venture capitalists are crazy; many of them are also rich and crazy," Hobson says. "They pick up the hot thing and make investments in the next hot thing, and that's how they make money."

And Boo.com was hot. The company's young Swedish founders made the cover of Fortune magazine. They hired Francis Ford Coppola's son to shoot edgy, off-beat commercials. And they began to spend, spend, spend.

"They were so caught up in creating the first, cool Internet company that money was spent prematurely," Greeven says.

"Think about when you're trying to conquer the world - what that takes," offers Narasin.

And the founders didn't do anything on the cheap. The London headquarters was on Carnaby Street, and in New York, the company was based in trendy Soho.

"I don't see why you necessarily need prime real estate," Greeven says. "This fantastic beautiful office overlooking the Hudson just west of Soho in Manahattan."

And then there was all the time and money that went into developing the company's cartoon trademark.

"Sort of a cool, witty, funky shopping assistant who would pop up and make little comments to you as you shopped," Greeven explains.

This was the mysterious Miss Boo.

They flew people "from New York to London to actually do her hair, to really focus on her clothing," Narasin says.

The Boo Web site was delayed again and again, however. And when it finally did get up and running, only customers with very fast computers could access the site.

"Boo.com is probably representative of some kind of Internet chuztpah," Hobson says. "I never could order from Boo.com. My computer (seemed to make) it take so long that I never actually ordered from them."

Last Christmas, the company's make-or-break season, sales were anything but bullish. Former employees say the company sold less than $1 million worth of merchandise worldwide. At one point, the only sale in Italy was a $3 keychain. It was returned, costing Boo $11 in shipping and handling.

Says Narasin: "They were driving a Ferrari down a road at 190 mph, and they ran out of gas."

By spring, six months after it launched, Boo went bust. It was out of business.

"There is sort of a sense now of watching a car crash, and people are (sort of) entertaining themselves, saying, 'Well, what's going to go down next?'" Greeven observes.

A lot has changed since Boo.com was created. Many analysts now believe that the Internet gold rush is over.

"That's just all part of the shakedown. Eventually things will settle, and one or two solid things will grow," Greeven says.

And for Greeven, after her summer at the ranch, she's returning to traditional magazine writing even though Boo.com is coming back.

After Boo's collapse, competitor Narasin, CEO of fashionmall.com, bought the company name and a truck load of leftovers for less than a penny on the dollar.

"We got about 40,000 Frisbees," he says.

Narasin will relaunch the site this fall and hopes to be smarter than his predecessors. He shot pictures of the empty offices at Boo's London headquarters to remind himself what failure looks like.

"I don't believe anybody's going to spend $200 million to launch from scratch a brand on the Internet ever again. And so, it's like the great mansions in the gold coast of New York. No one will ever build them ever again," he says.