Kozmo.com
Encyclopedia
Kozmo.com was a venture-capital-driven online company that promised free one-hour delivery of "videos, games, dvds, music, mags, books, food, basics & more" and Starbucks
coffee in several major cities in the United States
. It was founded by young investment bankers Joseph Park
, Yong Kang and Robert McNamara in March 1998 in New York City, and was out of business by April 2001. The company is often referred to as an example of the dot-com
boom.
, car, truck, or public transportation. The model was criticized by some business analysts, who pointed out that one-hour point-to-point delivery of small objects is extremely expensive and were skeptical that Kozmo could make a profit as long as it refused to charge delivery fees. The company countered in part that, in their target markets, savings due to not needing to rent space for retail stores would exceed the costs of delivery.
and Chase. and $60 million from Amazon.com
in 2000. It entered a five-year co-marketing agreement with Starbucks
in February 2000, in which it agreed to pay Starbucks $150 million to promote its services inside the company's coffee shops. Kozmo.com ended its deal in March 2001 after paying out $15 million. In July 2000, at the height of its business, the company operated in Atlanta, Chicago
, Houston, San Francisco, Seattle, Portland
, Boston
, New York
, Washington, D.C.
, San Diego and Los Angeles
. Kozmo had filed an IPO
with Credit Suisse First Boston
, but it never went public. The writing was on the wall for Kozmo, as money woes and public relations mistakes continued to plague the company. Despite serious concern and many suggestions from its employees to require a minimum purchase and/or a delivery charge, Kozmo continued to use the same business model of free delivery no matter what the price, even if it were a $.50 pack of gum or candy bar.
The company was the subject of an April 2000 report by MSNBC.com
reporters Brock Meeks
and Elliot Zaret claiming that Kozmo was redlining
sections of the cities it served that were populated primarily by African American
s. Kozmo denied that race played any part in its decision on what zip codes to deliver to, asserting that they choose market areas based primarily on Internet penetration rates. The Equal Rights Center, the Washington, DC
-based civil rights group referenced in the article, pursued the company about the allegations. Later in the year, the ERC announced a joint initiative with Kozmo, stated that "Kozmo's initial service area was not motivated by racial discrimination," and Kozmo committed $125,000 toward increased Internet availability for underserved communities.
While popular with college students and young professionals, the company failed soon after the collapse of the dot-com bubble
, laying off its staff of 1,100 employees and shutting down in April 2001. Employees of the company in many of their 18 locations nationwide, found out about the shutdown only after arriving to work their scheduled shifts, and finding the doors locked. Those locations, as well as their Memphis distribution center, were soon liquidated by a veteran entertainment wholesaler from Florida. Company delivery bags and uniforms were sold to discount stores across the country and can still be found.
, released in June 2001
, depicts the growth and fate of the company.
In April 2005, former CTO
Chris Siragusa launched MaxDelivery, a Kozmo-like service in downtown Manhattan
specializing in the delivery of food, wine, DVDs and essentials, still in business.
Joseph Park
, former co-founder and CEO, went on to co-found Askville
in 2006, which is now part of Amazon.com
. Park left Amazon.com in June 2009 to become president of BibleGateway.com
, which is owned by Zondervan
, a Christian publisher that is a unit of HarperCollins
(which is owned by News Corp.).
Yong Kang, former co-founder, returned to Wall Street, and as of June 2009 listed his occupation as investment banking at Lehman Brothers
(now Barclays Capital
).
Starbucks
Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 17,009 stores in 55 countries, including over 11,000 in the United States, over 1,000 in Canada, over 700 in the United Kingdom, and...
coffee in several major cities in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. It was founded by young investment bankers Joseph Park
Joseph Park
Joseph Park is a Korean American investment banker that founded Kozmo.com in 1997. He was profiled in the documentary film e-Dreams. He is a co-founder of Askville, which is owned by Amazon.com...
, Yong Kang and Robert McNamara in March 1998 in New York City, and was out of business by April 2001. The company is often referred to as an example of the dot-com
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
boom.
Model
Kozmo had a business model that promised to deliver small goods free of charge within an hour by bicycleBicycle
A bicycle, also known as a bike, pushbike or cycle, is a human-powered, pedal-driven, single-track vehicle, having two wheels attached to a frame, one behind the other. A person who rides a bicycle is called a cyclist, or bicyclist....
, car, truck, or public transportation. The model was criticized by some business analysts, who pointed out that one-hour point-to-point delivery of small objects is extremely expensive and were skeptical that Kozmo could make a profit as long as it refused to charge delivery fees. The company countered in part that, in their target markets, savings due to not needing to rent space for retail stores would exceed the costs of delivery.
History
Its headquarters were located in New York City. According to documents filed with the Securities and Exchange Commission, in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million. The company raised about $250 million, including $28 million from a group of investors in 1999 which included Flatiron, OakOak Investment Partners
Oak Investment Partners is a private equity firm focusing on venture capital investments in companies developing communications systems, information technology, new Internet media, healthcare services and retail....
and Chase. and $60 million from Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
in 2000. It entered a five-year co-marketing agreement with Starbucks
Starbucks
Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 17,009 stores in 55 countries, including over 11,000 in the United States, over 1,000 in Canada, over 700 in the United Kingdom, and...
in February 2000, in which it agreed to pay Starbucks $150 million to promote its services inside the company's coffee shops. Kozmo.com ended its deal in March 2001 after paying out $15 million. In July 2000, at the height of its business, the company operated in Atlanta, Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
, Houston, San Francisco, Seattle, Portland
Portland, Oregon
Portland is a city located in the Pacific Northwest, near the confluence of the Willamette and Columbia rivers in the U.S. state of Oregon. As of the 2010 Census, it had a population of 583,776, making it the 29th most populous city in the United States...
, Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
, Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
, San Diego and Los Angeles
Los Angeles, California
Los Angeles , with a population at the 2010 United States Census of 3,792,621, is the most populous city in California, USA and the second most populous in the United States, after New York City. It has an area of , and is located in Southern California...
. Kozmo had filed an IPO
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
with Credit Suisse First Boston
Credit Suisse First Boston
Credit Suisse First Boston was the former name of the banking firm Credit Suisse.-History:In 1978, Credit Suisse and First Boston Corporation formed a London-based 50-50 investment banking joint venture called the Financière Crédit Suisse-First Boston...
, but it never went public. The writing was on the wall for Kozmo, as money woes and public relations mistakes continued to plague the company. Despite serious concern and many suggestions from its employees to require a minimum purchase and/or a delivery charge, Kozmo continued to use the same business model of free delivery no matter what the price, even if it were a $.50 pack of gum or candy bar.
The company was the subject of an April 2000 report by MSNBC.com
Msnbc.com
msnbc.com is a news website owned and operated as a joint venture by NBCUniversal and Microsoft.In addition to original content from its news staff, msnbc.com is the news website for the NBC News family, with content from the cable television news channel MSNBC, NBC shows such as Today, NBC Nightly...
reporters Brock Meeks
Brock N. Meeks
Brock N. Meeks is an award-winning investigative journalist. He pioneered the field of online journalism and founded one of the preeminent online publications, CyberWire Dispatch, in 1994. At its peak, CyberWire Dispatch was distributed to more than 800,000 readers via mailing lists and newsgroups...
and Elliot Zaret claiming that Kozmo was redlining
Redlining
Redlining is the practice of denying, or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain, often racially determined, areas. The term "redlining" was coined in the late 1960s by John McKnight, a...
sections of the cities it served that were populated primarily by African American
African American
African Americans are citizens or residents of the United States who have at least partial ancestry from any of the native populations of Sub-Saharan Africa and are the direct descendants of enslaved Africans within the boundaries of the present United States...
s. Kozmo denied that race played any part in its decision on what zip codes to deliver to, asserting that they choose market areas based primarily on Internet penetration rates. The Equal Rights Center, the Washington, DC
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
-based civil rights group referenced in the article, pursued the company about the allegations. Later in the year, the ERC announced a joint initiative with Kozmo, stated that "Kozmo's initial service area was not motivated by racial discrimination," and Kozmo committed $125,000 toward increased Internet availability for underserved communities.
While popular with college students and young professionals, the company failed soon after the collapse of the dot-com bubble
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
, laying off its staff of 1,100 employees and shutting down in April 2001. Employees of the company in many of their 18 locations nationwide, found out about the shutdown only after arriving to work their scheduled shifts, and finding the doors locked. Those locations, as well as their Memphis distribution center, were soon liquidated by a veteran entertainment wholesaler from Florida. Company delivery bags and uniforms were sold to discount stores across the country and can still be found.
Post-Kozmo
The documentary film e-DreamsE-Dreams
e-Dreams is a 2001 American documentary film directed by Wonsuk Chin portraying the rise and fall of Kozmo.com, an online convenience store that utilized bike messengers to deliver goods ordered online within an hour....
, released in June 2001
2001 in film
The year 2001 in film involved some significant events, including the first of the Harry Potter series and also the first of The Lord of the Rings trilogy...
, depicts the growth and fate of the company.
In April 2005, former CTO
Chief technical officer
A chief technology officer is an executive-level position in a company or other entity whose occupant is focused on scientific and technological issues within an organization....
Chris Siragusa launched MaxDelivery, a Kozmo-like service in downtown Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
specializing in the delivery of food, wine, DVDs and essentials, still in business.
Joseph Park
Joseph Park
Joseph Park is a Korean American investment banker that founded Kozmo.com in 1997. He was profiled in the documentary film e-Dreams. He is a co-founder of Askville, which is owned by Amazon.com...
, former co-founder and CEO, went on to co-found Askville
Askville
Askville is a user-driven research site founded by Amazon.com and opened to the public on December 8, 2006.-History:Askville was co-founded by Korean-American former investment banker Joseph Park, previously co-founder of Kozmo.com . The documentary film e-Dreams portrays the fate of the company...
in 2006, which is now part of Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
. Park left Amazon.com in June 2009 to become president of BibleGateway.com
BibleGateway.com
BibleGateway.com is a website designed to allow easy searching of the Christian Bible in many different versions and translations, including Spanish, French, and other non-English languages . The website is free for anyone to use...
, which is owned by Zondervan
Zondervan
Zondervan is an international Christian media and publishing company located in Grand Rapids, Michigan. Zondervan is a founding member of the Evangelical Christian Publishers Association .- History :...
, a Christian publisher that is a unit of HarperCollins
HarperCollins
HarperCollins is a publishing company owned by News Corporation. It is the combination of the publishers William Collins, Sons and Co Ltd, a British company, and Harper & Row, an American company, itself the result of an earlier merger of Harper & Brothers and Row, Peterson & Company. The worldwide...
(which is owned by News Corp.).
Yong Kang, former co-founder, returned to Wall Street, and as of June 2009 listed his occupation as investment banking at Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
(now Barclays Capital
Barclays Capital
Barclays Capital is a global British investment bank. It is the investment banking division of Barclays plc which has a balance sheet of over £1.2 trillion . Barclays Capital provides financing and risk management services to large companies, institutions and government clients. It is a primary...
).
See also
- Dot-com companyDot-com companyA dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
- FreshDirectFreshDirectright|thumb|Fresh Direct logo FreshDirect is an online grocer that delivers to residences and offices in the New York City metropolitan area. FreshDirect also offers next-day delivery to most of Manhattan and parts of Brooklyn, Queens, The Bronx, Staten Island, Nassau County, Westchester County, ...
- WebvanWebvanWebvan was an online "credit and delivery" grocery business that went bankrupt in 2001. It was headquartered in Foster City, California, USA, near Silicon Valley. It delivered products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in ten U.S...
online grocer - UrbanfetchUrbanfetchUrbanfetch was an Internet company founded in 1999 which enabled customers to order products online and have them delivered by bike messenger in less than an hour within certain delivery areas covering most of Manhattan and London. The company's business plan was essentially identical to that of...
- AskvilleAskvilleAskville is a user-driven research site founded by Amazon.com and opened to the public on December 8, 2006.-History:Askville was co-founded by Korean-American former investment banker Joseph Park, previously co-founder of Kozmo.com . The documentary film e-Dreams portrays the fate of the company...
External links
- Archived versions of kozmo.com at the Internet ArchiveInternet ArchiveThe Internet Archive is a non-profit digital library with the stated mission of "universal access to all knowledge". It offers permanent storage and access to collections of digitized materials, including websites, music, moving images, and nearly 3 million public domain books. The Internet Archive...
(Original Kozmo.com site predates June 1, 2001).