What was Boo.com supposed to be?
Boo.com was an online store for designer sportswear and street fashion, founded in 1998 by three Swedes: Ernst Malmsten, Kajsa Leander and Patrik Hedelin. They arrived with a record. Malmsten and Leander had started the Swedish online bookstore Bokus.com in 1997 and sold it the following year to the Swedish group KF Media.
The plan for Boo.com was to skip the slow country-by-country rollout entirely. The site would open in 18 countries at once, in seven languages, taking payment in 18 currencies, with prices set for each local market.
The technology was the pitch. Shoppers could drag a garment onto a 3D model, zoom in and rotate it. A cartoon assistant called Miss Boo offered suggestions while you browsed. Nothing else in 1999 retail looked like it, and nothing else in 1999 retail cost as much to build.
Investors bought the story. J.P. Morgan, Goldman Sachs, Bernard Arnault of LVMH and the Benetton family put money in across three rounds totalling roughly $135 million, including a $101 million round in July 1999. Before a single item had been sold, Boo.com had spent about $25 million on advertising and public relations.
What happened on launch day, 3 November 1999?
Boo.com opened on 3 November 1999 after months of missed launch dates. About 50,000 people visited on the first day. Roughly four in every thousand of them placed an order, a conversion rate of 0.25 percent.
The reasons were not subtle. The site leaned on JavaScript and Flash, which corporate firewalls blocked and older browsers handled badly. It did not work on Macintosh computers at all, which cut out a large share of the design and media crowd the brand was aimed at.
Then there was the bandwidth. The 3D viewer and the Miss Boo animations had to download before a shopper saw anything, and most of the audience in 1999 was on a dial-up modem. Our dial-up speed comparison puts a 56k line next to a 2026 connection and shows the gap. A store built for broadband, served over a line that slow, is not a store. It is a waiting room.
Boo.com kept rebuilding the site after launch. Each rebuild cost money the company was already spending faster than it could raise it.
How fast did Boo.com burn $135 million?
Fast, and in public. By October 1999, a month before the store opened, Boo.com had around 400 employees across eight offices, with staff in Amsterdam, Munich, New York, Paris and Stockholm as well as London.
The headquarters and the call centre sat on Carnaby Street in London, one of the most expensive addresses in British retail, rather than somewhere cheaper. That single choice became the shorthand for how the company spent.
Through the first and second quarters of 2000, cash was leaving at more than $10 million a month. Revenue never came close to matching it. The founders were funding a global logistics and technology operation out of venture capital while the shop itself converted a quarter of one percent of its visitors.
The arithmetic was not unusual for the period. Pets.com and Webvan ran the same equation in the United States, spending ahead of demand on the assumption that the next round would always arrive. What set Boo.com apart was the speed. The $135 million was gone in 18 months, and the store had been open for only six of them.
What happened on 18 May 2000?
Boo.com ran out of road. Malmsten spent the final weeks trying to raise a bridge round from backers who had already watched the Nasdaq slide through March and April of 2000.
"Unless we raise $20 million by midnight, boo.com is dead," Malmsten said on 18 May 2000, in a line recorded in Dave Chaffey's case study of the collapse for Smart Insights. Around half the money was pledged. It was not enough and it was not in time.
KPMG was appointed that day to wind the company up. More than 400 staff and contractors lost their jobs, roughly 200 of them at the Carnaby Street office and the rest across Stockholm, Paris, New York and Munich. Many had gone unpaid.
The next morning the Financial Times ran the headline "Boo.com collapses as investors refuse funds" and called the company Europe's first big internet casualty. Malmsten wrote his own account, "Boo Hoo: A Dot.com Story from Concept to Catastrophe", published in 2001. "By writing a book, I hoped to come to terms with the overwhelming sadness and emptiness that follows such a great loss," he wrote in it.
Who owns Boo.com today?
Hostelworld Group, the hostel booking company listed in London, holds the boo.com domain. No fashion store has traded at that address since May 2000.
The wreckage was split in two at the liquidation. Bright Station, the British technology company run by Dan Wagner, bought Boo.com's e-commerce software from KPMG for 250,000 pounds, about $372,500 at the time. Fashionmall.com, a New York fashion portal, bought the brand, the domain and the Miss Boo character for about $375,000, a figure Forbes filed in May 2000 under the headline "Boo.com Assets Sell for Spooky Price: $375,000".
Fashionmall.com ran a thin version of the site for several years, then sold the domain to Web Reservations International, the Dublin company behind Hostelworld. It relaunched boo.com in May 2007 as a travel planning site with reviews and destination listings. In November 2009 the private equity firm Hellman and Friedman bought Web Reservations International outright, and the travel version of Boo.com was shut down in October 2010. An official told PhocusWire the company wanted to "channel its resources" into its existing brands.
Web Reservations International became Hostelworld Group plc and listed on the London Stock Exchange on 2 November 2015, valuing the group at 245 million euros. The boo.com name has sat on its books ever since, unused.
Was Boo.com right about online fashion?
About the idea, yes. About the year, no.
Two companies founded in 2000, months after Boo.com closed, built what Boo.com had described. ASOS launched in June 2000 selling affordable fashion to young British shoppers. Net-a-Porter launched the same year selling luxury labels. Both started narrow, in one market, with plain product photography and pages that loaded.
The difference was not vision. It was sequencing. Boo.com spent $25 million telling the world about a store before the store worked, opened in 18 countries at once, and shipped a 3D viewer the average 1999 connection could not carry. ASOS and Net-a-Porter waited for broadband and spent on inventory and logistics instead.
The shape of the failure keeps recurring, which is why the case is still taught. Amazon came within sight of the same cliff in 2000 and survived because it had revenue and a bond issue behind it. Boo.com had neither. It had a story, $135 million and six months of trading.
Frequently Asked Questions
Why did Boo.com fail?
Boo.com failed because it spent $135 million in 18 months building a global fashion site that most shoppers in 1999 could not use. The store opened on 3 November 1999 needing JavaScript, Flash and a 3D product viewer, would not run on Macintosh computers, and crawled over dial-up connections. When investors refused a final $20 million, Boo.com went into receivership on 18 May 2000.
How much money did Boo.com lose?
Boo.com raised and spent about $135 million between 1998 and May 2000, backed by J.P. Morgan, Goldman Sachs, Bernard Arnault of LVMH and the Benetton family. Roughly $25 million of it went on advertising and public relations before the site opened. At liquidation the remains sold for under $1 million in total: about $375,000 for the brand and domain, and 250,000 pounds for the technology.
Is Boo.com still a website?
No. Boo.com has not sold clothes since May 2000. The domain passed from Fashionmall.com to Web Reservations International, which ran boo.com as a travel site from May 2007 until October 2010. That company is now Hostelworld Group plc, listed on the London Stock Exchange since November 2015, and it still holds the boo.com name.