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2000’s Dot-Com Bust Becomes Dot-Gone Rush in 2001

2000’s Dot-Com Bust Becomes Dot-Gone Rush in 2001 2001 – A Year of Change As 2001 dawned, the term “dot-gone” had already entered our business lexicon, no less so here in the San Fernando Valley. And as 2001 comes to an end, a number of Valley onetime dot-coms are indeed long gone. As the year developed, some of the most ambitious plans for state-of-the-art e-commerce wound up in the proverbial boot hill of dot-coms a few within a matter of months of making their appearance. “There really were a lot of companies that should never have gone public,” said Jeff Pittsburg, president of the New York-based brokerage, Pittsburg Institutional. “That was part of that whole dot-com crash,” he said. “A lot of those companies didn’t really have a product that people wanted to buy.” Among the Valley’s dot-com casualties were: Take That, Spiderman Stan Lee Media Inc., the Encino-based media company, was supposed to create, distribute and license new comic book characters by the creator of Spiderman on line. But the company, named after if not directly run by the genius behind Spiderman, crashed and burned without ever attracting much attention for its online pay service. It closed up shop for good in June 2001, leaving behind a mountain of debt, an investigation by the Securities and Exchange Commission and accusations of mismanagement and fraud. In August, company co-founder Peter F. Paul, who had fled to Brazil, was arrested and accused of manipulating the price of company stock in order to defraud investors. The case against Paul is still pending. Lee, primarily a company figurehead, was never charged with anything. He, presumably, is somewhere back at the drawing board. No Deliveries Accepted Kozmo Inc., which planned to deliver videos, snacks and electronics to its online subscribers, made its mark in the Valley with its huge North Hollywood warehouse and what its executives thought would be a prime local subscriber base. But within months of opening here, the company went bust and closed its Kozmo.com Web site for good in April after five years, reporting a loss of $26.4 million on $3.5 million in revenue in 1999. No Size Fits All The startup children’s wear online marketer Enson Inc. seemed poised to make a big splash with its proposed Web site as it negotiated a deal to move into a 108,000-square-foot building near the Burbank Airport last May. But when the money ran out, the company’s plans for its e-commerce site went south along with its fortunes. A Taxing Business Encino-based Taxes4Less may have thought it was catching the next wave with its online accounting service, particularly since the Internal Revenue Service was encouraging people to file online tax returns. But the company fell flat as few sought out its service and by July, it had filed for Chapter 7 bankruptcy, with assets of $125,500 and liabilities of $887,854. The Mouse Has Left the Building The Walt Disney Co.’s Go.com portal departed this world in 2001, taking with it sister portals MrShowbiz.com and music-oriented WallofSound.com, both which Disney had acquired for about $100 million in 1999 from Microsoft Corp. co-founder Paul Allen. After Go.com posted a $242.1 million loss in 2000, it took with it nearly 700 jobs and $790 million in losses and restructuring costs. According to Disney officials, they are now “rethinking” their Web strategy and expect to refocus on core sites like abc.com, espn.com and disney.com. Take the Money and Run Finally, some Valley dot-coms that were the recipients of serious venture capital funding in 2000 can simply no longer be found. Not on the World Wide Web, not at their former addresses, not even in the Yellow Pages. A few onetime high flyers that have vanished without a trace are: – Veriserve, which raised $23 million in 2000, – CU Shopper of Burbank, $16.6 million, – Wizshop of Sherman Oaks, $5 million, – Word of Net, $1.75 million, – Competitive Knowledge of Van Nuys, $1 million.

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