Flooz.com

One of the most fascinating stories from what I have read on the dot-com bubble is that of Flooz.com. This was a company that was set up with the premise of providing an “online currency” that would act as an alternative to paying for things online with your credit card. You had to buy Flooz from their website, or you could receive them as a kind of gift token from other internet companies, and then you were able to use it at retail partners that had signed up, including some notable firms such as Tower Records and Barnes & Noble.  The company even had the public backing of Whoopi Goldberg (a signal of potential success?) and it is estimated the company raised approximately $35million from investors.

One example of how Flooz tried to attract users was an offer where you could give someone $50 in Flooz and receive $15 yourself, which is an offer that will have clearly appealed to many people. However, for something like this to work it would obviously need to become a widely used medium of exchange.

It didn’t.

Flooz went bankrupt in 2001, leaving many people with Flooz that were now worthless. One point that I should make about Flooz.com and its failure is that, as stated by its founder Robert Levitan, by mid-2001 approximately 19% of purchases of Flooz could be accounted for as fraudulent purchases. This may have accelerated its decline, but its fair to say that, “the writing was on the wall” regardless. 

The question I keep asking myself when I read about Flooz.com is why did anyone invest in it? Maybe hindsight makes this idea look so ridiculous, but why would anyone want to buy an “online currency” when they could just use the currency they already have? For the company to have raised so much money though, it must have struck some people as a good idea. Or maybe, people didn’t really think about what it was they were investing in, and they simply jumped on the bandwagon of another internet start-up with big ambitions, but one, like so many others, without a real sense of how to achieve those lofty ambitions. 

A message from Osama Bin Laden, circa 2000