Boo goes Bust

May 22, 2000

The herd must be getting nervous. Peter Jennings on ABC's Evening News has told us about the collapse of both Boo.com and the Digital Entertainment Network on the same day. Looks like all the NASDAQ doomers weren't so loony after all. The ABC news story even implied that investors weren't patiently waiting for the Internet Promised land anymore, they want to see the flowing milk and honey. The NASDAQ and the Internet have now reached the point where investors aren't willing to throw good money after bad. I don't think there ever was any Internet good money, but I'm not a true believer. The NASDAQ has entered a critical new phase: there will be no more free ride from burned investors. The bar is closed.

Boo.com's story is the usual Internet schmooze. A splashy launch a mere six months ago and now a total collapse. 400 million dollars of fiat frenzy is now worth whatever the vultures can glean from the corpse. Boo was done in by "a combination of high setup costs and an inability to attract enough customers." Seems to me that this combination would be fatal to any type of new, or old, company.

Does it even matter now that the vision of a global online sports retailer ever existed? Does it matter the two Swedish owners are "disappointed" that their "strong efforts..to raise additional funds which would have allowed the company to go forward with a clear plan." The AP goes on to say "their plan envisioned a restructuring of retail operations and the identification of partners." Isn't it a little late? Why didn't they do this before they raised the $400 million? The French entrepreneur Bernard Arnault and Italy's Benetton Family (they do the child porn ads for their clothing line) have now lost a lot of money. Sorry. Don't invest in Internet startup companies that don't have any idea of what they are doing. Stupidity should be painful. I'm more sorry for the 300 people who have lost their jobs when the company collapsed. The blow dealt to Europe's Internet industry also doesn't concern me. Bye, bye boo.com.

ABC also mentioned something called the "Digital Entertainment Network", whatever that is. This Internet network never had a market penetration of more than 2%, yes that's right, 2% of the available market. It's programming was "hip hop" and a couple of other terms I have no idea of what they mean. One of those interviewed commented it was "ahead of its time." So far ahead I have no idea what the programming was. Not enough other people did either I guess. ABC didn't mention how many hundreds of millions of dollars went down the NASDAQ rat hole on this one. $400 million here and a few hundred million there; pretty soon you're talking real money-to paraphrase Senator Everet Dirksen's quote. How much more will the long suffering NASDAQ investor tolerate? Good question. Is the herd starting to ask hard questions? The day the herd begins to question whether the money they "invest" in Internet startups will ever be repaid is the day they won't invest anymore. Once that happens the NASDAQ is finished.

Oh, the NASDAQ was down 3%, 106 points, Friday, May 19th. This is a sign the herd of investors is starting to question the basic Internet business assumption. It will be interesting over the next few weeks to see if there are any new Internet IPO's. But hey, I guess I don't share the Internet vision. At least not enough to invest in startup companies that have no business plan, no prospect of profit and no one in charge who has any idea of what they are doing. I just buy gold. I'll leave the new Internet economy stuff to people who don't mind losing their money; losing it to people wearing earrings and who know what hip hop music is to boot.

WHO WILLS CAN-WHO TRIES DOES-WHO LOVES LIVES

There is no worse bitterness than to reach the end of your life and realize you haven't lived. -- M. Scott Peck

One cubic foot of gold weighs more than half a ton (1,306 pounds).

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