For the nervous investor it seemed like one more ugly portent. Wasn’t boo once a candidate for a stock-market listing and reckoned to be worth more than $350 million? If a venture supported by the Benetton family and luxury tycoon Bernard Arnault could fold, how about the rest of Europe’s new crop of start-ups? A study last week by accountants PricewaterhouseCoopers suggested that a quarter of Britain’s listed Internet companies would run out of funds within the next six months. Tumbling share prices have already undermined confidence in New Economy companies, and boo’s fate will mean still greater caution, says Lars Waagstein of the Internet research group Jupiter Communications. “Venture capitalists will become much pickier about where to put their money,” he warns.
Maybe so. But boo’s failure also had a lot to do with a lack of Old Economy cost controls. The extravagance went far beyond the cost of the slick TV and print advertising. New employees could expect free palm-top computers; free organic fruit was delivered to their London office. Senior management reportedly splurged on five-star accommodations and Concorde travel. Add a delayed launch and the loss of key staff at critical moments and boo had enough failings to sink any company, whatever its medium.
Besides, the sheer scale of boo’s ambition in a tricky e-tail market invited trouble. “You just can’t sell high-touch, high-return goods on the Web,” says Miles Saltiel of brokers WestLB Panmure in London. Yet boo opted for a simultaneous launch in 18 countries with a hypersophisticated site that proved too smart for its own good. Sure, it’s fun to try out possible oufits on a twirling 3-D dummy, but not if the untried technology means lengthy waits for those images to download.
Certainly, boo’s fate hasn’t deterred other would-be e-players. Within hours of its demise some 30 buyers had shown interest in Europe’s first dot-com fire sale. There is speculation that some are established retailers with the revenues and the expertise to exploit the infrastructure that boo created. Count staff among the possible winners, too. As soon as the news broke, headhunters were outside at the company’s Soho offices distributing business cards by the fistful. One recruitment company left a £5,000 tab at a nearby bar. Says a former boo staffer: “It was a frenzy. Recruiters were buying drinks for us all night.” boo is dead; long live the boom.
