NEW YORK (CNN/Money) -
Chris Siragusa knew Kozmo.com was in trouble when a customer ordered a single pack of Mentos and, because of the company's business model and promises to customers, the 50-cent item had to be delivered – a $7 expense to the company.
But after Kozmo's high-profile flameout, Siragusa, Kozmo's former chief technology officer, also knew the company was on to something despite its flaws. One night he went out in search of Triple Paste diaper rash ointment for his crying child, an errand that ended up taking several hours as Siragusa desperately combed drugstores in his neighborhood in search of the product.
The experience renewed his faith in the Kozmo idea, and despite – or perhaps because of -- the painful lessons learned, he's back in business with MaxDelivery, a Web-based delivery service in which customers can order DVDs, groceries, drugstore items and other conveniences online and have them delivered from the company's Tribeca warehouse to customers' doorsteps in under an hour.
"There was a good, strong, core business model underneath that got diverted by the times and some decisions that were made," said Siragusa. "But in the back of my head, I always thought it was a great idea."
No more 50-cent deliveries
Siragusa, who worked at a software company helping to manage its technical infrastructure post-Kozmo, has made some noteworthy changes from the Kozmo model, and MaxDelivery's marketing pitch prominently points these out.
Customers of Kozmo.com who fondly remember getting single pints of ice cream delivered on a whim won't get off that easy this time. MaxDelivery has a $10 minimum order, and there's a $4.95 delivery charge for orders under $50. Siragusa said this is to keep customers from abusing the system, as they did with Kozmo, and he says MaxDelivery's average order size is much different than Kozmo's.
"Someone ordered a pack of Mentos. Then two hours later they'd order a pint of ice cream," said Siragusa. "People did this because there was no penalty. Kozmo had a number of orders that were unprofitable."
He's also keeping MaxDelivery a lot simpler, making sure the focus stays on DVDs, groceries and other daily needs.
"Kozmo started out as a business dedicated to getting consumers what they needed every day," he said. "It morphed form that into being superstore for everything you might possibly want, from books to CDs, and having deliveries as a tack-on. We're going back to the core."
Siragusa also said the company isn't beholden to investors who are more focused on growth than profitability. He said catering to the demands of the venture capitalists that funded it led in part to Kozmo's too-rapid expansion into other cities and product categories.
But he faces the challenge from other Internet competitors that have sprung up since Kozmo died, such as the thriving DVD rental service Netflix and popular home grocery delivery service Fresh Direct. He's hoping that the lure of one-hour delivery will set him apart from these competitors, which require advance planning.
Siragusa started the company in September 2004 and formally rolled out the site earlier this year. He's mum on specifics about the company's financials but said he expects to start turning a profit by early in the fourth quarter this year. He is also carefully planning expansion into other neighborhoods in Manhattan as well as one or two other cities, and is mulling a move to add gourmet foods to the product line.
Where are they now?
It's clear that Siragusa is keen to apply the painful lessons of the dot-com era to what he believes is a fundamentally sound business idea. But not every dot-com casualty is trying the Internet world again. Here's what some other big names from the era of irrational exuberance are up to:
Stephan Paternot A millionaire on paper by the tender age of 24, Paternot watched his paper fortune disappear when TheGlobe.com, an online community he co-founded with Todd Krizelman, saw its shares plummet to nearly zero just a year after its high-profile IPO. But his years as a media darling must have had a lasting effect, because Paternot is seeking the spotlight again.
After resigning as co-CEO, he penned an autobiography, A Very Public Offering: A Rebel's Story of Business Excess, Success and Reckoning, in 2001, and is currently pursuing a career in acting. His latest film, a 2004 independent short called "Time Enough at Last," prompted one reviewer on the Internet Movie Database Web site to call the film "a new benchmark for the overblown self-indulgence and tremendous pretentiousness of rich kids at film school."
Theglobe.com is still around, though its Web portal is not. The company is now focusing on internet telephony and online entertainment. Paternot also founded a film production company. Former partner Krizelman attended Harvard Business School and still sits on Theglobe.com's board of directors, according to published reports.
George Shaheen The CEO of now-defunct online grocer Webvan, which appeared on the cover of the final issue of dot-com chronicler The Industry Standard, Shaheen earlier this year became CEO of Siebel, which makes customer management software. Siebel announced Monday that Oracle plans to acquire the company.
Steve Case America Online co-founder Case resigned in January 2003 as chairman of what was then known as AOL Time Warner under pressure from leading shareholders who were upset by the sharp drop in share value following AOL's purchase of Time Warner. He remains a member of the merged company's board. CNN/Money is a unit of Time Warner (Research).
He also started Revolution Health Group, a privately held company that invests in companies offering alternative health and wellness services to customers. Case recently added ousted Hewlett Packard chairman and CEO Carly Fiorina to the board, which also includes ex-Netscape CEO Jim Barksdale and the former Secretary of State, Colin Powell.
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