In the last years, different technology companies have been founded thanks to excellent ideas, creating new services or products, but for bad decisions or improper management, these organizations have faced bankruptcy. In this post, we will talk about some of these businesses; showing how their bankruptcy processes were and how they faced them.

1. Four bankruptcy cases in the
technology industry
By Suzzanne Uhland
Image courtesy of
ekkun at Flickr.com

2. In the last decades, the technology businesses have ruled our
world in multiple ways. Giant companies like Google, Facebook,
Amazon, Apple, among others, have brought to our lives
different new aspects, changing our behavior and how we do
things. In addition, these huge corporations, have developed
incredible business models, creating billions of dollars and
thousands of employees. These organizations, have become
not only part of our lives but also a vital key for the world’s
economy, making it more dynamic and interesting, due to their
continuous innovations, products, and services.
Four bankruptcy cases in the
technology industry

3. Some of these organizations are considered the biggest in the
planet, being valued in billions of dollars, making their owners
some of the richest people on earth. Moreover, the constant
innovation and the multiple technological advances let persons
around the world develop new disruptive products, giving birth
to amazing and great businesses. However, some of these
startups, have failed and being declared in bankruptcy for
different reasons, showing that the creation of disruptive ideas
is not always the only thing for a successful business.
Four bankruptcy cases in the
technology industry

4. In the last years, different technology companies have been
founded thanks to excellent ideas, creating new services or
products, but for bad decisions or improper management,
these organizations have faced bankruptcy. In this post, we will
talk about some of these businesses, showing how their
bankruptcy processes were and how they faced them.
Boo.com
Founded in 1999 in the United Kingdom by Swedish
entrepreneurs (Ernst Malmsten, Kajsa Leander, and Patrik
Hedelin), Boo.com was one of the first retail fashion business
on the internet, selling mainly clothing and cosmetics. For its
creation, this organization received more than $135 million
dollars in venture capital, but two years later, the company was
Four bankruptcy cases in the
technology industry

5. declared in bankruptcy, due to its inability for its payment
obligations. In other words, Boo.com was liquidated in 2000,
due to its liquidity issues and financial agreements
non-payment. Today, this bankruptcy case is considered one
of the biggest failures in the internet industry.
One of the principal reasons for Boo.com bankruptcy was that
the company developed its platform with very advanced
conditions for the technology elements in that time. Put
differently, its website was amazing and very new for those
days, but most computers did not support it. Another cause for
Boo.com bankruptcy was its software. For viewing its
merchandising and clothing, people had to download a
Four bankruptcy cases in the
technology industry

6. specific application, but it was incompatible on different computers.
Other reasons for its failure were the highest maintenance costs, the
delivery conditions, and the dot-com crash.
Flooz.com
Founded in 1999 in New York city as one of the most disruptive
businesses, Flooz.com faced bankruptcy three years after its
creation. It was developed for establishing a virtual currency for
being used in different retail stores like J. Crew, Barnes & Noble,
Restoration Hardware, Starbucks and Tower Records, working as a
virtual credit card. This company collected more than $40 million
dollars and was sponsored by the actress Whoopi Goldberg, but it
was not enough for being a successful technology business.
Four bankruptcy cases in the
technology industry

7. Some of the reasons for Flooz.com bankruptcy were the bad
management of its resources, the few businesses accepting it
as a payment way and the dot-com crash. In addition, the
company was syndicated for criminal activities, more
specifically for money laundering from the Russian mafia, who
stole legal credit cards for using the virtual currency created by
Flooz.com. After all these problems and situations, the
organization filed for bankruptcy.
Four bankruptcy cases in the
technology industry

8. eToys
It was an American retail website selling mainly toys and figures. It
was founded in 1997 and after some years of activity, it faced
bankruptcy, being acquired by different owners until in 2009 it was
purchased by Toys “R” Us. For 1999, the organization reached a
market value for more than $166 million dollars, rivaling with huge
retail businesses like Amazon, Walmart or Target.
Some years after its creation, the organization was unable to keep its
sales budget, having losses for more than millions of dollars. For its
critical situation, eToys was unable to pay its credit responsibilities,
accumulating more than $240 million dollars in debts. In addition, its
great competitors, increased their sales, taking eToys to bankruptcy
in 2001.
Four bankruptcy cases in the
technology industry

9. Napster
This is probably one of the most famous technology companies
from the past decade in the world. It was created by Sean Parker
and Shawn Fanning in 2000, as a music file sharing service, taking
the music business to a new level. In 2001, Napster reached a
huge popularity, obtaining more than 26 million users sharing
music.
After some years of activity, Napster started to have legal
problems with different artists, for copyright infringement, closing
its services in 2001. Two years later, Napster was bought by
Roxio, working as a music subscription service, and five years
later it was purchased by Best Buy for almost $120 million dollars.
In 2011, the company was bought by Rhapsody.
Four bankruptcy cases in the
technology industry

10. Related: The Bankruptcy process and some of its legislation
concepts by Suzzanne Uhland
Four bankruptcy cases in the
technology industry