Kozmo.com: Waiting and Hoping

Kozmo.com: Waiting and Hoping

Kozmo.com: Waiting and Hoping

Moneybox
Commentary about business and finance.
Aug. 23 2000 10:56 AM

Kozmo.com: Waiting and Hoping

For the past couple of weeks, Kozmo.com has been in the news quite a bit. First came word that the company's young founder has essentially been pushed aside. Then there was news of 275 layoffs. And reports that the company is considering a merger with its rival Urbanfetch, which had previously been accused of stealing Kozmo's business plan (in a squabble that I like to think of as the "Who's Stupid Idea Was This?" dispute). Finally, we got the announcement that Kozmo's public offering--with the planned ticker KZMO--would be delayed until next year at the earliest.

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Some faithful Kozmo-nauts, I assume, still believe in the company's eventual success. The far more prevailing attitude has been a mix of I-told-you-so relief and jeering Schadenfreude. My own feeling, however, is a kind of bemused disappointment.

For a long time now, I've considered Kozmo to be the ultimate litmus test--a living, capital-attracting example of how extreme the hopes and dreams of the dot-com moment could get. I really wanted Kozmo to go public, I wanted that moment when the company would effectively say to the capital markets: Hi, we deliver videos and candy bars, and we would like one hundred and fifty million of your dollars so we can carry on with it for a while longer. I wanted to see what would happen, to see how many people really believed.

Just for fun, here is my favorite pair of numbers in the Kozmo S-1, the document a company files with the SEC when it intends to go public. In the fourth quarter of 1999, Kozmo had revenues of about $2,117,000. Scan down its list of operating expenses to the item "Delivery," which cost the company $2,281,000 in the quarter. In other words, the cost of deliveries alone (not counting administrative expenses, marketing, sales, or even the cost to Kozmo of items being delivered, all of which helped push the total loss for the quarter to more than $18 million) was greater than the amount of money the company took in. For a delivery service, that seems very, very unpromising.

But never mind that. I'm not here to pick on Kozmo--really. The point is that there was a degree of faith built into the Kozmo idea (and I realize this is a bit of a cliché) that was truly religious in proportion. That doesn't mean it was wrong. Maybe Kozmo will be a really profitable company, and maybe Christ will walk the earth again. Who can say?

I gather the company is tinkering with its business model, trying, among other things, to add other businesses to its customer list. This, too, I find disappointing, because it almost sounds as if even Kozmo doesn't believe in Kozmo anymore, and it wants to be something else now. (I don't know whether it's something more plausible or not, but it's something else.) So even if the day comes when KZMO appears, it may not represent the same things it represents now. Maybe there will be a whole new S-1, laying out a completely different vision of the future. It just won't be the same. If the day ever comes when KZMO floats by on the ticker, it will just make me feel nostalgic.