Ray Nolan, the founder of online travel company Web Reservations International, has a rebranding challenge on his hands.
The Irishman has bought the domain name of boo.com, one of the dot.com era's most notorious protagonists in Europe, and turned the former online fashion store into an interactive travel website.
The original boo.com was created in 1998 by two London-based Swedes – Ernst Malmsten and Kajsa Leander. It spectacularly tanked in 2000, having burned through $120 million (€89 million) of venture funding in 18 months. Among the reasons for the startup's failure were its complicated design and a profligate corporate culture.
The biggest loser out of Boo's investor base was Omnia, an investment fund backed by Lebanon's Hariri family, which had invested nearly $40 million in the start-up. More than 400 staff and contractors, many of whom had not been paid for months, were made redundant. Creditors such as advertising agencies were looking at bad debts of $25 million.
After the company went bust, the US online fashion store Fashionmall acquired the Boo name along with its animated sales assistant Miss Boo. UK e-commerce business Bright Station, which is run by internet entrepreneur Dan Wagner, bought the Boo software.
Malmsten went on to write a book called “Boo Hoo: A dot.com story from concept to catastrophe”. In it he happily provided insight into the company's spending habits: “After the pampered luxury of a Lear jet 35, Concorde was a bit cramped,” he noted for example.
In its new guise as an interactive travel website, boo.com offers customers access to 50,000 hotels in 165 countries. Its new owner, Nolan's Dublin-based online travel company Web Reservations International, was founded in 1999 and owns other travel websites like hostelworld.com and trav.com.
Does boo.com's comeback reflect a more general trend in European dot.com business? Christian Siegele, venture capital partner at 3i in charge of internet investments, says that the dot.com aftermath illustrates an important difference between US and European venture capital. “The fallout shattered investor confidence in Europe more than in the US – and European dot.com startups have found it particularly difficult to attract venture capital investment post the crash. This difference is now narrowing as European dot.com businesses are making strides in terms of performance and perceived attractiveness.”
Siegele points out that the dot.com venture capital market has more growth potential in Europe than in North America: “The US market has become overheated, with big venture funds investing in very niche dot.com businesses that are difficult to make money out of. The European market is more diversified – with venture funds investing in consumer, feature and deal-based businesses.”
The dot.com venture capital market in Europe outperforms its US counterpart in another area, Siegele argues: returns. “European returns are in absolute dollar amounts typically smaller, but relative returns have proven to be similar or even higher in the last one to two years.”
The reappearance of boo.com is reflective of a positive trend in European e-commerce, and might even anticipate a more successful future for European venture. To deliver on this promise, however, the next generation of dot.com companies need to focus more on cost control than the original Boo crew ever did.