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10 Tech Companies That Totally Imploded


8
Webvan
An auctioneer taking bids during the sale of Webvan's assets at its former headquarters in Foster City, Calif. on Oct. 31, 2001. ©Dan Krauss/Getty Images
An auctioneer taking bids during the sale of Webvan's assets at its former headquarters in Foster City, Calif. on Oct. 31, 2001. ┬ęDan Krauss/Getty Images

Webvan, which launched in June 1999, allowed customers to order their groceries online and have them delivered to their homes. It was a popular idea, but was probably ahead of its time given the low Internet saturation of the day. Webvan raised around $800 million in venture capital and $375 million in an IPO in November 1999. Its stock reached $34 on the first day of trading [sources: Stross, Delgado, Goldman]. Webvan's operations started in San Francisco and expanded into eight other urban markets. It didn't just pick up and deliver groceries, but warehoused all its own merchandise -- it had the issues of both a traditional grocery store chain and a delivery service. It also required lots of staff, and spent a massive amount on each warehouse for cutting-edge automation and servers to handle orders. Rather than going for slow growth, Webvan invested $1 billion in state-of-the-art warehouses for a planned expansion into 26 cities to be completed in 2001 [source: Goldman].

Like many other dot-coms, the company fell victim to severe overspending and hasty expansion. Before the end, Webvan closed in its Dallas and Atlanta markets to reduce costs. It also made some rookie mistakes like cutting produce quality in some areas to save money, which upset clients. The company had 750,000 customers in its remaining markets, but couldn't woo enough new business to break even. Webvan's stock eventually dropped to 6 cents -- it laid off around 2,000 workers, went bankrupt and shut down in July 2001 [source: Lanxon]. The company name, domain and logo seem to have been resurrected as an Amazon-powered Web store that sells non-perishable goods.