In the tardy nineties , Silicon Valley entrepreneur Spencer Waxman was in Morocco on vacation when heheardan Arabic slang term for money — flooz — that stuck with him . In the dot - com boom read post back in the United States , URLs with obscure etymology were pop . When Waxman and better half Robert Levitan decided to co - find a fresh path of disrupt the online commerce industry , calling it Flooz.com was almost a foregone conclusion .
Unfortunately , it was also one that was doom to fail .
Non - cash currency has been with us since the Chinese used cowry shell to sort out debt for goods and religious service more than 3000 years ago . In the 1960s , acknowledgment cardsbecame an enticing option to saving and carrying theme bills . When online retailing detonate in the 1990s , it was only natural that startups would set out to explore practical defrayal methods .
At the fourth dimension , digital transactions were perceive by many consumers to be a near - guarantee of personal identity theft . reach a wag to a vendor in a closed - grummet retail environs was one thing , but the view of drudge seize their data once it was recruit into the borderless environment of the internet kept many away from online shopping .
As it turn over out , that paranoia would turn out to be warrant in our current mood of constant information breach . It was also good for businesses hoping to plow their apprehension over credit card security measures into a monetized resolution . Flooz.com debuted in 1999 , just one year after another currency - based URL , Beanz.com , had garner press . Beanz were a form of take in point organisation , with approved transactions indue customer with redeemable gift vouchers . Flooz took a different approach : customer would sign up to Flooz.com andpurchasegift credential for specific retailers , which they could then use themselves or pass along to a giving recipient via electronic mail .
For businesses , it was a direction of driving traffic to web site ; for consumers , it was a way to keep mention card transactions define to one trafficker ; for Flooz.com , being the intermediary entail taking a 15 to 20 percentcutof complete transactions on the selected retail sites , which straddle from Godiva Chocolates to Barnes & Noble and Tower Records .
To facilitate Flooz.com ignore through on-line marketing noise , Levitan muster in actressWhoopi Goldbergto be their spokesperson . In rally for company shares and Flooz.com money , Goldbergledan $ 8 million ad campaign for radio , television , and mark that extolled the benefit of using Flooz.com .
Whether it was Goldberg ’s pitch or the concept itself , Flooz.com met with a receptive audience . The company debut in the surrender of 1999 , and had opened 125,000 account by January 2000 . That yr , or so $ 25 million in Flooz.com money was buy and used . ( In a nod to the impenetrable mental lexicon of the internet at the time , the media fuck to point out that Beanz could be used to buy Flooz . )
Bolstered by the attention and early succeeder , Flooz.com was eventually able to fire $ 35 million in venture majuscule . Consumers could come across their invest obligation by e-mail a code to their gift recipient without having to neutralise clock time shopping . For a meter , it appeared Flooz.com would become a leading method acting of payment for online transactions .
But it did n’t take long for the seams in the Flooz.com framework to show . While gifting vouchers to family and friends was commodious for the gifter , the giftee was stuck with a very circumscribed number of seller that took Flooz.com as defrayment . If Amazon , for example , had a deal on a DVD or book that Barnes & Noble did n’t , Flooz exploiter were out of destiny . Shopping for a bargain was n’t possible .
The second and most incapacitating detail was one Flooz.com was forced to make in rules of order to hit deals with vendors . The troupe guaranteed its transactions , meaning that it would make sound on orders even if Flooz dollars had been purchase via fraudulent way . By the summer of 2001 , that commitment became a tipping point . Agents from the FBI informed Levitan that they suspected a gang of Russian hackers had purchased$300,000worth of Flooz in edict to launder funds from stolen credit cards .
This created a paralyzing immediate payment menstruation problem : As their credit card processor withheld investment trust until Flooz.com could batten down the transaction , the great unwashed were still busy redeem Flooz dollar bill they had already spent . retail merchant then looked for Flooz.com to reimburse them . Suddenly , customers sample to pay with Flooz weregreetedwith error messages that the site was down .
Those issues , coupled with the fact that corporate node had already started to move away from gifting employees with Flooz dollars , squeeze Flooz.com to file for Chapter 7 failure in August 2001 . Court paper bring up almost $ 14 million in indebtedness . ( Beanz.com was also a injured party of the superman - com binge , when participating retail merchant processing the points steady went out of business . )
Levitan rally , founding the Pando file cabinet sharing connection andselling itto Microsoft in 2011 for $ 11 million . Meanwhile , Flooz.com remain a barely - remembered footnote in atomic number 99 - up-to-dateness , though it would be laborious to graph the rise of digital funds like Bitcoin without it . Like with so many other good estimate , timing is everything .
