The big Kozmo KO

How a celebrated 28-year-old dot-com exec went from big swinging dick to completely kaput.


Diane Seo
July 21, 2000 11:00PM (UTC)

In a display that may go down in history as dot-com hubris at its worst, Kozmo.com founder Joseph Park recently climbed atop a piano at a drunken company bash and crowed shamelessly to a rowdy crowd about making the front page of the Wall Street Journal, the New York Times, the Chicago Tribune and the Los Angeles Times.

The 28-year-old entrepreneur clearly relished his role as a much-buzzed-about dot-commando. Last spring, Park was another shockingly tender Net celebrity who'd conquered the Web with a catchy idea: Kozmo.com, which would deliver everything from Krispy Kreme doughnuts to the latest copy of "Martha Stewart Living" via thousands of highly mobile orange-and-green-clad messengers.

Advertisement:

This week, however, Park and fellow co-founder Yong Kang, 27, announced they were stepping down from their chieftain posts and appointing CFO Gerry Burdo to take over day-to-day operations. (Park and Kang, who will remain chairman and vice chairman, did not make themselves available for interviews -- even to the nation's top papers.)

At 34, Burdo's not exactly a gray-haired veteran. But having worked as a principal financial officer at Ethan Allen, the thinking is he'll inject some stolid old-economy wisdom into a 3-year-old enterprise that last month fired 24 people -- or 5 percent of its salaried staff -- and put plans to raise as much as $150 million in a public offering on hold.

According to Kozmo.com spokesman Michael Gordon, the changes do not portend doom for the New York company, which also offers videos, CDs, books, magazines, snacks and a wide range of other goodies within an hour -- in 10 cities. "Joe and Yong are terrific visionaries, so this is a great role for them," Gordon says. "And Gerry has a sense of urgency around achieving profitability and enhancing the customer experience."

Advertisement:

Said Park in an oddly cheerful press release: "We are lucky to be growing faster than I could have ever imagined, and I am thrilled with our accomplishments. Now is the ideal time for Kozmo.com to be led by someone equally obsessed with serving our customers and serving the bottom line."

But some industry insiders believe the shake-up has less to do with Park and Kang clamoring for more "visionary" roles than skittish investors insisting on management changes to revive the company's once highly anticipated IPO, which would surely face hostility in today's profit-oriented market.

"I anticipated this, because [Park and Kang] were like two college guys playing chess," says Jeffrey Hirschkorn of IPO.com, a New York financial research company. "They needed a veteran."

Advertisement:

Enter Mr. Ethan Allen.

Hirschkorn believes Kozmo's underwriter Credit Suisse First Boston, along with other VC muscle, pressured the two entrepreneurs to walk the plank to save the profitless, high-risk business, which lost $26.4 million on sales of $3.51 million last year. "Credit Suisse has a reputation of being an elite underwriter, and it would have hurt its reputation to take a company public with a big undertaking, but not big talent."

Advertisement:

Kozmo also has many big-name backers, including Amazon.com, which took a 32 percent stake in the company with its $60 million investment.

Anna Wheatley, editor of Alley Cat News, which covers Silicon Alley, likens Kozmo's plight to TheGlobe.com, which nudged aside its big-talking young founders; this week, it named a more experienced CEO from the (as old guard as it gets) American Institute of Certified Public Accountants.

"We'll see a lot more of this in the dot-com world -- putting in new CEOs and CFOs that are very stable, experienced managers," Wheatley says. "I'm not saying the days of the young founder are over, but once you build something and get the company financed, a different set of skills are needed."

Advertisement:

Wheatley believes Park is a smart, nice guy, with a bright future in the Internet biz. But she thinks his early brush with fame might have preoccupied him at a critical time. "These young, celebrity entrepreneurs are their own worst enemy because they believe their press," she says. "They have their 15 minutes of fame, and they feel invincible because all of a sudden, everyone knows who they are. But then they take a hit in public, and that shield of invincibility disappears."

Park, however, won't be disappearing just yet. Gordon insists he'll still be instrumental in guiding Kozmo.com through the ever-complex Web universe, and that he'll be happy to talk to the media at a later time.

"Joe's still the face of the company."

Advertisement:

Diane Seo

Diane Seo is the senior business editor at Salon.

MORE FROM Diane Seo


Related Topics ------------------------------------------


Fearless journalism
in your inbox every day

Sign up for our free newsletter

• • •