In Memoriam

Cheers to Failure: Confessions and Cocktails at the Startup Funeral

CTO of New York's dearly departed Kozmo.com tells all.
img 0321 Cheers to Failure: Confessions and Cocktails at the Startup Funeral

RIP, startups.

“I thought this was gonna be like a real funeral,” Betabeat’s date complained. Her confusion was understandable. The invitation for Friday night’s Startup Funeral–a sort of reverse launch party for failed startups–instructed us stop by the “New Work City Funeral Home.” So we were a little surprised, upon entering the dim second-story loft off Canal Street, to find a DJ spinning hip-hop as guests milled about the Chinatown coworking space in business casual–save for a veiled woman and a dude in devil’s horns.

We didn’t spot any condolence casseroles, but canapés sat on trays next to bowls of punch and pink paper lamps hung from the ceiling. On the Western window, a large screen bore the Wifi password.

Precisely one hour into the event, a bagpiper’s procession cut the networking short, indicating that it was time for the mourning to begin. Host Kevin Galligan, an Android developer in a priest’s toque, reassured us we weren’t the only ones befuddled by the party’s conceit.

“At first everyone kind of got it,” he explained. But the notion of celebrating failure–something we hear Silicon Valley types are a little more comfortable with–became difficult for locals to process. “It turned into, ‘We’re gonna have lessons, right? We’re gonna learn what they did wrong and we’re gonna avoid that next time?’ Or it’s like, ‘Oh you’re gonna make fun of everybody? That’ll be hilarious!’ Then it was people that were upset: ‘Oh, it’s a funeral? It’s so morbid! Why would you do that?’ Eventually I just stopped explaining it,” Mr. Galligan admitted.

After some more funereal piping, he passed the mic to his cohost, web designer Leo Newball, who showed off the miniature urns (filled with hard candy) each presenter would receive. “Father” Newball apologized that Favorly, which describes itself as “Kickstarter for human capital,” wouldn’t be on the speakers list due to a fortunate turn of events. Just two hours before the party, the company had been resuscitated, narrowly avoiding the deadpool.

The first presenter, iOS developer Brian Papa, took the floor in front of a projected mock tombstone that read, “Addieu 3/2011-8/2011: There was an app for that.”

Mr. Papa described his now defunct app as “a quick and easy way to connect with people that you meet on Facebook, Foursquare and Twitter all in one shot.” Addieu may have won third-place for best app at South by Southwest in 2011, but it was still “very awkward to use in real-life situations.” Users would have to get their friends to download Addieu, “and it was a tough word to spell because it’s not even a real word. It’s a French word that we added a letter to.” But the biggest problem, Mr. Papa concluded, might have been that “we were trying to solve a problem that nobody really had.” Soon enough, he bid adieu to Addieu.

Dan Tashman, cofounder of Skip Trace Design and former star of Betabeat’s web series “The Pitch,” was more somber as he described how his app Get-a-Game grew out of—and was held back by—his passion for pick-up sports. “I was trying to build this portal for users,” Mr. Tashman recalled, “but in the end it didn’t really serve the people who were going to be monetizing the business, which is the sports service providers, the gyms, the trainers.”

As a “single cofounder,” Mr. Tashman revealed, recruiting a team from around the world led to terrible hours. The end came, however, when he had a hard time with the ever-popular pivot, a Startupland staple: “They always tell you to do what you’re passionate about, but then they expect you to have this flexibility where if it doesn’t catch, you should pivot quickly. And that’s something that I had a lot of trouble with. Because at the end of the day, I had a specific goal in mind and anything else was really not what I wanted to do with the rest of my life.”

Last up was Chris Siragusa, former CTO of Kozmo.com, the free online delivery service whose orange-cloaked bike messengers once ruled the streets of New York. He jokingly described the company, now a punchline for dotcom era excess, as “the most ridiculous company ever to try to do something.”

“In a year and a half we went from six people working in a basement to three hundred people working in five floors downtown,” Mr. Siragusa told an astonished crowd. “We went from one warehouse in lower Manhattan to 25 warehouses in 11 cities around the country. We went from just videotapes to DVDs to books, movies, magazines and prepared burritos. And at the end of the day I think we raised somewhere close to $280 million.” The only problem? “We were losing money on every order.”

And who could forget Kozmo’s notorious Oscars party in advance of the company’s March 2000 IPO? Not Mr. Siragusa. “Liquor was flowing much more than today,” he recalled. “There was our CEO standing on a grand piano giving this crazy speech about all the stuff that we’re gonna do in the future. Everyone left the party just counting the value of all their shares in their head. The market crashed two weeks later.” As investors fled, Kozmo shed employees and closed markets, eventually folding in April 2001. The best parts of the business model were resurrected, however, when Mr. Siragusa went on to found the similar, but smaller, Maxdelivery.com.

“We’ve been in business for seven years,” he announced with a smile, “still growing, and having a great time.” Sans grand piano, we assume.

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