It ended up costing the company $27 per order just for processing and delivery. Each 300,000-square-foot distribution center cost $25 million to build and employed 16 people (and a thousand servers) just to handle the back-end technology. Īnalysts blame several factors for Webvan's demise, not the least of which was the great expense of building its gee-whiz automated warehouse infrastructure.
#Comipo version history plus
Yet even with this cash - plus an incredible $1 billion from private investment firms like Sequoia Capital - the company couldn't become profitable. Launched in 1997, Webvan went public in 1999 and raised $375 million in the process. All in all, this wasn't the smoothest coming out party for Vonage. The botched IPO inspired a second lawsuit against Vonage for misleading investors. The angry customers won a class action suit against the underwriters, which came to roughly $800,000 in fines and restitution. Then, a few days later, after the stock price had dropped considerably - it lost 30 percent in the first week alone - the customers were told that their purchases had gone through and that they owed the original stock price of $17 a share. When excited Vonage customers tried to buy stock online, many were told that the purchases didn't go through.
In an ironic twist, the high-tech company was undone by a technical snafu. Vonage took the unusual tactic of offering 13.5 percent of its IPO shares directly to Vonage customers, who could buy the shares online through a special Web site created by the underwriting firms. Usually, IPO shares are shopped around to investment firms and individual big-ticket investors who do business with the underwriter.
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