How and Its Money Were Soon Parted

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The rapid bankruptcy and dissolution of activewear e-tailer is Europe's first big dot-com meltdown, and a very scary story for its venture capitalists and would-be e-merchants. The company, started by three Swedes just six months ago, made a splash with hip brands like DKNY and North Face and what the Brits call an "all-singing, all-dancing" site complete with e-tailer innovations — 360-degree revolving sneakers, watches and clothing — that are just making their way to car-buying sites in the U.S. Problem was, they went through their sizable $120 million stake like a New Mexico clearing blaze. "We wanted everything to be perfect," Swedish cofounder Ernst Malmsten told The Financial Times of the company's marketing- and technology-heavy spending habits. "My mistake has been not to have a counterpart who was a strong financial controller." was actually showing some small net earnings, but their paying customer base wasn't growing fast enough to offset the ravages of "cash burn." TIME technology writer Chris Taylor says the British-based company might have had a chance if it had controlled costs and taken one lesson from the Yanks: "Customer service," he says. "The Europeans don't really get that yet. Just as important as a flashy site is an effective support system, with real people manning real phones, making sure shopping online is actually better than shopping in a store. At, it wasn't." In other words, may not make any money yet, but at least the books arrive on time. Taylor adds that it may be a little early for Europe to support a true e-tailer. "The online market in Europe, in terms of the number of computers and ISPs and people's general comfort level with the Web, may not be mature enough yet," he says. But e-liquidator KPMG says it's already gotten 30 offers for disposing of's lifeless husk and will probably make a sale by next week. If the new owners watch their money a little more closely and get the trains running on time, may yet come back to haunt us.