Pay the Piper

In these days of financial problems in the worlds markets, it seems strangely coincidental that I watched a program called “e-dreams”. This program concerned itself with a new startup company called “Kozmo.com” which existed from 1998 to 2001. The service it provided is irrelevant.

The central character of the documentary was Joseph Park the founder of the enterprise, a (self-confessed) entrepreneur in his late twenties, who’s infectious enthusiasm pushed the company into dizzying expansionism.

There were many issues that bothered me regarding enterprise Kozmo.com, and primarily it centres around it’s young founder. Firstly, the documentary is a shameless promotion of Park and his apparent wizardry of the business world. One wonders if rather than send his curriculum vitae to future employers he will instead just mail them out a copy of the e-dreams DVD. Scenes of his employees performing “we’re not worthy” bowing to Park and coverage of his bonce appearing in magazines and TV talk shows are strewn throughout the film with monotonous regularity. I can’t even begin to describe his god-awful motivational speeches to his troops, which seem to be lapped up by these lemmings who must have received an extra serve of naivety at birth that bright people missed out on.

You may be thinking that I don’t particularly like young Park, and if the truth be told, he isn’t someone I would be willing to put much trust in. However, I put the idea forward that he is simply an example of where capitalism has some terrible flaws.

It seemed to me that during its operational years, Kozmo.com had one main objective, that being an IPO (initial public offering). Essentially, Kozmo.com was trying to raise capital, and lots of it. In order to do this , the company needed to be “sexed up” to appeal to the sucker investment market who will view the incredible growth of the business (operations expanded into almost a dozen cities within three years) and see that as the siren song for their investment portfolio. The only thing is, profit seemed to take a backseat to the whole extravaganza ($26.3 million dollar loss in 1999).

Now, I am certainly no communist. If you want something done badly, put it in the hands of your government. But, the only time capitalism works is when the concept of the profit motive is adhered to. It is commercially irresponsible for an unprofitable company to keep expanding its operations. To do so is like building a skyscraper without setting the foundations properly. It will come crashing down. Business expansion is something that needs to be done in layers. A newly added layer needs to be tested for profit stability before more are added.

To conclude, was Park negligent in his duties? No, he was just following a common practice of many people who have their eye on the wrong prize. However, I bet he would have a difficult time delivering one of his god-awful motivational speeches to the 1100 employees who lost their jobs after the collapse of Kozmo.com. Now that, I would like to see.

Todays shout out goes to market regulation. In the jungle of the commercial world, it is our only hope for law and order.

Todays shout down goes to the naïve investor. Do your homework, and don’t blame others if you don’t make the fast bucks.

"Penny Pincher", by Dan the VespaMan.

Money Money everywhere,
And many a penny to spend,
We spent it all yesterday,
And tommorrow we’ll spend it again.

I haven’t felt the credit crunch,
But I certainly have heard the shout,
I wonder how I’ll pay the bills,
“With credit” I cry no doubt.