Beenz.com
Beenz.com was a website that allowed consumers to earn beenz, a type of online currency, for performing activities such as visiting a web site, shopping online, or logging on through an Internet service provider. The beenz e-currency could then be spent with participating online merchants.
The marketing and brand concept positioned Beenz as ‘the web’s currency,’ global money that would challenge the world’s major currencies. The Beenz management team raised almost $100 million from venture capitalists including Apax Patrickof, Larry Ellison of Oracle, Francois Pinault of PPR, Vivendi Universal, Italian financier Carlo de Benedetti and Hikari Tsushin of Japan[1].
Contents
Main information
Year Of Birth: 1998
Year Of Demise: 2002
CEO: Philip Letts
Founded By: Charles Cohen
Since launching a new currency is illegal in many countries, beenz management and its legal teams had to meet with finance ministers across Europe to assure them that Beenz would be categorized as virtual points. Within days of its launch in the UK, Beenz’ offices in London were visited by the Financial Services Authority (FSA) on suspicion of operating an unlicensed bank (apparently the FSA misunderstood that the ‘Bank of Beenz’ on the website was, in fact, just a marketing name for the user account area. The company agreed to change this to ‘My Beenz’ and the FSA was satisfied). Beenz received several awards for its marketing campaign.
Beenz Review
Beenz operated in the United States, Sweden, France, Germany, Italy, Japan, Singapore, Australia and China. At its peak, there were offices in 12 countries, and translations of the beenz website into several languages.
After the dot-com bubble burst, the company replaced its CEO, Philip Letts, with a team including the founder, Charles Cohen, and other Board directors Stephen Limpe, Don McGuire and Sean Lane. The company could not go public, further funding did not materialise, and the company was sold to US-based Carlson Marketing Group in 2001 for an undisclosed sum.
Carlson planned to integrate the beenz system into the customer relationship management tools they offered to clients. After the sale of the company to Carlson, beenz account holders were given a period of time to redeem their beenz before it became integrated. After September 11 attacks, Carlson’s business (which was heavily reliant upon bank and airline points programmes) struggled and the beenz concept was shelved. Carlson did not renew the domain name.
Partnerships
Amongst the company’s partnerships was one with MasterCard enabling holders of the ‘rewardz card’ to transfer earned beenz to their credit card account. This was one of the first relationships of its kind between a traditional finance company and a dot-com enterprise.
Beenz was also once aligned with the now-defunct Speedyclick.com, which carried its own virtual currency. Beenz could be converted into SpeedyBucks, but not vice versa.
Beenz.com failure
In June 2008, CNET counted Beenz among the greatest dotcom disasters.
Unlike Flooz, which closed abruptly, Beenz is giving its customers a 10-day notice. The Beenz.com home page says that any beenz remaining in a member’s account after 12:01 am (EST) on August 26th will be invalidated and the member will not be entitled to any compensation of the invalidated beenz[2].
Published reports said that Beenz.com, originally founded in 1998, will close offices in Europe and Asia, but will keep its New York offices open in order to manage the sale of its assets. Reports also stated that the company is not out of money, but is curtailing expenditures in order to bring some value to shareholders.
Founders
The inventor of Beenz was Charles Cohen, from the UK. He co-founded the parent company and joined forces with former reality television star Neil Forrester, whom Cohen had met whilst the pair were students at Oxford University. After tossing around the idea of Beenz and trying to get it off the ground Charles joined forces with Dave King, John Hogg, and Philip Letts to take Beenz forward. They quickly divided roles – Charles would take on the tasks of website development becoming CTO, Dave was Head of Sales and Philip became CEO, John Hogg headed Marketing. Philip took on Nicolas De Santis to develop the much vaunted Beenz logo and brand vision. After an intensive period of fundraising Beenz launched with a guerilla marketing campaign designed by the crew and Nick Band of Band and Brown. John Hogg moved over and De Santis became Chief Marketing Officer. Letts led Beenz to raise nearly 100 million dollars and spearheaded the expansion worldwide. He moved head office to New York from London and brought on Philippe Cothier as European president, Mitch Feigen as US president and opened an Asian division.
Letts left Beenz after closing the last big round of over 30 million and went on to run Tradaq.com, a business-to-business exchange that allowed companies to buy and sell products and services without using cash.
De Santis left a few months after that and took on Chief Marketing Officer of Opodo.
Cohen used his experience with Beenz.com to write a book in 2002 called Corporate Vices: What’s Gone Wrong With Business . He now runs Probability plc in the UK, a mobile gambling business that he co-founded in 2004. Before beenz Cohen worked with Thought Interactive (a web design business). Initially the concept was heavily dependent on the English speaking world and to change that the company recruited such characters as the Swedish entrepreneur Mikael Karlmark to launch its first non-English subsidiary.
Marketing Campaign
The company used an innovative guerilla marketing campaign to get the word out in the early days. Instead of distributing a flyer in the conventional way, the company hired magicians and sleight-of-hand experts to slip the flyers surreptitiously into the pockets of members of the public. The flyers depicted “Billy Beenz”, the fictional company mascot. Billy had a shock of red hair and a goofy expression[3].
There was some controversy when it transpired that the flyer distributors were specifically targeting drunk people, in an effort to make their task easier. There were many reports of people waking up after a night of drinking to find the Billy Beenz flyer mysteriously in their pocket.
Funding
Beenz.com said it raised $39.5 million in an additional round of financing. Making a significant push to expand globally, Beenz.com secured investments from the online arms of Italian media conglomerate Gruppo l’Espresso and Hong Kong-based New World Group, among others. U.S. investors included BayStar Capital, Sycamore Ventures, ING Barings and DRW Venture Partners. The New York-based upstart, which offers online currency to consumers that register and buy on partner sites such as Blockbuster.com and MP3.com, also raised an additional $11.9 million from investors, including Softbank, for recently launched joint ventures in Italy, Greater China, Japan and Korea[4].
Beenz’s Business model
The beenz business model was based upon arbitrage. Companies purchased beenz from the company at a locally determined exchange rate. They could then award these to consumers for actions to which the issuer attached value, such as making on-line purchases. Beenz were collected by the user clicking on a Java Applet and entering their email address linked to a beenz account. Consumers were then able to use their beenz to purchase goods from on-line merchants. Each merchant was free to exchange beenz at any notional value they liked, the company assuming that the market would settle the exchange value of each beenz. Merchants were then able to sell beenz back to the company itself at a pre-defined exchange rate. The company made its margin on the spread between the sell and the buy price of beenz in the market. In the later stages, a professional economist was employed to model the behaviour of prices and flows of money in this micro-economy, and keep it healthy.
Cohen’s stated long term aim was eventually to allow consumers to purchase beenz directly from the company and for the “beenz economy” to eventually resemble that of a real economy. However, at the time, this was fraught with difficulty as some countries (such as France) expressed a view that such alternative currency schemes were undesirable and that they would seek to prevent them from operating.