Before Bitcoin: The Rise and Fall of Flooz E-Currency

iStock
iStock

In the late 1990s, Silicon Valley entrepreneur Spencer Waxman was in Morocco on holiday when he heard an Arabic slang term for money—flooz—that stuck with him. In the dot-com boom taking place back in the United States, URLs with obscure etymology were popular. When Waxman and partner Robert Levitan decided to co-found a novel way of disrupting the online commerce industry, calling it Flooz.com was almost a foregone conclusion.

What Levitan and Waxman envisioned was a virtual gift certificate that would drive business to participating online retailers, give consumers some sense of security over their private information, and make shopping for stubbornly gift-resistant recipients easy. Rather than merely offering cyber currency, this was a service with purpose.

Unfortunately, it was also one that was doomed to fail.

Flooz.com

Non-cash currency has been with us since the Chinese used cowry shells to sort out debt for goods and services more than 3000 years ago. In the 1960s, credit cards became an alluring alternative to saving and carrying paper bills. When online retailing exploded in the 1990s, it was only natural that startups would begin to explore virtual payment methods.

At the time, digital transactions were perceived by many consumers to be a near-guarantee of identity theft. Handing a card to a vendor in a closed-loop retail environment was one thing, but the thought of hackers seizing their information once it was entered into the borderless environment of the internet kept many away from online shopping.

As it turns out, that paranoia would turn out to be justified in our current climate of constant data breaches. It was also good for businesses hoping to turn their apprehension over credit card security into a monetized solution. Flooz.com debuted in 1999, just one year after another currency-based URL, Beanz.com, had garnered press. Beanz were a kind of earned points system, with approved transactions gifting customers with redeemable gift vouchers. Flooz took a different approach: Customers would sign up to Flooz.com and purchase gift certificates for specific retailers, which they could then use themselves or pass along to a gift recipient via email.

For businesses, it was a way of driving traffic to sites; for consumers, it was a way to keep credit card transactions limited to one vendor; for Flooz.com, being the intermediary meant taking a 15 to 20 percent cut of completed transactions on the selected retail sites, which ranged from Godiva Chocolates to Barnes & Noble and Tower Records.

To help Flooz.com cut through online marketing noise, Levitan enlisted actress Whoopi Goldberg to be their spokesperson. In exchange for company shares and Flooz.com money, Goldberg led an $8 million ad campaign for radio, television, and print that extolled the benefits of using Flooz.com.

Whether it was Goldberg’s pitch or the concept itself, Flooz.com met with a receptive audience. The company debuted in the fall of 1999, and had opened 125,000 accounts by January 2000. That year, roughly $25 million in Flooz.com money was purchased and used. (In a nod to the impenetrable vocabulary of the internet at the time, the media loved to point out that Beanz could be used to purchase Flooz.)

Bolstered by the attention and early success, Flooz.com was eventually able to raise $35 million in venture capital. Consumers could meet their gifting obligations by emailing a code to their gift recipient without having to waste time shopping. For a time, it appeared Flooz.com would become a leading method of payment for online transactions.

Paul Hawthorne/Getty Images

But it didn’t take long for the seams in the Flooz.com model to show. While gifting vouchers to family and friends was convenient for the gifter, the giftee was stuck with a very limited number of vendors that took Flooz.com as payment. If Amazon, for example, had a deal on a DVD or book that Barnes & Noble didn’t, Flooz users were out of luck. Shopping for a bargain wasn’t possible.

The second and most crippling detail was one Flooz.com was forced to make in order to strike deals with vendors. The company guaranteed its transactions, meaning that it would make good on orders even if Flooz dollars had been purchased via fraudulent means. By the summer of 2001, that commitment became a tipping point. Agents from the FBI informed Levitan that they suspected a ring of Russian hackers had purchased $300,000 worth of Flooz in order to launder funds from stolen credit cards.

This created a paralyzing cash flow problem: As their credit card processor withheld funds until Flooz.com could secure the transaction, people were still busy redeeming Flooz dollars they had already spent. Retailers then looked for Flooz.com to reimburse them. Suddenly, customers trying to pay with Flooz were greeted with error messages that the site was down.

Those issues, coupled with the fact that corporate clients had already started to move away from gifting employees with Flooz dollars, forced Flooz.com to file for Chapter 7 bankruptcy in August 2001. Court papers cited almost $14 million in liability. (Beanz.com was also a casualty of the dot-com bust, when participating retailers processing the points steadily went out of business.)

Levitan rebounded, founding the Pando file sharing network and selling it to Microsoft in 2011 for $11 million. Meanwhile, Flooz.com remains a barely-remembered footnote in e-currency, though it would be hard to chart the rise of digital funds like Bitcoin without it. Like with so many other good ideas, timing is everything.

14 Retro Gifts for Millennials

Ravi Palwe, Unsplash
Ravi Palwe, Unsplash

Millennials were born between 1981 and 1996, which means the pop culture they grew up with is officially retro. No matter what generation you belong to, consider these gifts when shopping for the Millennials in your life this holiday season.

1. Reptar Funko Pop!; $29

Amazon

This vinyl Reptar figurine from Funko is as cool as anything you’d find in the rugrats’ toy box. The monster dinosaur has been redesigned in classic Pop! style, making it a perfect desk or shelf accessory for the grown-up Nickelodeon fan. It also glows in the dark, which should appeal to anyone’s inner child.

Buy it: Amazon

2. Dragon Ball Z Slippers; $20

Hot Topic

You don’t need to change out of your pajamas to feel like a Super Saiyan. These slippers are emblazoned with the same kanji Goku wears on his gi in Dragon Ball Z: one for training under King Kai and one for training with Master Roshi. And with a soft sherpa lining, the footwear feels as good as it looks.

Buy it: Hot Topic

3. The Pokémon Cookbook; $15

Hop Topic

What do you eat after a long day of training and catching Pokémon? Any dish in The Pokémon Cookbook is a great option. This book features more than 35 recipes inspired by creatures from the Pokémon franchise, including Poké Ball sushi rolls and mashed Meowth potatoes.

Buy it: Hot Topic

4. Lisa Frank Activity Book; $5

Urban Outfitters

Millennials will never be too old for Lisa Frank, especially when the artist’s playful designs come in a relaxing activity book. Watercolor brings the rainbow characters in this collection to life. Just gather some painting supplies and put on a podcast for a relaxing, nostalgia-fueled afternoon.

Buy it: Urban Outfitters

5. Shoebox Tape Recorder with USB; $28

Amazon

The days of recording mix tapes don’t have to be over. This device looks and functions just like tape recorders from the pre-smartphone era. And with a USB port as well as a line-in jack and built-in mic, users can easily import their digital music collection onto retro cassette tapes.

Buy it: Amazon

6. Days of the Week Scrunchie Set; $12

Urban Outfitters

Millennials can be upset that a trend from their youth is old enough to be cool again, or they can embrace it. This scrunchie set is for anyone happy to see the return of the hair accessory. The soft knit ponytail holders come in a set of five—one for each day of the school (or work) week.

Buy it: Urban Outfitters

7. D&D Graphic T-shirt; $38-$48

80s Tees

The perfect gift for the Dungeon Master in your life, this graphic tee is modeled after the cover of the classic Dungeons & Dragons rule book. It’s available in sizes small through 3XL.

Buy it: 80s Tees

8. Chuck E. Cheese T-shirt; $36-$58

80s Tees

Few Millennials survived childhood without experiencing at least one birthday party at Chuck E. Cheese. This retro T-shirt sports the brand’s original name: Chuck E. Cheese’s Pizza Time Theatre. It may be the next-best gift for a Chuck E. Cheese fan behind a decommissioned animatronic.

Buy it: 80s Tees

9. The Nightmare Before Christmas Picnic Blanket Bag; $40

Shop Disney

Fans of Tim Burton’s The Nightmare Before Christmas will recognize the iconic scene on the front of this messenger bag. Unfold it and the bag becomes a blanket fit for a moonlit picnic among the pumpkins. The bottom side is waterproof and the top layer is made of soft fleece.

Buy it: Shop Disney

10. Toy Story Alien Socks; $15

Shop Disney

You don’t need to be skilled at the claw machine to take home a pair of these socks. Decorated with the aliens from Toy Story, they’re made from soft-knit fabric and are big enough to fit adult feet.

Buy it: Shop Disney

11. Goosebumps Board Game; $24

Amazon

Fans that read every book in R.L. Stine’s series growing up can now play the Goosebumps board game. In this game, based on the Goosebumps movie, players take on the role of their favorite monster from the series and race to the typewriter at the end of the trail of manuscripts.

Buy it: Amazon

12. Tamagotchi Mini; $19

Amazon

If you know someone who killed their Tamagotchi in the '90s, give them another chance to show off their digital pet-care skills. This Tamagotchi is a smaller, simplified version of the original game. It doubles as a keychain, so owners have no excuse to forget to feed their pet.

Buy it: Amazon

13. SNES Classic; $275

Amazon

The SNES Classic is much easier to find now than when it first came out, and it's still just as entertaining for retro video game fans. This mini console comes preloaded with 21 Nintendo games, including Super Mario Kart and Street Fighter II.

Buy it: Amazon

14. Planters Cheez Balls; $24

Amazon

Planters revived its Cheez Balls in 2018 after pulling them from shelves nearly a decade earlier. To Millennials unaware of that fact, this gift could be their dream come true. The throwback snack even comes in the classic canister fans remember.

Buy it: Amazon

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Dollymania: When Dolly the Sheep Created a '90s Media Sensation

Dolly the sheep at the National Museum of Scotland
Dolly the sheep at the National Museum of Scotland
Paul Hudson, Flickr // CC BY 2.0

It was Saturday, February 22, 1997, and British researchers Ian Wilmut and Keith Campbell were expecting a final moment of calm before the results of their unprecedented scientific experiment were announced to the world.

The team had kept the breakthrough under wraps for seven months while they waited for their paper to be published in the prestigious journal Nature. Confidential press releases had gone out to journalists with the strict instruction not to leak the news before February 27.

But that night, the team was tipped off that journalist Robin McKie was going to break the story the very next day in the British newspaper The Observer.

Wilmut and Campbell raced to the lab at the Roslin Institute on Sunday morning as McKie's story hit the media like a thunderbolt. International news outlets had already started swarming at the institute for access to Wilmut and Campbell's creation: Dolly the sheep, the world's first mammal successfully cloned from a single adult cell. Shielded from the general public, she stuck her nose through the fence and munched calmly on the hay in her pen, unperturbed by the horde of news photographers. Dolly, a woolly, bleating scientific miracle, looked much like other sheep, but with a remarkable genetic difference.

By the end of that Sunday, February 23, nearly every major newspaper in the world carried headlines about Dolly the sheep.

A Long-Awaited Breakthrough

Born on July 5, 1996, Dolly was cloned by Wilmut and Campbell's team at the Roslin Institute, a part of the University of Edinburgh, and Scottish biotechnology company PPL Therapeutics. The scientists cloned Dolly by inserting DNA from a single sheep mammary gland cell into an egg of another sheep, and then implanting it into a surrogate mother sheep. Dolly thus had three mothers—one that provided the DNA from the cell, the second that provided the egg, and the third that carried the cloned embryo to term. Technically, though, Dolly was an exact genetic replica of only the sheep from which the cell was taken.

Following the announcement, the Roslin Institute received 3000 phone calls from around the world. Dolly's birth was heralded as one of the most important scientific advances of the decade.

But Dolly wasn't science's first attempt at cloning. Researchers had been exploring the intricacies of cloning for almost a century. In 1902, German embryologists Hans Spemann and Hilda Mangold, his student, successfully grew two salamanders from a single embryo split with a noose made up of a strand of hair. Since then, cloning experiments continued to become more sophisticated and nuanced. Several laboratory animal clones, including frogs and cows, were created before Dolly. But all of them had been cloned from embryos. Dolly was the first mammal to be cloned from a specialized adult cell.

Embryonic stem cells, which form right after fertilization, can turn into any kind of cell in the body. After they modify into specific types of cells, like neurons or blood cells, they're call specialized cells. Since the cell that gave rise to Dolly was already specialized for its role as a mammary gland cell, most scientists thought it would be impossible to clone anything from it but other mammary gland cells. Dolly proved them wrong. 

A Worldwide Reaction—And Controversy

Many scientists in the '90s were flabbergasted. Dolly’s advent showed that specialized cells could be used to create an exact replica of the animal they came from. “It means all science fiction is true,” biology professor Lee Silver of Princeton University told The New York Times in 1997.

The Washington Post reported that "Dolly, depending on which commentator you read, is the biggest story of the year, the decade, even the century. Wilmut has seen himself compared with Galileo, with Copernicus, with Einstein, and at least once with Dr. Frankenstein."

Scientists, lawmakers, and the public quickly imagined a future shaped by unethical human cloning. President Bill Clinton called for review of the bioethics of cloning and proposed legislation that would ban cloning meant ''for the purposes of creating a child” (it didn't pass). The World Health Organization concluded that human cloning was "ethically unacceptable and contrary to human integrity and morality" [PDF]. A Vatican newspaper editorial urged governments to bar human cloning, saying every human has "the right to be born in a human way and not in a laboratory."

Meanwhile, some scientists remained unconvinced about the authenticity of Wilmut and Campbell’s experiment. Norton Zinder, a molecular genetics professor at Rockefeller University, called the study published in Nature "a bad paper" because Dolly's genetic ancestry was not conclusive without testing her mitochondria—DNA that is passed down through mothers. That would have confirmed whether Dolly was the daughter of the sheep that gave birth to her. In The New York Times, Zinder called the Scottish pair's work ''just lousy science, incomplete science." But NIH director Harold Varmus told the Times that he had no doubt that Dolly was a clone of an adult sheep.

Dollymania!

Because she was cloned from a mammary gland cell, Dolly was named—dad joke alert—after buxom country music superstar Dolly Parton. (Parton didn’t mind the attribution.) Like her namesake, Dolly the sheep was a bona fide celebrity: She posed for magazines, including People; became the subject of books, journal articles, and editorials; had an opera written about her; starred in commercials; and served as a metaphor in an electoral campaign.

And that wasn't all: New York Times reporter Gina Kolata, one of the first journalists to give readers an in-depth look at Dolly, wrote Clone: The Road to Dolly, and the Path Ahead and contrasted the animal's creation with the archetypes in Frankenstein and The Island of Dr. Moreau. American composer Steve Reich was so affected by Dolly's story that he featured it in Three Tales, a video-opera exploring the dangers of technology.

The sheep also became an inadvertent political player when the Scottish National Party used her image on posters to suggest that candidates of other parties were all clones of one another. Appliance manufacturer Zanussi used her likeness for a poster with her name and the provocative caption "The Misappliance of Science" (the poster was later withdrawn after scientists complained). In fact, so widespread was the (mis)use of her name that her makers eventually trademarked it to stop the practice.

Dolly's Legacy

Following Dolly, many larger mammals were cloned, including horses and bulls. Roslin Biomed, set up by the Roslin Institute to focus on cloning technology, was later sold to the U.S.-based Geron Corporation, which combined cloning technology with stem cell research. But despite her popularity—and widespread fear— Dolly's birth didn't lead to an explosion in cloning: Human cloning was deemed too dangerous and unethical, while animal cloning was only minimally useful for agricultural purposes. The sheep's real legacy is considered to be the advancement in stem cell research.

Dolly’s existence showed it was possible to change one cell’s gene expression by swapping its nucleus for another. Stem cell biologist Shinya Yamanaka told Scientific American that Dolly’s cloning motivated him to successfully develop stem cells from adult cells. He later won a Nobel Prize for his results, called induced pluripotent stem cells (iPS) because they're artificially created and can have a variety of uses. They reduced the need for embryonic stem cells in research, and today, iPS cells form the basis for most stem cell research and therapies, including regenerative medicine.

Dolly had six offspring, and led a productive, sociable life with many human fans coming to visit her. In 2003, a veterinary examination showed that Dolly had a progressive lung disease, and she was put down. But four clones created from the same cell line in 2007 faced no such health issues and aged normally.

Dolly is still a spectacle, though, nearly 25 years after her creation: Her body was taxidermied and put on display at the National Museum of Scotland in Edinburgh.