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.

A screen capture of Flooz.com
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.

Actress and Flooz.com spokesperson Whoopi Goldberg is photographed during a public appearance
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.

Wayfair’s Fourth of July Clearance Sale Takes Up to 60 Percent Off Grills and Outdoor Furniture

Wayfair/Weber
Wayfair/Weber

This Fourth of July, Wayfair is making sure you can turn your backyard into an oasis while keeping your bank account intact with a clearance sale that features savings of up to 60 percent on essentials like chairs, hammocks, games, and grills. Take a look at some of the highlights below.

Outdoor Furniture

Brisbane bench from Wayfair
Brisbane/Wayfair

- Jericho 9-Foot Market Umbrella $92 (Save 15 percent)
- Woodstock Patio Chairs (Set of Two) $310 (Save 54 percent)
- Brisbane Wooden Storage Bench $243 (Save 62 percent)
- Kordell Nine-Piece Rattan Sectional Seating Group with Cushions $1800 (Save 27 percent)
- Nelsonville 12-Piece Multiple Chairs Seating Group $1860 (Save 56 percent)
- Collingswood Three-Piece Seating Group with Cushions $410 (Save 33 percent)

Grills and Accessories

Dyna-Glo electric smoker.
Dyna-Glo/Wayfair

- Spirit® II E-310 Gas Grill $479 (Save 17 percent)
- Portable Three-Burner Propane Gas Grill $104 (Save 20 percent)
- Digital Bluetooth Electric Smoker $224 (Save 25 percent)
- Cuisinart Grilling Tool Set $38 (Save 5 percent)

Outdoor games

American flag cornhole game.
GoSports

- American Flag Cornhole Board $57 (Save 19 percent)
- Giant Four in a Row Game $30 (Save 6 percent)
- Giant Jenga Game $119 (Save 30 percent)

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Good Gnews: Remembering The Great Space Coaster

Tubby Baxter and Gary Gnu in The Great Space Coaster.
Tubby Baxter and Gary Gnu in The Great Space Coaster.
YouTube

Tubby Baxter. Gary Gnu. Goriddle Gorilla. Speed Reader. For people of a certain age, these names probably tug on distant memories of a television series that blended live-action, puppetry, and animation. It was The Great Space Coaster, and it aired daily in syndication from 1981 to 1986. Earning both a Daytime Emmy and a Peabody Award for excellence in children’s programming, The Great Space Coaster fell somewhere in between Sesame Street and The Muppet Show—a series for kids who wanted a little more edge to their puppet performances.

Unlike most classic kid’s shows, fans have had a hard time locating footage of The Great Space Coaster. Even after five seasons and 250 episodes, no collections are available on home video. So what happened?

Get On Board

The Great Space Coaster was created by Kermit Love, who worked closely with Jim Henson on Sesame Street and created Big Bird, and Jim Martin, a master puppeteer who also collaborated with Henson. Produced by Sunbow Productions and sponsored by the Kellogg Company and toy manufacturer Hasbro, The Great Space Coaster took the same approach as Sesame Street of being educational entertainment. In fact, many of the puppeteers and writers were veterans of Sesame Street or The Muppet Show. Producers met with educators to determine subjects and content that could result in a positive cognitive or personal development goal for the audience, which was intended to be children from ages 6 to 11. There would be music, comedy, and cartoons, but all of it would be working toward a lesson on everything from claustrophobia to the hazards of being a litterbug.

The premise involved three teens—Danny (Chris Gifford), Roy (Ray Stephens), and Francine (Emily Bindiger)—who hitch a ride on a space vehicle piloted by a clown named Tubby Baxter. The crew would head for an asteroid populated by a variety of characters like Goriddle Gorilla (Kevin Clash). Roy carried a monitor that played La Linea, an animated segment from Italian creator Osvaldo Cavandoli that featured a figure at odds with his animator. The kids—all of whom looked a fair bit older than their purported teens—also sang in segments with original or cover songs.

The most memorable segment might have been the newscast with Gary Gnu, a stuffy puppet broadcaster who delivered the day’s top stories with his catchphrase: “No gnews is good gnews!” Aside from Gnu, there was Speed Reader (Ken Myles), a super-fast sprinter and reader who reviewed the books he breezed through. Often, the show would also have guest stars, including Mark Hamill, boxer “Sugar” Ray Leonard, and Henry Winkler.

All of it had a slightly irreverent tone, with humor that was more biting than most other kid’s programming of the era. The circus that Tubby Baxter ran away from was run by a character named M.T. Promises. Gnu had subversive takes on his news stories. Other characters weren’t always as well-intentioned as the residents of Sesame Street.

Off We Go

The Great Space Coaster was popular among viewers and critics. In 1982, it won a Daytime Emmy for Outstanding Individual Achievement in Children’s Programming—Graphic Design and a Peabody Award in 1983. But after the show ceased production in 1986, it failed to have a second life in reruns or on video. Only one VHS tape, The Great Space Coaster Supershow, was ever released in the 1980s. And while fan sites like TheGreatSpaceCoaster.TV surfaced, it was difficult to compile a complete library of the series.

In 2012, Tanslin Media, which had acquired the rights to the show, explained why. Owing to the musical interludes, re-licensing songs would be prohibitively expensive—potentially far more than the company would make selling the program. Worse, the original episodes, which were recorded on 1-inch or 2-inch reel tapes, were in the process of degrading.

That same year, Jim Martin mounted an Indiegogo crowdfunding campaign to try and raise funds to begin salvaging episodes and digitizing them for preservation. That work has continued over the years, with Tanslin releasing episodes and clips online that don’t require expensive licensing agreements and fans uploading episodes from their original VHS recordings to YouTube.

There’s been no further word on digitizing efforts for the complete series, though Tanslin has reported that a future home video release isn’t out of the question. If that materializes, it’s likely Gary Gnu will be first to deliver the news.