This is a New York real-estate story and one of marketing excess. It’s about Amp’d Mobile, the too-hip-for-its-own-good virtual mobile carrier that filed for bankruptcy last June after burning through $360 million in capital. A lot of that money was spent on things like MTV ads to attract 175,000 young, urban customers. The problem was that nearly half of them turned out to be unable to pay their bills.
Today, a company called VoodooVox, which I wrote about last week, occupies Amp’d Mobile’s former posh offices on Union Square in Manhattan, complete with a massive terrace overlooking the city. VoodooVox CEO Scott Hamilton was able to acquire the space and it’s custom-built contents “by feeding on the corpse of Amp’d,” as he so delicately puts it. For $16,000 at bankruptcy court, he was able to to get a couple hundred thousand dollars worth (his estimate) of furniture and other surplus.
As Hamilton was cleaning out the desks and filing cabinets, he came across some of those excesses in the form of marketing schwag—like condoms stamped with the unfortunate tagline, “Try not to die.” Little did the Amp’d marketing genius who came up with that line know that the expiration dates on the condoms would outlast the company.
Hamilton also found a closet full of Amp’d fleece jackets. Maybe he should send those to all the investors who pumped money into Amp’d and themselves got fleeced in the process.
For a company with so many “holes” in its business plan, ultimately leading to total failure, I’m not sure I’d want too many of those free condoms. (:
After hearing about the struggles of Amp’d, I don’t see how the other VMC’s are even making it (Helio, Boost, Virgin, etc.)
Anyone have any insight into what it takes to be a successful mobile virtual network operator? The marketing techniques seem to be similar across the board so that shouldn’t be a big differentiator.
The MTV generation were/are smarter than Amp’d Mobile anticipated.
Amp’d Mobile should have market on functionality. It is much easier
to win on that premise than coolness.
$360 million is a lot of money to burn.
Don’t these VC have a checks and balance in place ?
wonderful post. very funny.
What new functionality could they have brought? As an MVNO, don’t they get the “less-than-or-equal-to” treatment from the networks they piggyback off of? Distribution and marketing are the two big differentiators, I think.
As far as I can tell, Helio’s still around largely because it markets itself as a high-tech, niche thing. Boost is all about marketing, too ; it’s just another arm of Nextel targeting youth. Virgin got in early and went after distribution (pre-paid wireless). IMO, MVNs aren’t good business. Too many unknowns about provider relationships/contracts–maybe for prepaid, but otherwise I’ll stick with Cingular.
There was a lot of talk about Apple releasing the iPhone under an “Apple” service contract, where Apple would operate a MVN in order to sell the hardware. It’s a different tactic that’s probably worth considering. If anybody could pull it off, it would be Apple.
Wow, no Facebook story so far - cross your fingers!
To be fair, if given the choice of a free promotional pen, and a promotional condom.
I know which I’d choose. My pencil is broken.
Hi Erick,
Could you tell us why TechCrunch hates MySpace so much?
Thanks!
“TRY NOT TO DIE”. That’s real genius! LOL.
The MVNO business model is entirely flawed - MVNOs basically purchase, rebundle and resell wireless minutes from the big carriers, believing that they have better opportunity to resell those minutes at lower cost, contrary to the law of economies of scale, simply through better marketing.
The only way an MVNO can succeed in my opinion is to target individuals who will not be using minutes very often (such as the elderly or very young children) or for temporary visitors to the US needing a phone for emergencies, and charge a monthly rate for access plus a high per minute rate, but providing the phone with no contract or credit-check. Targeting hip urban youth is like an insurance company underwriting patients with terminal illnesses - they will never make money because people will use the phones and minutes every month, and their marketing spend will quickly outpace any profit gain from aquiring said customers.
If I was to create an MVNO I would co-brand and launch the AARP MVNO, which for $19.99 a month provides 30 minutes of emergency calls a month to seniors, $0.50 a minute there after - no credit check or contract, and simple to use phones with large buttons and quick dial emergency buttons, and a tip-calculator. No web access, no fancy stuff. It would require minimal investment, and would make money hand over fist - anyone want in?
I think it would make for an absolutely fascinating Techcrunch article if someone knowledgeable could break down in an itemised form how exactly a company can burn through $360 million so quickly.
Great post!
One of my favorite quotes is from the choreographer Twyla Tharpe, in her book:
“Whom the gods wish to destroy, they give unlimited resources.”
Companies that are forced to work with tight resources develop discipline and profit habits that continue for life. Companies that start with too much cash typically don’t develop businesses that are strong, and know how to whether difficult times.
Like all generalizations, there are exceptions to this one. But, it’s what I have generally found to be true.
Bruce Judson
Founder, Search Free Apps
http://www.SearchFreeApps.com
Glad you’re writing for TC now Erick (i’ll miss B2) - great post. Thanks!!
Thats a great post….”Try not to die” that sounds lame to me, might be catchy for someone but it purely depends on which context it applies to.
http://vidsonly.blogspot.com
We’re gonna party like it’s 1999…
There are several success cases of MVNOs in Europe, where prepay is more prevalent. I don’t have the figures, but Virgin Mobile is highly regarded in the UK and has a very different image than T-mobile, from whom they rent the infrastructure. It’s competitive advantage it’s based not only on marketing, but on excellent customer service, which is what most wireless carriers lack. Also, I think they keep a slimmer organization than traditional operators since they are usually able to beat them on price as well.
Don’t know if it counts but there was a Facebook post on TCUK:
http://uk.techcrunch.com/2007/.....in-london/
Damn!………they burned through $360 million and still a bankcrupty. If i had got a $100,000 out of that capital, I could have done some good web 2.0 product. Had some ideas but no cash. Just a simple blogger at the moment.
Virgin got in early and went after distribution (pre-paid wireless). IMO, MVNs aren’t good business. Too many unknowns about provider relationships/contracts–maybe for prepaid, but otherwise I’ll stick with Cingular.
Cool post
thanks
This line made me laugh: ““Try not to die.” Little did the Amp’d marketing genius who came up with that line know that the expiration dates on the condoms would outlast the company.”
Nicely written, Erick.
Wow! 360 million. Gone.
I have been trying to push an almost airtight business plan with an unassailable model since 2005, and I got nothing from any of the VC’s except blank stares. Then, they go and fund not only the likes of Amp’d - spectacular enough, but several web20 clones captained by well know valley figure heads that seem to specialize in burning small companies down in the post Series A phase.
Maybe a real mobile business plan that serves a working, blue-collar market is just not sexy when you can choose to place capital into dozens of social video sites that are virtual clones of each other. Bah!
http://abmw.wordpress.com/2006.....ness-plan/
http://abmw.wordpress.com/2006.....-dispatch/
Wow, maybe Amp’d will start paying off all of the contractors and vendors that they screwed over with the pennies on the dollar they have collected during their fire sale.
I find it disturbing that the media continues to hype the notion that Amp’d Mobile’s customers didn’t pay their bills.
Amp’d Mobile didn’t pay their own bills which forced contractors to not finish work that would have enabled their customers to pay their bills.
As one of the firms that got royally screwed the Amp’d senior staff and executive team are the folks who need to be held accountable, not the customer.
moderated? Me? Things just get worse.
Try Not to Die. Hilarious. If only their business plan were as good as their ability to acquire venture capitol.
># Gonzalo wrote
> Don’t know if it counts but there was a Facebook post on TCUK:
> http://uk.techcrunch.com/2007/…..in-london/
I didn’t even know there was a Crunch UK site. Where is linked on the main TC page? Now I’m waiting for Crunch New Zealand, easy to read a few pages of articles a month probably…
This is the greatest post… I have ever seen. NICE work.
“Try not to die” is only half as funny as “Amp’d Mobile Is Coming” stamped on a condom package. Odds are they won’t be “coming” any more so clearly the condoms are no longer necessary.
Now thats some good marketing … LOL
Darin
Maybe he should send those to all the investors who pumped money into Amp’d and themselves got fleeced in the process.
Maybe the investors should have invested their money in something sensible.
I have no sympathy for investors. If they can’t tell something good and decent from bull, they shouldn’t call themselves investors. Do your homework before your invest, and odds are you won’t lose $360 mil.
I love how stupid they are. If no one has kids, then they’re entire business is finished.(I tried to make this funny… but nothing that came out*snicker* would be appropriate for the interweb.)
Is it me or does that look like a picture of a ummm well, you know.
http://fakesteveballmer.blogspot.com
I give this post an A+ just for that last line…with the ridiculously humorous pun about getting “FLEECED!”
Where is the bankruptcy auction taking place?
I dunno, I think the condom is pretty damn clever. Then again, i watch a lot of Ultimate Fighting Championship, where Amp’d ran a lot of ads.
Man, I saw that picture in my RSS reader before I even saw the name of the article and almost spit soda all over my monitor.
Truly ironic. How do you burn through 300+ million? Maybe the investors should have been the one wearing condoms…
Burning through $360 million - wow.