August 16, 2001 1:05 PM PDT
Customers better start spilling their Beenz
Internet surfers have only 10 days to use up their Beenz after the company announced Thursday that its online operations will cease Aug. 26. Any outstanding Beenz will be worthless after that date.
A short message on the Beenz Web site announced the close and said any Beenz in a member's account after Aug. 26 "will be invalidated by Beenz.com, and the member will not be entitled to any compensation of any kind for such invalidated Beenz."
In addition to shutting down its online currency system, Beenz is closing its London offices and laying off the 10 to 15 employees who work there, said Beenz spokesman David Vindel. It will keep its New York office open and is in negotiations with several companies about selling off its assets piecemeal, he said.
Vindel declined to say which companies are negotiating for Beenz hardware, software and intellectual property, but he said Beenz plans to announce a deal "soon."
The shutdown comes after the suspension of rival online currency Flooz.com last week. Flooz is talking with several companies about resurrecting its operations and expects those talks to come to fruition soon, Flooz Chief Executive Robert Levitan said earlier this week. Unlike Beenz, Flooz shut down without warning consumers.
Beenz, which raised about $80 million in four rounds of funding, is not in any financial difficulty and does not plan to file for bankruptcy, Vindel said. Instead, the company is winding down operations to conserve cash, he said.
"The company has money. It's just reducing costs even further, trying to provide shareholders with value," Vindel said.
Beenz announced in March that it was actively seeking a buyer or additional funding to keep afloat its London operations. In the last year, the company has gone from having 265 employees in 15 offices worldwide to having just 25 employees total in its New York and London offices, Vindel said.
Vindel did not know how much in outstanding Beenz is still held by customers.
After the Internet bubble burst, e-currency companies tried to evolve by concentrating on business customers, but the collapse of a high-profile trailblazer such as Beenz shows that the Old Economy credit card companies have probably won the online shopping battle.
Experts believe that online currency sites such as Beenz were overtaken as a way of shopping online by credit cards, which had the advantage of being virtually universally accepted both on and offline. In contrast, digital currency appealed to Internet merchants because they avoided the hefty charges involved with credit cards.
Two to six companies are negotiating to buy bits of Beenz operations, Vindel said. The London layoffs will happen in the next several weeks, he added.
Staff writer Graeme Wearden reported from London, and News.com's Troy Wolverton reported from San Francisco.