July 18, 2000 10:00 PM PDT

Kozmo.com founders step down; new CEO named

The two 20-somethings who founded Kozmo.com and built the Net's largest same-day delivery company have stepped down, sources close to the company said.

Joseph Park, Kozmo's chief executive


Gartner analysts Carol Ferrara and Adam Sarner say same-day delivery companies that support online commerce face an interesting dilemma: They offer a highly compelling service, but delivering that service profitably is extremely difficult.

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since 1997, is now chairman. Co-founder Yong Kang is expected to be named vice-chairman shortly, the sources said.

Gerry Burdo, who has been the chief financial officer at Kozmo since November, immediately becomes CEO. Before working at Kozmo, Burdo was a principal financial officer at furniture retailer Ethan Allen.

A Kozmo representative did not return phone calls this afternoon.

Kozmo, a Net store that delivers entertainment and convenience items, has attracted media attention for its strategy of taking orders placed over the Web and scattering employees on bicycles, motorbikes and automobiles to hand-deliver the goods.

Since the spring slump in e-tailing stocks, Kozmo has attempted to bill itself as more of a delivery company for other Web stores, striking deals to deliver goods for Amazon and Starbucks. Amazon invested $60 million in Kozmo, which has received a total $250 million in capital investment.

Kozmo laid off 24 employees last month and filed federal documents that revealed a $27 million deficit.

The company is facing some labor issues in its Seattle operation, where employees balked after being required to agree to extensive background checks or lose their jobs.

Kozmo has delayed its plan for an initial public offering, sources told CNET News.com last month. The company has not pulled the offering with the Securities and Exchange Commission, but company executives will wait until September before attempting an IPO, sources said.

Park, 28, and Kang, 27, launched the company in a small warehouse in New York and have expanded to 10 cities, including Chicago, Los Angeles, and most recently, Houston.

 

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