Kozmo.com

A video in an hour, free, by bicycle

Shut down
19902026

Kozmo promised free delivery of videos, snacks, games and Starbucks coffee to your door within an hour, by bicycle or on foot. It raised around $250 million, including $60 million from Amazon, paid Starbucks $150 million for a marketing deal, and closed in April 2001 without ever charging a delivery fee.

Timeline [edit]

  1. 1998
  2. March 1998 Launch
    Kozmo opens in New York

    Free delivery within the hour, by bicycle.

  3. 2000
  4. February 2000 Funding
    A $150 million deal with Starbucks

    Five years of in-store promotion and video return boxes.

  5. March 2000 Funding
    A $150 million IPO is registered

    Amazon has already put in $60 million. Thirty cities are planned.

  6. April 2000 Decline
    The IPO is withdrawn

    The Nasdaq breaks and the public offering never happens.

  7. 2001
  8. 11 April 2001 Shutdown
    Kozmo closes

    1,100 people lose their jobs.

  9. 2018
  10. March 2018 Revival
    The brand returns as a warehouse club

    Unconnected to the original company. Offline again since 2023.

The site through time

Browse kozmo.com as it was, via the Internet Archive's Wayback Machine:

1998 1999 2000 2001 Full archive →

Ownership [edit]

Kozmo.com, Inc. 1998–2001 Founded Founded in New York by Joseph Park and Yong Kang

Key figures [edit]

MetricValueAs ofConfidence
Revenue (USD) 3.5 million 1999 Confirmed Annual revenue against a net loss of $26.3 million, per SEC filings

Confirmed official figures · Reported media, cites a source · Estimated analyst or our estimate

Why it shut down [edit]

Official line: Closed on 11 April 2001, laying off 1,100 employees, after its planned $150 million IPO was abandoned and no further funding could be raised.

Our analysis: Kozmo refused to charge for delivery, which meant a courier could be dispatched across a city for a single video rental worth a few dollars. The company argued that saving on shop rent would cover it. It never did, on any order.

History [edit]

An hour, no charge

Joseph Park and Yong Kang were investment bankers in their twenties when they founded Kozmo in New York in March 1998. The offer was simple and slightly unbelievable: order a video, a game, a magazine, ice cream or a Starbucks coffee, and it arrives at your door within the hour, delivered by someone on a bicycle. No delivery fee, no minimum order.

Customers loved it, which was the problem. Analysts pointed out immediately that dispatching a person across Manhattan to deliver a $4 video rental costs far more than $4. Kozmo's answer was that it saved on retail rent, and that the savings would eventually exceed the cost of the couriers.

The money

In 1999 the company had $3.5 million of revenue and lost $26.3 million. It raised roughly $250 million in total, including $28 million from Flatiron, Oak and Chase in 1999, and $60 million from Amazon in 2000.

In February 2000 it signed a five-year agreement to pay Starbucks $150 million to put return boxes for videos in up to 500 of its coffee shops and promote the service. That figure is worth restating: a company with $3.5 million of annual revenue committed $150 million to a marketing partnership.

The last hour

Kozmo registered for a $150 million IPO in March 2000 and planned to reach thirty cities. The Nasdaq broke that same month and the offering was withdrawn. It tried charging a $1.99 fee on small orders, far too late and far too little.

On 11 April 2001 Kozmo shut down and laid off 1,100 people. The brand has been bought and relaunched twice since, most recently in 2018, and the site has been offline again since 2023.

Everything Kozmo promised is now available in most large cities. The difference is that the delivery fee is not free, and that turns out to be the entire business.

Similar projects

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Sources [edit]

  1. Kozmo.com ceases operations CNN Money 12 April 2001 [archived]
  2. Kozmo's delivery problem Forbes 22 June 2000 [archived]

Last verified: 13 August 2026. Spotted an error? Suggest an edit (corrections with sources are reviewed and applied).