Why did CollegeClub.com fail and others succeed?
CollegeClub.com was registered on April 4, 1996 and by 2000 had around 3 million registered users. I was one of those users who used it to find friends at other colleges online. On August 22, 2000, CollegeClub.com announced bankruptcy and said it would be acquired by Student Advantage, an Internet educational content and commerce specialist, for $7 million in cash and 1.5 million shares of its stock. Almost exactly three years later, in August of 2003, MySpace.com launched. Less than a year after that Facebook.com began as a social network for colleges on February 4, 2004, but eventually opened up to the general public on September 26, 2006. What happened to College Club? What made it different from Myspace or Facebook?
Why did MySpace and Facebook succeed when CollegeClub failed?
All of a sudden what seemed so hard for CollegeClub.com to do seemed easy for others. Was it the curse of the “first to market first to fail” concept that’s befell such greats as Palm, Netscape, and Tivo? Or was it something else? EDIT: since writing this initially in September of 2009, MySpace may not be the best comparison, but Facebook is still doing just fine. 11/4/2011.
CollegeClub.com’s Business Model
Lets take a look at the business model. CollegeClub.com allowed users to sign up for free, create profiles, communicate with each other, and post pictures online. Once it attracted a certain number of users, the site was then able to sells advertising to businesses looking to sell to this highly impressionable market with loads of free time and disposable income. Marketers know that if they can hook a customer in college, they may have them for life. Both MySpace.com and Facebook.com used this same model so why did CollegeClub.com fail?
CollegeClub.com was getting funding at the tune of $15 million from a group of investors that included Convergence Partners and France-based Viventures as well as $40 million from Seligman Technology Group via the group’s investment fund and additional money from previous investors Convergence and Sony. Later deals included partnerships with Ericsson and General Motors, with a planned IPO in the offing. The old addage of “it takes money to make money” wasn’t making CollegeClub.com any money. Why?
I have two reasons why I think this site tanked:
The first reason is bad management and the second reason is the high cost of technology at the time.
Infoworld said at the time, “While one source close to the company traces the financial difficulties to some unorthodox spending practices by management, [new owner, Student Advantage] said it believes that problems stemmed from the nature of the site’s business model.” I think Student Advantage was wrong. We now know there was nothing wrong with their business model (because it worked for both Myspace and Facebook) and this next statement from Infoworld backs this up:
In the recent past, Student Advantage has shown less than stellar financial performance itself. Since the beginning of the year, the company’s stock price has plummeted from a high mark of just over $20 to its current price, which is hovering just above $7. In addition, Student Advantage has continually met analysts’ predictions of red ink, and the company has suggested that losses will continue throughout next year.
The company went from bad management to worse management – and technology costs were adding up.
“The business model works.” said Monte Brem, senior vice president of corporate development at CollegeClub in said in 2000 – and he was right – but he noted that with nearly 3 million users, the back-end costs for the site ran high and needed multiple rounds of financing for success. “It requires a tremendous amount of scaling to be profitable,” Brem added. And back then, scaling cost much more than it did in 2003 and 2004 for MySpace and Facebook respectively. Moore’s Law has two effects. Not only does technology double in speed or capacity each year, but the price almost always shrinks by half every two years. For example, a Pentium III desktop PC with 128 MB RAM and a 40 GB hard drive cost $1800.00 in 2000. In 2003, the price of a desktop had dropped below $1000 for over twice the power. Multiply that over all the equipment needed to run a large social network. In April, 2008 Facebook expanded the number of servers it uses to 10,000. The more CollegeClub.com added users, the more technology they had to add on back-end to support the load. Their revenue simply could not overcome their expenses.
So why did CollegeClub.com fail?
Primarily, it was ahead of its time. It had a good idea, but no one had really succeeded with it before. Bad management decisions were made and the implementation of the idea did not match up with the cost of the infrastructure at the time. Had they waited until 2002 to launch, they could have superseded either MySpace or Facebook, but there is another reason why they may never have made it: their name. Names like MySpace and Facebook are not associated with a specific group like CollegeClub.com is. Eventually CollegeClub.com started HighSchool.com to address this problem but even it has the same problem of locking it into a specific group. There were also privacy and age related problems on the site, much like MySpace ran into in 2006 and Facebook has ran into almost every year of it’s existence.
What can we learn from CollegeClub.com?
There are three things they could have done differently:
- They didn’t pick a scalable name that was generic enough to be applied to almost anyone, anywhere. Sometimes it is good to be niche, but you take on more risk if you’re running your own equipment. Sometimes is pays to have a name that can be used broadly, even if you start off small within a specific niche.
- Take the time to develop a good business plan and don’t be afraid to change the business plan as you go. Create metrics for success, track them, and change course if necessary. The businesses that are most successful are the most agile.
- Avoid debt if possible when starting a business. It always catches up with you. And the more debt you have the less your’e able to (as in #1) scale or (as in #2) change course. One of the most important things in any business is cash flow.
When You Say Yes but Mean No: How Silencing Conflict Wrecks Relationships and Companies…and What You Can Do About It
In 2003, Leslie Perlow wrote a book called, When You Say Yes but Mean No: How Silencing Conflict Wrecks Relationships and Companies…and What You Can Do About It. In that book, Leslie does a case study on the demise of CollegeClub.com in the chapter, Nine Bad Endings. Pages 141-156 cover the merger with Versity, the talks about the IPO, and the eventual bankruptcy. Overall it’s also a good book on management as one reviewer called it, “A Management Must-Read”.
“Saying yes when you really mean no” is a problem that haunts organizations from startups to big businesses. It exists across industries, levels, and functions and is inflamed by a sour economy, when the fear of losing your job is on everyone’s mind and the idea of allowing conflict to surface or disagreeing with others seems inherently risky. Too often, the conversation at work bespeaks harmony and togetherness, even though passionate disagreements exist beneath the surface. Is this what really happened to CollegeClub.com? Read the book to find out.
CollegeClub.com Email
CollegeClub was full of so much promise. What happened?
CollegeClub “The world’s largest college community”
FREE E-mail you can also hear through the phone!
FREE voicemail, with your own 800 number!
FREE discount card!
FREE Web page builder!
TONS of ways to meet people like you! (Chat, Interest Groups, and more!)
LOTS of other cool stuff! (Including online games and music videos!)
Suprise. CollegeClub is no longer offering free email.
In 2007, Alloy Media, owner of the CollegeClub.com trademark, discontinued the CollegeClub email service rendering all “@collegeclub.com” email addresses defunct. Their website (http://mail.collegeclub.com), simply said:
“Oops! Sorry about that! These CollegeClub applications are no longer in service.
If you are trying to access your old emails so that you can forward them on to another address, use this url: http://legacy.collegeclub.com/mail.
This Service will only be available until Friday, March 16th, 2007.
Here is what the email login screen last looked like in March, 2007:
CollegeClub.com Where Are You Now?
If you type ‘http://www.collegeclub.com‘ into your browser you will be taken to Teen.com, which is, according to their web site the, “ultimate online destination for teens on celebrities, entertainment, music, and fashion.” I think what they mean to say was that they are a ‘destination for teens’ that covers ‘celebrities’, not “teens on celebrities,” which has an entirely different meaning.
Teen.com is owned and operated by Alloy Media, LLC, which is a New York based media company that is partners with Alloy Marketing and Alloy Entertainment. Alloy Media also owns Channel One News, which most know is a 12 minute news program for teens broadcast via satellite to middle schools and high schools across the United States.
The Internet is not a friendly place. Things that don’t stay relevant don’t even get the luxury of leaving ruins. They disappear.” -Facebook’s Little Red Book
For those looking for other ex-CollegeClub.com members, check out ExCollegeClubbers. The ‘tribe’ is “for everyone who wants to meet new friends, but in particular for ex members of Collegeclub.com…It used to be cool like Tribe and we have all lost contact with each other. So non-ex members and ex- members alike are invited to join.”
Comments
24 responses to “What Happened to CollegeClub.com?”
Damn good piece here. I was reminiscing about my collegeclub.com days and came across this. I thought everyone had forgotten about them. They were the myspace and facebook before myspace and facebook existed. CollegeClub and MiGente are pioneers.
I awoke with the same question on my mind. Thanks for your research and insight. Collegeclub was one of my favorites (and I even had a brief stint working for them). You’ve done well in portraying the downfall of a pioneer and set up for wide reception of social networking sites.
Cool article, when MySpace and Facebook were becoming so popular I wondered what ever happened to collegeclub. Gret site for meeting people at the time. Looks like they were just ahead of their time.
I certainly agree. I used to be on Collegeclub constantly and then it was gone. Thanks for the article. I wonder if they destroyed all of that informaton such as pictures, email and profiles. Collegeclub in itself was a great concept.
I was a an avid user of coleegeclub.com. I used it as my secondary email as well. I lost a lot of pictures when it disappeared. I wonder as well what happened to them all.
Yeah, CollegeClub.com died a slow death. It was a great concept and definitely ahead of its time. It seems that much of the CC talent left the company early or maybe they were forced out. I recall someone on the site, a designer (maybe) winning a Webby Award, and leaving CC after that. I never got the CC discount card, and I actually saw CC reps at a student event, and they told me that they hadn’t gotten their cards either. They were trying to have CC reps on college campuses, but I don’t think that panned out. Don’t remember if they even offered to pay or if it was just lame freebies. At some point in the mid 2000s they got rid of their e-mail service. I would still get random e-mails from peeps on it. After their e-mail ended it just became this lame portal to go to. It also went downhill when they got rid of their College Club personals.
Nice Article!
Man, this article was great! I was one of the Campus reps in Indiana, and I loved this site and had some of the best times of my life not only working for the site but being a part of a pioneer website that NO ONE remembers except those who were on it. Crazy how technology can make you forget (remember NEO GEO!?) Still got some of the original cups some where and my T-shirt I used to push out to friends (that and those stupid Frisbees). The pay was great too, $5 for each member that joined. Sounds like nothing, but during a party when everybody is getting drunk, you could take pictures and make sure if they wanted to see all of the fun they would have to sign up! Priceless. Collegeclub.com was the bomb!
I remember CollegeClub too… I ended up signing up to replace an expired hotmail account from the late 90s and a mail.com address that annoyed me into looking elsewhere… I signed up one day when I had a craving for chocolate and they were giving away coffeecrisp bars… The account I signed up for at the booth at my school never worked, so I went to a campus computer lab and signed up by myself, and was eventually hooked… It was great with everything I needed (plus more I didn’t) e-mail, IM, webpage hosting, profiles, e-mail clubs etc… I must have signed up during it’s downfall, because it was perfect at first, then it started having intermittent failures (usually e-mail) I continued to try to use it until I was finally forced to use yahoo… I still don’t understand the appeal of facebook or myspace, nad I don’t intend on using them, but I sometimes miss CollegeClub…
MY NEPHEW HAD A COLLEGECLUB EMAIL AND NOW I NEED TO FIND HIM HIS NAME IS KARL SCHUMACHER NOT SURE OF THE SPELLING OF THE LAST NAME NOW I CAN NOT CONTACT HIM SINCE COLLEGE CLUB IS NOT LONGER A WEB SITE
You might try to find him on Google or Facebook. Teen.com probably won’t help you, but they own the rights to everything that was Collegeclub.com. Hope you find him!
Colleclub was the S#@*! Their chat tool was better than the current Facebook. I use to spin hours at a time on collegeclub. To me Facebook is just a sophisticated version. Thanks for the story.
man, i remember the ability to call up collegeclub and leave a voice message to someone using their user name. BAD ASS!!! FB has nothing on that.
I forgot about that feature – that was so cool back then and you can’t even really do that now with Facebook.
I used to use collegeclub.com. I even had e-mail with them. Thankfully it was not my only e-mail account, otherwise I would have been without an e-mail address for a time. I don’t know why I liked it so much. I do love facebook for the most part, but the current chat annoys me. Yesterday it seemed to start sending all my IMs also as private messages as well, which is annoying, not only for me, but my friends/ family. I could be having a long discussion, and we’d both end up with a long private message thread that was not necessary.
I met my husband on collegeclub and we been together almost 9 years and have two gorgeous sons…sadface
Wish they managed this site better because honestly its it better than facebook.com myspace.com blackplanet.com
It would have continued to evolve and be the biggest thing since sliced bread.
Oh well…I got my man and my kids so it served it purpose!
Collegeclub still is the best. 1800collegeclub. was so much fun. I can still hear the guy on the advertisement saying “cooolegeclub!”. collegeclub saved my life one night. Really, it did.. Thank you collegeclub!!
Well, there is far more to it than this article suggests. In one day, the managers of SA decided to clear out the offices in San Diego, including developers, writers and just about anyone with a salary. The site was kept to a degree, but they seemed to shift focus to an offline guide to local discounts and fell back, far behind the emerging market for online products and services.
The ideas we had, from partnering with green tortoise and later egghead online, were all shot down fast. The worst was when we recommended pulling in on-college students and they revealed the cost of computing was a bigger blockade than the growth and breadth expansion such an idea would generate. I did not even get a final paycheck…
I can say that another problem there was the idea that some pre-internet person wan waltz in, reorganize everything and somehow squeeze a bit more revenue out. They did this first at collegeclub, then almost everywhere they could put a clueless boomer in place who did not “get it,” per se. Cue the dot collapse…
I just found my old college club discount card and wondered whatever happened to the site. Great article. Thanks!
You should do an interview with the #2 guy, Eric Berman. He is still around San Diego involved in the Internet space and can be found by a quick google search. It would be cool to hear his perspective and lessons learned. Disclosure: I worked at CC back in the day.
Nice blog post Erich. Just for fun, i wanted to google collegeclub.com to see what would come up and it is nice to see someone have a more intelligent post about what went down. I was one of the main founders. You nailed a big part of the issue on the head about the cost of technology. At that time, we had to spend a lot of money on infrastructure and tech salaries – no other choice really. There will always be perceived “Management Issues” with a company growing as fast as we did while acquiring other companies, but that was a fairly common issue. The market crashing when it did was the really the biggest cause of our demise. The VC’s were investing money at a rapid rate during the big internet rise and the mantra was to get as much market share as possible and not too worry yet about profits. That was also fairly common of “internet” companies during that era. The problem was that we were days away from raising another round to get us to an IPO when the big market crash hit. We were left without enough money to survive which forced us to layoff people without much notice and that lead to the slow demise and eventual sale to Student Advantage – they had a different goal – more on the discount side and a totally different vision. Bottom line…a major case of bad luck on the timing of the market crash along with the high start up costs made it difficult for us to overcome those hurdles. For all of those involved, it was a very emotional and fun journey – both employees and fans alike. Of course, we will all wish things turned out more positive, but in life we learn that there are always major bumps in the road and it is how we react to them that makes us the people we are today. Hope everyone is doing great out there.
i remember collegeclub back in the day! i did a google search too out of curiosity and came to this site! man it was ahead of its time indeed, meet alot of cool peeps on there too. wish the managers had did a better job of running it before it went bust. it was out wayyyyyyy before facebook and myspace
Wow! I was reading up on php this morning, thinking about database management and stuff. My mind wondered to my early days on the Internet. Back when I was in high school, I discovered highschoolclub.com and was hooked, through them, I met collegeclub.com. So, this morning, I just asked myself, “what happened to these guys? Tis pretty sad what happened but nice to know some people still remember them, and to hear from people who worked differently with them, is nice.
YES! I went off to college in 1999 and was a big College Club supporter. When I got out of college there were a few people in graduating classes behind me that told me about Facebook. After CC I didn’t think Facebook would be what it is today, but it’s interesting to compare them all!
Great post. I randomly tried to Wiki it today and couldn’t find anything.. crazy. I was telling my friends that blackplanet.com gets forgotten, but it definitely was NOT the first popular social site. But I couldn’t find info on collegeclub through Googling it. Thanks for sharing!