All the stories are funny unless you were an investor but the first is most instructive. It was started by a law student who decided that overpricing products and hoping he could reneg on promised rebates was a great way to make money.
Based on his buisness model, law students are being taught today that a lawyer is free to…
1. Price Gouge
2. Steal by creating unending layers of bureaucratic paper barriers
3. Reneg on promised rebates
Though the Federal Trade Commission barred him from ever having a rebate business again, don’t worry, he can still make it big in government service as a result of this training.
From Start Up Journal
The Internet spawned so many weird gizmos and bad business ideas that mocking dot-com duds became something of a sport in the post-bubble era. But some ideas still stand out for pure silliness. These are products and services that attracted lots of publicity — and, in some cases, millions of dollars in funding — before folding.
Take CyberRebate.com, which thought it could make money by giving stuff away for free. The online retailer, founded in 1998, sold an assortment of goods at heavily marked up prices (some items going for up to 10 times their retail values), but promised customers a hefty rebate that often amounted to 100% of the purchase price.
For example, CyberRebate charged about $1,100 for a 13-inch RCA television that normally retailed for a few hundred dollars. Buyers could get a full refund of the purchase price as long as they jumped through some hoops — rebate forms had to be submitted by a deadline, and checks came 10 to 14 weeks later. CyberRebate banked on the idea that some percentage of buyers would forget to fill out the rebate form, or fail to do so in time, leaving the company to pocket the money.
But selling items at such wildly inflated prices just about guaranteed customers would go out of their way to get their rebates, quickly sinking CyberRebate into heavy debt. The company, founded by law school student Joel Granik, filed for Chapter 11 bankruptcy protection in May 2001, listing liabilities of $83.4 million. Much of that debt was owed to consumers who were promised rebates but hadn’t received them.
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