Before Bitcoin: The Rise and Fall of Flooz E-Currency

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iStock

In the late 1990s, Silicon Valley entrepreneur Spencer Waxman was in Morocco on holiday when he heard an Arabic slang term for money—flooz—that stuck with him. In the dot-com boom taking place back in the United States, URLs with obscure etymology were popular. When Waxman and partner Robert Levitan decided to co-found a novel way of disrupting the online commerce industry, calling it Flooz.com was almost a foregone conclusion.

What Levitan and Waxman envisioned was a virtual gift certificate that would drive business to participating online retailers, give consumers some sense of security over their private information, and make shopping for stubbornly gift-resistant recipients easy. Rather than merely offering cyber currency, this was a service with purpose.

Unfortunately, it was also one that was doomed to fail.

A screen capture of Flooz.com
Flooz.com

Non-cash currency has been with us since the Chinese used cowry shells to sort out debt for goods and services more than 3000 years ago. In the 1960s, credit cards became an alluring alternative to saving and carrying paper bills. When online retailing exploded in the 1990s, it was only natural that startups would begin to explore virtual payment methods.

At the time, digital transactions were perceived by many consumers to be a near-guarantee of identity theft. Handing a card to a vendor in a closed-loop retail environment was one thing, but the thought of hackers seizing their information once it was entered into the borderless environment of the internet kept many away from online shopping.

As it turns out, that paranoia would turn out to be justified in our current climate of constant data breaches. It was also good for businesses hoping to turn their apprehension over credit card security into a monetized solution. Flooz.com debuted in 1999, just one year after another currency-based URL, Beanz.com, had garnered press. Beanz were a kind of earned points system, with approved transactions gifting customers with redeemable gift vouchers. Flooz took a different approach: Customers would sign up to Flooz.com and purchase gift certificates for specific retailers, which they could then use themselves or pass along to a gift recipient via email.

For businesses, it was a way of driving traffic to sites; for consumers, it was a way to keep credit card transactions limited to one vendor; for Flooz.com, being the intermediary meant taking a 15 to 20 percent cut of completed transactions on the selected retail sites, which ranged from Godiva Chocolates to Barnes & Noble and Tower Records.

To help Flooz.com cut through online marketing noise, Levitan enlisted actress Whoopi Goldberg to be their spokesperson. In exchange for company shares and Flooz.com money, Goldberg led an $8 million ad campaign for radio, television, and print that extolled the benefits of using Flooz.com.

Whether it was Goldberg’s pitch or the concept itself, Flooz.com met with a receptive audience. The company debuted in the fall of 1999, and had opened 125,000 accounts by January 2000. That year, roughly $25 million in Flooz.com money was purchased and used. (In a nod to the impenetrable vocabulary of the internet at the time, the media loved to point out that Beanz could be used to purchase Flooz.)

Bolstered by the attention and early success, Flooz.com was eventually able to raise $35 million in venture capital. Consumers could meet their gifting obligations by emailing a code to their gift recipient without having to waste time shopping. For a time, it appeared Flooz.com would become a leading method of payment for online transactions.

Actress and Flooz.com spokesperson Whoopi Goldberg is photographed during a public appearance
Paul Hawthorne/Getty Images

But it didn’t take long for the seams in the Flooz.com model to show. While gifting vouchers to family and friends was convenient for the gifter, the giftee was stuck with a very limited number of vendors that took Flooz.com as payment. If Amazon, for example, had a deal on a DVD or book that Barnes & Noble didn’t, Flooz users were out of luck. Shopping for a bargain wasn’t possible.

The second and most crippling detail was one Flooz.com was forced to make in order to strike deals with vendors. The company guaranteed its transactions, meaning that it would make good on orders even if Flooz dollars had been purchased via fraudulent means. By the summer of 2001, that commitment became a tipping point. Agents from the FBI informed Levitan that they suspected a ring of Russian hackers had purchased $300,000 worth of Flooz in order to launder funds from stolen credit cards.

This created a paralyzing cash flow problem: As their credit card processor withheld funds until Flooz.com could secure the transaction, people were still busy redeeming Flooz dollars they had already spent. Retailers then looked for Flooz.com to reimburse them. Suddenly, customers trying to pay with Flooz were greeted with error messages that the site was down.

Those issues, coupled with the fact that corporate clients had already started to move away from gifting employees with Flooz dollars, forced Flooz.com to file for Chapter 7 bankruptcy in August 2001. Court papers cited almost $14 million in liability. (Beanz.com was also a casualty of the dot-com bust, when participating retailers processing the points steadily went out of business.)

Levitan rebounded, founding the Pando file sharing network and selling it to Microsoft in 2011 for $11 million. Meanwhile, Flooz.com remains a barely-remembered footnote in e-currency, though it would be hard to chart the rise of digital funds like Bitcoin without it. Like with so many other good ideas, timing is everything.

The One Where Jennifer Aniston's 'Rachel' Haircut on Friends Became a Phenomenon

NBC Television/Getty Images
NBC Television/Getty Images

The legacy of NBC's Friends isn't one of ratings records or piles of awards—it's about the way the show managed to impact popular culture by showing life at its most mundane. This is a series that turned sipping coffee into an art form, still prompts philosophical debates over the morality of being "on a break," and made it impossible not to shout pivot! when moving furniture. But Friends reached its cultural zenith when it managed to transform a simple hairstyle into a global talking point, as untold millions of women in the ‘90s flocked to salons all wanting one thing: “The Rachel.”

“The Rachel” hairstyle, which was the creation of stylist Chris McMillan, was first worn by Jennifer Aniston’s Friends character Rachel Green in the April 1995 episode “The One With the Evil Orthodontist." It has its roots as a shag cut, layered and highlighted to TV perfection. It may have been a bit too Hollywood-looking for a twenty-something working for tips, but it fit in the world of Friends, where spacious Manhattan apartments could easily be afforded by waitresses and struggling actors.

The Birth of "The Rachel"


Aniston in 1996, during the height of the style.
NBC Universal/Getty Images

The style itself wasn’t designed to grab headlines; McMillan simply gave Aniston this new look to be “a bit different,” as he later told The Telegraph. In hindsight, the ingredients for a style trend were all there: The cut was seen on the show’s breakout star as the series hit its ratings peak; an average of more than 25 million viewers tuned in each week during Friends's first three seasons. You can’t have that many eyeballs on you without fans wanting to get closer to you, and the easiest way to do that is to copy your style.

During the show’s second and third seasons in the mid-1990s, stories began to appear in newspapers and magazines about salons from Los Angeles to New York City and (literally) everywhere in-between being inundated with requests for Aniston's haircut. Some women would come in with their copy of TV Guide in hand for reference; others would record an episode of the show and play it at the salon to ensure accuracy. For these stylists, a good hair day for Rachel on a Thursday night meant big business over the weekend.

"That show has made us a bunch of money," Lisa Pressley, an Alabama hairstylist, said back in 1996. Pressley was giving around four "Rachels" per week to women ages 13 to 30, and she was touching up even more than that. Another hairdresser estimated that, during that time, 40 percent of her business from female clients came from the "Rachel." During the early days of the trend, McMillan even had people flying to his Los Angeles salon to get the hairdo from the man himself—a service that he charged a modest $60 for at the time.

A Finicky 'Do

What many clients learned, though, was that unless you had a trained stylist at your side, “The Rachel” required some real maintenance.

"People don't realize the style is set by her hairdresser," stylist Trevor Tobin told The Kansas City Star in 1995. “She doesn't just wake up, blow it dry, and it just turns out like that."

That was a warning Aniston knew all too well. In recent years, she has expressed her frustration at not being able to do the style on her own; to get it just right, she needed McMillan on hand to go through painstaking styling before shoots. In addition to being impossible to maintain, in a 2011 Allure interview, Aniston called it the “ugliest haircut I've ever seen." In 2015, the actress told Glamour that she found the look itself “cringey."

Though Aniston had grown to loathe the look, it was soon the 1990s' go-to style for other stars like Meg Ryan and Tyra Banks and later adopted by actresses and musicians like Kelly Clarkson and Jessica Alba. Debra Messing had an ill-fated run-in with it when she was told to mimic the style for her role on Will & Grace. They soon realized that trying it without McMillan was a fool’s errand.

“[It] was a whole debacle when we tried to do it on the show,” Messing recalled. “They literally tried for three hours to straighten my hair like [Aniston's]. It was so full and poofy that it looked like a mushroom.”

A Style That Sticks Around

A picture of Jennifer Aniston from 1999.
Aniston sporting her post-"Rachel" hair during the show's sixth season.
NBC Universal/Getty Images

Aniston’s personal preference for longer hair soon made its way on-screen, replacing the shorter, choppier “Rachel” by season 4. The once-iconic look was officially ditched, the last remnants of which were washed away in a flowing sea of ever-growing locks doused in blonde, pin-straight highlights. And once a haircut’s namesake turns their back on the style, it’s likely only a matter of time before the rest of the world moves on, too, right?

Wrong. “The Rachel” endured.

Unlike Farrah Fawcett’s showstopping feathered hair from the ‘70s, celebrities, news anchors, and the average salon-goer were still wearing the hairstyle well into the 2000s. Even now, fashion websites will run the occasional “Is ‘The Rachel’ Making a Comeback?” article, complete with the latest Hollywood star to sport the familiar shag.

It’s a testament to McMillan’s skill, Aniston’s charm, and Friends’s cultural sway over audiences that people are still discussing, and donning, the hairstyle some 25 years later. And in a lot of ways, the haircut's success mimicked the show's: it spawned plenty of imitators, but no one could outdo the original.

A Quick History of Hidden Camera TV Commercials

Consumer Time Capsule, YouTube
Consumer Time Capsule, YouTube

At restaurants like Tavern on the Green in New York and Arnaud’s in New Orleans, diners sitting down for formal meals are seen complimenting the waiter on their coffee. Just a few moments later, they’re informed it wasn’t the “gourmet” brew typically served, but a cup of Folgers Instant coffee that had been “secretly switched.” The surprised patrons then heap praise on their duplicitous waitstaff.

This scene and others like it played out hundreds of times in television commercials throughout the late 1970s and early 1980s. Variations date as far back as the 1950s, and some commercials—like Chevrolet's now-infamous 2017 spot that depicted amazed onlookers marveling at the car company's numerous J.D. Power and Associates Awards—still air with regularity. Instead of using actors, the spots purport to highlight the reaction of genuine consumers to products, often with the use of hidden cameras positioned outside the unsuspecting customers' field of vision.

 

Despite skepticism, the people in these ads are often members of the general public offering their unrehearsed response to beverages, laundry detergents, and automobiles. That doesn’t mean, however, that there’s not a little bit of premeditation going on.

The idea of recording spontaneous reactions for advertising purposes dates back to the 1950s, when Procter & Gamble arranged for housewives to compare the whiteness of laundry washed in their Cheer detergent against the comparatively dingier load that resulted after a soak in the competition. The camera wasn’t “hidden” and the spokesman made no secret of his intentions—he was holding a microphone—but the women were approached in a laundromat and not a casting office. Those who appeared in such spots would receive a $108 fee, along with residuals that could add up to thousands if the commercial aired repeatedly.

This approach was refined by Bob Schwartz, a former director of the prank series Candid Camera. In 1969, Schwartz formed Eyeview Films and worked with ad agencies to capture spontaneous reactions to products. An early spot for the floor cleaner Spic and Span was a hit, and other companies and agencies followed the template. For a 1982 spot, Schwartz set up his crew in a supermarket and invited customers to try Oven Fry, a new frozen chicken product from General Mills. The most expressive reactions (“mmm-mmm!”) were invited to consent to be in the commercial.

In more controlled settings, it’s necessary for advertisers to make sure the pool of potential testimonials is suited for the product. Before filming spots like the Folgers tasting, a team of market research employees typically recruited people by inviting them to take part in polls on the street. They’re asked about coffee preferences—the better to establish whether they even like the beverage—and were then invited to a nearby restaurant for a free meal. Out of two dozen couples selected for a Folgers spot in San Francisco in 1980, two or three were selected for the commercial.

 

The Folgers spots aired for years and were memorable for how surprised people appeared to be that they had just consumed granulated crystals instead of fresh-brewed coffee. But that doesn’t mean viewers necessarily believed their reactions. A 1982 consumer survey found that consumers often found their endorsements too stiff, meaning they were prompted, or too natural, which hinted that they might be actors. Though ad agencies went to great lengths to assure authenticity, their praise made audiences dubious.

Why would non-actors shower products with compliments? It takes a bit of psychology on the part of the ad agencies. For Chevrolet's 2017 spot that was ridiculed for people overreacting to the mere sight of a car, one of the participants—who asked to remain anonymous due to a non-disclosure agreement—told The A.V. Club that the upbeat environment and surreal exposure to a new car after agreeing to take part in a market research survey left his group feeling like it would be rude to say anything negative.

“We never retook a take, but you felt really bad about saying something negative about Chevy because there were 50 cameras on you, and it was just this one [host],” he said. “He did this magic trick of making it seem like you were hurting his feelings if you said anything bad about Chevy. You didn’t want to see this guy stop smiling. It was really bizarre.”

Candid? Sure. As candid as if they were among friends and not a squad of marketing executives? That's a different story.

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