Boondoggle operated as a web site where consumers could buy interesting alternatives to gifts of CD vouchers and High Street shop certificates. Instead, gift vouchers were sold for a range of activity days, adventures and luxury services being offered by third parties. The activities ranged from tank driving to dog grooming.
On the company's web site, a statement headed "Boondoggle Bites the Dust", says:
"We think we were on to something good here: an excellent concept of making it easy to buy an exceptional gift or arrange a great day away, a great financial model with no inventory, margins of 30% plus and extraordinary cash flow, partnerships signed with over 80 activity suppliers and 100 affiliates, a state-of-the-art open source website, and good early results from our ten weeks of trading. But we found this wasn't enough."
In an article in Scotsman.com, Boondoggle's founder, Doug Wilson, explained yesterday that one mistake his team made was to raise only £200,000 for the initial phase of the site, partly to avoid over-diluting their equity before proving their business model.
Wilson wrote, "it was a good idea, until Boo.com, Clickmango, and the general decline in the technology sector came to pass." He added that marketing projections let them down, despite the validation of the figures by two sets of apparent experts. When trying to close a funding deal, the projections made their actual performance look poor, causing a drop in confidence and consequently funding.