Amp’d Mobile, the hard-charging mobile content company that raised $360 million only to burn through it all and crash into bankruptcy, continues to surprise.
We’re now hearing from people familiar with Amp’d strategy that its mistake was to change its credit check policy, in a foolhardy effort to boost subscribers. The company’s founder chief executive, Peter Adderton, known for dashing in and out of Los Angeles with a helicopter, searched his business for bottlenecks to the company’s growth. The big one he found: Credit checks. While his company’s carrier partner, Verizon, checked customers’ credit to make sure they had enough cash to pay their bills within 30 days, Amp’d decided to relax the requirement to 90 days for its own network.
So Amp’d marketed like crazy to these riskier people with lower credit ratings, got them all signed up, and then 90 days later — oops — found that something like half of them were having trouble making their payments, many of heading into collections, according to our source. We’ve contacted the company for comment, and will update.
Adderton has since been ousted. But what were Amp’d Mobile’s multiple investors — including Highland Capital Partners, Columbia Capital Equity Partners Vivendi/Universal Music Group and MTV Networks — thinking? How did they let him get away with such a careless strategy, especially when it was well known virtual network operators in the past, including ESPN’s had so much trouble?
Two days ago, a peeved Verizon Wireless, which was letting Amp’d use its cellular network, asked a court to let it kick off Amp’d from its network. It said Amp’d is burning through $370,000 a day since filing for bankruptcy in June, and still hadn’t come up with a loan to pay the millions it owes Verizon for usage of its network. Amp’d Mobile will have just $9,000 in cash by this coming Monday, Verizon said.
Tags: co:Ampd-Mobile15 Comments
-
Jay Parkhill said:
Hindsight is 20/20. One could ask the same question of subprime lenders, who went after a similar (overlapping?) market. Both risky strategies that would have been considered brilliant if they’d paid off, but sadly didn’t.
-
Ramon said:
There isn’t a fixed business model yet, so anyone with enough networking can get away with this type of strategy. This makes it harder for other start-ups with serious strategies to get funded.
-
Brandon Powell said:
Matt I believe Amp’d is buring through 370k a day not simply 37k. All in all it’s a hit on the MVNO market. Who’s Next?
-
Matt Marshall said:
Thanks, fixed.
-
a non said:
Thanks to Redpoint Ventures!
-
Adrian said:
whats the matter mate? we had a great time, didn’t you? Keep your wallets out, our head Roo is going after it again. We will be back for another bite of corporate america.
-
Anonymous said:
Had a great time at your investors expense, nice. Why don’t you keep your “Roo” on the Outback where it belongs. And stop screwing with our already screwed-up wireless system. “Keep our wallets out”? Who in their right mind?!
Take your bite out of corporate Austrailia, leave corporate America to the guys who can write business plans.
My advice… buy an iPhone.
-
TTurner said:
I was a ampd mobile subscriber and had no problem paying my bill on time. No, I don’t have perfect credit but I am good @ paying my bills on time especially my cell bill it’s my life line. So yes us a ampd subscribers are fucked.
-
mmxohjrqcx said:
Hello! Good Site! Thanks you! cyiuuvfgmi
-
klira said:
-
Dave said:
could anyone tell me if i can get service for ampd hollywood phone with another sevice provider?
-
Mike said:
This was bullshit….I never got my mail in rebate money back so ah yeah….suck it to who ever ran this company
-
Igor said:
Dang that terrible that Amp’d no long exists. I asked them lik twice to ask about a pre-pay plan but yeah their customer service sucked……………
-
Dominique said:
I was with amp’d mobile last year befor i got deployed and my bill was out of this world. I want to kno ow and the hell my bill ot so damn high but, anywhoo I deployed to Iraq and I still need to pay the bill….Who do I contact to pay the bill
12 Trackbacks
4:42 pm
Amp’d Customers, Consider Yourselves Fk’d said:
[...] customers in April, but dropped half of them when they failed to pay their bills (Amp’d tried to boost subscriber numbers by accepting customers with low credit ratings). The company had taken $360 million in VC funding; [...]
5:10 pm
Amp’d Customers, Consider Yourselves Fk’d | Tekjuice.com said:
[...] customers in April, but dropped half of them when they failed to pay their bills (Amp’d tried to boost subscriber numbers by accepting customers with low credit ratings). The company had taken $360 million in VC funding; [...]
6:19 pm
proxieslist.net said:
[...] customers in April, but dropped half of them when they failed to pay their bills (Amp’d tried to boost subscriber numbers by accepting customers with low credit ratings). The company had taken $360 million in VC funding; [...]
8:39 am
Technology News Daily said:
[...] customers in April, but dropped half of them when they failed to pay their bills (Amp’d tried to boost subscriber numbers by accepting customers with low credit ratings). The company had taken $360 million in VC funding; [...]
12:32 pm
JAYFALLON.NET » Blog Archive » The Social: December 3rd through August 13th said:
[...] VentureBeat » What were they thinking? Ampâ
3:23 am
Startup Signal - Today’s Top Blog Posts on Entrepreneurship - Powered by SocialRank said:
[...] VentureBeat » What were they thinking? Amp’d Mobile’s mad credit strategy [...]
8:29 pm
VentureBeat » 20 worst VC investments of all time said:
[...] Amp’d Mobile: $360 million, ended in bankruptcy. [...]
11:35 am
The 20 Worst Venture Capital Investments of All Time | The Best Article Every day said:
[...] Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. While other mobile providers check for an ability to pay bills within 30 days, Amp’d let it go to 90 days and marketed to these risky customers. It has been reported that 80,000 of the company’s 175,000 customers were unable to pay their bills. [...]
1:19 pm
Apple Iphone » Blog Archive » The 20 Worst Venture Capital Investments of All Time said:
[...] Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. While other mobile providers check for an ability to pay bills within 30 days, Amp’d let it go to 90 days and marketed to these risky customers. It has been reported that 80,000 of the company’s 175,000 customers were unable to pay their bills. [...]
1:40 pm
iPhone Software » Blog Archive » The 20 Worst Venture Capital Investments of All Time said:
[...] Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. While other mobile providers check for an ability to pay bills within 30 days, Amp’d let it go to 90 days and marketed to these risky customers. It has been reported that 80,000 of the company’s 175,000 customers were unable to pay their bills. [...]
1:01 am
The 20 Worst Venture Capital Investments of All Time at Hoovaloo.com said:
[...] Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. While other mobile providers check for an ability to pay bills within 30 days, Amp’d let it go to 90 days and marketed to these risky customers. It has been reported that 80,000 of the company’s 175,000 customers were unable to pay their bills. [...]
9:06 am
Biggest Venture Capital Busts — Scott Fish said:
[...] Amp’d Mobile: $360 million raised, ended in bankruptcy. [...]