Founding: EToys.com launched in 1997, co-founded by CEO Toby Lenk, COO Frank Han and Idealab founder Bill Gross. The company received over $15 million in funding from Sequoia Capital, Highland Capital Partners and Idealab, with an additional $100 million in funding from three private institutional investors led by Promethean Asset Management.
History: EToys seemed like the perfect idea for busy parents. It offered them a chance to order thousands of toys in every category from the comfort of their homes. The site’s Babycenter and Parentcenter sections, which featured articles and newsletters for new and expectant mothers, were popular and formed a loyal customer base. The editorial content also helped eToys distinguish itself from competitors and try to avoid the seasonality of the toy industry.
The site had fun features as well, including gift recommendations by age and information about popular characters, from Madeline to Barney. The company also won praise for its site design and had technically sophisticated warehouses and fulfillment operations.
EToys had a successful IPO on May 20, 1999. The offer price was $20, and it closed at $76 on the opening day. This helped generate praise for the online toy category.
Despite the positives, eToys suffered a black eye after it failed to deliver some orders in time for Christmas 1999, which ruined critical first impressions for new customers, and made many wary of using the site again. eToys’ lead was put in jeopardy after Toys "R" Us and Amazon.com formed a partnership in August 2000 – a major competitive blow to eToys going into the 2000 holiday shopping season.
What Happened: In an effort to avoid the shipping missteps of 1999, the company spent heavily to build two enormous warehouses to handle inventory and delivery. But Christmas sales for the 2000 season totaled $120 million, just half of the company’s projections, leaving the company out in the cold. Having run out of money and other funding options exhausted, eToys filed for bankruptcy in March 2001. That month, the company sold its Babycenter unit (including Parentcenter) to Johnson & Johnson for about $10 million.
In the following months, eToys sold $5.4 million worth of inventory to KB Toys, which also bought eToys’ trade names, logos, URL’s, and trademarks for $3.35 million.
Where Are They Now? The reasons behind eToys' failure are similar to those of other online retailers with plans for world domination: An immediate need for a large infrastructure and plenty of cash to support an untested business model.
“The bottom line is that eToys had the potential to be a great $500 million company but it was masquerading as a $5 billion company," Phil Polishook, vice president of marketing at eToys, tells The Standard. "I think that overall it was a well-run company, but in hindsight it built too big an infrastructure and spent too much money too quickly. Had the company grown more slowly, perhaps it could have survived the market downturn and grown into a nice $300 to $500 million company.”
Polishook is currently CEO of custom furniture maker Deskmakers. Frank Han is an entrepreneur in residence (EIR) at Redpoint Ventures & Greylock, and Toby Lenk is president of the ecommerce division at Gap Inc. Han and Lenk declined to comment when contacted by The Standard. EToys was reborn in October 2001 as a subsidiary of KB Toys. In 2004, eToys separated from KB Toys and is owned and operated by The Parent Company.
Were you an employee, customer, or client of this service? Then
Comments
I was one of the BabyCenter hosts during the eToys era. I did all my Christmas shopping there three years running; the third year was as they marked everything down to close out. I think of them every time I pull the kids in the wagon, which came from eToys. As a store, it was amazing, and they had the kind of toys in one place that you have to scour far too many web sites to find. As the people running BabyCenter, they cared about the users as well as the hosts. The community has never been the same there since eToys went under, because the same feelings about the community were not part of J&J's vision. For them, it was a business opportunity. For eToys, it was more of a family. Of all the dot-coms that went under, eToys is the one I miss the most.
The story is not in keeping with the facts. eToys went Public for nearly $8bn, but speciously, Goldman Sachs and others kept all the proceeds from $16 per share to $78 per share. The Law suit in the NY Supreme Ct (case 601805/2002 ) is a farce.
The Court, Dept of Justice, SEC, Debtor and Creditors approved of the immediate destruction of Books n Records when the bankruptcy case was filed in 2001 (eToys docket item 300)
They were going to liquidate all the assets to Bain/KB for $5.4 million, until Laser Haas's company (CLI) upped the ante and helped get back over $45 million into the company cash accounts.
It was discovered that the law firms of MNAT and TBF (counsels for Debtor and Creditor respectively) had undisclosed conflicts of interest. MNAT and TBF conspired to place a paid associate of TBF's within eToys as "wind down" coordinator, Pres, CEO and confirmed Plan administrator.
TBF, MNAT and Barry Gold all had undisclosed, conflicts of interest by with holding the fact they were connected to Bain/KB
TBF ,MNAT and Barry Gold with held this from the court as they stymied all efforts to merge eToys with other public companies and then sold the assets of eToys (their client) to their other client Bain for discounts in the tens of millions.
eToys is now Public again, where Scott Henkin of Fir Tree Value Fund, participated with the ruse, permitting Traub and Barry Gold to do their schemes.
Now Scott Henkin is a key Exec at DE Shaw
DE Shaw no owns the Parent Company ,that now owns eToys on NASDQ at stock symbol KIDS
The Delaware US Attorney, of course, has refused to prosecute this, as Colm F Connolly was a partner with the MNAT law firm in 2001, when the fraud and perjury began.
There is plenty more, if you can handle the Truth
http://fraud-corruption-mnat.townhall.com/default.aspx
There is MUCH MORE!
John Hnanicek, former CIO of eToys, is now the CIO of Knowledge Learning Corporation based in Portland, OR. KLC is a private education company -- the parent of KinderCare and Knowledge Beginnings childcare centers -- and is part of the Knowledge Universe family of companies run by Michael Milken.
We thank you all for looking at the facts and the new information you are providing. As stated there are many, many more items connected to this story.
Why did eToys drop its deal with Gap long before it filed bankruptcy?
Why did eToys go off the stupid end of logic, on a basis of projected sales of $250 million and build two 1 million sg foot operations in both "zone 1"s" when one 500,000 sg foot facility in Ohio, Arkansas, Indiana etc would have done.
How is the Bowles facility in Blairs Va connected to the owners of eToys?
Why did David Haddad and others willfully break the law and hide overseas cash assets in the millions of dollars?
How much was the overseas inventory of eToys sold for and to whom?
Why did the three gals of IT, Denis Arter and Lisa Turco go to Aruba for 3 weeks after losing their job and income in 2001?
Why did Irell & Manella speak to the WSJ and in effect, kill the deal with Scholastic to merge eToys?
There is much, much more, including the fact that the sale of eToys to Bain, DE Shaw, merged into Parent Company is rescindable as a non "bona fide" sale.
Equitable Subordination 510(c) means that eToys can be a whole company again.
Why has the Dept of Justice given implied, blanket, immunity to confessed acts of Perjury and Fraud on the Court?
There is more
www.laserhaas.wordpress.com
www.bankruptcymisconduct.com
www.wjfa.net/bk/etoys.html
So, is the Parent Company a subsidiary of the Grandparent Company?
Dear Mr. Cotriss:
I am not doubting your motivation for your story on eToys and its bankruptcy case. However, your presentation of the history ignores the most dramatic and most relevant facts showing the true context of the "disappearance" of so much shareholder value. The "Where are they now section" fails to report the closing of at least one law firm whose principals reopened shop under a new name, as well as the remarkable shuffling of lawyers among supervisory roles at the Department of Justice unit which is charged with regulating the conduct of bankruptcy professionals and duty bound to report bankruptcy fraud to prosecutors. It seems that a former law partner at one of the professional firm accused with the most egregious violations was the attorney at the U.S. Trustee's office who decided against prosecuting his "former" brothers and partners. Shouldn't he have stepped aside and let an un-conflicted lawyer make the decision?
This peculiar unit of the D.O.J. has an amazing history of ignoring crimes by entities associated with their fellow lawyers. Similar to how Eliot Spitzer (a former DOJ employee) and his relationship with organized crime (prostitution ring et al) is being spun into a sex scandal, when the real story that should be reported is Spitzer as chief NY State prosecutor was "owned" by an organized crime family. This crime family held career ending dirt on the Attorney General and Governor of New York. Just as corrupt public officials buried and ignored evidence in the eToys bankruptcy, Spitzer buried the "death threat advice" evidence delivered to his office by certified mail.
http://jaactv.com/330/site/content/view/12/30/
Here is a transcript of this evidence showing counsel to my former firm refusing to bring conflict of interest issues by bankruptcy professionals to the attention of the court, as he bring up the subject of death threats "happens all the time". There are many criminal and ethical violations evidenced by this attorney validated transcript:
http://jaactv.com/330/site/component/option,com_docman/task,doc_download...
The real question regarding cases like eToys, Worldcom / MCI, WebSci, AmmoCore, and many others: when will the DOJ and the FBI start to follow former federal Attorney General John D. Ashcroft's advice?
" No country -- certainly not the United States -- is free of corruption. In the real world of limited resources, we know that we can only detect, investigate and prosecute a small percentage of those officials who are corrupt."
" I remain convinced that there is no more important area in the fight against corruption than the challenge for us within the law enforcement and justice sectors to keep our own houses clean."
How could you forget the clash eToys had with online art group eToy over eToys' attempt to strong arm the eToy.com domain name from them? A short history of the event: http://www.rtmark.com/etoymain.html
The eToys virtual sit-in (a primitive DOS attack using real people instead of bots) is a contributor to the Christmas 1999 failure. http://www.rtmark.com/etoy.html
The US Attorney was a partner with MNAT(the law firm for the Debtor eToys) and the TBF law firm is now closed as DTV says, it merged with Dreier LLP and the attorneys continue their raids of public companies such as eToys, Kmart, FAO, Levitz, Enron and AmmoCore,
The $500 million dollar lawsuit in NY Supreme court is a dog n pony show, for MNAT represents Goldman Sachs in Delaware while TBF law firm with Barry Gold worked for Goldman Sachs controlled entities such as Cosmetics Plus. While everyone is connected to Bain.
The ex Gov may have stated he is only worth $200 million, but parties provided proof that the company he owns in Bermuda, SanKaty is worth $2 billion. Mitt also has off shore accounts in Europe as well.
That bunk that he had no idea how much money he really has is BS high time. Does anyone really believe a rich man created a "blind trust" and never asks the Trustee how the Trust is doing. Give us a break.
These guys are all above the law, where the US Attorney and MNAT parties clerked for Judges in the 3rd Circuit and the big push to get Connolly nominated as DE Dist Ct Judge is just another effort to cover up the whole affair.
How is it that the DOJ or FBI do not do something about all of this. A deliberate scheme to steal a public company and no investigation. What is really going on here?
my girlfirend was a CS manager for etoys and really liked it, but that whole christmas 99 thing was caused becasue they used the USPS for delivery, instead of UPS or FedEx, if they just woulda used ups everybody would have got there shit on time and been happy, she got very little complaints about service or quality other then there stuff not showing up in time for christmas.
It is quite possible that it was a deliberate scheme to bring eToys down. Many more stories exist out there, A team of prosecutors could make a career out of the felony violations just of this case.
Perjury, Willful Circumvention of Code/ Rule, Obstruction, MisPrison of a Felony, Failure to Declare cash assets (deliberately), False Oaths, Scheme to Fix Fee's, Collusion, Failure to review preferentials to connected parties, SEC Violations, SarOx, schemes to defraud shareholders for direct personal benefit, naked shorting, pump n dump, selling assets prior to bankruptcy for pennies on the dollar to connected friends. willful Destruction of Books n Records (prior to the court order), insider trading, options shorting, etc, etc.
The current scheme to defraud the shareholders and creditors in the NY Supreme Ct case is a way of exonerating Goldman Sachs, Fleet and Merril by a farce of a trial with a rigging in place to appear to do right. (as if no one has seen such before)
But the TIDE is turning, after we discovered that the US Attorney, Colm Connolly was a partner with the MNAT law firm ------ the Delaware Dept of Justice failure to transfer venue or appoint any independent prosecutor violates many, many, laws, Model Rules of Conduct and Ethics protocols (such as the Mandate to assign a case number to the Office of Review & Oversight or refer the issue to the Public Integrity Section)
So we sent a formal Complaint to the US Attorney's office in CA (Tom O'Brien)
and S U R P R I S E
what does Mr. O'Brien do,
he disbands the Public Corruption Unit and threatens career prosecutors with retaliation if they dare speak with the press about the real reasons for the dismantling of the Unit.
Please see L A Times Story
http://articles.latimes.com/2008/mar/20/local/me-shakeup20
After trying for several years to get the case noticed, the FBI finally calls me,
after talking to both east and west coast Special Agents extensively
the Region 3 Trustee RESIGNS
and then, less than a week later,
the FBI raids the OSC's office and home
forrrrr
destroying files on whistle blowing against the Government.
it takes a while for the wheels of justice to grind
after all the FBI is short handed these days.
Director Mueller has stated that Corruption is the number one priority behind terrorism.
We will believe him when we see the case number for eToys.
The Baltimore FBI agent stated to me that it may be a futile task, if the "fix" is in with the DOJ
So I asked him to either resign or do,
for doing not, is complicity.
It is BIG Money we are talking about here,
In eToys, Stage Stores and KB alone, there is more than $500 million in documented Fraud
and 100 acts of perjury.
As a Judge or US Trustee only gets paid $140,000 per year,
while firms like MNAT partners make a million a year
and their clients make Billions in the DE Courts
How much inducement do you think must occur to sway a Judge and US Trustee?
We cannot prove what they have received, for it is almost criminal to investigate a Judge or Trustee even though the LAW states their finances are to be an open book.
The fact is, it is a World economy out there
and even dear old Mitt, who owned and controlled Bain
has much more than $200 million in his off shore account of SanKaty
in Bermuda, that he owns 100% himself.
Much more to this Story than you could ever believe
MUCH
MORE
Let me set the record straight---the ill-conceived start of etoys
thanks to David Cotriss for producing this report
Toby Lenk found my site—Dr. Toy’s Guide www.drtoy.com the first on the internet on toys and wrote to me. He said he thought my site made sense, and he and his partner were looking for a new business venture, and asked me why I was not selling toys. I explained in email, on the phone and in person when Toby Lenk and Frank Han came to visit me in Berkeley before etoys was launched.
As Dr. Toy, the only PhD in child development and education (author of three books on toys, Smart Play Smart Toys now published in 10 countries—recently published in Greece and Israel, soon in Taiwan and Russia, and 40 years in the toy business) explained my focus was to select the best educationally oriented toys and children’s products from a wide range of companies (including active, creative and developmentally appropriate products, from small to large companies, offering low to high tech products) plus plenty of information and resources to parents.
I asked them what their goals were. They said they wanted to put toys R Us out of business. I told them that plan was a bad idea, I did not agree and I did not think it made any sense. There is value of creating strong on line and retail businesses. They elaborated on their plans. I told them it was not sensible the way they wanted to proceed, and the plans and goals were way off the charts as far as to how the toy business was structured. I told them ultimately their goals would fail.
I suggested an excellent alternative that if they had followed my advice would have supported them, and all of the independent, small specialty toy retailers around the country who did not then or inadequately now have a good web presence or technical ability to present their alternatives in the marketplace. There was an excellent way to do this as I told them by creating an infrastructure that would work and would become a “win win” for everyone. When they told me of their plans I strongly advised them against what they were planning to do, and offered what would have been a much more effective way to provide a dynamic internet toy system that would link across the country, and would have been a strong on going, excellent, and lucrative service and business that would have grown steadily, and ultimately supported the toy industry, small retailers and consumers in the long run.
Instead they had their own mind set and proceeded as they did. The details as stated are apparent. Some aspects are known only by those involved closely who would know the full details. Phil Polishook knows his part. Toby and Frank know their part. Others involved in the etoys investments and business affairs know other aspects. The truth is the entire drama caused a huge tsunami and many serious repercussions. .
Its unfortunate that while this same drama was playing out so many small retailers across the country were forced out of business, Toys R Us and Amazon forged an alliance that was broken by Amazon, plus many other excellent products and small companies that might have still been in the marketplace were stymied and stopped from finding their niche.
It’s hard to have intuition, professional approach and experience and attempt to educate people who possess MBA’s and think they have all the answers. Arrogance pushes their actions and is deleterious to others.
Finally, we are looking for a new entity to take over our program, good will, services, award program, site and promotions and strengthen all we have attempted to do over the past 15 years. We find experiences with etoys and others (those who take without compensation concepts, professional approaches and services) have been so well financed, devious and ruthless that we find it’s impossible to continue to compete and maintain the full range of services we strive for. We know independent evaluations, resources and information are important to consumers. Greed, lack of ethics, and arrogance are bad business, bad for the toy business and ultimately for this country. If anyone has suggestions we are open to hearing from you. Stevanne Auerbach, PhD/Dr Toy™ drtoy@drtoy.com
Phil is right The bottom line is that eToys had the potential to be a great $500 million company but it was masquerading as a $5 billion company," Phil Polishook, vice president of marketing at eToys, tells The Standard. "I think that overall it was a well-run company, but in hindsight it built too big an infrastructure and spent too much money too quickly. Had the company grown more slowly, perhaps it could have survived the market downturn and grown into a nice $300 to $500 million company.”
Frank han is not included in the referenced company abo ve
Stevanne: Thanks for your lengthy account. The Web has indeed proved to be a disruptive technology, not only for the toy industry, but also for booksellers, electronics retailers, and others. And who is Frank Han?
Thanks to Steveanne we have an early view of how it go to where it did. Frank Han and Toby Lenk were the [purported] founders of eToys, though Toby received most of the Press credits.
The real deal is the company can still be saved. If one honest public servant stepped up and did the right thing. The public entity was deliberately stolen and the monies/ efforts to steal can be countered, if the issues were addressed Properly. In the NY Sup Ct case of ebc 1 (eToys) v Goldman Sachs (NY Sup Ct case 601805/2002) there is an $500 to $800 million case that is continuing. However, it is being "continued" by the same perpetrators of fraud that stole all the assets "post-petition" and even after they confessed to filing false affidavits(Including the Supplemental affidavit to get the courts permission to be the counsels to sue Goldman Sachs) they are still being left in charge of the case.
The case is not being handled in good-faith, as Goldman Sachs even brought to everyone's attention the issue that Wachtel & Masyr, was involved in the Barry Gold Hiring issues....
The failure of Wachtel and Pomerantz to point out he issues to the NY Supreme Ct is a violation of 18 USC 4, breach of Model Rules of Conduct and among other Ethical breaches, the violation of 18 USC 1346 Breach of Fiduciary Duty (honest services fraud statute) has started to become the mainstay pathway.
The current push to force the Nomination of Colm F Connolly to DE Dist Ct judge is one of the ways the rogue elements in the System of Justice seek to cover up the whole affair.
The other is the push for Mitt as VP,,, for if they do this much cover up, before he is in office, what do you think will happen after he is really there?????
(Mitt owned and controlled Bain/KB that stole eToys in 2001 forward)
Want to respond to a few questions that were asked. Frank Han was Toby Lenk's partner one of them went to harvard and the other to Stanford for MBA's
Can't remember the Idea man behind them both (but his first name was Bill and I remember reading a lot about him) located in Cambridge He pushed them forward to find model for business--so they found my site, took my concepts without any compensation then or later and did not fully understand or appreciate the toy business and left many suppliers in the end in the lurch--
Now the etoys site is owned by a new entity that seems to be garnering a wife range of items..
The way business if often handled is part of the entire system of greed and corruption that seems to have a stranglehold on american business in negative ways eventually failing everyone.
Odd today to find mutual fund brokers according to WSJ do not trade in their own mutual funds they are selling. If they are asking others to buy in why don't they also invest?
Strange to find out Toby Lenk now works at the GAP on line- the owner of the GAP wants to impose his modern sanctuary of art onto the protected Presidio without consideraton of the natural planning for the entire location.--The modern museum building is better suited for waterfront or MUSEUM ROW in SOMA according to architectural experts.
eToys was dealing with Gap-Direct when eToys filed for bankruptcy.
They stopped the Gap dealings
Then, after a while, with all the books n records destroyed.
KB /Bain bought eToys and then sold eToys Direct to DE Shaw
The current Exec at DE Shaw is Scott Henkin
Funny thing is Scott Henkin was former Exec at Fir Tree Value Fund
one of the Creditors who secretly approved the the insider trading and dealings
of the TBF law firm planting a paid asociate of theirs Barry Gold to take over Toby's position as CEO
The sale of eToys assets, due to the non disclosure of conflicts of interest was NEVER a "bona fide" sale and is therefore rescindable..
The pot is boiling over and the power centers are diminishing.
It is only a matter of time before a honest public servant seizes upon the chance and goes after these guys.
TIC TOC
Geez, let it go! This comment section looks like a Home for the Bitter and Twisted. The company over-spent and went bankrupt when it missed its numbers and couldn't raise more money in tumultuous financial markets, what's so sinister about that? Was there a shooter never identified? No. Was there a mafia connection? No. How about Santa Claus? Ummm, nope.
It's over. Move on.
I beg your pardon Jason, you are not qualified to make such a statement.
Many of us participants in eToys have lost our lifes savings and the thievery is being permitted to continue when Goldman Sachs is to make a $500 million dollarr settlement, Bain is to give back $300 million for the value and Scott Henkin, Fir Tree Value and DE Shaw have a lot to settle also.
Traub and his gang continue the criminal acts
Paul Traub's partner, Tom Petters in PGW, Ubid and Fingerhut (another eToys issue)
had the FBI seize his billion dollar empire
www.petters-fraud.com
When you have lost thousands and millions and wish to just let it go
Then just go away
But don't you dare step up and tell us harmed to lay down and be silent for your Comfort!
Post new comment