Kagi

» see kagi.com as it lived, on the wayback machine

~ the last words ~

Kagi opened in September 1994 out of a mailbox address on Walnut Street in Berkeley, California. Kee Nethery had spent the previous six years designing AppleTalk networks and had done time at Apple and at Farallon, and the problem he picked next was not a networking problem at all. A programmer in one country had written something good and a person in another country wanted to pay for it, with no sane way for the money to cross.

Shareware ran on the honor system and the honor system ran on friction. You downloaded the thing, you used it, and if you liked it you were supposed to send the author money. Most people did not, and plenty of the ones who wanted to simply could not. Kagi's answer was a small Register program that authors bundled with their software. You filled in a form and picked a payment method, and the program scrambled your card number into a block of text you could email or drop in the post. Once a month the author got a single payment from Kagi with a list of every transaction behind it.

I was fourteen in 1998, on a 33.6k modem in Turkey, and the paying half of shareware was closed to me. Downloading was easy. Sending forty dollars to an author in Australia was not something a kid with no card and no dollar account could do, so the nag screens stayed exactly where they were. Kagi was built precisely for the person I was not yet.

~ the record ~

~ how the money moved ~

The register form took a US check or cash in whatever currency you had lying around, alongside the card networks and an invoice line for people who had to run the purchase past accounts payable. First Virtual was on the list too, which dates the thing precisely. Kagi held the merchant account so the author did not have to, and ran the store page on top of it.

That is why so many small Mac developers never left. An author in 1999 who wanted to take cards directly needed a merchant account and a tolerance for chargeback paperwork, and Kagi charged a cut to make both somebody else's problem. By the end the company counted over three thousand active suppliers and more than six thousand product titles.

~ the ten year hole ~

Around 2006 Kagi took on a legal advice outfit selling a monthly subscription, and it grew into the largest client on the books at roughly twenty thousand transactions a month. The sales tactics were aggressive enough that customers disputed the charges with their banks instead of asking for a refund, and every dispute cost Kagi a fee plus a mark against its standing with the card networks. When the client stopped covering what it owed, Kagi was left holding about six hundred thousand dollars. Nethery spent the next ten years trying to pay it down.

~ what went down with it ~

The notice went up on the homepage and that was the warning. "For the past ten years Kagi has been struggling to recover from financial losses due to a supplier fraud situation," it read. "We have reduced the debt but the recovery has failed and forced us to close. We are sorry we failed you." Operations ceased at midnight on 31 July 2016, just short of twenty two years in business.

The company went into an assignment for the benefit of creditors, which put a third party in charge of carving up what was left. Around two thousand clients were owed their June and July money, and the people running the estate told them to expect six months before anyone could say what fraction they might see. Developers who had routed every sale through Kagi since the nineties found out the same morning as everybody else.

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