ZapMe!

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

~ the eulogy ~

American public schools in the late nineties had a computer problem that was mostly a budget problem, and a company in California offered to make it go away. Turkish state schools at that same moment did not have a lab for anybody to advertise into. The entire ZapMe proposition needed a building full of teenagers with a screen each, which is a thing you have to already own before someone can sell it back to you.

ZapMe! Corporation launched in 1996 out of San Ramon, run by Lance Mortensen, who had made his money in pasta before this. What a school got was a computer lab with a satellite dish on the roof and a connection that cost the district nothing to run. What the school gave back was screen space. Students browsed through ZapMe's own software, which kept a permanent panel of advertising in the corner of every page, and the company sold that panel.

It moved fast. Over roughly three years ZapMe put 25,000 computers into about 2,000 schools, and by the end of the third quarter of 2000 the network reached 2,300 schools across 45 states and something close to two million students. Dell put money in. So did Sylvan Ventures, the investment arm of a tutoring company. The stock touched $12.50 in november 1999 and was at 96 cents twelve months later.

The opposition was organized and it worked. Commercial Alert called the company a corporate predator in 1998, and Junkbusters pushed the same argument from a different side: an audience of minors, required by law to be in that room, looking at advertising nobody had asked them about. What alarmed people more was the data, because the software also collected information on the children using it. Legislators started asking whether any of it should be permitted at all.

~ the dossier ~

~ how it landed ~

For a school with no money the deal was hard to refuse and hard to read properly. Districts spent their own funds on wiring and on preparing rooms for equipment that had been described to them as free, which is how a gift ends up on a budget line.

ZapMe was running at about $20 million a quarter to deploy and maintain that network, a figure the company put in its own SEC filing in october 2000. No version of the advertising business covered it. The investors could see the political risk arriving at roughly the same speed as the bills.

~ the funny part ~

Having given the computers away, the company asked for them back. Schools were told in late 2000 that they could pay for the equipment by february or return it. Districts that had already installed everything, some of them thousands of dollars deep in preparing the room, were left choosing between an invoice they had never budgeted for and an empty lab with cable running to nothing.

About a thousand more schools had signed up and were still waiting for hardware when installations stopped. Those ones got nothing at all.

~ the day it died ~

Gilat Satellite Networks, the Israeli company whose Spacenet subsidiary had been carrying ZapMe's traffic the whole time, offered around $50 million for 51 percent of the stock in late 2000 and took control on 11 january 2001. What Gilat wanted was the browser technology and the network underneath, for selling private communications networks to businesses.

The company renamed itself rStar and left education. The free service to schools ended in february 2001, four years after the first lab went in. Mortensen's public reasoning was that continuing was too risky for shareholders with legislators circling the advertising model, which is an honest answer and also the entire critique: the schools were never the customer.

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