Capazoo or Crapazoo?

Posted on December 19, 2007
Filed Under Web 2.0 Kool Aid |

I was intrigued when I read a December 10 article on TechCrunch about a Canadian social networking startup named Capazoo. The article mentioned that the company had raised no less than $25 million - all from private investors and not VCs. Quite an accomplishment. The name Capazoo sounded familiar, however, and sure enough, there was a reason - Capazoo had launched a year earlier as a Flash social network that didn’t go anywhere.

Further intrigued, I tried to find out more about Capazoo and the people behind it, especially after reading a TechCrunch comment that made some serious allegations:

Unfortunately this is a ponzi scheme on a number of levels.

The company (from my private sources who have seen the deal) raised $8 million on a pre-money $76 million from private angel investors who knew nothing about tech. This primarily came from famous sports personalities who knew nothing about investing in startups and were chasing the exhaust & hype of the MySpace acquisition going back to 2005.

They then raised another $7-8 million in cash from another group of similar angels at a valuation that was over $125 million.

They used the hype of famous people investing to get other famous people investing while spending their cash at pre-bubble levels.

A bunch of unsophisticated investors have thrown close to $15 million of real cash that my sources say has been spent. There money is ALL GONE.

The company is on the verge of missing payrolls, since they staffed up last year to more then a hundred employees and a burn rate of over $1.3 million a month they have spent almost all the real cash they raised.

No VCs will touch them due to the crazy valuations and a cap table that includes hundreds of small angel investors throwing in $100-$200k chunks.

They now run around raising more funds on a month to month basis to keep the doors open, all the while they have less then 10,000 members on the site and continue to burn huge amounts of cash.

This is without assessing the merits of the idea which combines as pointed out by Duncan basic social networking features with an AllAdvantage multi-level marketing scheme.

Their place in the deadpool is coming a lot quicker then you may have realized.

My bet for the deadpool insertion is by April 2008 they will be gone.

Other posts (like this one) make similar claims and indicating that the president of Capazoo is a former professional athlete seem to give credence to the possibility that “famous sports personalities” did make up some of Capazoo’s investors.

Regardless of these claims, however, the fact that Capazoo has raised such a large amount of money from unknown sources seemed odd, especially given the fact that the company apparently failed miserably in its first attempt and currently appears to have a registered userbase in the 5 figure range, hardly making it a bonafide player in the social networking space. Odder was the fact that Capazoo signed a large deal with infrastructure provider SAVVIS to “sustain the company’s rapid growth” which just didn’t seem to exist. And oddest of all was that the names of the people who appear to make up Capazoo’s management team don’t seem to have any past associations of note in the technology or consumer Internet markets.

At worst, I thought, Capazoo is playing a “pump-and-dump-style” PR game hoping to create the impression that it’s a more viable player in the social networking space than it currently is. At best, I thought, Capazoo’s founders have big dreams, at least $25 million worth of good connections and are going to go balls out trying to compete in the oversaturated social networking space regardless of the slim odds. And then I noticed Capazoo’s press release from October 26, 2007:


Offer Would Cover Housing, Rehab, Compensation for Lohan’s Migration to

New York, October 26 – Capazoo ( today announced their full and unequivocal support for embattled starlet Lindsay Lohan by offering her a new online home (and income) via their unique social networking and online entertainment site.

Details of the proposed agreement include one year’s rent for a luxury apartment in Manhattan or – should matters take another turn for the worst – funds for a fourth rehab stint.

Ms. Lohan would also benefit from Capazoo’s social networking model, which allows members to monetize their online popularity through the practices of Tipping and referral bonuses. Capazoo executives estimate that, should Ms. Lohan abandon her much ballyhooed MySpace page and move to Capazoo, she could garner over $1,000,000 or more within a few months of operation.

One of Capazoo’s primary missions is the support of charitable organizations and causes. Given Ms. Lohan’s much-publicized need for financial and moral support, Capazoo executives extended this offer of support in return for her joining their online community.

“We believe Ms. Lohan is talented, beautiful and deserves support as she reassembles her life,” stated Luc Verville, CEO of Capazoo. “ is the perfect platform for Ms. Lohan to monetize the re-launch of her career.”

As a means of expressing their desire to work with Ms. Lohan, Capazoo recently launched the “Help Lindsay” page ( on their site, allowing Members and Lindsay’s fans to post to the site, Tip generously to generate immediate income for Ms. Lohan, and beseech her to join their burgeoning Web 2.0 community.

Huh? Perhaps Capazoo’s recent tie-up with National Lampoon is very appropriate because after reading this press release I could only think one thing: Capazoo is a joke.

Not only does the press release itself remind me of something I might write as parody, but it’s almost mind-boggling that Capazoo executives would seriously “estimate” that Lohan could make “$1,000,000 or more within a few months of operation” on their “burgeoning Web 2.0 community” which, at the time, had only launched four days earlier.

But I digress. If Capazoo is making its way to the deadpool, at least it seems it’s going happen in an entertaining fashion - something suit and tie VCs would never allow! I can only hope that some of the company’s burn goes to future press releases of an equally-humorous nature.

Speaking of which: Amy Winehouse was just arrested. I think there might be an opportunity here for Capazoo. Since her drunken performance at a concert cut her tour short, she’s out some money. What better place to relaunch her career and recoup some of that lost money than at the social network that seems to know all about relaunches: Capazoo.

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17 Responses to “Capazoo or Crapazoo?”

  1. Robert Dobilina on December 19th, 2007 11:33 am

    Capazoo is more real than you think. Folks are already making money from their content.

  2. Debbie Davies on December 19th, 2007 1:01 pm

    Amy Winehouse is a super star. She’s the highest debuting British female artist in the history of the US albums chart. Her album ‘Back to Black’ is the best selling album of 2007. She’s nominated for six Grammys.

  3. Matt A.* on December 19th, 2007 2:05 pm


    Either you are affiliated with Crapazoo in some way or… you’re very naive, to put it nicely.

  4. Advice for PR Firms that Shill on Blogs : The Drama 2.0 Show on December 19th, 2007 2:16 pm

    […] My post on Canadian startup Capazoo received the following comment from a person identifying himself as “Robert Dobilina”: Capazoo is more real than you think. Folks are already making money from their content. […]

  5. Drama 2.0 on December 19th, 2007 2:20 pm

    Robert: perhaps you might want to change your comment to “Capazoo is more real than you think. PR firms are already making money from their business.”

    Debbie: a drunk is still a drunk. :)

    Matt A: “Robert” works for a PR firm that represents Capazoo. See my latest post.

  6. Matthew on December 20th, 2007 9:51 am

    The great thing about the Internet is that there is more information and coverage available to users. The bad news is that every Tom, Dick and Harry wants to call themselves a journalist.

    I am the Director of Communications for and am disappointed at the lack of basing, research and factual evidence in this so-called story.

    At Capazoo, we are very proud of our achievements over the last 8 months or so. Yes, we had a previous version of the site launched in 2006.

    However, as is the case with any start-up, there is a period of trial and error. We have learned greatly from our mistakes and have focused our efforts incredibly over the last 8 months. Our site was built entirely in-house and it’s been very well received by our Members thus far.

    We are not in danger of not making any payroll, contrary to the unfounded rumors that have been spread. And we have an open door policy at our headquarters. We invite ANY journalist who wants to cover our story, to either visit us in person or speak to our President on the telephone.

    Iconic comedy company National Lampoon recently acquired equity in our site and we couldn’t be prouder! We have several major partnerships in place and on the horizon - further demonstrating our credibility, stability and marketability.

    In any new venture and start-up, there’s a trial and error process - especially when you’re doing something that’s never been done before.

    There’s nothing scheme-like about our company and I sincerely hope that anyone who takes an interest in contacts me for more information, rather than ragging on an entity that is truly unique and welcoming of all.

    Everyone is entitled to their opinion, but when opinion is disguised as journalism, it can improperly and unfairly corrupt the public as a whole.

    As you can see, I am passionate about what we are doing here, and I would think that many of you would welcome a site that appreciates and values you more than any other in the industry.

    If you would like more information on Capazoo, simply message me on my page - … Happy Holidays everyone.

  7. Drama 2.0 on December 20th, 2007 12:08 pm

    Matthew: please save the bullshit and answer the following:

    1. Why is your PR firm shilling on blogs like this?
    2. Why in the world would you issue a press release like the Lindsay Lohan one? It’s just not the type of thing one typically sees from a company with “credibility, stability and marketability.”

    Please note that I have not yet called Capazoo a “scheme” (it looks like you’ve copied and pasted a lot of the text from your TechCrunch comment). In case you didn’t read my post, I personally made the following claims:

    1. Your company didn’t have much success in its first go-round.
    2. It appears that you have a registered userbase in the 5 figure range.
    3. Saying that Capazoo is experiencing “rapid growth” (the type that would justify a multi-million dollar deal with SAVVIS) seems quite an overstatement. Just look at your Alexa and Compete charts.
    4. Your two top executives (Grant Carter and Luc Verville) do not seem to have any past connections of note in the technology or consumer Internet spaces.

    You have already acknowledged that my first claim was accurate. If you’d like to provide evidence refuting the other three, I’m waiting. In the meantime, maybe you should talk to your PR firm about their blatant and ineffective shilling.

  8. Planète 2.0 on December 24th, 2007 10:26 am

    Capazoo pr Crapazoo?

    Selon Drama 2.0, via Mashable,  le startup canadien Capazoo fait partie des “dumbest startups of 2007″.
    “While Canadian social network Capazoo might not have the dumbest concept of the year (a social network with an internal economy)…

  9. veejaytsunamix on January 11th, 2008 1:29 pm

    I’ve worked as a consultant (web strategist) for crapazoo.
    I’m still waiting to get paid…
    Obiously they didn’t (like) take my advice.
    Now on myspace I have more friend then they have members & I work alone without founding.

    We’ll be at Sundance in a week!
    Looking for alternative booking…
    Have projector & might end up in a bar,
    or even on the street (have generator)!
    We are in Chicago presently!
    We’ll be in California, in February,
    producing TsunaMiXes in HD for the Next Wave!
    This is real & I made it happend without a robot.

  10. nicole bavier on January 11th, 2008 6:07 pm

    I have read some of the comments which I find disapointing since the negative views are with merit. I have joined and found the site great and it is only in its infancy. Yes i am certain there will be issues as any start up business has but give them a break

  11. Cant say ;) on January 11th, 2008 9:54 pm

    Dear Drama 2.0

    I want to congratulate you on actually writing 100% fact. 95% of things I read that I am VERY familiar with seem to be embellished, not this time :). You should go tell your boss that he owes you a nice lunch. is a scheme, no doubt.

    Founder Luc Verville has already been proven a thief and had to pay back 400k a few years ugo. (look it up) :P

    His brother Michelle Verville co founder, Has a very large cocaine problem. I would say a few grams per day, and is having a new baby with a 19 year old waitress. He is 43 (props)

    The foundation of this highly ambitious startup from Montreal is built on a con artist and a coke head. (and now there’s million bucks spent and not a red cent of revenue)

    I will keep going….

    Luc Verville and Michelle Verville’s mother worked at the office, she has been fired by her son. (stab his own mother in the back)

    Michelle Verville is now suing his brother Luc Verville .

    I am finished with the facts, if there is some PR pup that wants to go over anything that I have mentioned I would be very happy :) Look it up.

    My opinion;

    The Lindsey lohan idea is cute, but stop doing coke. This might have happened if you had access personal access to celebrities rather than emailing them some BS about a condo in NYC! OMG !
    The girl wants to lay low, and why dont you tell her what you try and tell inverters “she could make a million bucks in 4 months” “COULD”

    Thant was pathetic!!!!

    ***note to investors***

    Call up some local’s to poney up your cash back :)

    I wish the investors best of luck and capazoo.

    Anyone that is trying to dig themselves out of any hole because of capazoo will not find it by getting in deeper. Its over.

    Well done 2.0

  12. rconhan on January 12th, 2008 10:19 am

    I cannot understand why the negative about a new business. There are always issues even Tim Hortons are closing stores and so is Starbucks but overall they are a success. I am not a member but I will be, frankly I like the idea of a Montreal company coming up with an alternative to Facebook.
    Lastly there is a company that I am aware of that is about to bring a ton of business content to Capazoo and I would not be surprise if this does not happen within the week. It will change the whole optics of capazoo for the best.

  13. Drama 2.0 on January 12th, 2008 11:50 am

    “nicole bavier” and “rconhan” are the same person. This shill has a static IP that actually appears to reveal the name of the person who “owns” the connection.

    If I continue to get shill comments like this, I’m going to turn comments off. What a sad state of affairs.

  14. Mario on January 15th, 2008 11:02 pm

    I didn’t know he was on coke. That explains why he looked so dazed every time i would talk to him. That’s wild. You have to be stoned to spend the money they spent. 100+ employees for a startup. Thats why his mother would always bring cookies to the office. The poor guy had the munchies.

  15. tc4y on January 18th, 2008 12:05 pm

    Drama 2.0,

    I used to be an employee @ Crapazoo and can tell you that most of management(so called) are a joke(im not a discruntled ex-employee by the way). Last month, December 2007, they laid off half of their staff from their customer service department(15 employees), and In January 2008 they laid off all but 6 employees from the rest of the customer service department. They are doing so bad that they didnt have the money to pay their staff. No members, no content, no investors, so no staff. The HR department of Crapazoo consists of a person who used to work in retail and has no experience in HR and has never gone to school for it, no degree no nothing.

    They didnt even pay their staff for coffee breaks which is against the law in Quebec,Canada!!!!!! They owe their customer service staff(ex-staff) thousands of dollars for that and i hear that a file has been opened at the Normes Du Travail so that the company can repay those employees. That there is a scar for life.

    The whole concept would have been good if only they had qualified people running the place. Just HR alone is a Daycare!!!!

    The mother of Luc was insane, Michel was fired by Luc and the investors, they spent all of their money on software and lucs boat…..

    I give them 3 months till they fold.

  16. rconhan on January 20th, 2008 8:58 am

    In regards to being a shill,I am anything but. I am using a computer that is part of a co-op so if anyone else happens to send you anything from this computer they do so independently.
    Let me direct your anger!
    First of all it is well know when Wal mart was getting sued for sexual harassment and not allowing women to move up within the organization
    Hilary Clinton was on the Board of directors and until she married Billybob she was a republican yet through all the trash she is almost president of the US.
    YouTube started in 2005 and had no advertisers and tons of problems until Google bought them.
    The point is there are issues with all sorts of success stories so why are you wasting so much time trashing a new company. It is emotionally draining and unproductive.
    Lastly I joined Capazoo only yesterday because I am in the spirit of supporting them plus I like their site.
    Now I know that when anyone makes a positive statement about them you trash them too as though nobody can have an opinion but you.
    Two positive facts that even you cannot dispute.
    Since I sent in my first comment the company I mentioned has gone on board with Capazoo and brought 25 businesses with them.
    the lagest radio station in quebec has teamed up with them to start regular events with Capazoo which will be starting in March . You will here announcements next month. I know this because my girlfriend works of the ad company of the radio station.
    Relax and find another cause like problems in China and Cuba

  17. Drama 2.0 on January 20th, 2008 11:35 am

    rconhan (or should I just call you David Nancoff): Today is January 20. You only joined Capazoo yesterday? That’s funny, seeing that your first comments were posted on January 12.

    You seem a little too invested in supporting Capazoo for somebody who just joined and happens to “like their site.”

    Why so many people seem to be wasting their time either defending or criticizing this startup is beyond me. Frankly, it’s clear it’s not going anywhere and it won’t be deserving of another post on this blog unless it goes into the deadpool in entertaining fashion.

    Closing comments on this one…

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    Drama 2.0 spikes the Web 2.0 kool aid by providing a critical analysis of Web 2.0 startups and the impact of Web 2.0 on the media industry. Other topics are explored when Drama 2.0 has a slight buzz. Read more about the Internet's version of Keyser Söze here.

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