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January 18, 2012

When a bad business model breaks up.

The daily deal business has it’s share of challenges.  One particular challenge is merchants providing products to the daily deal companies who themselves have shaky financials or questionable business models.  One huge blow up last year was Peanut Labs project WeeklyCinema.  WC tried to build a business model based on breakage (people not redeeming their coupons for full value or fast enough).  They lost the bet. Another group, Digital Doorstep, came along and tried the same thing with other gift cards (and Fandango).  It seems Digital Doorstep didn’t know how to do math either.  Tippr received this from them today as they filed for Bankruptcy. 

All,

It is with great regret we announce to you the closure of Digital Doorstep through Chapter 7 Bankruptcy.

Digital Doorstep has experienced fatal technology challenges to our redemption system causing severe late payment of over $3 Million in past due receivables by 23 Digital Doorstep Clients. Digital Doorstep's clients refusal to pay for services rendered has left Digital Doorstep in a position where it must formally send consumers seeking their product back to the Daily Deal site they purchased the product on.

For the next 45 days Digital Doorstep will continue to capture all consumer information when seeking redemption and forward consumer code request for your deals directly to you weekly from codes@digitaldoorstep.com

Launched in February of 2011, over 1 Million consumers have purchased Digital Doorstep "Experiences" ranging from Date Night to Girls Day Out and many more. Digital Doorstep has successfully serviced on the behalf of our daily deal clients over 600,000 consumers in the past 120 days. We pride ourselves in customer service and are shutting down redemptions to prevent further frustration by consumers.

We respectfully deny any attempts to "increase breakage" or to delay consumers in any manner whatsoever. Our redemption model has not changed from day one, it is simply a process of entering your code on our website and having the cards or codes emailed or postal mailed to you. Prior to our technology crash and late payment issues Digital Doorstep flawlessly serviced over 500,000 codes through our redemption process.

A company of our size simply cannot sustain $3 Million in unpaid accounts receivable.

Effective immediately Digital Doorstep will direct all consumers who have purchased a Digital Doorstep experience through your website  to seek an immediate refund or request direct delivery of their "experience" from your site.

Digital Doorstep has listed you as a potential creditor and you will have the opportunity in the next 45 days to ensure your claim is paid through our asset liquidation. The U.S. Bankruptcy court and a U.S. Bankruptcy trustee will be responsible for liquidating Digital Doorstep's over $3 Million in past due receivables, undelivered inventory of $2 Million in gift cards and digital codes,  and finally our database of over 700,000 active buyers to distribute funds to our clients who have paid in full and have open redemptions in our system.

For the forseeable future, Digital Doorstep will handle all client inquiries through our attorney Tom Polis and all consumer inquiries at info@digitaldoorstep.com

Thomas J. Polis, Esq. 
Polis & Associates, APLC
19800 MacArthur Blvd., Ste. 1000
Irvine, CA 92612

Formal bankruptcy filing information, including case number and details on the claim process will be forthcoming.

We sincerely thank you for the opportunity to have partnered together and will cooperate fully with the U.S. Trustee to ensure any and all financial impact to your company is handled through an expedited asset liquidation process.

Sincerely

Digital Doorstep Team

Posted by Martin at 8:33 AM | Comments (1) | TrackBack