The CueCat: How $185 Million Vanished on a Cat-Shaped Barcode Scanner

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In 2000, subscribers to Forbes and Wired opened their mailboxes to find a plastic barcode scanner shaped like a cat that they had never ordered. The CueCat, made by Digital Convergence Corporation, promised to spare people the labor of typing web addresses: swipe a printed code in a magazine and your desktop browser would load the page. Investors including Belo Corporation, RadioShack, Young and Rubicam, and Coca-Cola poured in $185 million to make it happen.

This episode follows the device from boardroom fantasy to 30 cent surplus. Print executives wanted proof that readers acted on ads, and they ignored what the product asked of people: a keyboard wedge spliced into the PS/2 port, an hour of registration, an invasive survey, and a unique serial number tying every scan to a real identity. Hackers fought back, the company threatened them, a data leak followed, and the whole venture collapsed within a year.

• Each CueCat cost about $6.50 to make, so the backers gave them away. Forbes mailed 830,000, Wired mailed more than 500,000, and RadioShack handed them out at the register.
• For television, users were expected to run a 3.5mm audio cable from the TV to the computer's sound card so inaudible tones in commercials could open web pages.
• Hobbyists launched a movement called declawing the cat, writing open source drivers and cutting a trace on the circuit board to disable the serial number. The company answered with legal threats, claiming users did not own the devices.
• In September 2000 a plain text file exposed the personal details of roughly 140,000 registered users on a public server. The apology came with a $10 RadioShack gift certificate.
• By May 2001 most of the 225 employees were gone, Belo wrote off its $37.5 million stake that September, and in June 2005 a liquidator offered 2 million units at about 30 cents each.