As much as you might be satisfied to never leave your apartment, even Manhattan isn't big enough for Kozmo.com. The company is currently in the process of expanding to Seattle, and by the end of 1999, the company hopes to add San Francisco, Boston, Washington, D.C., and Chicago to its list of cities served. That's why the company is trying to land $10 to $20 million in financing over the next few months.

"The biggest challenge is scaling up and handling the growth as we expand," said co-founder and CEO Joseph Park. "We definitely have the ground work going."

Groundwork is a good word for it. Unlike many e-tailers, which simply have to get the product to UPS, USPS or FedEx, the folks at Kozmo.com must hand-deliver their video to the customer in 60 minutes. Then they have to get it back. So far, that has involved operating two warehouses -- one in the Village and the other on the Upper West Side -- and paying bicycle couriers an hourly wage to handle drop-offs and pick-ups. Kozmo.com has also put together a network of pizza places, coffee shops, and the like, that have agreed to allow Kozmo.com customers to drop off their videos in their stores. Then the delivery drivers make the rounds to pick them up.

"A lot of people think that the Internet and online is a virtual world," said Park, "but there are a lot of aspects of traditional retail that you have to use."

Park, 27, and his college buddy from NYU, Yong Kang, 26, started Kozmo.com in 1997. At the time, both were bankers, Park having gone to work for Goldman Sachs in Los Angeles and Kang having joined the mergers and acquisitions department of Toronto Dominion Bank. In March of 1998, they launched the company's Website, delivering to lower Manhattan. Now, with about 35 full-time workers and 90 part-time delivery folks, Kozmo.com covers the whole island.

Those workers are possibly the biggest cost for Kozmo.com. Unlike some Internet companies, for whom scaling up for more customers simply involves adding a couple of servers, Kozmo.com must constantly face the challenge of deploying real, live, paid-by-the-hour workers, 50 or 60 of whom might be working at one time on the busiest days. There's no delivery charge, though, (except $1 for pick-ups) to help Kozmo.com defray the expenses. The company makes its money from $4 or $4.50 rental fees and from the mark-up on sales of videos, games, and snacks.

The company's biggest competitors, Park reckons, are grocery delivery companies like Peapod or Seattle-based HomeGrocer, which has just received $42.5 million in financing from Amazon.com. Park says Kozmo.com has an advantage in that its user base is larger than HomeGrocer's, although he won't divulge how many customers use the service. He also points out that Kozmo.com doesn't have to stock products (like milk) that hurt the online grocery stores' bottom line. "We don't want to replace the grocery store," said Park, "so we don't have to carry the low margin products." Still, Kozmo.com has some challenges the grocery delivery folks don't. It must get products hand-delivered in about an hour. Grocery deliver companies typically drop off orders according to a schedule or send non-perishable foods via FedEx or UPS. Kosmo.com must also retrieve the rented videos and games on their due date.

Even if the systems to handle these difficulties are in place in Manhattan, the company will face all new challenges in Seattle, and in the other cities Kozmo.com plans to tackle. Unlike Manhattan, these places are significantly more spread out -- 95 percent of deliveries will be done by car, says Park -- which will give the company a few more lessons to learn before things start running smoothly.

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Kozmo.com had 1998 revenues of $160,000. So far, the company has been financed with nearly $4.5 million dollars in angel money, but Park hopes to interest strategic investors and VCs in getting in on the expansion plans.

"We've really just scratched the surface," said Park. "There are one and a half million people who live in Manhattan today, and we're nowhere near that level."