Virtually from the beginning, wireless startup Amp'd Mobile seemed poised for greatness. When it formed in December 2003, its senior management team, including CEO Peter Adderton, was still glowing from its smashing success with wireless provider Boost Mobile. That company targeted multicultural youth, and Adderton successfully sold it to Nextel in October 2003.

Amp'd, the sequel that couldn't miss, was pitched to draw 18- to 25- year-olds who wanted to use their phones as entertainment devices. Amp'd invested heavily in original content and contracted with Verizon Wireless to operate over its broadband network. The startup promised to bring "a more relevant, personal experience to the wireless lifestyle with unique music, video, community, entertainment, sports, and gaming offerings."

Amp'd quickly became a darling of the venture-capital set. Columbia Capital (which had funded Nextel and XM), Highland Capital Partners (MapQuest), and Redpoint Ventures (MySpace), as well as corporate investors such as Intel, MTV Networks, Qualcomm, and Universal Music Group, provided Amp'd with $360 million in equity investments, plus another $31 million in debt financing.

A little over a year after its launch, Amp'd publicly declared that its model was working. It had attracted well over 100,000 subscribers and, in a January 2007 press release, CEO Adderton crowed, "Amp'd has always said mobile entertainment has the potential to change the way the world amuses itself. Our strong performance to date, unique entertainment offerings, and expansion into international markets proves we're on our way." The release cited average revenue per user exceeding $30 a month for content and data, compared to an industry average of $6.80. And content alone amounted to nearly 60% of that $30, compared to 25% for other carriers. Amp'd content--including Ultimate Fighting Championship (UFC) events, Supercross racing, and the series Lil' Bush (which proved so popular, Comedy Central turned it into a TV show)--made up 39% of its video downloads.

So when the company filed for Chapter 11 bankruptcy protection on June 1, one could be forgiven for wondering, What happened? How could a company with so much going for it burn through such a huge sum in less than two years? Executives at Amp'd declined to comment, and the company released a statement vowing to reemerge from bankruptcy after restructuring its back-end operations. However, at press time, the company announced that it would cease operations on July 24.

Adderton, who parted ways with the company shortly after the company filed for Chapter 11, did not respond to our interview request, nor did the company's major investors. But the tale told in the company's bankruptcy filings--and reinforced by interviews with a half-dozen former Amp'd executives (who spoke on condition of anonymity) and by comments from customers and employees on the Internet--lays out how appallingly poor execution and profligate spending can cripple a visionary company.

The official line: The company's problems began in early 2007. That's when Amp'd became aware of "customer collection problems at rates that were higher than industry norms," according to an affidavit filed by Amp'd president Bill Stone as part of the bankruptcy. By May, "nonpaying customers approached 80,000," out of an estimated total customer base of 175,000. As Tole Hart, a Gartner research director, puts it, "You can't give away your service to half your customers for free."