It sounds like they were excited to hear about as you said "extending your tenacles into the offline world." You probably didn't hit the notes they were hoping for. I know the article was to serve as more of an informative on the interview process but I'm wondering why you didn't take the acceptance as a sign that you should continue you working on the idea. Sure it might need some restructuring but that's where the persistence comes in.

Great article though regardless. Oh yeah, and the design/logo sucked ;)