The (One-Sided) Anatomy Of A Startup Failure

PodTech sells for $500 k

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PodTech.net had a lot of buzz around it primarily because blogger Robert Scoble left the sturdy walls of Microsoft to be a part of it. There were others with nice pedigrees, too, and $7.5 million in VC funding spelled sure success.

It must not have spelled it in English, though. This week, PodTech sold to ViewPartner, a company that doesn’t even seem to have a website, for under $500,000, or enough to purchase a one-bedroom condo in San Francisco.

PodTech sells for $500 k
Robert Scoble

How does that happen? you want to know. Everybody wants to know, which is why this FriendFeed thread has been highly viewed. Scoble’s been on hand giving lots of nonspecific insight as the rest await former PodTech CEO John Furrier to blog his side of things. One thing’s clear from Scoble’s posting: he definitely thinks it’s the leadership’s fault.

But that’s an easy bet, right?

There had been definite signs of trouble for PodTech over the past year. Transparency has its benefits, but sometimes that window into the company is actually a hole in a leaky boat. Besides few people being really clear about what, exactly, PodTech was about—video, it appears, long form, and technology, and Scoble’s there, making videos too long to watch right now. . .—a strange tweet in the steam of August 2007 rang alarm bells loud enough to be temporarily noticeable.

It could be, the blogosphere took it the wrong way. Chuck Olsen’s now blogospherically infamous tweet read this way:

Just got off the phone with Furrier – it’s a shitbag salad over there… Scoble’s out

For a solid weekend, bloggers dined on that, erm, shitbag salad, digesting it as Scoble’s termination or resignation, both of which he denied, before taking a small blogging hiatus. Then Furrier was forced out by the board, Scoble really did leave four months later, and so had everybody else anybody’d ever heard of.

Eventually, you just stopped hearing of PodTech altogether. That salad Olsen mentioned now appears to have had more ingredients than Furrier and Scoble. According to Scoble, there were lots of problems, including revenue, collective vision, and utilizing talent.

Scoble, from FriendFeed:

". . .almost all of the talent left. What’s left now is not much that’s worth much. The revenues came because of our social media leadership. That’s what Furrier really had in his hands. Owyang. Me. Cunningham. Jones. Gillmor. The rest of the stuff was a pipe dream that didn’t lead anywhere, which is really why the company burned through $7 million (plus several million in revenues)."

Other revealing comments suggest Scoble didn’t see eye-to-eye with (other) leadership, perhaps even with Furrier, though he refuses to give specifics and burn his bridges (probably a smart move). In a nutshell, he advised any startup-minded person watching this saga to have certain ducks in a row (paraphrased below), we’ll call them the Seven Habits of Highly Effective Startups:

  1. Revenue is pretty important. (For any old-schooler, that might seem obvious, but success stories like YouTube and Facebook have belied this age-old business tenet.)
  2. The ones who bring in the money, should be the ones in charge.
  3. Have a vision. Make sure everybody in the company shares that vision.
  4. When it comes to firing idiots, there’s no time like the present.
  5. You need good metrics/measurements to improve.
  6. Listen to your star players.
  7. Don’t fire a CEO without having a good replacement.

Furrier weighed in on the FriendFeed thread with a promise to blog more about what exactly happened with PodTech, and also took the time to note Scoble’s assessment may not match his own.

"There are many lessons," said Furrier. "Scoble’s view is from his perspective but there is a big picture that goes way beyond Scoble’s view and that has to do with building a company from a zero stage. I’ve moved on from a year ago after I was forced out by the board. We made some mistakes but directionally correct. Sure if I had a mulligan things might be different but a business strategy, financing strategy, and team strategy are part of the story."

And now, we wait to find out more. Sometimes there are better lessons in failure than in success.




The (One-Sided) Anatomy Of A Startup Failure
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  • Guest

    From what I’m hearing is that the vcs didn’t support the company

  • http://llcoperatingagreement.blogspot.com/ Joe

    Highly, highly disagree with #2–

    >>2. The ones who bring in the money, should be the ones in charge.<<

    A rainmaker is not necessarily a great manager.  In fact, rainmakers are often shitty managers.  Further, giving rainmakers management authority may dilute their value at rainmaking because they have less time to devote to it.  The trick: keeping rainmakers happy WITHOUT allowing them to grab the ship’s controls.  I found that compensation talks often even more than control.  Can you say performance based stock options?

    • http://www.brane.com.br Peter (IMC)

      I do agree that the invester shouldn’t be in full controll, but at the same time they should be able to set some principle rules that can not be ignored.

      I’d go for rules like:

      • As soon as you have the product ready for sales, START SELLING it and DON’T WASTE TIME making it even better. (you can do that also while you´re already selling)
      • Get a marketing director that knows how to test what works and what doesn’t work. (in marketing AND sales)
      • Use feedback from sales, marketing and customers to improve the product
      • As soon as you start getting revenues, focus on SUSTAINABILITY

      Investers should not be involved in the creative process though. That’s what they invested in in the first place. They´re good at recognizing creativity and interest in the (potential) result of that creativity, not in being creative them selves.


  • Susan

    ”Sometimes there are better lessons in failure than in success." 


    The lesson cost a lot of money… 7.5 million

  • Aaron

    Wow! Those Seven Habits of Highly Effective Startups certainly rang clear and true.  For example: The ones who bring in the money should be the ones in charge; and listen to your star players. Those were just 2 rules a certain  family business didn’t follow.   After I joined their small company, it grew by 4 times in 2 years.  Then they (the owners) thought they were invincible, and fired me.  It subsequently shrunk to it’s former midget size. They went downhill so fast that some weeks ago I saw one of the co-owners working for a fast food outlet.  Wearing a cap like a junior. He hid his face when I approached, so I walked on, sparing him the embarrassment. 

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