Sonopia Follows Amp’d Into The Deadpool
Mobile virtual network operators (MVNOs) have been having one hell of a time over the past year. The biggest burnout among them was Amp’d Mobile, which lost $360M before realizing its customers couldn’t pay their bills.
While Helio rode high for quite some time, that company has also lost Earthlink as an investor, seen CEO Sky Dayton depart, and accumulated a deficit of $560M.
Now Sonopia, an MVNO that enabled communities and organizations to set up their own branded mobile services (so-called “mini-MVNOs”), has also shut down after failing to gain traction.
According to a former business development consultant, Sonopia’s “approach was too ‘involving’ and too ambitious, offering targeted services and campaigns for segmented groups…which often lacked skills in running even a marketing program, let alone a mobile service.” Apparently the inflexibility of Verizon, its parent carrier, and the over-zealous optimism of founder Juha Christensen also led the company to ruin.
Sonopia is now in the TechCrunch DeadPool.
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Red Envelope Saga All But Over
Bad news for San Francisco based ecommerce site Red Envelope, an “upmarket online retailer with the primary goal of making gift giving easy and fun”: it’s about done. The company’s market cap is just $2.95 million even though it has cash on hand of nearly $12.3 million. The stock is trading at $0.23/share - it was as high as $8.42 in the last year.
Red Envelope was founded in 1997 and went public in 2003. But a steady stream of losses has taken it’s toll. CFO William Gochnauer resigned earlier this month, and board member John Pound resigned on March 30.
In a SEC filing on March 31, the company announced their credit line with Wells Fargo was terminated, the final straw. They also said they would be unable to continue operations and were talking to buyers.
On March 25, 2008, the Company received a letter from Wells Fargo Retail Finance, LLC (”Wells Fargo”) regarding the Company’s Loan and Security Agreement, dated June 26, 2006 (the “Loan Agreement”), between Wells Fargo and the Company. The letter advised the Company that for various reasons Wells Fargo would no longer provide the Company with the ability to draw on the credit line. As a result, the Company has insufficient funds to continue operations as a going concern.
The Company is currently engaged in discussions with two potential acquirers for the purchase of substantially all of the Company’s assets. However, there is no guarantee that the Company will be able to complete an acquisition in a timely manner, or at all. If the Company does not complete the transaction it may be forced to cease operations. In addition, a potential transaction may involve unexpected costs, liabilities or delays. The Company may be adversely affected by the announcement of the proposed transaction and the related process of soliciting alternative transactions, or by the uncertainty relating to the potential transaction or the possibility of another transaction involving the Company.
Everything up to this point is fact - what comes next is rumor: We’ve heard the company is basically laying off all of the staff and shutting down in the next few days. We have an email in to the company for comment.
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TechCrunch DeadPooled My Company And All I Got Was This Lousy iPod Shuffle
Who says nothing good comes from getting deadpooled?
Blake Machado was the winner of a YouTube announcement contest we held a couple weeks back. He was the first to guess correctly that YouTube would come out with some new APIs to spread its influence over the web. The prize was an iPod shuffle.
Turns out YouTube’s announcement was particularly poignant for Blake given his connection to the previous deadpooled Stage6. As he revealed to us after winning:
Ironically guessing/winning this is bitter-sweet. I was the PM of
Stage6 and this is an area where we had planned to beat YouTube to the
punch and gain some, hopefully, extremely positive results. We would
have as it was scheduled for Feb. release — oh well.
So how’d we comfort him in his time of need? Etched a reminder of that deadpooling into his “consolation” prize, of course. You’re welcome, Blake.
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Capazoo Blows $25+ Million, Heading To The DeadPool
Canadian social networking site Capazoo has fired most of its staff and is heading to the Deadpool.
We first wrote about Capazoo in December 2007 where we noted that it paid users to participate, but only if they paid a membership fee then referred other users in a classic pyramid scheme structure.
According to local media reports, Capazoo fired its entire development team (60 people) late last week with the one remaining sysadmin to keep the site itself running. Capazoo’s head office has a for rent sign in the window.
Besides a terrible business plan, a family dispute hasn’t helped, with brothers Michel Verville and Luc Verville fighting in court for control of the company. And just to keep the soap opera going, there are also accusations that the brothers embezzled money from the company; one figure being mentioned suggests $2 million is missing. Capazoo’s $25 million was initially listed as only being “private funding” but more recently National Lampoon became an investor.
Update: this from a source familiar with the company:
The big issue was fraud amongst the founders who were taking 10% commissions on all funds raised.
They did the first round ($8 million) at $72 million pre-money from a bunch of athletes and non-sophisticated angels at $100k-$200k chunks. Most of them didn’t know that management was taking 10% commission themselves (despite owning all the common) for all funds raised.
They then raised another $5-10 million (conflicting rumors) at a $132 million pre, while still taking commissions. The two brothers took almost $2 million out of the company before reaching more then 10K users and ballooned the staff to 130 staff before starting to do layoffs.
Capazoo joins the TechCrunch Deadpool.
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Surprise! The Bux.to Pyramid Scheme Is A Fraud
If anyone needs yet more evidence that schemes that pay users cash to watch ads, and then pay more for any other users that you get to sign up (AKA Pyramid Schemes) are nonsense, just see Chris Pirillo’s twitter message, which I have helpfully posted above.
The service in question is called Bux.to. They pay users $0.01 to watch an advertisement for thirty seconds. They also pay $0.01 for every advertisement viewed by anyone that has signed up using your referral code. Sounds great, but there’s one problem - users are complaining that they aren’t getting paid, or are getting paid weeks and weeks after they should have been.
The reason? Bux.to is undoubtedly finding itself in cash flow trouble. Advertisers, I’m sure, are not jumping at the chance to get to users who value their time at $1.20/hour and are only looking at ads because they’re paid to.
AGLOCO, another version of the scheme, went belly up last year. AGLOCO was created by the same team that founded AllAdvantage (also DeadPool) back in the late nineties. Basically, the model doesn’t work, no matter how people try to spin it.
Pirillo is particularly embarrassed about Bux.to, which he pushed hard to users in January. They aren’t paying him, and they won’t contact him.
It’s not often in a post that I get to explain a situation by saying both Caveat Emptor and Occam’s razor. If something looks like it’s a scam, it’s probably a scam.
Update: In a moment of total geek nirvana, I am watching Chris Pirillo read this blog post live on his Ustream channel (and you can now see him reading this update as well - ok, enough):
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Ziff Davis Media Takes A Dip In The Deadpool
Ziff Davis Media, the Web 1.0-era magazine publisher that should have died years ago, has finally declared bankruptcy. It owes creditors $225 million. They are trading that in for 89 percent of the company and an IOU for $57.5 million. Here’s pretty much all you need to know, from the AP:
The bursting of the Internet bubble hurt publishers like Ziff Davis, which said its print advertising revenue dropped to $40 million last year from $215 million in 2001. Its total revenue fell to $76 million last year from about $300 million in 2001.
The company, which is a remnant of the original Ziff Davis media empire that was bought and sold three times over during the past two decades (to Forstmann Little & Co., Softbank, and current owner private-equity firm Willis & Stein), currently publishes PC Magazine and a couple gaming titles. It also runs 16 Websites, the best of which is 1Up . During the 1990s, it launched a bunch of Internet-related print magazines which no longer exist. Over the past few years,it’s been trying to transition to the Web. Although it plans to emerge from bankruptcy intact, for now we are placing Ziff Davis in the deadpool.
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eSnips CEO Drama Disrupts Company
Lots of bad news leaking out of Israeli startup eSnips this week. The company, which is part social network and part file uploading service, continues to grow - recent Comscore says they had 8 million unique visitors in January, up from 2.2 million a year ago. But founding CEO Yael Elish left the company for “personal reasons” just as they were closing a round of funding a couple of months ago.
The funding, inevitably, fell apart. The company tried to regroup under chairman Nahum Sharfman, who took over as acting CEO. But they eventually went the layoff route, letting most of the 16 or so employees go.
It’s not clear if the company will fold or find a way to continue operations. But storm clouds have massed over what was once a promising startup.
To date eSnips has raised $5 million, mostly from Gemini Israel Funds and Greylock. We’re putting them on DeadPool watch.
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Much Hyped AllPeers To DeadPool
UK/Prague based peer to peer file sharing startup AllPeers announced that it is shutting down today: “We have not achieved the kind of growth in our user base that our investors were expecting, and as a result we are not able to continue operating the service.”
AllPeers first launched in 2006 to an incredible amount of user enthusiasm. They allowed anyone to create a private BitTorrent-like file sharing network via a Firefox extension.
We compared AllPeers to a number of competitors in late 2006 and found it to be the best service for those looking to create long term sharing networks with friends. Late last year they turned open source and began to build in full BitTorrent functionality into the service as well.
But apparently none of it was enough to keep the company on its feet. AllPeers had raised a single round of financing from Mangrove Capital Partners and Index Ventures.
AllPeers joins the DeadPool.
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News Via Old Fashioned Means Put On Deadpool Watch
Survey results released by We Media/Zogby earlier this week show that more people turn to the internet for news than any other source.
The survey found that nearly half of all people in the United States (48%) cite the internet as their primary source of news and information, compared to 29% for television, 11% for radio, and a dismal 10% for newspapers. There was an age difference at the lower end, with only 7% of people aged 18-29 getting news from newspapers, vs 17% of those 65 and older.
67% of Americans believe traditional journalism is out of touch with what they want from their news.
It should be noted that the survey did not break down the types of news sites respondents were reading online, so by no means do the results equate with the death of the mainstream media (ie they could well be reading mainstream media sites online). The figures do suggest that some forms of offline news reporting may well be headed to the Deadpool over the next 5-10 years, at least in the United States. It will be a long and slow death, but as newspapers and radio slump into lower and lower single figures, it’s a given that the presence of both will shrink; we’re already seeing massive across the board downsizing now in print media.
(in part via Reuters, image credit: Brian Solis)
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Blog Network MyKinda To Shut Down Today
I just got word from MyKinda founder Lee Wilkins that he plans to shutdown the Eastern European blog network later today.
The network launched just last September and was being bootstrapped. Earlier this week we reported that they were having significant financial difficulties, and had shut down all but two of their sites. Today, those last two will be shuttered as well.
Wilkins says the shutdown is temporary to ensure that money due to writers doesn’t continue to add up. The sites will remain down until, he says, “we redefine a more profitable sustainable business model.” The company had total expenses of about €319,000, with no advertising revenue to offset it. Wilkins capitalized the company with €175,000, leaving €144,000 or so in unpaid debts.
MyKinda joins the DeadPool for now. Hopefully we’ll see them relaunch down the road, and continue to cover tech and other news in Eastern Europe.
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