After a fall

A few days ago there was a story in the Merc News about a startup that went belly up. Most of my recent posts have been about soldiering on through through the downturn and keeping the startup fire going, but, companies do go under, and this is an interesting story one such.

You can read the full story here, but in brief it is about Hammerhead Systems that as recently as three years ago seemed poised to go big. After all, it had what conventional wisdom holds to be the key elements for success for startups: an experienced team, solid technology and plenty of funding. It must have looked like a sure thing to many people because we're talking serious money here: $100 million (it's hard not to think of all that we can do with just a tiny sliver of it!).

There's probably a bunch of would-have/could-have/should-have considerations, but interestingly the primary reason given for the failure is 'circumstances beyond their control'. The article covers industry turmoil, deals that became undone and buyers that didn't materialize. Though there is mention of some mistakes that were made, the team and the investors cite the times we are in as being the primary cause of their melt-down, preventing them from even being able to sell what they consider to be valuable technology.

By the way, I'm not about to second guess the experts, but I do wonder how, even after the dot-com bust, so much money could be poured into a company before they had real customers. I guess they must have had a good story to tell. But, the reason for posting this story is not schadenfreude, but a couple of items about the people involved:

• The CEO (also a member of the founding team) is the one going down with the ship, doing his best to sell the technology. Another example of the unmatched dedication of the founder/CEOs - they don't quit easily.
• The co-founders would like to start another company. Though this experience was painful, they 'love startups' and are looking to do it all over again.
  

This is probably a little bit of a cautionary tale, there's the whole 'money is not everything' angle for example. But, it is also an encouraging story of true entrepreneurs who don't give up easily and are willing to go after a new dream and build a new venture - it's going to be people like these that get the economy humming again.