I read this article by Jason Cohen focused on what he terms as “successful unsustainability” after the (recent) failure of Color following a $41 million VC round. I was interested largely because of my first roots in the industry and after reading it suddenly realized I’d never written about what happened.
In 1993, I joined a new, fledging company called Visual Radio after leaving a successful career start in the hotel industry and burning out (I was an accountant and it turned out to be so boring and demanding). Originally I was just there to do the books but through a series of events and by the pure chance that I knew how to code Perl, I eventually moved into technology.
Circa 1994 and the “chief engineer” (back then it was basically the head geek, there really wasn’t much in the way of formal titles) was abuzz about this thing called “the Web.” Our original business model had involved a subscriber-based system that married a CD-ROM with video, audio and images to a BBS-run system using a proprietary software we dubbed 2Hact. By this point, 2 years in, the model had produced a lot of buzz and very little cashflow. It was time for a change.
So we started peeking into the idea of this Web thing. We did a few web sites – not a real big deal, except that we had behind us a bunch of loose one-off projects that eventually became something – one of the first credit card gateways (using an x.25 back-end dialer system), some very early dynamically-driven sites (using both flat files and early RDBMS), streaming (yea boys, read that – streaming circa 1997 using license #1 from Real), and agent-based COM libraries. For a “web shop” (as we were calling ourselves by 1995) we were dabbling in an awful wide array of things.
Deals started to roll in fast. By 1997 we’d done some really killer work. In other words, we were every other pre-bubble dot-com. For example, we’d helped design and develop bizTravel – an early piece of the Expedia puzzle. We’d built an early streaming video system with moderated chat – more or less a pay-per-view version of pay-per-minute 800 lines. And we’d expanded on our credit card systems such that by 1996 we had built several gateways into the few banks that were early pioneers.
The team was unusual – but then again, so were most dot-com shops of the day. Since there were few CompSci guys and even fewer books (and no extensive Google), most of us had to learn to code “the hard way” – trial and error. Our designer was a former architect. Our complete lack of regard for any of the limitations of technology or design was what got us places.
But like most other places, by 1997 there was a sense of invincibility and unlimited growth. We were making money. Lots of money. Deals were all around us. We decided to get involved with two (now defunct) companies into a new technology – DSL. We made the wrong bet.
It’s a shame to watch a company you’d help foster fall apart, especially when you were the one who’d voiced concern about changing business models mid-stream. I’m not saying the company would have survived had it remained in its core – nearly every other dot-com died by 1999 – but to have become unsustainable in the way it did was bad. I was fortunate – I left before all that happened. But it did affect my team, and it was hard to watch.
In retrospect, at the very least, it made me more cautious. While I still have a love for the thrill of being in startups, I don’t go after the dreamers but instead after something that there is a definitive trend in. Success in a technology business is never predicated by the ability to attract venture capital, nor the lack of ignorance into the long term trends of technology. In his article, Cohen mentions “lasting value” – sustainability – probably one of the best comments I’ve heard this week.
If you are not an entrepreneur, which most of never will be, this is still important because the company you work with needs to have some of that built in. Yes in the tech world, jobs are relatively easy to come by but never count your chickens before they hatch (sorry for the cliché). As I’ve gotten older, security has become increasingly a factor of employment, right behind enjoyment and maybe even ahead of growth opportunity. Anyway, look for it – stop going after the flash in the pan because it’s highly unlikely that your ESOP will ever pan out.
I’ve deliberately left names out here. Most of us have moved on and only a handful are still in the technology business. Any of you I haven’t kept up with that reads this, please feel free to get in touch.