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Classified Ad Company Edgeio Shuts Down & Blames Investors
Edgeio announced late last week that it was ceasing operations and looking to liquidate its assets. The company, which had recently raised $6M in capital ($3M of which came from Intel), tried to build a business by aggregating classified listings from all over the web. In explaining the reasons why the business was unsuccessful, CEO Keith Teare stated, “I would say it came down to lack of vision on the part of investors to see the platform as part of the future.” The arrogance and absurdity of Teare’s statement is dumbfounding.
Businesses, especially start-ups, can fail for thousands of reasons, but shareholders are rarely, rarely among them. In point of fact, I should say investors never cause a business to fail, but I can think of a few cases where they actually could cause a business to fail if, for instance, a lawsuit among different classes of investors paralyzed a business to such an extent that it couldn’t function. But these are extremely rare, and in most cases, are ultimately the fault of the business for one reason or another.
Teare’s comments remind me of the scene in Wedding Crashers when Owen Wilson, sitting at the breakfast table, remarks that maybe it was the soft mattress that caused Vince Vaughn to have such rough night of sleep the night before. Vince Vaughn replies, “Yeah, it could have been that – or maybe it was the midnight rape or the gay, nude art show that took place in my room afterwards.” Maybe it was investors that caused Edgeio to fail, or perhaps it was because the site required custom meta tags on every single page of a contributor’s site, or that Edgeio used a completely bizarre XML format that was unique to their site and required a massive rewrite to accommodate the particular demands of a site that never climbed high enough in site rankings to justify the effort, or the fact that the site was completely piecemeal and unprofessional in its look and appearance, which caused serious doubts as to its stability, longevity, and ultimate value to users, contributors, or advertisers. Or perhaps their failure was due to the fact that they never really had a revenue model fully developed or executed that would turn a slightly interesting site/idea into a real business. The last time I looked, generating revenue through the delivery of sufficient value to customers at a level that eventually exceeds costs is the most certain manner by which a business can succeed. Relying on investors to see the future isn’t on the list, no matter how long you make it.
[tags]Arrogant Entrepreneurs, Edgeio, Ridiculous CEOs, Entrepreneurs Who Give Start-Ups a Bad Name, Blaming Investors For Failure, The Dog Ate My Homework, Wedding Crashers, Vince Vaughn, Owen Wilson, Intel, Intel Capital, Classified Aggregators, Classified Advertising[/tags]