The Walking Dead of Silicon Valley

Frisky070802 writes "CNN has a column about a liquidator who refers to thousands of Silicon Valley startups as the walking dead. It states: 'Pichinson, a self-described "doctor of reality" who helps liquidate companies, says he wouldn't have moved from Los Angeles to Palo Alto a few months ago had he not smelled more high-tech trouble looming.... "There's still another 6,500 to 7,500 companies out there who are among the walking dead."'"

Comments

Managers taking hostages?

[fjordboy]

Sometimes, Pichinson and Sherwood's 60 employees are able to salvage troubled startups by cutting costs and training the executives to rethink their ways. Sherwood even brings in an FBI consultant specializing in hostage negotiation techniques to help management.

This is possibly an idle curiosity, but how is having hostage negotiating skills going to help out management? Or are these tech firms even worse off than we thought?

Re:Managers taking hostages?

[swb]

Some companies fail because they have a stupid business model (or none at all), and no amount of business savvy can save them. But some fail because their management is in collective denial about their situation and management strategy.

A hostage negotiator is largely a psychologist, and psychologists are fairly good with people in denial. Get management to snap out of it, realize that their strategy is in need of correction, and in some cases you can save a company that has at least a good idea.

How does this compare.....

[wpiman]

With other industries starting up? What percentage of restaurants fail? Bookstores? Coffee shops? Are these number way out of whack with business as a whole?

Small companies can still survive

[Gary Whittles]

Recently, I was inspired to look up an old company I use to work for. They employed about 12 people total.

They had three sales people, three support people, on tester, one secretary, three programmers. One of the programmers doubled as their sysadmin. The support staff had to work on bugs for Q&A in their time between calls. They literally had clients that were some of the biggest lawfirms around.

They made a product. They sold a product. They made money.

The guys who started the thing took out personal loans to keep it going for awhile. He passed out profits back to the employees when times were good. Honestly, if there was a place to be promoted to or a position open when I was ready to go on I probably would have never left.

Small companies can survive in the IT world. They just have to have half a clue in their heads to do it.

Fill a niche, concetrate and expand along the niche not outside it, keep employee and overhead costs low (their building was nothing grand but I had my own office).

This is basic business stuff that many companies still have no concept of.

Re:Small companies can still survive

[fuzzybunny]

A couple of years ago, I was invited to join some colleagues in a payment technologies startup in Munich.

This was a highly impressive bunch of people. The senior guys came from one of the major producers of financial transaction enabler platforms, which would be a core part of our offer, with a huge customer base. The management of that company was friendly with the guys starting ours, who had an excellent understanding of the technology and the field, and great customer contacts.

We had backing from one of Germany's major prestigious conulting firms, and a very senior, respected politician, who would help us to many useful contacts in industry. No fixed costs, and a free office in one of the country's most prestigious locations didn't hurt.

We had awesome ideas which could be translated into real-life technology pretty quickly (essentially taking existing components and putting them to fairly revolutionary use.) A lot of companies were really looking to do business with us. But we failed. Why?

The "guys in charge" were an incredibly venal, slow bunch. They took about 6 months (!!!!) to come up with a semi-legible business plan, and refused any sort of capital, even angel funding, beyond what they themselves had put in initially (complete refusal to hand over any control, anyone?) They did not understand the concept of "do something, do anything to get started", including low-level use of free technology, such as improvised websites and initial customers, preferring to plan for pie-in-the-sky everything-must-be-perfect-before-we-move. Suck. A lot of startups die because they have crappy product, or work inefficiently, or a bad business model, or economic realities. Us? Our own goddamm fault, 100%, and I could kick some people for it (no, not myself, I was one of several people constantly screaming to DO SOMETHING, so I feel pretty vindicated, if disappointed.)

It especially irks me nowadays to see a lot of the technology and processes that we came up with in our spare time (!) in use commercially, 4 years after we died miserably. My girlfriend started work in one of the big-howevermany consulting firms, and showed me a presentation they'd done that year for some eastern european telecoms and financial institutions, which went over like gangbusters. Not plagiarized from us, since someone was bound to do this stuff in the long run, but eye-popping nonetheless. If we'd only...

The thing that bugs me so tremendously is the sheer wasted opportunity here. I have no mercy with all the crappy dot-coms that blowthedotoutyourass.com (look it up) was so bitter about--there was no reason for most of them to exist. But I really really hate it when a good thing dies for no really justifiable reason.

Blargh.

So your comment about "half a clue in their heads" is so spot-on I could spit.

The Walking Dead of ... India!

[Channard]

With so many IT call centre roles being outsourced to India, why not utilize India's Walking Dead. Specifically, there's an army - pun intended - of people who are considered legally dead in India due to corrupt officials declaring them dead so their relatives could get their hands on their land. I'm not making this up.. see this story

I would take his comments lightly...

[mtrupe]

This guy has an interest in tech companies going out of business. What is the difference between what he says and what the dot-commers were saying 3 years ago when they were constantly bragging about huge internet growth predictions?