Biggest failed deals
Accomplishing any one of these goals would have been remarkable. Achieving them all would be unprecedented. But to achieve all the goals requires the client State of Indiana to give the vendor IBM its absolute and unconditional support. Change management is successful only if the organization supports change, and in this case, Indiana did not. These programs failed or were failing , in very much the same way that Indiana's eventually would. IBM is unquestionably a great company, but what this contract needed was more than IBM could provide. Mega-contracts blind vendors to flaws and limits; the client must see physical evidence that risks have been sufficiently mitigated.
You may choose to take the risk because a single big contract can cost less to manage if it is successful. If not, however, a failed big contract is very expensive. The potential benefits of lower management costs can be compared to the increased risks of failure, and the cost of risk mitigation can also be factored in.
Court records show the parties' acknowledgment of some risks, but there is no evidence that the client or the vendor ever did the math and calculated the costs. Size alone is a factor for failure, but size tends to have co-factors as this contract did that lead to failure.
Contracts with potentially high risks require in-depth risk analysis and mitigation. Change Happens Many outsourcing contracts are designed to drive change. However, outsourcing contracts that are supposed to drive change -- but do not allow the vendor to make changes -- tend to fail.
In this case, the client tightly controlled the change mechanism and did not approve most vendor-requested changes. The conditions of the program changed, such as the addition of new programs and expanded volume of work. Even for client-initiated changes and expansions, they did not allow the vendor to add staff and cost or make other changes. This was a year contract. Over a decade, things will change in unexpected ways. For example, the economic downturn doubled the volume of requests for welfare aid.
A smaller vendor might hesitate to sue the government, or might give in when threatened with a lawsuit, but huge vendors like IBM have equally huge legal departments another risk of mega contracts. Everyone has disputes, but when communication stops, then other avenues for resolution are closed, and both parties start to think about lawsuits.
Make compromises and be inventive now because a court-ordered solution will be more expensive. Be Consistent In the first three years, Indiana officials repeatedly agreed the program had succeeded, and as per the contract told IBM to move on to the next stage in the program. When the State of Indiana sued IBM, they said the program had failed and had been in failure for years. This sort of inconsistency seriously undermines credibility -- inside the courtroom and in the business community. You have a right and duty to change your position when new evidence becomes available, but if you add unsupportable embellishments, you will do more to undermine your credibility that to support your argument.
In real life, assumptions are wrong, conditions change, and the goalposts move. One investor in the startup said that the founders were too aggressive in pushing for higher valuations. Company: AOptix Technologies. Long-time Free-Space Optics FSO player AOptix has shut up shop and is selling off its assets at auction next week… the company is currently trying to shop around its intellectual property. Carriers in the US and beyond are looking at wireless backhaul as alternative to fiber, but the expectation is that it should be cheaper and easier to install as well.
We deeply regret the impact that this has had on them today… Unfortunately, market conditions got in the way of us completing our mission. Via Variety. Immediately upon joining Primary Data, [former CEO] Lance Smith realized that its burn rate was out of control, particularly for a company with no revenue. Company: Guvera. Australian music streaming company Guvera has reportedly stopped operating, with its co-founder and biggest financial backer walking away from the project. Company: ChaCha. Advertising revenue declined sharply , leaving the company unable to service its debt, and no suitors took a bite.
Company: Drugstore. When I see the retirement of these two domain names, I see a play for Walgreens. Company: Mode Media. The day after the shutdown announcement, one Mode manager of an overseas office described receiving frantic emails from headquarters requesting immediate transfer of all funds and assets back to the US. No one can believe it. Company: Next Step Living. The firm intended to provide a missing channel for residential energy services leveraging its core energy-audit business.
In order to spur revenue, the company moved into downstream energy services such as solar installation and insulation installation and found itself in a low-margin business with a high rate of cash burn. The company also found itself confronted by conflicting energy program mandates and regulations. By the time NSL tried to return to its core home energy audit skills and jettison its downstream installation businesses, many of the VC investors had chosen to stop investing in NSL, despite their earlier entreaties for growth at all costs.
Company : Airware. Airware will serve as cautionary tale of startup overspending in hopes of finding product-market fit. Had it been more frugal, saved cash to extend its runway, and given corporate clients more time to figure out how to use drones, Airware might have stayed afloat. Company : AwarePoint. Awarepoint executives and board members could not be reached to comment on a recent tip from a former Awarepoint employee, who asked to remain anonymous and who said the company had unexpectedly shut down.
A separate tip, sent to me Tuesday by direct message on Twitter from a pseudonym, said the company shut down on May CEO Tim Roche did not respond to a voice message left on his office phone or to an e-mail. The result was a relative preponderance of lab researchers with Ph. Company: Aquion Energy. Despite our best efforts to fund the company and continue to fuel our growth, the Company has been unable to raise the growth capital needed to continue operating as a going concern. Company: Quixey. Read the Axios report here.
Company: Quirky. Company: Powa Technologies. In a meeting with the Financial Times last April, [Dan] Wagner compared himself to John Rockefeller, the US business magnate who dominated the oil and rail industries in the 19th century. He believed Powa would set down mobile payments infrastructure that would be just as revolutionary. Company: Lilliputian Systems. Company: Rdio.
Which is partly the trap of the business model itself — because of the content licensing deals, the margins for the business were so incredibly thin. You have to make it up with extreme volume, which is why you see Spotify going after every human being in the world. Company: OnLive.
5 takeaways from EU’s leadership failure summit
First there were doubts about its ability to deliver a lag-free experience, then business troubles led to a form of bankruptcy followed by big layoffs and a buyout, and all sorts of uncertainty after that. Company: Coraid. Its U. A CRN report earlier this month said the company was closing up for good and was filing for bankruptcy.
Company: Terralliance. Company: Webvan Group. Company: Better Place. The bet was risky because it required large geographies — indeed, entire nations — to adopt the technology in order for it to scale successfully. Also, a number of competing electric car efforts, including the venture by new company Tesla but also by the Big 3 and other manufacturers, kept the industry from adopting any one standard.
Company: AllAdvantage. That number dropped to less than , by December. Company: Kozmo. If making money on operations was a near impossibility, Kozmo seemed perpetually on the precipice of tapping into the public equity markets. Meanwhile, it floated other plans, like starting a print catalogue and delivering for local retailers. But then they discovered that other retailers had their own deliverymen. Company: eToys. The company also said it was on the verge of being delisted from the Nasdaq stock exchange. The events were not a complete surprise, given that company executives had cautioned late last year that eToys had only enough cash to remain open through March.
Company: Caspian Networks. First core routing. Then P2P networking. Then net neutrality. Investors apparently put the kibosh on the company before it crow-barred itself into another communications fad. Company: Pay By Touch. Despite those early customers, processing fingerprint payments has not taken off as expected. Pay By Touch claims that it has fingerprint scanners in 3, stores, but the privately held company has never disclosed how many transactions it processes.
Goliath situation. Company: RealNames Corporation. RealNames said it had no choice to but to close operations as Microsoft was its primary distribution partner. In addition, Microsoft expressed concerns about the quality of RealNames keywords that were sold. Torris said Boo. She pointed out that sites such as Landsend. Company: Savaje Technologies. Now the company is close to closing its doors as it seeks additional funding from venture capitalists. The company, which employs about people, had furloughed its developers and some other employees early in October, asking them to use up their vacation time or go on unpaid leave while Savaje moved to find its way out of its financial troubles.
Almost from the start, Pets. Moreover, to attract customers, the company depended heavily on discounts, said Jupiter Communications analyst Heather Dougherty.
4 Biggest Merger and Acquisition Disasters
As a result, the firm was selling supplies below cost the entire time. Company: Cereva Networks. The weakness was their not understanding, focusing and exploiting its sweet spot. A consequence of an incomplete or erroneous market understanding and a sole reliance on the internal body of experience and knowledge. Company: Calxeda. Company: Lesara. Lesara, which was an online fashion retailer, stated on its website:. We regret to inform you that the Lesara Online Store has closed.
Rest assured, we will do our best to fulfill orders that have been placed. Orders placed before 28th February will have a return policy of 30 days. Via Lesara. Company: Juicero. On Sept. Its collapse was the consequence of unsustainable costs, unflattering headlines and a bungled product launch. Four years after its founding, the startup was unable to find new backers willing to fund its ambition of making fresh juice accessible to all. Company: Auctionata. Auctionata has been in decline since news of serious trade violations perpetrated by co-founder and former CEO Alexander Zacke came to light in March , when Zacke and Auctionata board members were accused of illegally bidding on their own auctions.
Months later, reports of business difficulties at Auctionata emerged after independent evaluations of auction results suggested that the house was making only very few direct sales. Company : Wimdu. Select VC investors : Rocket Internet. They say imitation is the sincerest form of flattery. Via TechCrunch. Company : Verdezyne gri. Confirmed this month, Verdezyne, the synthetic biology company that was founded in and was working on the production of renewable chemicals, using their own highly-proprietary platform, has gone into bankruptcy.
The closure of the company came ahead of the imminent opening of its first commercial facility, which would have been an impressive achievement for an industry where one of the main challenges lies in producing bio-based materials on an industrial scale. Company: Sonitus Medical. We took a prevalent surgical treatment into the office where we reduced the cost by half and we significantly impact patient safety because there was no surgery involved and we made it more effective…. Company: DeNovis, Inc.
But having spent such a large sum of venture capital, DeNovis needed to go public or find a deep-pocketed buyer to return a large profit to its investors. Company: Aereo.
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Inside the infrastructure that drove its online service, it assigned every Aereo user a mini broadcast TV antenna, and it used this to argue that its service was no different than sticking a pair of bunny ears on your television. But broadcasters never bought this argument, and when it came down to it, neither did the US Supreme Court. Company: Beyond The Rack. The sales typically last 48 hours and are announced to email subscribers. The company has 14 million members, and , active buyers, according to court filings.
Company: Canopy Financial. Company: Soapstone Networks. Soapstone was an underdog from the start. Even as a known quantity, it was going to have to wrestle with the slow process of qualification at big carriers. Company: Claria Corporation. Company: SunRocket. Analysts have been predicting that it would be difficult for companies, like SunRocket and the more popular Vonage, to base an entire business around a VoIP service. Company: 38 Studios. Currently, the architecture of the autonomous vehicle is simply not converging, so a venture-backed company will not be able to justify the investment that will still be needed… There was a lot of deliberation and investors were prepared to keep going, but we saw that LIDAR was becoming a game of giants and as a small company, it would be difficult to continue operating and return investments.
Via co-founder Ran Wellingstein quoted in CTech. Via Pencil News. Shyp had bet everything on sustainability rather than expansion. Company : Apprenda. Company : PATH. As Facebook ballooned in size and our friend lists grew with it, Path sought to be the place where you chatted with only the people you were closest to.
What Can Be Learned From Indiana's $1.4 Billion Failed Outsourcing Contract
And for a little while, the idea seemed to work. Quickly, Google reportedly tried to gobble it up. Around , it was bought by Korean tech company Daum Kakao. And then we forgot about it. On October 1, the app will be removed from the app stores. Via Gizmodo. Company : Seatwave. Total disclosed funding : Accel, Ticketmaster Entertainment. Utilities have failed so far to expand their use of distribution grid-level power electronics much beyond the pilot phase, leaving Gridco with little opportunity to grow to the scale necessary to maintain its operations on the strength of its own revenues.
Company: Hello. Hello, the startup behind Sense sleep tracking devices, plans to shut down.
The company recently laid off most of its staff. According to a blog post from founder and CEO James Proud, the company continues to seek buyers for its assets. Company: TerraLUX. Longmont-based Terralux, now known as Sielo, ceased all operations on Aug. As of December , the company employed 57 people, according to the Longmont Economic Development Partnership.
Lundie declined to comment on current workforce numbers. Loyal3, a commission-free brokerage that initially emphasized IPO shares before transforming into a discount broker, announced Wednesday it will close its doors May The strategy relied on batch trading, wherein Loyal3 grouped company trades and executed only once a day.
Company: PepperTap. PepperTap — which operated in a high-competition, low-margin market — decided to shut down its main e-grocery business after months of rapid expansion showed no signs of profitability and deep discounts led to high cash burn. Company: Sprig. Company: Dealstruck. Dealstruck closed its doors after more than three years in business.
It closed because a deal fell through. Company: Sand 9. We are now about three months post acquisition, and the Sand9 executive team is gone but the meat of the company was indeed the MEMS technology that had been in development for many years. Company: Karhoo. Many of them have worked unpaid for the last six weeks in an effort to get the business to a better place. Unfortunately, by the time the new management team took control last week, it was clear that the financial situation was pretty dire, and Karhoo was not able to find a backer.
Company: Beenz. After the Internet bubble burst, e-currency companies tried to evolve by concentrating on business customers, but the collapse of a high-profile trailblazer such as Beenz shows that the Old Economy credit card companies have probably won the online shopping battle. Experts believe that online currency sites such as Beenz were overtaken as a way of shopping online by credit cards, which had the advantage of being virtually universally accepted both on and offline.
Company: Veoh Networks. Universal Music lawsuit was the main killer. Veoh won resoundingly but was mortally wounded by the senseless suit. Company: Dash Navigation. The navigation device was designed with true mobile web access and interactivity in mind, but sales were sluggish. Company: Move Networks. So what went wrong? For one thing, Move Networks never reached critical mass on the consumer side of things; despite early success with ABC, Fox, the CW, and others, many media companies shied away from the technology because it required a plugin that not many consumers had installed.
And how do you get good premium content unless people already have the plugin installed? Company: Nirvanix. By trying to play in the pure storage business, Nirvanix found itself in a market that, over the past five years, became increasingly commoditized by Amazon Web Services, Windows Azure and now Google Compute Engine, which have all been engaging in a price war.
With no service to offer on top of its storage, Nirvanix did not stand a great chance of differentiating from such large competitors. Company: Expand Networks. Although Expand Networks won appreciation for its technology, its operational performance was much less impressive.
Although it was a pioneer in its field, it failed to make a breakthrough. Company: Ecast. Company: Edgix. Many never had a sound business model to begin [with]. Edgix is one example. The company was basically a carbon copy of Cidera and other ISP caching solutions, with little new to offer. They basically launched a platform and went into business believing they would quickly generate revenue. Company: DoubleTwist. Two months later, DoubleTwist bowed to the inevitable. Company: Akimbo. Company: Sequoia Communications. Luis Arzubi, a general partner at Tallwood Ventures, told EE Times that Sequoia San Diego was forced to cease operations despite having working parts and customers because it failed to raise the needed capital to continue.
Company: govWorks. Arrogant and overly aggressive, company officials have alienated key government partners and vendors. They have burned through millions in false starts and other fumbles, and it has lost time and ground to competitors. One of the co-founders has been forced out by the board and other senior executives. Now directors are looking for a more seasoned manager to help Isaza Tuzman run the company. Harvard Business School case study department, here they come.
What I would not want to happen is that I say we can continue to support you for 6 months and then 4 months from now, we have a critical outage that we can just not resolve with our team. That would put us both in a much, much worse position. The company said it laid off about employees in the process of winding down.
Via CNBC. The California-based investment platform was founded in on impact investment principles. As a result, we will be closing.
Lessons From Indiana's Largest Failed Outsourcing Deal
Via Fintech Futures. The decision was a surprise to many Arivale employees and customers. Via Geekwire. The company was primarily known for its Persistent Aerial Reconnaissance and Communications PARC platform, a tethered drone that provided secure communication and continuous flight to customers.
It relied heavily on law enforcement and military contracts. Via The Robot Report. Company: ZipGo. ZipGo had earlier suspended operations in Bangalore and Mumbai two months ago, before completely shuttering down operations in other cities including Delhi NCR, Jaipur, Kolkata, and Pune. Via Live Mint.
Company : Alta Motors. Select VC investors : Harley-Davidson. According to an anonymous source, the company has halted business operations effective immediately, sending staff home early. Alta Motors currently has over 70 dealers across the country, and has already begun informing some of the closure. Company : Eleven James. Eleven James tried to raise additional funds to allow them to continue operating.
Company : Liquavista. Amazon declined to release further details. Company : Yogome. A video obtained by Forbes shows what appears to be a team meeting in which employees were informed of the news. The speaker said translated from Spanish :. The board of directors, as well as its investors and financial advisors, have met over the past few days to investigate and analyze the current state of the company as well as possible fraud… Based on an analysis of the economic situation of the company, and the effects of the crime of fraud, the decision has been made to end the operation definitively, since the company is in a situation of no return.
Via EdSurge. We have had some unexpected circumstances with the funding for the business. Due to setbacks with financing, unfortunately, we are ceasing operations for all employees, effective today, July 16, If we had been successful with these funding efforts, this difficult decision would have been avoided. The meal kits space is notoriously expensive, with many firms facing high marketing expenses as they work to attract and retain customers, many of whom flee after just a few times using the service.
No one ever says hardware is easy, and today it looks like another promising startup has hit a wall.