While I love all of the startups in the Silicon Forest equally, Portland-based SplashCast has always held a special place in my heart.
You see, not too long after I came back to this side of the desk as a consultant, I had the opportunity to meet with QMind founder Mike Berkley a few years back—and signed an NDA, I might add—when he was getting ready to retool the company into what would become SplashCast. And then they hired Marshall Kirkpatrick. And Alex Williams. And they showed a great deal of promise.
Unfortunately, that scrappy Portland startup’s history has now come to an end. SplashCast has decided to shutter its operations.
SplashCast accomplished great things with tiny resources. Despite the fact that we were ultimately unable to survive the headwinds we faced, it’s remarkable what we were able to achieve. We were a tiny, angel-funded, Portland-based startup that successfully navigated the bleeding edge of digital media for many years, partnering with the largest media companies in the world. Beginning with our transition from enterprise e-learning (when we were called QMIND) to consumer internet (when we “relaunched” as SplashCast at DEMO ‘07), the company nimbly adapted to the rapidly changing online media landscape.
It’s always sad to see a Silicon Forest startup close its doors—especially a startup that succeeded in courting investors and was fighting to survive the economic downturn.
At each turn, we moved from what ultimately proved to be a declining market opportunity to a larger opportunity. Our product team’s ability to quickly adapt allowed us to maintain product leadership at each step. Our business development team aligned us with the biggest players in the space. Our sales team ultimately found validation in a promising business model, closing advertising campaigns with some of the largest brand advertisers in the world: Nissan, Jack In The Box, Right Guard… We demonstrated that premium content applications in Facebook and MySpace can be monetized effectively with high-end display advertising. But that final chapter in the company’s history came too late, given our inability to convince the VC community to bet on us.
Another Mike—The Oregonian‘s Mike Rogoway—says the SplashCast demise was a foregone conclusion.
The news is no surprise — TechCrunch had word of SplashCast’s plight last spring.… SplashCast seemed as tuned in as anyone to the business opportunities in social networking, but by itself a clear sense of the market often isn’t enough.[HTML2]
In this case, obviously, it wasn’t.
Berkley and I have been trading messages back and forth. I hope to catch up with him soon to provide some more details on the story—and what’s next for the team.
For now, we simply have to bid them a fond farewell. And look forward to seeing where members of the SplashCast team land.
For more, see Mike Berkley’s post on the closing of SplashCast.
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[…] It’s never a happy to thing to have to report on the demise of once high-flying and well-funded Portland startups. But that’s exactly what happened, last year, when Portland-based SplashCast wound up switching off. […]
[…] 1. Money. This is the first time that I’ve worked at a company that literally ran out of cash. My first startup raised close to $70MM (although failed for other reasons) and my second went public (NASDAQ: INET). I’m still sorting it out, but I’m not going to play the Portland Card. Our lack of funding was a result of numerous factors (yes, including our location). If I had to give a single reason, I would point to the economy. (See good discussion at the SiliconFlorist blog on SplashCast and funding in Portland.) […]
When I started my company, I did so with the knowledge that no matter what happened, I’d learn from the experience and come out better on the other end. Whether we succeed wildly, fail miserably, or land somewhere in between, the entire team will have developed a skill set and ideology that can contribute to the growth of the next startup or business they are involved in. It builds intellectual capital, which in the end is invaluable for building an entrepreneurial community that is self supporting.
Silicon Valley isn’t a place, it’s a culture. Part of that culture is learning to fail. Better to fail fast, learn quickly, and move on to the next gig with more knowledge than the first go-around. Portland and Oregon in general is better off because of SplashCast and the team that gave it a go, learned a lot, and will rise again with another idea.
Sorry to hear the news Mike. You guys had a great product. Company’s are definitely isolated here in Portland, and it takes extra work for that visibility in big media. That being said, I wouldn’t move my company anywhere. People are passionate here and care about their environment, the company they work for and their town. This is rarely the case in the Valley.
First, Michael — please don’t feel any shame or regret. The only entrepreneurs worth working for or investing in are those who have seen failure (whether large or small) and dealt with it. You’re smart, determined, ethical, creative — it hurts now, but you’ll be OK, and I expect your next idea to be even better than SplashCast.
As for the PDX issue, I can say from experience that it is possible to build technology-based companies in Portland, receive VC funding, and accomplish a positive exit. I’ve done it twice now. There are things about the local economy that are buggy (lack of sufficient local VC funding, lack of local political understanding or support of enterprise creation or growth, etc.), but there are also things that are unique and great (highly education populace, creativity, lifestyle). As with anything, to succeed here you have to pick a good industry, have a winning idea, work like crazy, find your lucky breaks, and build a revenue model that is both rooted in reality and supportive of a bigger picture.
Lots to fix in Portland, but plenty to celebrate too.
Thanks, everyone. Again, a great discussion. I especially appreciate @furrier, from Palo Alto, jumping in. John has seen it all.
The truth is that we’re all still a little shell-shocked about this result, even though we’ve accepted it and are all moving on in good spirits.
That said, I still wake up at night thinking: “WTF, how could we not close the loop on our series B; we had so much going for us.” I run through the reasons in my head: worst economy in a lifetime, concerns about online display advertising, a late-evolving-revenue model, overly-diluted cap table, location, first-time CEO…
But perhaps most importantly: our difficulty in breaking through the noise. There is A LOT of noise in digital medial / social networking. Many (most?) VC’s are motivated by their gut as much as their intellect. Hype around a startup is a major “gut driver” for VC’s. Hype is driven, in large part, by being present and having a loud voice / strong personality. It has little to do with the actual business. In the case of SplashCast, we simply weren’t in the middle of it. This kinda brings us back to the PDX / location debate — but from a different angle.
This discussion around venture capital and Portland is material for a longer blog post… perhaps I will work on that over the next few weeks. I have a lot of thoughts to share.
Thanks again.
@TK especially if they are right next to each other (and in the SE).
More to your point: You are absolutely right, technology startups, particularly with a media component, are high risk ventures and those require a financial community who understands risk and are willing to play in that zone.
That is not Portland.
The financial atmosphere here is too conservative. Sure, there is the rare exception every few years, but, not really in the consumer-facing space. B2B maybe, B2C, not here.
The notion of setting up a storefront in the Bay Area (@Furrier) is an attractive idea, even if the back office happens here. But, rarely do start ups have resources to manage two locations and also fracture the communication of Sr. Mgt. so early in the game.
I agree w/some of above comments, I think Splash Cast could have survived better elsewhere. They were an anomaly for PDX, but offered hope…for awhile….
Marcus, Tech startups are high risk ventures. Food carts or bongs shop have a far better chance of succeeding pretty much everywhere.
I am sad to hear the new Michael is a great guy and had a good company there. The core issue is the denial many are having over how f’d up the ad market is.
Buyers are confused and the valuation of techniques employed by Splashcast are severerely undervalued. This isn’t a Splashcast issue. It’s the market. Sure some things on the execution side I’m sure Michael would want a mulligan for but that’s what its all about in business.
On Portland dont’ think that is an issue but what I would share with any companies out there thinking they have to move to Palo Alto . Don’t it’s expensive. Just hire someone here for presence and bus dev. Do it early in the process it might be a good investment.
Shameless plug: my new group blog SiliconANGLE is an open group so if anyone wants a presence here we would love to collaborate with you. The group is there to help entrepreneurs and companies.
Having a company go dark is sad especially a good one with people like Michael. Hopefully the market will turn and we can be in job creation mode verses job elimination. Where the hell is that stimulus …
I would point to Jive Software, easily the most successful tech company in Oregon , as a refutation of the argument Marcus presented. With that said Jive has certainly had their issues with Oregon and did just open up an office in Palo Alto…
I have to disagree with many comments here, even with the humbleness of Berkley himself (he deserves more credit than he’s giving himself).
The comments are skewing toward claiming that because SPLASHCAST had successful Brands and Clients (revenue) they were doomed to fail in this space?
But, businesses that don’t have revenue and commercial applications are deserved of being in business and succeed?
Well, if you don’t have revenue, then, well, you need VC funds to prop you up ’til someone buys you — but, we live in a region where VC dollars are disproportionate to the regional talent and tech.
A proverbial Catch 22.
I think the point is, SPLASHCAST could have easily raised more money if they’d been based in a more media/dollar friendly environment. They may even have moved into an M&A space because of opportunities that arise when there are a lot of people banging up against each other within physical proximity of one another.
SPLASHCAST was a rare business success in the 2.0 space in that they moved to a revenue model pretty quickly. They still needed cash to bridge their growth. But, being in PDX certainly limited their prospects on that front.
You don’t have to be bleeding edge or revolutionary to succeed, you need revenue and clients/partners who you bring value to. SPLASHCAST did that. It’s a shame to see them fold.
Mmm, I find it odd to blame Portland for the demise of this company.
Mike and his team gave Splashcast a good run but as in all things web-based, and especially the social web, if you don’t give people the right tools they tend not to embrace your technology/product. Splashcast was never a “needle mover” it was a corporate brand pushing device hiding behind a social networking play.
Sorry to hear of their demise but I hardly think its a stain on Portland or its venture capital industry.
Thank you Justin.
I once worked for a media oriented company here in Portland. In what was recently the Vidoop offices nonetheless. What happened? We did so well, that eventually we were bought by the Walt Disney Internet Group.
It’s possible to do well in this city and this market. You have to keep your eyes ahead.
Also, I’m not so sure how it’s possible to not keep afloat after making this kind of amazing deal:
http://www.socaltech.com/mobilestory.php?storyid=0018889
What happened?
Good discussion, folks. While our location in Portland did create a higher bar for us in raising VC money, it is not the sole reason for our demise. There are numerous examples of Portland companies who have attracted venture money from Sand Hill or Seatlle. Lack of experience at the CEO level was another critical factor — a factor that I will never have to deal with again. 🙂
Honestly, there are good reasons NOT to start a media company in Portland, Oregon. Geography (physical proximity to partners & customers) is very important, even in this virtual age. With the exception of About Us almost no media-oriented companies in Portland have received venture funding.
If SplashCast were based in Palo Alto, would we have succeeded in raising $10+ million? Perhaps. But if we were based in Palo Alto, we would not have been able to put together the incredible, highly-nimble and efficient team we had.
If you want to start a media company in Portland, you need to start with modest goals. Keep the team very small and build an audience up to a level where you are cash-flow positive. Then think about scaling. This is hard to do… look at About Us as a model.
I think it’s a bit of a cop out to say Portland is to blame for Splashcasts demise. I’m as bummed as any one to see a company here go under, but I think if we’re going to be brutally honest, and I think we need to be, I think their product was ultimately to blame. It was NOT bleed-edge, it was NOT revolutionary, what it WAS was display advertising. In an environment (the social web) dominated by products that serve people, theirs was a product that stroked brands and corporations.
To say that this was Portland’s fault, especially for a web based company, is sloppy logic and a weak straw-man designed to obfuscate poor product strategy.
I regret – and regrets are born of actions not taken – that I must agree with Marcus. Portland is a town to settle in *after *you’ve made it. You must bring your client base and vendors and *money* with you. There is not enough here to to feed a hungry fledgling.
Do the math. 3.5MM ppl in the state of Oregon. 3.5MM people in the city proper of Chicago. 200 miles to the nearest next metro, to which Portland offers no USP, no matter how creative and inventive we are. A westerly overfly of the East Coast at night, and the lights don’t let up until Iowa. Which has 1.3% unemployment *not* based on agriculture, BTW. What are they doing right?
And that bring us to a possible solution. Let’s look at places that are succeeding and follow the model.We don’t have enough resources to do it on our own. The world doesn’t cares we are “unique.” Maybe if Portland as a whole decided to pull in one direction, we could generate a solid enough base to attract revenue and employment generating anchors.
Being a base for green-driven enterprise will be yet another bobble on a string of beads. SplashCast should never have failed. Except they were a big pearl on the string of trinkets.
Can this change? Maybe. It would be huge to have such small numbers laser focus. So many of the first pioneer settlements #failed for the same reasons.
You using a sinker on that line or are you expecting the weight of your sarcasm to keep the bait low?
Portland = #Fail.
Sad, because a food cart or bong shop have a far better chance at succeeding than a venture into media and technology in Portland.
Splashcast did everything right. But, you can’t play in this space without having a financial community that is equally innovative and forward looking to draw upon.
Should they have packed up and moved South? Probably.
Should the rest of us?
Unless we want the next obituary to be our own, I’m afraid so.