Internet: Photo
Storage Site ‘Ran
Out of Runway’
Things happen at warp speed on the Internet, including business failure.
San Diego-based kablink, an E-business company, officially launched only several months ago, was forced to shut its doors last week and lay off 18 employees, the victim of a much harsher investment environment for high-tech startups.
“Timing is critical,” said Greg White, kablink’s founder and CEO. “You need enough runway to get the plane off the ground, and in our case, we just ran out of runway.”
Kablink provided an Internet service that allowed users to post and edit photos taken from a digital camera, then send them over the Internet to friends, family and businesses.
The company was operating in a competitive arena but was able to attract some $2.5 million in its initial capitalization round last year, including a sizable chunk from San Diego’s Band of Angels.
In recent months the firm was seeking some $5 million in a second round of financing. However, the battering the tech sector took this year on Wall Street caused many investors to find other places to park their money, White said.
“The market has created a lot of skepticism,” he said. “Most investors are hunkering down, investing in top-tier (stocks) in their portfolio. Some were making tough decisions about letting some investments go.”
Bruce Ahern, a local high-tech consultant, said the Nasdaq market crash earlier this year was a wake-up call to many investors, who weren’t examining what they were sinking their money into as long as the shares continued to rise.
“Once they started looking around, they had the emperor-has-no-clothes reaction,” Ahern said.
Kablink is just one more victim of a tech shakeout that shows no signs of ending anytime soon, he said.
“It’s going to stay the same for certain areas,” he said. “There’s a lot of the Web stuff that smells too much like a ‘me too’ type of operation.”
Even top-line Web sites that generate lots of hits such as drkoop.com are in trouble as the seemingly bottomless spigot of investor cash abruptly dries up, Ahern said.
White is no stranger to dealing with business failure. He was a founder of TriTeal Inc., a publicly traded Carlsbad software company that once had about 150 employees and a high-flying stock. The firm got into trouble in the late 1990s, and filed for bankruptcy in 1999.
Some of White’s colleagues at TriTeal are kablink investors. Last week, White was busy attempting to sell the licensing of kablink’s technology to several of the company’s partners. If that can be done, the firm could avoid filing bankruptcy, he said.
While the business failure hurts, White said he isn’t about to retire for good from being an entrepreneur.
“I’m going to get right back in the game. This is a temporary setback.”
