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A year and a half ago, my son Bob co-founded a company called Trenza which raised $3.3 million and set out to revolutionize the Internet. At its peak, he had two dozen employees, and they developed software that made Web browsing a 3D experience. Ordinary Web site and Web pages appeared in a 3D landscape, making it far easier to recognize the context and navigate to what you want. And designers using their authoring tools would be designing in 3D rather than 2D -- in other words, instead of giving your creative artists a blackboard to work with, you give them the Sistine Chapel.
While their technology moved forward at a rapid clip, the Internet business environment around them collapsed and transformed. When they started, investors were looking for the next great new thing that would change the world. They weren't interested in cautious, slow-growth companies. They weren't looking for penny-ante current profits. They were looking for a huge upside. They were willing to gamble, hoping that one of their investments would win big -- very, very big. Trenza was positioned great for investors of that kind. They were narrowly focused on developing the technology as well and as quickly as possible. They had no marketing. Once they completed their second round of funding, and once the product was complete, then they could line up customers. For now, they needed to focus their small team on the product itself.
As the investment environment turned bad, Trenza continued to attract interest. For about eight months, they were on the brink of getting one set or another of second round investors lined up. But the investors' criteria were in the process of changing. Increasingly, investors shied away from risks, and looked for sure wins. They no longer expected huge IPOs. Rather they were afraid of losing money. With the huge drop in stock prices, the assets they had to work with were greatly diminished. And the stock of well-established technology companies, with billions in annual revenue, billions in fixed assets, and hundreds of thousands of employees was selling for a small fraction of what it used to sell for. If you had money to spend, you would put it into one of these established and far undervalued companies rather than gambling on a startup with no customers and zero current revenue.
Toward the end, AOL expressed interest in a takeover. Dozens of phone calls and meetings seemed to bring that possibility ever closer to reality. With firm faith in the potential of their technology, nearly all of Trenza's employees hung on tenaciously, working the final month and a half for no pay, in hopes that the AOL deal would come through.
Then, at time when prospects looked brighter than they had in many a month, with everyone at AOL expressing enthusiasm, and only a couple more corporate hurdles to clear, someone near the top said no, and it was all over.
They closed the company down with a few dollars still in the bank, rather than go into bankruptcy. And two dozen brilliant hardworking Internet experts found themselves in a job market with very few opportunities.
Bob decided it was time for a break. He and his girlfriend set out on a three month trip to the Far East, with the hope that when they returned in September the market would have turned around and they'd have a clearer idea of what they wanted to do next. They started in Hong Kong and China. They are now in Mongolia. Next they'll go to Bali, Borneo, Singapore, Viet Nam, and Thailand. At various times, they'll be riding camels and yaks and elephants.
So yesterday, I got an email from Bob, sent from a town with a few hundred
inhabitants in a remote area of Mongolia. Previously, I'd gotten half a
dozen emails from him from small towns in China. Apparently, there are
public Internet cafes everywhere. And the irony struck me -- here Internet
business is still on very shaky ground, with more good companies folding,
day after day, because they simply can't raise the next round of financing.
And meanwhile the underlying strength of the Internet -- the people connected
-- continues to grow; and online interactions among people everywhere continue
to transform the world.
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