Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Nobody knows...the troubles I've seen...
Published on September 3, 2003 By Draginol In Blogging
The best part about being an entrepreneur is working with really good talented people. They say you can't choose your coworkers but that's the one perk of being an entrepreneur.

And over the past few years, we've put together an outstanding team of developers. I don't mean this as an idle boast but we have some of the best people on earth working together.

Years ago, in the OS/2 market days, we had put together a pretty good team too. But it all nearly collapsed when the OS/2 market died. But it wasn't OS/2 dying itself that did it. We weren't naive. We knew what was coming. But what we hadn't banked on is the stupidty of business partners.

In those days, 90% of our revenue came from third party resellers. We would sell to distributors who would in turn sell to resellers or retailers. And when OS/2 went down the tubes, apparently this came as some shock to the half-witted distributors we were working with. Two of them, Micro Central and Blue Orchards went down oweing us many hundreds of thousands of dollars. In fact, the only major reseller who did pay their bills (bless them) was Indelible Blue.

My budgets had taken into account the decline of the OS/2 market. But they didn't take into account us having to deal with that as well as eating roughly $400,000 in bad debts from our "partners". The result was the near collapse of our company.

We learned a valuable lesson back then. When we rebuilt we wouldn't rely on third parties. We would, instead, sell direct. We would create the world's most sophisticated Internet sales system ever seen. In 1999, we launched Stardock.NET and The Object Desktop Network -- software as a subscription. No biggie nowadays but back in 1999 it was pretty darn amazing. Bear in mind this is a year before Microsoft's own .NET initiative. We came up with .NET first you could say.

And we would still let third parties pay for our stuff if they paid up front. Ubisoft and Take 2 and GT Interactive all sold games that we made but they paid entirely up front.

Today, 75% of our revenue comes from direct sales. 25% comes from other sources. But sure enough, nearly all of that 25% is a collections pay in the butt. We may end up eating a good chunk of that 25% this year. Luckily, because of past experiences, I didn't "count" on that 25%. I budgeted our core business based on the 75% direct sales and planned to use that 25% for future expansion (such as buying a new building).

But it is still amazingly frustrating having to deal with inept or incompotent business "partners". There is little penalty for squandering other people's money in business. I think fly by the pants CEOs would budget and consider things more if there was some personal penalties for running your business into the ground oweing debt. They need some sort of law saying that if your payables exceed your net worth by more than say 2X that the officers of the corporations may be personally liable for some of the repayments.
Comments
on Sep 04, 2003
I think it's worth mentioning that the infrastructure and previews for Stardock.net and the Object Desktop Network were available to our customers starting in the latter portion of 1997. It wasn't officially "released" and supported until 1999, but Stardock was out there learning and doing a good two years earlier.

Just today, we got a [spam] fax touting the benefits of E-Commerce. It gave me a good laugh, considering how long we've had an online presence (websites, interaction with customers via email/usenet/elsewhere, even our own Compuserve forum back in the day , Internet orders, and electronic software distribution.

I also read an article today about how Valve is challenging the games distribution system with their Steam technology for Half-Life2. It's slick, no doubt. But to make it out like they are the first, when companies like Stardock have used the Internet to fulfill sales directly to customers (in some cases, ones who couldn't purchase a game at retail to being with) for years blows my mind. Not that we're the first to have done it either, but I daresay we've been at it consistently since before a dancing baby and "all your base" were the fun things to email to all your friends.

Kris
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