Blogmocracy in Action!
Guest post by: Mars!
Please bear with me today everyone. This article at first may not seem to be something that is up our alley of interest. Trust me, this is probably one of the most vital articles I have every posted on or linked to. Not because of the article itself, but because of what the article leads to in its comments section.
A little background first. Several years ago I signed up as a beta tester for a new kind of online gaming setup. It turned out that this was called OnLive. The idea is that a person would be able to purchase and rent games for play in the cloud. This would enable someone to play their games on any computer any time, in addition they could have access to their games through the proprietary MicroConsole, Android devices, Apple Ipad and Iphone, and now even Web enabled Vizio televisions. The service has been pretty good, there have been some hits and misses, especially in the area of late releases and slow rollout. I’ve been impressed with what I’ve seen though and especially enjoy the monthly subscription to the playpack, a group of over 200 games that you get for the 10 dollar subscription a month. OnLive has also expanded into a cloud based web browser and Cloud Windows Desktop. The business applications out there are fairly unlimited.
OnLive has recently suffered major financial issues, in this situation they have now sold the company assets to a venture capital group and eliminated all of their stock options. The founders took reduced compensation, the CEO took no compensation, and 1/2 of the previous employees have been rehired under the new structure. This entire move took place invisibly to the customer. Game rollouts continued as normal, server operations were uninterrupted, and they even offered four independent games for free this weekend.
While cruising the internet I found this article on OnLives restructuring. The article does make a couple errors, (the primary error being from the article that led me here that said OnLive had closed) but it’s a pretty sound explanation of what happened. Then something interesting and completely terrifying took place in the comments. Here are a couple for example.
http://techcrunch.com/2012/08/19/onlive-sold-to-onlive-and-nothing-will-change-heartbreaking-transition-notwithstanding/
Mark Birch · Subscribe · Principal at Birch Ventures
Could be a contender for a shadiest deal in tech this year…
Reply · 23 · Like · Follow Post · August 19 at 7:35pmTrevor Alexander Powell · Purdue University
Another reason why people can hate corporations. A good question to ask is how the employees are feeling? Would you go back to a company that did this to you? I figure it would depend on how good the job market is.
Reply · 3 · Like · August 19 at 8:33pmPablo Moreno Galbis · Stanford
How can such a dick move be legal? It seems to imply that you can f*ck over your employees at any time and keep moving as if nothing had happened.
Reply · 3 · Like · Follow Post · August 19 at 7:30pmDaniel Rose · Subscribe · Top Commenter · Ruhr Uni
Companies and investors aren’t lobbying for nothing. Take it from the poor and give it to the rich. Works that way since the stone age. If you are in the position to screw someone, you’ll make sure it’s legal.
Reply · 1 · Like · August 19 at 8:42pmRob Hoffmann · Subscribe · Top Commenter · Richmond, Virginia
If this stunt was legal, it shouldn’t be. And if it’s not legal… well… I wonder if it even matters…
Reply · 2 · Like · Follow Post · August 19 at 7:24pmRob Hoffmann · Subscribe · Top Commenter · Richmond, Virginia
It reads more like fraud than bankruptcy, to me… there are certainly legitimate ways to go bankrupt, if that was their plan. I just get the sense there’s more to this story — that the intent here was to evade the scrutiny that a bankruptcy filing might have brought.It probably is legal (but I maintain that selling a company to a shell company made up of basically the same people probably shouldn’t be legal, especially if it’s to avoid having a bankruptcy judge look at the books, a supposition which is only hypothetical in this case). It doesn’t look terribly ethical, and would probably be a red flag toward doing future business with them.
They “won” short-term. This doesn’t look like a play for long-term viability, though, does it?
Reply · 4 · Like · August 19 at 7:44pmRob Hoffmann · Subscribe · Top Commenter · Richmond, Virginia
Does this strike you as the action of a company that has a chance to survive?And what about the employees who got screwed out of stock options — or the ones who lost their jobs in this shell game?
I’m guessing you’re an OnLive customer. Enjoy it while it lasts.
Reply · 1 · Like · August 19 at 8:30pmFelix Mak · Subscribe · Top Commenter · UC Davis
Rob Hoffmann you’re wrong about me being an onlive customer, just like you’re wrong about this whole thing, what about employees and their stock options? execs and investors had way more stock options, and they lost them all too, what do you think, they’re laughing their ass off because their company is on the brink of collapse?
Reply · Like · August 19 at 8:35pmRob Hoffmann · Subscribe · Top Commenter · Richmond, Virginia
To Felix Mak, and anyone else who’s supporting OnLive here, a couple of thoughts before I head off to work:1. If you really believe that OnLive’s top executives have no equity in OnLive II, you have a very different fundamental belief in how corporations work than I do. The only people who lost stock options in this shuffle were the low-level types who wrote the code and built the servers — the ivory-tower types HAD to have protected themselves, otherwise this wasn’t worth it to them.
2. This move, while it may help OnLive II short-term, poisons the well for future startups. Since most startups have to conserve cash, the lure of stock options is one way to bring in the best available talent. If that talent no longer believes that their stock options are tied to the well-being of the company (but instead can be voided on a whim), they’ll start asking for more cash up-front instead — leading to both fewer available jobs in startups and fewer startups in general.
OnLive may have “won”, but the startup infrastructure lost.
Reply · 1 · Like · August 20 at 5:30amFelix Mak · Subscribe · Top Commenter · UC Davis
oh i see what we have here, a bigot who discriminates against executives
Reply · Like · August 20 at 11:04amI chose to use all of Rob Hoffmans posts because he is the best example of what is wrong in this world today. Insane rage against corporations with no clue on how these things work. Luckily, there are several more people like Felix Mak that understand the situation and what happened.
In a summary we have a situation where a company was going to fail, it was saved from shutting down thus protecting the customers purchases, 1/2 of the employees were rehired, the other half have consultant offers with the possibility of future rehire, and yet most of the commentators on a tech site are pouring hate on the company and the venture investors. From now on if anyone asks me how Obama got reelected and how there is any doubt about his defeat, I will just quietly point them to the comments section of that article.
I weep for this country.
-Mars
