That was the part that really stuck with me too. The previous startup I worked for sold energy-use reduction software and had initial success selling to local

That was the part that really stuck with me too. The previous startup I worked for sold energy-use reduction software and had initial success selling to local governments who wanted to look "green" and help a local startup (outside the valley). Once that limited market was sold to they started having trouble selling to the wider commercial market and didn't make sales targets. Government wasn't really buying to make a successful return on investment so perhaps the CD was also "hollow" as with friends and family.