4 ms·

OnLive Sold To OnLive And Nothing Will Change

47 points by jamesjyu 14y ago

batgaijin 14y ago
Huh, I wonder how many startups are going to start pulling this to stay 'competitive'. Can't just let the plebes think they can get shares without being a founder or investor.
- pbiggar 14y ago
  It looks like both the founders and investors were wiped out.
CaveTech 14y ago
They're going to give stock options to former employees in exchange for consulting work? Stock options similar to the ones the just forcefully discarded from said employees? I'd be camping out to take them up on that offer!
- posabsolute 14y ago
  if that is true, that's just a mess. They would not have any product without them. I really wonder how you can face your fired employes and tell them that all their stocks are gone but that they can do some consulting do get those back.
  - MediaSquirrel 14y ago
    Options in the old company would have been worth even less given the preference overhang from existing investors! The new company is actually good news for employees as a clean cap table and a reasonable (lower) valuation gives employees a realistic chance that their options will ever be "in the money." The old OnLive was poison.
Mythbusters 14y ago
A transaction like this is sure to raise the confidence of any enterprise thinking of using the onlive desktop product. :)
droithomme 14y ago
> All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party. What is the name of this assignee? They seem very motivated to not state that piece of information, or how much he was paid by the OnLive Mk II company for these assets.
- Stratoscope 14y ago
  From the press release quoted in the article: "An affiliate of Lauder Partners was the first investor in the newly-structured company..." http://www.lauderpartners.com/ http://www.lauderpartners.com/ Edit: Ah, I just realized that isn't exactly the answer to your question, but may be relevant at least...
  - mikeryan 14y ago
    Actually it is Lauder Partners also invests in a Comapny called "Active Video Networks."[1] Active Video Networks has for years been trying to do the same thing on Cable Set Top Boxes what Onlive has been doing with Games to PCs. Which is basically move all the processing to the cloud with low end thin clients in the home. In the TV Case they'd push interactive apps (via an MPEG frame over your cable infrastructure) to your cable box and basically you could get a whole interactive TV system on crappy old cable boxes. Looks like Gary Lauder (who's the main guy at Lauder Partners) is doubling down on this strategy. [1] http://www.activevideo.com/ http://www.activevideo.com/
- duskwuff 14y ago
  One of the commenters on http://www.joystiq.com/2012/08/18/documenting-the-death-of-onlive-notes-from-the-companys-final/#lf_comment=34471476 http://www.joystiq.com/2012/08/18/documenting-the-death-of-o... claims to be an employee, and names Microsoft as the assignee: > We start cutting corners and being a bit more conservative, and then finally Sony comes to our rescue. But when they look into how our business is being run, they see it's a mess, and pass. We're basically left screwed, but then Steve approaches Microsoft and begs them to take us. They see we're on the verge of bankruptcy and tell him they only want the top-earners and "brains" behind the operation (the 1%) and that they'll pass if he doesn't "trim the fat." So that's exactly what he does.
adrr 14y ago
If it was a pure asset transfer and not ownership. Did the investors and other share holders get burned?
AznHisoka 14y ago
Sooner or later, you gotta make money. Hype doesn't pay the bills (and all I heard about is hype about OnLive). There's no free lunch.
casca 14y ago
There's rightfully a fair amount of noise being made about this as many on HN can imagine themselves in a similar situation. But there may be another lesson to take here. For me, the key phrase in this article is the first one: "Faced with a dire financial situation...". The nature of working for a startup where you trade current income for potentially huge future income implies a level of risk. Looking at the breathless press coverage, it's easy to imagine that most startups are a raging success. The truth is that most will be in a "dire financial situation" and have no choice but to perform some juggling if there's any chance that they'll stay in business. It's quite possible that the owners were deliberately trying to screw the employees, but more likely is that it's a desperate move by desperate management who are trying to salvage their dream.
- phillmv 14y ago
  Why was it in a dire financial situation if it had millions of subscribers? I can't find any descriptions of the cause of the crap finances, especially with millions of subscribers. A likely scenario seems possible: their financiers/vcs decided they didn't like the direction the company was taking/unhappy with growth and called in their loans and forced everyone out. Everyone, except the vcs, takes a haircut. (Was there a more straightforward reason?)
  - wmf 14y ago
    There was a rumor about 8,000 servers with only 1,600 simultaneous users; in other words an out-of-control burn rate.
    - fjarlq 14y ago
      That rumor was reportedly a rhetorical question asked by Perlman during the last company meeting. Anybody know why they didn't use a flexible virtual server solution like Amazon EC2? "There's no way to exactly estimate how many servers we'd need. So we literally bought thousands of them, and all the equipment and networks to go with it," Perlman told employees. Those servers, he said, came with lengthy contracts -- contracts that tied OnLive's capital up in maintaining servers that few (if any) users were actually using. "If you've got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?" -- http://www.joystiq.com/2012/08/18/documenting-the-death-of-onlive-notes-from-the-companys-final/ http://www.joystiq.com/2012/08/18/documenting-the-death-of-o...
jstanderfer 14y ago
HN is focusing far too much on the employee stock options. Once any company gets into a "dire financial situation", the options are already completely worthless. The worse alternative would have been to not restructure and just shut down the company leaving everyone without stock options, jobs and probably without severance either.
- balloot 14y ago
  How exactly does screwing the employees out of stock options help the company not shut down? Outstanding stock options have zero effect on a company's profitability/burn rate. In any event, OnLive might as well just shut down anyway. It has completely poisoned its name and nobody worth a damn would go work there after this stunt. And it's far too ambitious a project to have any chance to thrive with B-level engineering talent working on it.
aqtyu 14y ago
Early stage startup are just not worth the risk anymoe.
dminor 14y ago
> and that rumors of Steve Perlman cashing out of the old company were not true. Gee techcrunch, I wonder who started those rumors?
guscost 14y ago
It's more of a restructuring?
GlennS 14y ago
If the company is effectively bankrupt, then your equity is worth nothing. That's the risk you take when you accept shares in a company as payment.
deleted 14y ago
[deleted]

47 points by jamesjyu 14y ago

Huh, I wonder how many startups are going to start pulling this to stay 'competitive'. Can't just let the plebes think they can get shares without being a founder or investor.

pbiggar 14y ago
It looks like both the founders and investors were wiped out.

CaveTech 14y ago

They're going to give stock options to former employees in exchange for consulting work? Stock options similar to the ones the just forcefully discarded from said employees? I'd be camping out to take them up on that offer!

posabsolute 14y ago
if that is true, that's just a mess. They would not have any product without them. I really wonder how you can face your fired employes and tell them that all their stocks are gone but that they can do some consulting do get those back.
- MediaSquirrel 14y ago
  Options in the old company would have been worth even less given the preference overhang from existing investors! The new company is actually good news for employees as a clean cap table and a reasonable (lower) valuation gives employees a realistic chance that their options will ever be "in the money." The old OnLive was poison.

Mythbusters 14y ago

A transaction like this is sure to raise the confidence of any enterprise thinking of using the onlive desktop product. :)

droithomme 14y ago

> All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party. What is the name of this assignee? They seem very motivated to not state that piece of information, or how much he was paid by the OnLive Mk II company for these assets.

Stratoscope 14y ago
From the press release quoted in the article: "An affiliate of Lauder Partners was the first investor in the newly-structured company..." http://www.lauderpartners.com/ http://www.lauderpartners.com/ Edit: Ah, I just realized that isn't exactly the answer to your question, but may be relevant at least...
- mikeryan 14y ago
  Actually it is Lauder Partners also invests in a Comapny called "Active Video Networks."[1] Active Video Networks has for years been trying to do the same thing on Cable Set Top Boxes what Onlive has been doing with Games to PCs. Which is basically move all the processing to the cloud with low end thin clients in the home. In the TV Case they'd push interactive apps (via an MPEG frame over your cable infrastructure) to your cable box and basically you could get a whole interactive TV system on crappy old cable boxes. Looks like Gary Lauder (who's the main guy at Lauder Partners) is doubling down on this strategy. [1] http://www.activevideo.com/ http://www.activevideo.com/
duskwuff 14y ago
One of the commenters on http://www.joystiq.com/2012/08/18/documenting-the-death-of-onlive-notes-from-the-companys-final/#lf_comment=34471476 http://www.joystiq.com/2012/08/18/documenting-the-death-of-o... claims to be an employee, and names Microsoft as the assignee: > We start cutting corners and being a bit more conservative, and then finally Sony comes to our rescue. But when they look into how our business is being run, they see it's a mess, and pass. We're basically left screwed, but then Steve approaches Microsoft and begs them to take us. They see we're on the verge of bankruptcy and tell him they only want the top-earners and "brains" behind the operation (the 1%) and that they'll pass if he doesn't "trim the fat." So that's exactly what he does.

adrr 14y ago

If it was a pure asset transfer and not ownership. Did the investors and other share holders get burned?

AznHisoka 14y ago

Sooner or later, you gotta make money. Hype doesn't pay the bills (and all I heard about is hype about OnLive). There's no free lunch.

casca 14y ago

There's rightfully a fair amount of noise being made about this as many on HN can imagine themselves in a similar situation. But there may be another lesson to take here. For me, the key phrase in this article is the first one: "Faced with a dire financial situation...". The nature of working for a startup where you trade current income for potentially huge future income implies a level of risk. Looking at the breathless press coverage, it's easy to imagine that most startups are a raging success. The truth is that most will be in a "dire financial situation" and have no choice but to perform some juggling if there's any chance that they'll stay in business. It's quite possible that the owners were deliberately trying to screw the employees, but more likely is that it's a desperate move by desperate management who are trying to salvage their dream.

phillmv 14y ago
Why was it in a dire financial situation if it had millions of subscribers? I can't find any descriptions of the cause of the crap finances, especially with millions of subscribers. A likely scenario seems possible: their financiers/vcs decided they didn't like the direction the company was taking/unhappy with growth and called in their loans and forced everyone out. Everyone, except the vcs, takes a haircut. (Was there a more straightforward reason?)
- wmf 14y ago
  There was a rumor about 8,000 servers with only 1,600 simultaneous users; in other words an out-of-control burn rate.
  - fjarlq 14y ago
    That rumor was reportedly a rhetorical question asked by Perlman during the last company meeting. Anybody know why they didn't use a flexible virtual server solution like Amazon EC2? "There's no way to exactly estimate how many servers we'd need. So we literally bought thousands of them, and all the equipment and networks to go with it," Perlman told employees. Those servers, he said, came with lengthy contracts -- contracts that tied OnLive's capital up in maintaining servers that few (if any) users were actually using. "If you've got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?" -- http://www.joystiq.com/2012/08/18/documenting-the-death-of-onlive-notes-from-the-companys-final/ http://www.joystiq.com/2012/08/18/documenting-the-death-of-o...

jstanderfer 14y ago

HN is focusing far too much on the employee stock options. Once any company gets into a "dire financial situation", the options are already completely worthless. The worse alternative would have been to not restructure and just shut down the company leaving everyone without stock options, jobs and probably without severance either.

balloot 14y ago
How exactly does screwing the employees out of stock options help the company not shut down? Outstanding stock options have zero effect on a company's profitability/burn rate. In any event, OnLive might as well just shut down anyway. It has completely poisoned its name and nobody worth a damn would go work there after this stunt. And it's far too ambitious a project to have any chance to thrive with B-level engineering talent working on it.

aqtyu 14y ago

Early stage startup are just not worth the risk anymoe.

dminor 14y ago

> and that rumors of Steve Perlman cashing out of the old company were not true. Gee techcrunch, I wonder who started those rumors?

guscost 14y ago

It's more of a restructuring?

GlennS 14y ago

If the company is effectively bankrupt, then your equity is worth nothing. That's the risk you take when you accept shares in a company as payment.

deleted 14y ago

[deleted]