Crash-and-Burn Case Study

This story is reminiscent of the dot-com days, when tech companies hit the wall at two hundred miles an hour.  One day they’re flush with cash, enjoying the new marble floors and capuccino machines; the next, the doors are closed and everyone is laid off.

Canadian company Geosign rode this wave in 2007 with $100 million in revenue and $160 million in VC funding.  Now, a year later, the sign posted on their home page says it all: “Sorry, this site is temporarily unavailable. Please check back later.” 

How did it happen?  The company was like a small sailboat that capsized when the mighty Google supertanker changed direction.  Geosign initially profited by taking advantage of an internet advertising system that came to a crashing halt when Google changed its policies. The changes were made by Google to ensure that ad-words took visitors to legitimate content, rather than pages which were composed of nothing but more ads. Google feared that customers would lose confidence in ad-words (and the Google search engine) if searches simply led to a nest of advertising links.  Before Geosign could reposition itself as a content-provider, Google had changed its policies and the damage was done.  Geosign went belly-up.  It serves as a cautionary tale for small tech companies and illustrates the power of dominant players like Google.

Related reading: Financial Post Business Magazine Cover story: Blown away


Calgary – 15:25 MST

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