A well-capitalized ad broker would be able to pay its publishers promptly; it's part of the reason why such middlemen take a big cut of advertisers' payments. The only sensible reason why Glam can't pay Web publishers promptly is because it no longer has the capital to float its accounts receivable, despite raising $85 million earlier this year. I'm sure Arora will deny that he's running low on money — in which case he will be tacitly admitting that he's stiffing his partners.

W: Letter of Apology
Elon Musk
Sent: Monday, November 03, 2008 4:22 PM
To: Everybody
Below is what I believe to be a sincere apology from Peng Zhou for the leak to Valleywag.
To: Elon Musk
Subject: Re: Letter of Apology
——————————————————————————————-
Dear Tesla Motors Employees,
Tesla Motors is a great company and is pioneering the green revolution. I have always been a proud Tesla employee and we all worked extremely hard towards the company mission. Throughout past two years, I also took a wild ride in the great emotional roller-coaster of WhiteStar 1.0, 2.0 and Model S. Having driven Model S mule few times, I truly believe this is the vehicle that will change the world.
However, macro economic climate changed so dramatically and Model S is getting delayed and the company is refocusing. The past month has been very difficult, sitting through planning meetings and watch employees make in or out of the layoff list. It is so sad to lose 87 employees in a week. I became very upset and did the very foolish thing of writing a letter to Valleywag. I have never thought this letter would create such an upsetting situation for Tesla Motors and I should have never sent that letter. When Elon asked the originator of the letter to step forward, I should have done so. I am deeply sorry things happened this way.
I have submitted my resignation with my manager, who had no knowledge of this. I’ll try my best to make situations better for Tesla Motors.
Again, my sincere apologies.
Best Regards,
Peng

Current Tesla shareholders have 30 days to choose, through a process known as a rights offering, whether to fund the debt, which is convertible, at a later round of financing, to shares. Tesla thereby avoids setting a new, presumably lower valuation for the company — almost a certainty if it had issued new shares, given Tesla's straitened financial condition. But the reality remains: Having raised $146 million in venture capital and tens of millions of dollars more from customers putting down deposits on the $109,000 Roadster, Tesla is now sinking into debt. In January, it may obtain a $200 million loan guarantee from the Department of Energy — meaning that it will be borrowing more cash. $9 million in the bank now, with $240 million in debt to come: Tesla will soon resemble, in miniature, the stumbling Detroit giants it hoped to overturn.

As a longtime employee of Tesla Motors, yesterday was the worst day since i joined Tesla Motors four years ago. A company all-hands meeting was called yesterday evening and a simple six-page company financial model was communicated. I was shocked to learn that we only had ~$9 million in the bank.

The first few hundred cars have been paid full in cash when they booked their vehicles. The reservations following that required from $4,000 to $60,000 of deposit. We have over 1,200 reservations, which manes we've taken multiples of tens of millions of cash from our customers and have spent them all. Meanwhile, we only delivered less than 50 cars.

I actually talked a close friend of mine into putting down $60,000 for a Tesla Roadster. I cannot conscientiously be a bystander anymore and allow my company to deceive the public and defraud our dear customers. Our customers and the general public are the reason Tesla is so loved. The fact that they are being lied to is just wrong.

Update: Tesla's Musk has confirmed his employee's report that the company only has $9 million in the bank.

(Photo by danegolden)

Besides Peerflix, the company started by jilted MySpacer Brad Greenspan has also purchased struggling companies PageFlakes and Revver in the last year, and Greenspan made a personal investment in Flurl, but was turned away by JumpTV.

All that wheeling and dealing while not paying attention to basic operations like payroll? Flashy products and technology that may or may not actually exist? "Out of touch" sounds about right.

Greenspan and friends will probably just blame the market as management shorts employees, since that's all the rage these days. But this looks a lot like a textbook case of "excess and lack of self-discipline" to me. Who may end up the winner in all this? The Hollywood Hills Cat Burglar, who seems to have gotten away from Greenspan's mess just in time. (Photo by Getty/Alberto E. Rodriguez)

Gator had changed its name to Claria, and raised some $40 million to launch a personalized homepage which never caught on. In the sneakiest move of all, it then raised $11.5 million under a new company name, JellyCloud, with the same set of executives as Claria — Scott Vandevelde and Scott Eagle among them. Was Jellycloud just Claria reborn? It's now a moot point, if our tipster's report is accurate. And a painful mistake for US Venture Partners, SoftBank, Sand Hill Capital and Crosslink Capital — who have managed to lose $11.5 million in just five months.

It's as if he thought that playing a game of buzzword bingo would masquerade as strategic thought. A television salesman by trade, Falco was plucked by Time Warner CEO Jeff Bewkes from NBC Universal to replace Jon Miller, in a universally derided move. A commonly held belief among insiders: Falco and Bewkes thought AOL would be sold off by now, with Falco moving on to some role at Time Warner's film and television properties. AOL has continued to embarrass. And so has Falco. The only question is which exit will come first.

IAC CEO Barry Diller has a ghastly track record of launching projects in-house; almost every vaguely promising Internet property he owns, he bought from someone else: Ask.com, Match.com, CitySearch, and so on.

And personal finance sites are deadly. In trying to break the mold, FiLife managed to be even more condescending than most. Its introduction:

Most personal-finance sites are snooze-filled, sometimes schoolmarmish affairs. Save more money! Don't you dare go out to dinner! Suffer, scrimp, suffer, scrimp. We're kind of tired of that approach, and we reckon you are, too.

Watching Wall Street's meltdown, would you be surprised if 20somethings were uninterested in qualifying for a mortgage and investing in mutual funds? Personal-finance sites are usually more motivated by luring advertisers than readers. The former are now in scarce supply, too.

Heavy has never been a particularly reputable company. It used to inflate its traffic with popup ads. Yet it still managed to raise $20 million in venture capital in January 2007. By last fall, investors began to clamor for more revenue. The startup's management then brought in what our source calls "C-level grownups."

The hires included CMO Eric Hadley from Microsoft; CTO Scott Penberthy from Photobucket; CFO Todd Sloan from Nielsen; and VP Richard Rocca, who spent a few months at shady ad network Glam Media after leaving the equally unsavory ad startup Gorilla Nation.

That crew now runs the company, "but the problem is there's not going to be anybody to run it with them," says our source, who calls the new leaders "ineffective."

Most C-level people, you know, they might have been able to roll their sleeves at one point in time, but now they're pretty much ineffective people. In one instance, [Hadley, who came] from Microsoft was going around asking for help with Excel. Didn't they give classes on Microsoft Excel at Microsoft? He was like, 'well, uh, I went to business school.

Heavy's problems run deeper than its executives' lack of skill with office-productivity software. Its advertising deal with MillerCoors to sponsor Heavy's "Tiny Entourage" show has the brewer in trouble with consumer advocate groups. Also, our source says the ad network that's supposed to save the company isn't making any money.

The litany of defections from Heavy is long. The VP of west coast sales left in June. The VP of east coast sales left this week for a competitor. Three sales directors on East Coast left, leaving one with the entire territory. ("He's loving it," our source says.) The entire U.K. team quit in June, and the company is trying to hire new staff there. The VP of marketing left for Ripe Digital Entertainment, an online-video studio. And Jimmy Jellinek, a VP of programming who had quit the company once but returned in February, has left again, this time for Playboy.

But the hardest loss to bear, for a company trying to attract 18-34 males, may be comely reality-TV star Jen Schefft. Scheftt, who starred in ABC's "The Bachelorette," only joined the company in June. She's gone, too, our tipster says. That's a pretty abrupt cancellation.

(Correction: Richard Rocca informs us he was not fired from Gorilla Nation, as we reported, but left on his own. "Gorilla Nation and I are still close and I forward business there way all the time.")

It's a long-held truism in the Valley not to risk your own money on a project when there are plenty of people willing to let you risk theirs in the hope of a return. You can now add that you probably shouldn't risk your company's most vital assets in exchange for loans from interested parties. As it stands, all of Flagship and partner Ping0's employees have been laid off, and HanbitSoft along with competitor Perfect World are now sniffing around the remains looking to poach whatever engineering and development talent they can, while Roper and other executives are said to be paying the last of the team's salaries out of their own pockets.

And according to our source, the death of the company couldn't have come at a worse time. The development team were just putting the finishing touches on the code to allow players of Mythos to make "real money transactions" — in other words, pay for in game items and new content as they played. By offering the game for free or nearly so and then charging the players nominal fees afterwards, the game can benefit from wide adoption early on and a revenue stream to pay for the development of more features and content as time went on.

But it meant that Flagship would have to eat the cost of early game development (which can be wildly expensive) and would almost guaranteed not to recoup the full cost on release. While it's an interesting business model that could prove wildly profitable a well-funded company, at one where Roper's old pal from Blizzard, CFO Ken Williams, couldn't keep the burn rate under control and was pawning IP off to licensees in exchange for bridge loans, it might make a little more sense to get some sales in first and nickel-and-dime players later. (Photo by Gamerscore Blog)

Instead, PodTech's buyers get a company that may not have been paying employees after a "reorg" and was pretty much entirely in hock to its bankers, says our tipster. On the one hand, the company has tried to drum up new business while on the other, quiet calls were being made behind the scene looking to unload what scant assets the company held — kudos to the unnamed acquirer for picking up "classic Robert Scoble!" Might we suggest removing "Pod" from the name of the company? With the iPod displaced by the iPhone and podcasting moribund, it's what the cool kids like Adam Curry are doing.

Now rumors have it that while the upper management is desperately seeking to merge with another player in this space to help stop their cash hemorrhaging (Healthline, HealthCentral and Waterfront are all leading candidates), they'll have to push out another set of layoffs on the quickly-shrinking company. My contacts suggest the next set of layoffs will occur by month's end and be in the 35 - 45 person range, bringing the company down to a 140-person business (from its high of 250+).

The save-the-company-through-acquisition plan is believable. Revolution Health's latest strategy has been to pursue traffic for traffic's sake — like last month's deal with social network Daily Strength. The company, we're told, earns most of its revenues from CarePages, a previous acquisition. Combining with other health sites to increase advertising inventory essentially turns Revolution Health into a vertical ad network. Because of the pace at which ad dollars are moving online, it's a very popular move for failing companies these days. But it's not the consumer revolution in healthcare Case promised.

As a last ditch effort, they were going to go all porn with 'CarnalTV.' They lost the last of their talent at this point because they didn't want to work for a porn company.

Dear XXXXXXXX

A number of difficult personal family health problems have led me to make a few hard choices related to Red Herring Wireless.

Indeed, for the first time in nineteen years, I have decided to postpone an event. Red Herring Wireless has been rescheduled to the mid September in Beijing - we will notify you of the exact date in the coming weeks.

In Beijing this month we had assembled a unique group of exceptional players who have managed to play an instrumental role in defining the wireless sector. Telstra, China Mobile, eAccess and many others committed to join us. We trust that we will manage to see them again in September.

We will contact you in the next weeks and I look forward to working with you. I appreciate your understanding and I trust we will speak soon,

With kindest regards,

Alex Vieux
CEO

We had hundreds of active users and you could feel the buzz around it. We threw a few parties that continued to support the good mood all around. Hell, our CTO Sam even met his current girlfriend at one of them.

One hopes those laptop's batteries were charged. A source tells us PG&E was also preparing to shut off the Herring's electricity over an unpaid power bill.

In this clip filmed at a recent Red Herring conference Vieux bragged about firing unproductive employees, and scolded entrepreneurs for not doing the same. What would he say about a CEO who doesn't pay rent on his employees' offices?

After winning kudos from the site that chronicles startups in 2005, Michael Arrington invested in the company. Cubrilovic even contributed to the site and crashed at Michael Arrington's place for a time. What followed were many laudatory posts which, though the relationship was disclosed, didn't state the obvious — that by mid-2007 the company owed customers, investors and employees money.

The only mention that the site, and the company, was facing problems came in an addendum to a post about Joyent. Arrington had stopped writing about the company as investor, but continued to write other companies he'd funded which weren't tanking. Duncan Riley finally pointed out last January that "there are big questions about [Omnidrive's] long term viability." Riley proceeded to defend Cubrilovic on a podcast run by the entrepreneur, before one of the hosts described spending an evening at Arrington's house in January of 2007 "doing shots all night with [Cubrilovic]."

The details that I've heard are that a competitor, possibly Box.net, tried to make a deal that could have at least allowed the company to close the book on some debts; but that because of the company's structure, Cubrilovic had to sign off on the deal, yet was unreachable. Observers say that the CEO's erratic behavior showed a pattern perhaps indicative, in their opinion, of substance abuse. Former CTO Phil Morle's contention that payments went directly to an account held by Cubrilovic sounds like a recipe for a binge-spending disaster.

In an update to his original post that Cook published yesterday, the investor seemed to dance around the issue of alcoholism:

Too many parties, too many conferences, too much working between 1-4am, not enough working normal business hours, too much socializing, not enough focus, no business development, and not enough follow up and delivery.

It's true. I used to work for them over 2 years ago and all of my friends that were there are now gone. They laid off the last of them today. It's sad but LONG OVERDUE. Akimbo is now officially dead although the heartbeat died over a year ago.

Not even the HR person knew about it until the rest of the employees were notified (in an impromptu all-hands meeting in the middle of our normal lunch hour - how obnoxious!). The execs, of course, had to have known about it the day before, and one of them even assured some of us yesterday that we had "nothing to worry about" in terms of the health of the company or job security.

It seems like the CEO was hoping he'd be able to swoop in at the last minute and play the hero. Unfortunately, such was not meant to be. They're only keeping all of the execs and high-level managers, a couple of engineers, the accountant, the HR person, and a little flunky who filled a position that wasn't even open at the time of his interview. Apparently he is related to or knows a friend of the CEO. What the hell were they thinking?!?

It's all a bit shady if you ask me. Clearly the board thought so, too.

In short, Vieux pressures his "finalists" to attend the conference and pay $7,500 for a video interview. (No wonder his videographers quit all at once, citing interference from the business side of the Herring.) What's really shameful is that executives like Google's David Lawee and Microsoft's Dan'l Lewin lend their names to this farce.

Just wanted to share the news that I have resigned as a director from Pulvermedia. And I am not able to say anything else nor can I address any questions about this.

The debate is interesting enough: With cell phones constantly changing, should one try to optimize Web pages for small screens and numeric keypads, or make tools that run on any number of phones?

But that debate doesn't tell us why Mowser failed. A former Yahoo insider says Beattie's Mowser drew on several elements of Yahoo's Sushi platform for cell-phones, now known as Yahoo OneSearch and OneConnect, among other names. Beattie, better known inside Yahoo for his prolific blogging and conference attendance than for his product-management skills, just couldn't duplicate the design. (Other ex-Yahoos did manage to recreate parts of Sushi, allegedly so successfully that they got sued by Yahoo.)

His former colleagues, from what we hear, aren't shedding too many tears over his tale of woe, which includes getting his car repossessed twice and subsisting on buttered macaroni. Then again, given that his alternative was somehow hanging onto a job at Yahoo, I'm not sure Beattie was worse off in the end.

The departures include Yahoo veteran Tish Whitcraft, CFO Tom Cronan, and VP of communications Sarah Ross — though we're told Ross is still consulting for the company. Outcast PR, Ooma's agency, tells me it no longer represents the company; dropping a PR agency is usually the sign of a company whose cash is running short. No wonder: Ooma's phone device is overpriced and technically unimpressive.