Amp’d Mobile Implodes: Burns $360 million, Declares Bankruptcy

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1. Steve Macdonald
   

   June 2nd, 2007 at 9:07 pm

   These ventures are extremely risky. They are typically all or none: either monster success stories or absolute failures. It all depends upon whether they hit that magical tipping point…

2. Alaska Miller
   

   June 2nd, 2007 at 9:35 pm

   LAUGH OUT LOUD.

   Hey guys! Let’s scrape up $360 million and launch a phone company!! Just outright hilarious. Of course management all walked away with a good piece of that 360 mil.

3. CHEF
   

   June 2nd, 2007 at 9:36 pm

   Uhh…..what qualifies Amp’d as a “Mobile social networking company”?

   Messaging and blogs say “Coming Soon”:

   http://ampdlive.ampd.com/MessagingBlogs

   Their “Community” downloadable applications section consists of a (single) AOL AIM client:

   http://ampdlive.ampd.com/NewsL.....munity.php

   Amp’d is/was more of an attempt to market premium carrier “content” as opposed to acting as a platform for social networking activities / services / interaction amongst their suscribers. This is what happens when the LA content-centric tards attempt to make a run at InterWebs 2.0.

   Helio is closer to your so-called “Mobile social networking company”: they’ve got that “Buddy Beacon” feature that lets you see the location of other Helio subs, gift / begging of pay for content between subs, as well as the email client on their Ocean phone with integrated instant messaging status.

   Of course, Helio is burning through cash at a pretty rapid rate as well.

   LOL.

   Did I point out there are probably more Jaiku users than Helio?

4. Host
   

   June 2nd, 2007 at 9:43 pm

   Hey whoever let them burn that much . AmpD was a MVNO and now anybody can become a MVNO. Try SONOPIA it is free and you can become another AMPD by just spending $50. Not that everybody would like to become one especially when it is going to the deadpool

5. EP
   

   June 2nd, 2007 at 9:44 pm

   It really is amazing that so much money went into such a risky industry. I dont understand what the investors where thinking, with that kind of money poured in at what kind of exit valuation would they have been able to walk away happy? It seems like a really bad play ending in a worst case scenario.

6. Jimmy
   

   June 2nd, 2007 at 9:45 pm

   So a company whose main business was being a phone company is web 2.0?

   Man, that definition sure has gotten broad.

7. Duncan Riley
   

   June 2nd, 2007 at 9:49 pm

   Jimmy
   it was pretty much both, it was a phone company offering Web 2.0 functionality, it’s exactly why I noted it as such and certainly some of its competitors aren’t strictly phone companies either, you’ll see services such as VelvetPuffin and Loopt in the TechCrunch archives.

8. Andrew
   

   June 2nd, 2007 at 9:52 pm

   seems like Web 2.0 now is any company that became successful or launched after the bubble burst

9. Mike Malone
   

   June 2nd, 2007 at 9:52 pm

   Bankrupt doesn’t necessarily mean dead… the group of investors who are $360 million into this deal will probably want to salvage _something_. The company has done enough marketing/advertising to have a bit of brand recognition, which someone will probably find valuable… and they presumably have some sort of user base.

   Basically, this may not be the last we hear of amp’d mobile.

10. Host
    

    June 2nd, 2007 at 9:58 pm

    “Bankrupt doesn’t necessarily mean dead…”

    when a founder lets his company go bankrupt..that means he is no more interested to run it.

    of course the investors who have pumped ..millions of dollars..and feel duped…and who are not willing to face the fact that they made a wrong investment decision…will still be looking for some way to make the company stand on its own again…so that the investors can get maybe 10 cents of the dollar…

    but..a startup without the original founder is like a patient in a coma.

11. EH
    

    June 2nd, 2007 at 10:05 pm

    A vintage turn-of-the-millenium story!

12. Doug Mehus
    

    June 2nd, 2007 at 10:09 pm

    It’s worth noting that Telus Ventures, the venture capital arm of Canadian diversified telco Telus Communications Inc., and also my wireless phone company, was a signficant investor in Amp’d. They also aggressively promote Amp’d to young users in e-mail marketing and on http://www.telusmobility.com/

    Cheers,
    Doug

13. india JACK
    

    June 2nd, 2007 at 10:19 pm

    Dude, all you guys are idiots…

    AMP’d is pulling in $20 Million bucks a month from customers!!!!

    That’s about $20 Million more than any of you guys have ever pulled in…

    There will be. Little beelt tightening a dilution of equity and an AMP’d 3.0 that will be a Billion Dollar revenue generating company in 2 years…

    You guys suck, how muchy of the $360 Million did you get?? NONE…..

    It’s like you think AT&T and Verizon are customer centric companies….

    If AMP’d is really up for sale there will be 20 companies with multi-billion $$ balance sheets ready to buy them….

14. Neil
    

    June 2nd, 2007 at 10:34 pm

    agreed, C11 doesn’t mean the end of the game, but in this case (according to 12) 20 mill revenue doesn’t cover the costs of running the operation which is a shocking statment to read.

    As far as this story goes, I think it highlights the problems that Telco’s have in entering the SNS space. Sure, they have users, and yes they stand to make a hell of a lot of money from GPS, PSMS and also the opportunity to migrate users to new services in a non formal environment.

    The problem is that using a SNS on a mobile phone isnt very interesting. The screen is just too small to make anything other than messaging interesting. I can see Telcos partnering with SNS to create synergy, or buying out an existing SNS and introducing mobile realted content, but the cahnces of someone like AT&T, BY etc building their own network from scratch are zero - IMHO.

15. Allen Stern
    

    June 2nd, 2007 at 10:40 pm

    I am with Jimmy - where is this Web 2.0? I mean the bodega down the block from me closed last week - maybe it was Web 2.0 too? They had an internet site

    The interesting thing here for me was that they offered me a job about 18 months ago.

16. Bryan
    

    June 2nd, 2007 at 11:05 pm

    MVNOs aren’t real wireless carriers. They just piggy back off of the real ones. More importantly, they have virtually nothing to do with Web 2.0 which is what TC is all about.

    Thanks to Duncan for writing about so much stuff lately, but I dont think that any MVNO deserves to be written about on TechCrunch unless it has some real Web 2.0 roots in it.

17. will
    

    June 2nd, 2007 at 11:13 pm

    whats a “Mobile social networking company” ?

18. bigbuda
    

    June 2nd, 2007 at 11:19 pm

    Just walked by a amp’d mobile booth in my local shopping mall the other day, was wondering how they make any money…. a service that does not differentiate, a name few have ever heard of. The only company that has a chance is probably helio, been hearing lots of buzz about helio.

19. Mike Malone
    

    June 3rd, 2007 at 12:01 am

    I think the other lesson to learn from this bankruptcy is just how expensive it is to bring a consumer product to market. Starting a website is one thing — there is (comparatively) little upfront cost and you can scale as you grow. When you’re building a consumer product you need to do a lot of R&D, make a lot of investments (in people, distribution, manufacturing, etc.), and have a ton of publicity (which often ends up being the most expensive part).

    Reminds me of some comments my brother has made about his experience at TiVo. He started there when the company was virtually unknown and had maybe two dozen employees. By the time he left he was the head of Product Marketing and the company had burned through several hundred million dollars in funds. That’s just the way it goes.

20. Laura
    

    June 3rd, 2007 at 12:03 am

    So, bankruptcy means their terrible TV ads will be pulled en masse, right? Because I’m betting that ate up a heckuva lotta cash. When will these old-skool people learn that TV ads are the worst 6 figures you can spend?

21. tapster
    

    June 3rd, 2007 at 12:42 am

    adding ampd to the dead pool is a little premature to be honest. Filing for Chpt 11 is a strategy, not closing of the doors

    less sensationalist commentary on moconews - eg.
    http://www.moconews.net/entry/.....perations/

22. myplaylist
    

    June 3rd, 2007 at 1:10 am

    Well thats good news. Im looking forward to seeing more of the same in the next few months. These over funded VC backed cooperate losers don’t have what it takes, with either innovation, kudos, or fiber. Let the good times roll and all rejoice that there is one less monster in the water.

23. Jordy Mont-Reynaud
    

    June 3rd, 2007 at 1:28 am

    I have to say I agree with the folks who think the emphasis on Amp’d as a Web 2.0 company is a pretty big stretch.

    For example, I’m not sure how you can claim that Loopt (a company with $5M in funding who distribute their mobile GPS app through carriers and MVNOs) is a competitor to Amp’d (an MVNO that raised $300M+ which sells phone service and hardware). Never mind the massive difference in size, if those companies did interact it would be as partners, not competitors.

24. Wes
    

    June 3rd, 2007 at 2:34 am

    It would be interesting to see which part of their business had the bigger failure between the telco bit and the web bit.

25. Raj
    

    June 3rd, 2007 at 2:41 am

    C11 is Bankruptcy PROTECTION - it will basically allow ampd to continue under DIP financing (for 6-12 months) Verizon and the other creditors to swap their debt for stock, dilute the equity pool for the original investors, and allow the new Amp’D to emerge debt free with MAD free cash flow and profit. Just look at the Airlines - they do this every 10-15 years. At that point, the service providers will have a vested interest to promote Ampd (and may buy it outright to aquire the customers). Customers are very loyal to Ampd, and they have a good demographic of “upsell-able” customers (unlike sprint/nextel)

    The main problem with Amp’d is that they offer phone service for $50 a month with unlimited texting. I have heard stories of people literally sending and recieving 5,000-10,000 text messages a month on their service. Since amped is an MVNO, it must pay Verizon or ATT a gateway fee for every text sent - and I think this is where a lot of the losses are coming in to play. Other than that, marketing is definitely a big cost to scale a network (just look at vonage), but the customer base acquired through that marketing is probably what saves the company from being dismantled, and the light bulbs, chairs, desks and copperwire sold off on eBay!

26. Start
    

    June 3rd, 2007 at 7:09 am

    So it seems that the Chapter 11 filing is more of a strategic move than really writing off this company to the deadpool.

    All said and done…the VC’s behind this company could have been better off somewhere else…. Maybe the vcs did not burn their own money …because as it goes:

    Startup burns->VC burns-> Hedge Funds burns ->Mutual Funds burns -> General Investor Public (u and me)

27. Thomas
    

    June 3rd, 2007 at 7:31 am

    Steve,
    Can you let me know which MVNO was the “monster” success?

28. Harro!
    

    June 3rd, 2007 at 7:42 am

    It took years for web-based platforms to reach common ground in screen resolution, HTML standards, browser platforms, scripts, etc…

    Adoption of mobile based content is going to take time. So its waiting it out in bankrupcy to unlock its value.

29. Mike predicted powerset.com is next
    

    June 3rd, 2007 at 7:45 am

    In Mike’s mind : He believe that every entrepenuers should not party with VC money, buy house, date hookers and lustful women, and release vaporware.

    Yeah right!!! Why should we listen to TC… We should clone greed and crooks in this planet.

30. Murti
    

    June 3rd, 2007 at 8:24 am

    So fellow TC readers, whose going to be next? Lets speculate…

31. Plot to kill Web 2.0
    

    June 3rd, 2007 at 8:36 am

    How to kill web 2.0?

    1. Lie to Investors
    2. Get tons of VC money
    3. Start buy million dollar home.
    4. Start having sex with 10 different women.
    5. Copy and steal people’s work without premission
    6. Create vaporware product
    7. Destory every penny startups out there.
    8. Clone Digg product
    9. Create lousy and add web 2.0 widget.
    10. Take the money and never comeback.

32. Jordan
    

    June 3rd, 2007 at 8:38 am

    They must of had a great business plan

33. notes: Venture capital
    

    June 3rd, 2007 at 8:56 am

    In case, if you don’t know what Venture capital means….

    Venture capital means “risk capital” and accepting government’s loan shark theory. You own tiny percentage of your company. if you lose it. you will lose everything you have… home, car, saving account, IRS put huge taxes on you, retirement planning, job position, no money, create family problem, and divorce beautiful wife. You also have to pay state taxes… Ten times higher percentage than organize crime loan shark.

    If you planning to create web 2.0. Never use VC money. Only if you want to take risk or ride suicide rollarcoaster.

34. Slava
    

    June 3rd, 2007 at 9:16 am

    To quote their press release regarding the matter:

    ” Amp’d Mobile Inc. filed for protection under Chapter 11 bankruptcy to restructure the business. As a result of our rapid growth, our back-end infrastructure was unable to keep up with customer demand. We are taking this step as a necessary and responsible action to sustain and strengthen our momentum in the market place.

    We expect to continue normal business operations throughout the reorganization process.

    We are confident that we will emerge from this stronger than ever …”

    Read it here: http://get.ampd.com/About/Press/index.php

    Doesn’t sound like they are exactly rolling up and dying.

35. Free
    

    June 3rd, 2007 at 9:44 am

    Long live web 2.0 and long live AmpD

    Do you want to buy my startup or invest in it :

    http://cgi.ebay.com/ws/eBayISA.....0126906061

36. Frank
    

    June 3rd, 2007 at 10:18 am

    I saw this coming… but to clear a few things up for those less in the know of mobile. Amp’d is not a social networking company. They DO NOT compete with VelvetPuffin or Loopt. Their competitors are Helio, Boost, and Virgin Mobile.

37. Allen Stern
    

    June 3rd, 2007 at 10:42 am

    Ch11 is not a def. “deadpool” - just go look at Delta Air Lines.

38. Jeff Clavier
    

    June 3rd, 2007 at 11:29 am

    As many commenters have already stated, this one is not in the deadpool yet. Equity is going to be wiped out, debt is going to become equity, and new investors will get the benefits of all the money that has been spent building the service and the audience. Tough for the people who funded the $360M.

39. trevo
    

    June 3rd, 2007 at 12:12 pm

    WTF????

    The Demise had nothing to do with Web2.0.

    The core of it had nothing to do with AMP’d “Web2.0″ features, the demise was that MVNO model sucked (Helio’s about to tank too).

    Its ok to cover this implosion in TechCrunch… but to ACTUALLY tie it to any sort of “Web2.0″ news is COMPLETELY MORONIC.

40. trevo
    

    June 3rd, 2007 at 12:17 pm

    Re@ Allen 36/Jeff 37.

    True its not “deadpool”.

    But its pretty obvious they never got any real traction to be a continuing concern. AFAIC they’ll probably get bought up and perhaps continue to run as AMP’d to target a niche market, but the days of AMP’d as a separate independent company is officially over.

41. Allen Stern
    

    June 3rd, 2007 at 12:36 pm

    From what I remember from discussing the position, they are/were a niche operation targeting urban users. Again this was about 18 mos ago.

42. listikal
    

    June 3rd, 2007 at 12:42 pm

    Wow, to much competition in what is still an small market

43. Peter
    

    June 3rd, 2007 at 1:49 pm

    I am willing to bet that very little diligence was done on this by the VCs. They all probably got caught up in the fancy MTV parties, hanging out with rappers that Amp’d worked with, etc etc.

    I’m betting that there will be lawsuits coming and some of the VCs will have to answer some serious questions around oversight, audit committee activities etc. Failures like this dont happen overnight. It took many months of terrible accounting and controls to get to where they are.

    I bet some VC careers will be over as a result of this one as well.

    Will this deal become the poster child of of the current “boom”? Much like eToys or Pets.com were 6 years ago? I think some of the same investors are involved in this deal as some of those past failures too…..

44. Jason
    

    June 3rd, 2007 at 2:04 pm

    Are we seeing hte return of f’d company with the techCrunch deadpool??

45. Mica
    

    June 3rd, 2007 at 2:26 pm

    Indian Jack - they may be billing for 20m a month in services but with over 60% of subs credit challenged, they are unlikely to have less than 7m in collections at any point in time. They have a prepaid caliber subscriber and a post paid service due to the limitations in the surepay solution provided by Verizon.

    And I also take issue that they are an MVNO - they are a reseller with only image (marketing spend) as their differentiator. As a reseller, they will never have uniqueness in their offering other than packaged content and hip marketing. The tier 1 carriers will never let a reseller provide leading edge network control features to their subscribers and that is what has provoked the challenges all resellers are facing – noting more than what rolls of the assembly line at the tier 1.

46. Anthony C
    

    June 3rd, 2007 at 4:25 pm

    LOL! Well, I knew this company wouldn’t make it far!

    They made a name for them self QUICK and lost it EVEN FASTER!

47. otto
    

    June 3rd, 2007 at 6:44 pm

    next one: mystrands.com

48. extensions forklift
    

    June 3rd, 2007 at 7:32 pm

    did some yell “AMP’eeedddddd” when they made this decision?

    - heh with all the commercials you would think / they were doing good -

    RB

49. Marc
    

    June 3rd, 2007 at 8:04 pm

    Well I don’t think this is surprising at all. There’s plenty more room in the deadpool though.

50. Kikoman
    

    June 3rd, 2007 at 10:21 pm

    All of these VCs with fancy degrees should call the folks at MobileTV.net for advice. They developed and launched their mobile services on a budget of less than $10K.

51. Steve
    

    June 4th, 2007 at 7:52 am

    I’ve been involved with MVNOs for some time now and all have a distinct cost disadvantage with the “Big 4″ carriers. Although they were spawned to reach markets the big guys could not, they still go head to head with carriers. Some have done a good marketing job but financial responsibility has never been a strong point.

52. Mike
    

    June 4th, 2007 at 8:44 am

    Ya - this company was doomed. Did anyone else see their horrible TV commercials? It was quite obvious that they were seriously reaching.

53. take the booth at the mall FREE
    

    June 4th, 2007 at 10:56 am

    Hey all i have a booth at the mall with what else but ampd mobile. if anyone thinks that this company has any potential be my guest. i can email you the cost of running the card at the mall out in Long Island New york. I have to say we have done in the past three months something like 200 new subs but i cant say that it was my selling skills although i would like to. i think that it was just the matter of everybody and there mother (literally) getting approved. I was approving kids that just graduated from high school. just turn eigtheen and getting approved. no credit needed. Anyway kind of a disapointment but i am a little sick of it. if anyone wants to take a chance with this one and thinks this company is on a come back be my guest because i am done!

    EMAIL ME AT EMILTBOK21@AOL.COM

54. POOPS
    

    June 4th, 2007 at 11:56 am

    Does Anyone have any faith in this darn company? i think i can speak for everyone and say well jus thave to wait and see. lots of companies that filed chapter 11 managed to dig them selves out of the grave. I sure hope that ampd mobile see there mistakes, studies them very carefully and then hopefully someone other than Peter Adderton will take over and make this a hit.

55. Seth Brundle
    

    June 4th, 2007 at 2:04 pm

    All I want to know is:
    Who’s Gonna Train Me????

    http://acceptable.tv/videos/16.....-Train-Me-

56. Al Ramirez
    

    June 4th, 2007 at 2:23 pm

    This kind of fallout is really big and bad news any way you slice it. The management team maybe got too much credit for the Boost Mobile deal’s success which was a similar concept in terms of the target market but in a time with lower expectations. Maybe the $300M+ was a reflection of too much investor confidence in the “Serial Entreprenuer Theory”. I suspect Sky Dalton’s Earthlink success may not be a clear signal that Helio has a secure bridge to success. Virgin the MVNO with the best chance of success is still no barn burner. The belief that MobileTV could drive the want for these MVNOs has also been a disappointment and I suspect the next fallout could be for companies like GOTV and MobiTV (only 2M customers with several Million in funding). This could serve Investors as a lesson learned that the trend of putting bigger bets on fewer deals may not always be the best strategy. Sad part is this may shrink fundings in the near term but, hopefully not. Its very disturbing that Telecom start ups have had a pretty bad track record for all the hope there is in the industry.

57. Walt M
    

    June 5th, 2007 at 8:49 am

    The bottom line is value - are you generating any NEW value for customers. Ampd was too broad and it looked no different then the major operators (worse, it had no brand). There are models that do add value to what operators already do - any partner with them, rather then compete with them. Companies like Rave Wireless which serves colleges, Qualcomm’s new healthcare MVNO and possibly even Google’s yet-to-be-detailed phone service. Not to mention the iPhone — these approaches are adding NEW value to the customer. People will pay for value, they will not for substitutes.