After unsuccessfully trying to sell his startup Sxip Identity to Google or Microsoft, CEO Dick Hardt is now facing a lawsuit over the insolvency of his startup. Hardt is perhaps best known for his amusing slide show explaining his company’s Identity 2.0 system. It typically started with the slide at right asking, “Who is the Dick on your site?” Investors are now asking a similar question.
Hardt is not making funny slide presentations these days. According to a complaint from investors in Vancouver, where Sxip Identity is based, Hardt raised $370,000 as a bridge loan until he could sell the company. According to TechVibes, which covered this last week:
When Hardt’s attempts to sell Sxip Identity failed, he told the plaintiffs that Sxip Identity was insolvent and that their notes has [sic] little or no value. This is where things get messy. The plaintiffs allege that Hardt failed to disclose that there were two separate Sxip entities (Sxip Identity and Sxip Network - he is CEO and President of both) and that only Sxip Identity would be a party to the notes.
Sxip Identity is indeed insolvent with a March 2008 balance sheet indicating that they owed Sxip Networks $4.7 Million and Hardt personally $275K. Sxip Identity’s total assets at the time were just under $1 Million.
That’s a pretty slick move, Dick.
Identity is still a problem that needs to be solved. Unfortunately, Sxip won’t be solving it.
Just because someone can give a good pitch, does not mean they can build a real company. Below is Hardt giving his slide show pitch at eTech in 2006.
Update: After I put up this post, I spoke with Dick Hardt. His biggest issue seemed to be with my opinion that he failed to build a a real company. Fair enough. I suggested that he e-mail me a response, which is reproduced below:
Erick
Thanks for the followup call and the offer to post a response on the article. There are some corrections contained below on facts you state, as well as additional information that I think upon examination, may lead you to change your opinion. As for responding to the lawsuit, I have attached Sxip’s statement of defense so that your readers can see both sides of the story.
– Dick
“Hardt is not making funny slide presentations these days.”
Incorrect. In the past month I gave a keynote presentations at the MySQL conference, an identity conference in New Zealand and a conference on identity management trends in Hamburg. I think the Identity 2.0 message is an important one to given. I also think my presentations are still funny. The deck is now over 1000 slides and people are laughing at the appropriate spots.
“Identity is still a problem that needs to be solved. Unfortunately, Sxip won’t be solving it.”
This is your opinion, but I don’t think it makes sense when you look at the facts. Sxip is working on solving the Identity 2.0 problem. We merged our efforts into the OpenID community a couple years ago, I sit on the board of the OpenID Foundation and am active in the community. OpenID looks to be a real contender for solving the Identity problem … at least that is what I read on TechCrunch.
Additionally, our Firefox add-on, Sxipper (available at http://sxipper.com) supports OpenID and helps users manage their passwords and fill in forms with the click of a button. Sxipper continues to be actively maintained and the user base is growing 5% per week. As the product matures, perhaps you will give it a review?
“Just because someone can give a good pitch, does not mean they can build a real company.”
From comment 33: “No, not too harsh. The company is bankrupt and on top of that there are allegations of self-dealing. If it had been a real business, Google or MSFT would have been more interested.”The company is not bankrupt.
I have successfully built and sold companies (ActiveState the best known). We had a real business with Sxip Access with solid partnerships with SFDC and Google. We sold that business to Ping Identity. Google and MSFT look at lots of real businesses and don’t do an acquisition.
I stand corrected on Hardt’s presentation habits. As for Identity 2.0, Sxip and Hardt may be making important contributions to OpenID (I don’t dispute that), but laying claim to OpenID’s achievements for Sxip is a bit of a stretch. As for my comment referring to the company as bankrupt, that was a mistake due to my misunderstanding one of Hardt’s comments below (No. 26) referring to a “reorganization” of the company and also the fact that I was responding quickly from my Blackberry on a plane ready to take off. I should have said insolvent. His statement of defense to the lawsuit is embedded below the video.
Typical TechCrunch, as I’ve said many times before: TechCrunch is the FOX news of the software industry. Sensationalistic, ignorant, sound bytes filled with biased conjecture. I’m only here b/c I saw Dick’s Twitter and wondered what was going on.
Unsubscribe.
Has someone done a study of the value - or, ‘failability’ - of a startup’s name?
Maybe, a ‘name drag coefficient’?
I think the Skipspsxsisiitwhatever name got a good once-over the last time it appeared in this place, but I really do wonder - how much more likely is your company to fail because of the terrible name you assigned it?
I almost had a heart attack when I heard that OpenAds renamed itself OpenX after……well, i don’t know after what, but it seems they want to fail hard, too.
being part of the Sxip Access acquisition to Ping Identity and directly involved in Sxip User Manager purchased by TriCipher i want to step up and tell you Sxip had and continues to have a “real business.” throughout Dick has been honest and upfront about all matters of his business to employees *and* investors alike.
this topic seems a bit like the game telephone to me: the longer the story is circulated, the more convoluted and further from truth it gets. Erick, before writing this article, i really think you should have had a discussion with Dick.
TechCrunch is turning into the National Enquirer for Computer Nerds: find a little dirt, spice it up a bit, add a few insults, insert a juvenile joke or two, and you’re done.
I would assume that even the “more sophisticated” investors Dick mentions should be somewhat troubled by the lack of personal integrity displayed by skimming off the assets in one company while sticking the debts in another that gets jettisoned.
Out of interest: Which company do past employees stock options come from?
Interesting that in his legal filing Dick does not address the accusation that the investors were never even told about the second company.
Too early to judge but he may be in the clear from a legal standpoint. But, if he did not inform the investors about this ‘arrangement’ then I think his credibility will be shot.
My $0.02 (Canadian)
1000 slide PP deck? What a dick.
Harry “be concise mothafudga” Wang
Sxip isn’t a good name. Not catchy enough. Obviously there’s more to business than this, but this is really important. Szip? Sixip? Then you find out it’s Skip, which makes no sense at all.
Before you judge Dick, take a look at the parties on the other side of the lawsuit. Ask how successful they have been as startup guys. Ask what their motivations might have been in launching the lawsuit.
Dick Hardt is a huge asset to the Vancouver and world IT industry. Having worked for Dick once directly (ActiveState) and indirectly (he was a board member for XML Global) I know him personally and professionally.
He is a motivated and intelligent man with vision. TechCrunch would do well to fully investigate legal matters on both sides before making a localized issue a worldwide one.
My bullshit detector just went off. I think Dick is a smooth talking crook. If I had invested in his company, aside from feeling like a fool, I’d hold his nuts hostage until I got my money back.
Just my two cents.
He said earlier it had fallen victim to the economic problems and not the site stated that satisfy customers through the old crew management. Anhanua I think the media blackout, which hide behind a lot of fake facts.Convey to you directly from the site Sxip is pleased to announce that TriCipher, Inc. has acquired Sxip User Manager. Sxip User Manager is a newly-released tool that allows administrators to provision and manage users in both Salesforce and Google Apps Premier from a single screen while enabling users to authenticate to both with the same username and password. After the sale of Sxip Access in February. the sale of Sxip User Manager is the final step allowing Sxip to focus on consumer solutions. The service will provide a complement to TriCipher’s own identity management solutions.
This was stated at the site sxip script and I prepared him to you here
Tribal assurances of my highest consideration
and thank you
A company with a revolving door of top calibre management (Paulin, John, Chuck, etc.) was not a good sign over the past few years. Some good names came and went after relatively short stints at Sxip. Something was obviously very wrong management-wise at Sxip to suffer such a high turnover. I would assume if investors were betting on Dick alone, they were blind and deserved to lose their investment. It takes a stable, multi-talented management team to execute. Sorry Dick, a team-of-one just doesn’t cut it in the new management age.
50. Erick Schonfeld
May 22nd, 2008 at 8:56 pm
I’m sorry, but in my book, an insolvent company being reorganized is a failure.
——————–
Erik,
did you know GE declared insolvency somewhere in the early part of the 1900s? You comment above is an opinion, but history has shown quite the opposite. Insolvency is essentially an inability to pay creditors, including debt holders. It’s typically a cash flow squeeze. This is why many companies have revolving credit facilities to manage their day-to-day cash needs. Many companies that find themselves in an insolvent situation, emerge energized and restored. Airlines are a relavent example.
One last misconception is that insolvency is a b/s problem. It is not. It is about insufficient cash flow.
Straight facts make for better reading.
@mogilny You are correct, spamming is the worst kind of internet marketing, which is exactly why I do NOT do it, and limit myself to a respectful signature line as noted below. Thank you for pointing that out.
Allan Sabo
Alti Success Strategies
Experts at Integrating Social Media and Internet Marketing
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