Capazoo lays off 60, shops itself (52)
In yet another dramatic but expected turn of events, Capazoo, the “black sheep” of startups in Montréal, has layed off all of its development team late last week. 60 developers, mostly .Net programmers, were asked to leave the premises immediately, and all that was left was a sysadmin to run the whole system. The official explanation was that it’s because of the legal problems between the Verville brothers. The judge refused to come up with a final decision and ruled that Capazoo’s shareholders should settle the dispute between the two co-fonders. But there was no settlement, and nobody is officially running the company.
Roberto Rocha also reports that there is now a “a louer” (to rent) sign in front of Capazoo’s offices, and I was also told that remaining employees were layed off Monday. There are also rumours that Capazoo is trying to shop itself, to a Toronto-based venture fund interested into acquiring the technology behind Capazoo.
For those who didn’t get the story, the Capazoo adventure was started 2 years ago. It was advertised by its founders to be the next Facebook, and the founders proclaimed they would reach $650millions monthly revenues. Soon, they managed to get funding from athletes and wealthy individuals, up to an announced $10.6 million. The fact though is that audience and revenues never came, probably because the “executive” team knew nothing whatsoever about technology and how to design and market a web product.
So here we are. Lots of talk, lots of money, lots of weird ideas and creative “marketing schemes” thrown around, and now the end of a local company … which, in my opinion, doesn’t even deserve a post on Montreal Tech Watch. But I guess we have to write down history and facts so as the next new entrepreneurs would learn the lesson.
I hope this will not dissuade smart investors from continuing to make smart bets.
I wouldn’t worry about that. The investors that the Verville brothers drummed up were a bunch of athletes, not your regular VCs. VCs saw right through them and refused to hand over their money. This shouldn’t have the negative effect you’re worried about.
I’m with Mark btw, it’s a shame to see anything like this happen to a group of people but there have been strange rumblings out of that place for a long time now.
[...] Luc Verville and his brother, co-founder Michel Verville is settled. Read more about it here and here.Capazoo has been heavily criticized ever since it launched. You can read about its turbulent [...]
maybe he is starting a club with the Iraqi ex-information minister
are you trying to say that we should start praising Capazoo?
and you seem to have a misunderstanding of “blogging”. what makes you think that companies can pay bloggers to market their products? wake up, we are in 2008
for comment 10,
having lots money and lots of tech engineers doesn’t mean you will be successful
Capazoo lays off 60, shops itself http://tinyurl.com/2wq685
[...] to local media reports, Capazoo fired its entire development team (60 people) late last week with the one [...]
As for the .NET developers, please contact me, I might have some cool contract work to offer!
I don’t get your points. Heri covered this properly.
Except for a heavy tech product, no start-up needs $25M. They built a basic social networking platform with 60 programmers. Most experience would say, that is great salesmanship and the fund raising stage and gross mismanagement in delivery.
A clear case of over-promise, under-deliver if this story is true.
What sources do you have to say there were 60 developers? The Gazette? TechCrunch?
I was one of the laid off employees there and, there were 9 developers trying to do their BEST to make it happen but at the same time, with all the crap written in blogs and comments on articles, it has become really nasty to work there! You people should know better and VERIFY what you’re writing before doing so!
@AG = thanks for trying to see the other side of the story.
@Everybody
Don’t get me wrong guys, I’m pissed to have been laid off and I don’t trust anything coming from the Verville anymore but, it hurts when I read about false facts on the web. A community is supposed to support its people, not bash on them! Show a little support or just move on when you don’t believe in a project instead of saying anything that could hurt it and to see it vanish…
/rant mode off
http://www.ottawacapitalnetwork.com/entrepreneurs/fundingRoadMap/chooserVC.asp
Your posts appear unrealistic, not based on high technology venture facts, and harsh towards the Canadian company which put a lot of work into their venture. Go to VCs and ask them for stats on investing. As I said, in my humble opinion, Capazoo was too late to market, nothing to do with management, technology or products… I would basically do an investigation on every author who made false public posts against this company, and look for their connections with foreign Capazoo competitors.
To be clear, I feel bad for the developers, doers that were there. Rarely if ever is the accountability for a business failure with the employees – it is with the management. Your comments clearly support this.
@17: I like that you are pushing to get facts onto the table. Keep going, As you do though, remember that technology is now delivered on a global basis. There is phenomenal talent around the world at very low cost. Spending $25M (assuming this is a fact) by such a point in a venture raises questions. That’s all.
In my opinion I think you’re way off saying the reason for failure was that they were “late to the market”. That’s a big reference to the maturity of a very dynamic market.
I hear you, that’s ok to react to what is presented but, don’t you feel curious about it being far too ridiculous to be 100% true?
You say it yourself that something sounds funny about all this… That would be a good candidate to get yourself some answers? AG is trying to do that and I’m glad you like it…
There were 100 employees at this time. So you see there is a lot of History already .
=> Always ask how many employees there is before signing for a startup !
read these articles
http://lapresseaffaires.cyberpresse.ca/article/20080211/LAINFORMER/802110512
http://lapresseaffaires.cyberpresse.ca/article/20080211/LAINFORMER/802110518
http://lapresseaffaires.cyberpresse.ca/article/20080211/LAINFORMER/802110517
http://lapresseaffaires.cyberpresse.ca/article/20080211/LAINFORMER/802110516
and by the way, what kind of evidence do you want?
I was there too and you should be more honest about the reasons you were all fired, don’t you?
You’re right there’s a lot of (untold) history…
[...] http://montrealtechwatch.com/2008/03/19/capazoo-lays-off-60-shops-itself/ http://communities.canada.com/MONTREALGAZETTE/blogs/tech/archive/2008/03/18/r-i-p-capazoo.aspx [...]
I can vouch for Simon — I know who he is as well as at last one of the PMs and analysts he is talking about. He was laid off because of a change to .NET pure and simple. I think he had been there a month or two at the time. I have several connections to Capazoo past and present (or, until last week). Yes, there are many untold stories, and, frankly, who cares? You want to talk about porn connections, gambling connections, mafia connections, black market Viagra sales, coke use, employees being threatened, bisexual CEOs being outed on the site, what? There’s plenty of stories to go around. What untold story do you want to tell?
If you were there at the time, as you say, why don’t you reveal your name so we can verify who you are?
crazy comments at montrealtechwatch about capazoo’s demise http://tinyurl.com/2rbq49
One note, though – Alexa traffic isn’t a reliable metric of visits these days. Use Compete instead (http://siteanalytics.compete.com/capazoo.com/?metric=uv) because Alexa’s survey network is out of date and inaccurate. According to Compete, they’re still seeing traffic.
Social networks are hard to grow predictably; for every pie-throwing, friend-sharing app on Facebook there are hundreds like it that don’t succeed. In many ways, the battle for the social network fabric is over – it’s Facebook, OpenSocial, Bebo, Myspace, Amazon, and a few others. Now we’re building things on top of that social graph, and companies like Huddle.net are going beyond throwing food and biting vampires to actually build work applications.
Flixster started out as a social network, but only found success when it simply became a Facebook app. Consumers are tired of educating site after site about their friends, and digging invite after invite out of their spam filters.
In the current market, I hear VCs talk about YASN (Yet Another Social Network) all the time. They’re not investing in it. So the glut of leftovers are being shopped around at discount prices. The plain truth is that, scandal or not, selling a social network that’s already burned through $10+ million (meaning investors would demand $30+ million back!) is a very difficult job in today’s market.
It really is a shame that things didn’t work out although it’s not surprising considering some people with important roles were close to being web-clueless (no notion of ergonomics, of what makes a web site work, of what makes users come back to a web site, of what can create positive buzz instead of sleazy-trash buzz, etc.)
The basis behind the whole web site is that users who put content deserve to have their share of profit that big sites usually make on the back of the content-makers. I think that’s noble (in a capitalistic sorta way) but I don’t think the money-making aspect of Capazoo should have been as publicized as it was this early in the web site’s life.
That message got out all wrong thanks to Capazoo’s multiple inefficient marketing campaigns and press releases (and its “director of communications” who’d rather say everything is perfect than say “wait a minute, maybe they DO have valid points, let’s see if we can get real, objective 2-way communication going instead of me going all preachin’ and no listenin’”)
Yes, there was a pyramid-scheme-like part to the web site, but it stopped after 4 levels and encouraged people to refer their friends. It was inoffensive as far as I’m concerned. It was no different than web hosting companies who give money to people who refer clients.
I’m not quite sure where their 25 million went, honestly, but I’d venture a guess that top management (some qualified, some not) each being paid 200k+ year didn’t help much (and that’s not counting that atrocious 10% finder’s fee we keep hearing about and that office Capazoo had in Florida for a while).
What probably didn’t help was that the site was built *twice* from scratch, once by Java consultants ($$$) and they all got let go and were replaced by .NET permanent employees who started the whole thing from the ground up. The original site had a Flash UI, need I say more as to why the site was rebuilt from scratch?
In retrospect, I think the site, as it is, had potential and I still think it does although the name Capazoo is a cursed one now. The technology was pretty interesting and efficient and I’d venture a guess saying we had one of the better .NET team in the city (knowledge-wise and teamwork-wise).
Some facts:
-Capazoo had around 60 employees (IT, design, marketing, communication, tech support, management)
-Capazoo’s tech team, as mentioned above, had 17 people, 9 of which were programmers and 6 of these worked on the main web site.
-At its biggest, shortly before launch is October 07, the numbers were around 100 employees (they had hired a dozen people for tech support for members, a very useless thing to do considering the site had just started) and 23 people on the tech team.
-This site is hosted, the “sysadmin” who’s staying employed is a “friend of the Verville family” and he is there more as an office caretaker than anything else (and to ensure that employees don’t come in to pay themselves by stealing their $3k workstation). He has nothing to keep up and running (and probably doesn’t have enough tech knowledge to do so anyway)
Lessons to learn from this:
1- make sure your design team understands the concept of what makes a good and ergonomic web site
2- make sure your marketing team understands that “viral” doesn’t mean putting a video up on youtube while sitting there and twiddling your thumbs hoping the viewcount increases and thus, hoping to generate traffic on your web site.
3- keep it simple, stupid. People are drawn to simple things. If they want cluttered, they’ll start working on their tax forms.
4- don’t rush your products out of the door just to get more funding (I realize this is easier said than done)
5- money doesn’t necessarily make a good web site.
I think that’s it, I’ve tried being constructive and, hopefully, the subsequent posts will be as well. I do realize that doesn’t explain where the 25 millions went (certainly not on the technology-side of things as far as I’m concerned, except maybe for that hosting deal but I think Capazoo’s hosting press release was a lame attempt at creating a “omg they invested 5 million in hosting! They must be serious about their stuff!!” buzz.).
[...] Capazoo lays off 60 employees and closes shop (Make sure you read the comments!). Also, Valleywag linked to us in their post about the collapse. [...]
So I am now free to comment on the record and explain what went on. The truth is in fact that the former managing owner’s accusations were mostly the result of his own decisions and actions. His lack of focus in leading the company and allowances of several overspending put the company in a perilous position by the time he was pushed out. His over 90 charges in court were all thrown out and his friend at La Presse didn’t even report on these facts, nor did he ever get all sides of the story before his accounts in the paper. Further proof of his slanderous and inaccurate reports is indicated by the lack of any other credible outlet picking up the story.
Now, I got shafted out of job just like everyone else. Thankfully, I am fortunate to have several current freelance opportunities, a radio show on The Team 990 and a few other prospects on the go. But, I did want to set the record straight now that I am not bound by the company’s PR agency.
The real truth behind Capazoo by the end? It was no longer about the site. It was about the new B2B direction we were working on. Leveraging the technology and social media space was what we were working on and by the end Capazoo was merely the test platform for this new promising direction. It was certainly exciting and something that unfortunately the persistent legal challenges eventually killed.
I do concur with the fact that the original team of Capazoo did not have the Internet experience to succeed in the social networking space. I completely 100% agree. However, by the end, all of the overspending, overstaffing and lack of experience was no longer an issue. The GM, the Tech Team, the social media/seo expert brought in, were all contributing to the company’s turnaround after the former managing owner was no longer in charge. To a man, everyone knew that there were tons of mistakes made prior to the fall of 2007, but even though they were all rectified, sites like these were still punishing Capazoo needlessly out of spite, perhaps funding jealousy and also perhaps out of fear no one would ever invest in the MTL startup market again. The fact remains that investors will always take part in an idea they believe to be incredible- no matter where the fledgling company is based. So if you want to bash a startup, do it for the right reasons, and not by looking in the rear view mirror at old reasons that no longer apply.
At any rate, I have learned a good deal about the power of social media by many of you posting on this site and I am thankful for that. I hope in my next media relations/pr role I undertake in Montreal that I learn from what happened at Capazoo and I stand up for what I know to be the right response to post on site like these….
matthewross@sympatico.ca is my email address…. take care all….
I have to disagree with you Matthew in regards to the impact of Francis Vailles’ and tech blogs coverage. I think that this kind of coverage is essential and relevant today more than ever before.
And to say that Capazoo would be better off today had that coverage never occured would be wrong for reasons that I have learned before rather than after Capazoo folded, thanks to blogs like this one.
Furthermore, the article did mention that all charges were dropped so please, before tearing apart your shirt and going around scraming “slander!”, at least, take the time to read carefully:
«Le juge a conclu que Michel Verville n’avait aucune preuve valable. Que le départ de son frère Luc de la direction créerait un chaos», a dit Mason Poplaw, avocat de Grant Carter et Darryl Shannon, deux des principaux dirigeants.
http://tinyurl.com/36szog
You’re a good guy Matthew, but don’t treat the people you “communicate” with like morons, in the end, I believe it just contributed to creating more negative/laughable buzz which Capazoo definitely did not need.
Yes, I do realize I’m posting anonymously, please don’t lecture me about this, I’m not going to magically come out of my closet.
And I never discounted the power of mediums such as these, Mr. Anonymous person, if I had I wouldn’t have said how I learned from it…. Good luck to you, whoever you are, but shame on you for posting anonymously …..
There was no tone of anger in the La Presse articles. At all. I’d guess that your French isn’t so strong, but I know who you are, and I _know_ that your French isn’t strong, so I don’t have to guess. What’s more, you barely refute anything that was said in any of the articles. You have some kind of pride about what you were working on, good for you, but you have done little to show the people who read this blog that the articles were incorrect.
Furthermore, I have to agree 1000000% (gee, that seems like a lot) with what Martin said, negative press or blogs do not bring down a 25 million dollar web company. Have you ever seen the negative press about Yahoo!, Wikipedia, Microsoft, etc. on sites like Techcrunch and Valleywag? Not to mention the blogs and individuals who speak out about these companies. Yet… they still exist. How mysterious.
Michel Verville didn’t shaft you out of a job; Luc Verville did. He’s the one that was still taking 10% off the top at the end. You didn’t refute that point brought up in the article. Luc’s sitting pretty in his estate in Magog with millions of dollars, plenty of cars, etc. How’s the overnight radio gig?
Also: Michel Verville is a major prick, but he was the visionary. Without him there was no Capazoo. All of the projects you worked on in the last year or so, with the exception of the pyramid scheme and the debit card, came from Michel. He’s a totally crazy person, sure. He lacked focus. But there was no company without his idea. People weren’t just going to sign up for Luc’s pyramid scheme without some content or idea behind it. I hate them both, but that’s beside the point.
@ex-employee: Oh, and there’s no shame in posting anonymously, as long as you don’t resort to negative attacks, which you did not.
I might be naive, I don’t know, but it seems to me like it was fair coverage. Where it is exactly that you perceive anger? I have no way of saying he’s 100% objective (are we ever?) but the LAST thing I perceived in his various articles was anger or frustration. He got Paul Roberge to defend the company. He quoted Grant Carter’s lawyer and mentioned that Luc never returned his calls regarding this. Probably due to the gag order. Oh… wait! Is that why La Presse never got his side of the story? Because he couldn’t speak about it? Seems awfully convenient.
Anyway, you went from “he didn’t mention that the charges were rejected” to “he did mention that the charges were rejected but it wasn’t covered properly”. Good progression.
Regarding the porn link, I’ve heard Robert say he used to be involved in the porn industry and he didn’t seem ashamed to admit it. However, Robert being Robert, he might have been joking about it which wouldn’t surprise me. But the problem is this: Don’t expect everyone to take what he claims with a grain of salt like I did. Plus, with all the “onemodelplace” shady pictures we had on the web site, I’m not surprised people linked us to the porn industry.
At any rate, even if I post anonymously, it doesn’t matter, most if not all of my co-workers could have posted what I’m posting so it’s not like I feel ashamed or anything. I’m still trying to be constructive about what I say here because there are so many anonymous people posting random stuff out there, I feel inclined to step in and add some facts to this whole mess.
Robert Samuels and Marty Marion where leading the Marketing team after I got fired…and of course this include the smart Matthew. No members, no hads and no money. This is a fact in all business.
Marty Marion (head of marketing) was a sleaze ball who had spent a significant amount of is career working for online casino’s (golden palace) and had been involved in shady enterprises. Most of this is hard to trace, but he is still the owner of a few sex related domain names:
http://dns411.com/cgi-bin/whois.pl?whois=hotsex.sex
http://dns411.com/cgi-bin/whois.pl?whois=hardcock.sex
His ideas were as old as he was. And I believe he abused Michel’s trust and confidence.
In all the time I was there (which was quite a while), I can testify that Michel was unstable and not always as qualified as i believed himself to be. But there was no one more in love with the product than him. When he wasnt plagued with personnal issues (bad mariage) he was in the office early and worked hard. I believe he gave Capazoo all he could. Up until his brother took control. Then I have no doubt his life became hell.
Michel sometimes behaved like a mean prick toward some people he didn’t like. But in general I have seen him to be honest, proud and always willing to believe in people’s good intentions and potential. But Michel also had the habit of trusting the wrong kind of people and delegating power on the basis of reputation. I have seen his trust get abused and swindled over and over.
Surrounded by the right people, maybe Michel could have made something out of Capazoo, but he had the misfortune of being Luc’s brother.
Knowing Michel, I would not be surprised if he tries to start some other web venture in the future. He truly loved what he did and believed he could create something different and good.
I hope he learned enough so that he will be less naïve next time and trust a different kind of people.
As for Luc, he is a very competent and intelligent crook. Intelligent enough to have scammed people over and over and never been caught. But as karma would dictate, a lot of of his ventures have resurface to haunt him… and I hope more will follow.
La Presse should lookup at Luc’s Forex ventures. More dirt there. But as usual, he will most probably have covered his tracks and washed his hand properly… he is a very clean crook.
As for the original team, it was 1/4 of the size of the second one. The team was assembled in only 6 weeks. And a live site had been delivered in 12 weeks of work. The java backend team was provided by an experienced montreal firm and their work had been audited and was shown to be of an excellent caliber.
Why did the first incarnation failed? Because the team which built it disolved and left the company. After the first launch, Luc pushed to hire an incredibly incompetent and third rate project manager which he named director (Patrice Tardif). Under this oppressive and incompetent management, all senior developers abandoned the company and the project came to a halt. At the request of its demoralized staff the firm which provided the Java developers gradually backed out of the deal. So Michel and Luc had no choice but to find someone else to keep the project going.
At that moment, they found a few key people who could quickly bring in a new team. But that team was coding only in .Net so they had to start over. So, more than a full year afterward (56 weeks) they relaunched a slow a buggy website and actually got no more visits than the first.
Version 1: 12 weeks+12 devs=8k members
Version 2: 56 weeks+20ish devs =9k members
So I wish that people from team 2 would just shut the fuck up and not talk about things they dont understand themselves.
But honnestly, both team 1 and team 2 didnt have a chance. Some of us have compared our experiences from both teams and it is obvious that the management of the company was so rotten and innadequate that a success was impossible.
For a startup to work, the founders and core team needs to be very competent, experienced an trustworthy of each others. It’s not something you can buy… it’s something you must be.
Capazoo was not my first startup, and it has not been my last. Every failure is an opportunity to learn. But I learned more than I wished at Capazoo.
I wish all the luck to everyone who has been laid off.
The second iteration was made from scratch starting in may 2007 and the first production release has been put up in september 2007. I don’t know where you take your 56 weeks of work. Also, 20ish devs is innacurate since a lot of team members left or have been asked to leave since they were not fit for the position they had and few other joined in afterwards. Not that they were incompetent but mainly because the pressure was intense and not everyone could handle it and stay efficient. All in all, this project had great potential but has been brought to a ridiculous drama.
For my part, I had a blast working there for 9 months and made new friends I look forward to work with in the future.
This company was a nightmare to work for and I hope they remain shutdown forever.
@Michel, you now have the technology yes, but you need good people to be able to handle it, do you have them? If so, great! If not, then, I suggest you to start to search for them! And I would give you this advice: stop posting the kind of comments you just did, you will get famous yes, but not the way you think… Anyways, good luck! With the criticism and skepticism already built up toward your product, you’ll probably need more than just money and talent to get it up and running! And oh, don’t forget to pay us ex employees because we’re gonna be watching you very closely!
You never told me where you went. I guess the site closed down too quickly. You know how to reach me. Keep in touch.
e-mail: michelverville@gmail.com