Identity 2.0 Startup Sxips Into the Deadpool
Erick Schonfeld
71 comments »
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.
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“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.”
-Well I don’t know about that…. I would say 9 times out of 10 if I’m listening to your pitch and I find my self saying get to the point already… 5 times in this case even with fast forwarding… -chances are it’s not that great.
Isn’t what “DICK” is showing in the video, what google is trying to do from website to website with OPEN Social?
A little harsh no? He’s an startup guy. If at first you don’t succeed… at least he tried and I hope he tries again.
Court docs contain ***allegations*** until they make it to trial.
This is very sad.
Erick ,
you are not being nice to this guy . this kind of harsh stuff in uncalled for . dea was good ..it was addressing a real problem and you would have singing in his pray if this would have worked … Its sad what happen .. as war as allegation slick move i guess lets leave it to court to decide ..save your judgment for other occasion .
I admired his presentation since the day I saw it. Sad that his startup didn’t manage to end with a good note.
I’m sure he’ll start again.
What we need is COID. i.e. OPEN ID + high security + accountability of some kind. It is gonna have be to be centralized or some sort of central contact. I mean who do you contact is somebody steals your password?
Wow Erick - brutal post. Were you an investor?
First, I loved the presentation style of Dick, I think he broke down the issue of online identity verification and portability so a non-techie could get it.
As for his business structure, well, just like I learned in my MBA from the school of hard knocks, you should always create seperate entities to hold intellectual property from the operations and marketing of said.
Thus - Brilliant!
Now, if he failed to adequatlely communicate this separation to his investors, well, thats the only “shade” i can see in the grove.
Just as “Bored” mentions - these are “allegations” and there is a burden of proof that rests on the shoulders of his investors. sorry guys if you faild to do your due dilligence.
Allan Sabo
Alti Success Strategies
Experts at Integrating Social Media and Internet Marketing
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Mike, I am finding that your success is getting into your head. Don’t let that happen. I personally feel it was a good attempt and sad that it dint work out. I would rather appreciate his effort than condemn it.
Erick ,
your tone in the post is really not cool.
“Just because someone can give a good pitch, does not mean they can build a real company”
I don’t know anything about Sxip’s downfall… but it is surprising you’d make such a snotty remark without, apparently, knowing much either.
Building a startup is really, really, hard. A failed one doesn’t necessarily mean its founders “don’t know how to build a real company”.
You should know better.
Next time end your post with a link to: http://www.techcrunch.com/2007.....the-arena/
which is more in the techcrunch spirit
“Just because someone can give a good pitch, does not mean they can build a real company.”
As a friend of dick’s, I would point out that he has successfully built (and sold) a company in the past (ActiveState).
A good presenter but you kind of expect some sort of a ’solution’ or at least realy good point at the end after all the wind-up. That’s where it starts to fall apart for me.
Peter
do you follow me @ http://twitter.com/peterurban
Ahh my apologies, it was Erick who posted it, No wonder!!
this is news?
A good presenter but you kind of expect some sort of a ’solution’ or at least really good point at the end after all the wind-up. That’s where it starts to fall apart for me.
Peter
do you follow me @ http://twitter.com/peterurban
Was that a technical presentation or an episode of “Zero Punctuation”???
@COID The embassy? Ghostbusters?
@Allan Sabo Hey, you experts in internet marketing, you should know spamming is the worst type of internet marketing. Don’t do it.
I enjoyed Dick’s talk. Too bad he was too focused on building his business and not his product.
I have followed Sxip since the very beginning. Dick Hardt has worked each and every step of the way to make the company a success.
I met Dick at the Next Web 2008 and we talked for a while. A really smart guy who has worked hard to solve the identity problem on the internet. That deserves respect.
I don’t know about those allegations but I don’t think this post is fair. To criticize or make fun of people when they fail is easy. I expect more from TC.
What about Sxip Network? The lawsuit seems to be centered around the claim that Dick leeched off Sxip Identity by funnelling resources into Sxip Network.
Is Sxip Network also heading to the DeadPool or will it pool off another “MediaMax/The Linkup/Nirvanix” by letting the original company go down the tubes but moving the IP into a new one.
Stop making fun of Dicks! you have people have dicks too. I mean except famales.
Dick’s obviously a smart guy. Failure happens. As far as the lawsuit, there isn’t enough details to make a judgment statement on that.
The reason why your startup dick failed. Because most of search engine pick up STD pornstars. This is why you should change your name to richard.
Also - isn’t TechCrunch’s primary focus centered on the cutting edge new ideas and technology ventures? What’s with the recent trend of TechCrunch relishing the tiny failures of these start-ups? This is a prime example that can be filed right next to the Twitter “articles.”
I wonder who will turn out to be…. “the next GIANT FAILURE”!! Sponsored by TechCrunch.
Yup, Dick already built and sold a very successful startup for $23 million.
http://www.theregister.co.uk/2.....tivestate/
Not defending his actions but that last line was pretty childish and patently false.
Erick
I am pretty easy to get in touch with if you wanted to verify any aspects of the story, disappointing that you did not.
fyi: my more sophisticated investors are not part of the lawsuit and are ready to participate after we complete the reorganization.
– Dick
It’s a shame Dick’s contact regarding this story is limited to comment #26. Would have expected more from a journalist with Erick’s experience. I guess he could not resist the ease of dick jokes and insults.
Best of luck Dick. I loved your presentation because it helped my understand the problem and the concept of digital identity > which was a pre-requisite to understanding the solution.
I agree - it would have been a good idea to get both sides of the story.
Fail 2.0
Would he have gotten this far, even, had he not done the Bob Dylan one word per slide schitck?
Just because someone can write a blog post, does not mean they can be a real journalist.
It’s a pity seeing Sxip going to the deadpool; I love using it’s FF add-on Sxipper
Dick is a leader in the identity community - so be as crass as you want, but his legacy lives on. And, hopefully his next efforts will have better success.
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. Sxip was much hyped and didn’t deserve it. Yes, it is sad.
Dick,
Happy to talk any time. Am on a plane now about to take off, but if you dispute anything here, let’s talk. Reason I didn’t contact you was because this had already been reported. It’s not really my story. Just commenting on what’s already been covered.
You are allowed to do that on a blog, for all the (anonymous) journalism experts in comments.
This is a harsh post. No reason for Erick to throw dirt at Dick who is as far as I know a great entrepreneur and one of the best inspirational sources for me personally. And I agree that being a great presenter is almost a prerequisite for being able to raise venture capital at least, but also to be an entrepreneur.
oh no !!! does this mean.. that ping’s gonna go join the dead 2.0 pool too ?
but hey !!. the “who’s the dick on your site” video (http://www.youtube.com/watch?v=RrpajcAgR1E) referenced to in this post is one of the “BEST” (lessig style) presentations on identity I have ever seen
Erick: It’s really pretty weak to use the “It’s not really my story” angle when you have completely editorialized the story by deciding who’s right and who’s wrong in a lawsuit that hasn’t gone to trial.
As for your tone in comment 34 (”you are allowed to do that on a blog”), it just makes you seem childish and unable to accept or respond to legitimate criticism.
Full disclosure: I know some of the parties involved in this story, but have no knowledge or interest in the real story behind the lawsuit. But I do know that you could have found out about Active State, which Dick Hardt sold to Sophos for north of $20 million, with about 15 seconds of Internet research. Or that he was one of the earlier investors in Flickr, which is at least as much a statement of credibility. Not having done that research makes your comment about the difference between building a real company and a good presentation still more offensive.
Article is a bit harsh, but I am not surprise this happened to Sxip. Thier pitch may be interesting, but their sales approach was pretty bad.
I’ve had business dealings with them and Dick did not do a very good job managing his salesforce or empowering them to close deals. It was sad to see how their executive team cut the legs out from under them when attempting to close large deals. One deal would have probably saved Sxip from itself, but Dick couldn’t get it done.
Marc van Waardenburg :
wrt. Sxipper, do not fear, the product will continue on and is being actively maintained. We have some really cool features in the hopper once we sort out the reorg.
Erick:
The time to have had a discussion would have been BEFORE you wrote the story. Feel free to reach out once your plane lands.
The new slam about Sxip not being a real business emphasizes the responses about other readers have presented on your brand of journalism.
Using your “logic”, Yahoo is not a real business since Microsoft did not complete an acquisition.
The Sxip Access business was a “real business” having been sold to Ping. Later we sold a related piece of technology to TriCipher. Both deals are listed on the sxip.com website — pretty easy to find.
Clearly you can win this particular war of words given that you can post to the main page of TechCrunch and all I can do is post on my own blog or write comments down here that few people see. Your response to your other readers is “interesting”.
btw: the irony that I authenticate myself to write comments by just typing in “Dick Hardt” is pretty hilarious.
– Dick
Zooboomafoo: nice factual, anonymous post, NOT
I had a great sales team for Sxip Access that was aggressive in doing deals. They were empowered to close any deal that fit into our business strategy. We made a business decision to exit the Sxip Access business and had numerous suitors for that business. The only reason we are in trouble now is that a few investors refused to sit down and talk about how to restructure the business after the divestiture was not as lucrative as we had hoped.
@Dick - don’t even bother answering anonymous comments. There’s absolutely no point in doing so.
@Eric - Well, I guess from the tangent you’re looking at this, Business 2.0 didn’t join the dead-pool but was a strategic move..
Great presentation Dick, it served the purpose well.
Why don’t you issue a clarification on your homepage with a link here. I’m pretty sure anyone seriously investigating the story will have a look.
Jagtesh Chadha: thanks for the kind words. I just sent Erick a response for him to post on the main story as well as the companies statement of defense.
Erick was kind enough to apologize for not calling.
I will vouch for Dick Hardt being an upstanding businessman. His work at ActiveState to help promote Perl on the “other” platform was done in a way that both promoted open source and yet provided a business model to help pay for the development effort, at a time that the Perl community really needed it. I also had the opportunity to investigate Dick’s business dealings during that period fairly thoroughly in preparation for some very significant relationships between my company and his, and found nothing out of the ordinary. I trusted him at his word then, and I would find no reason to distrust him today.
“Just because someone can give a good pitch, does not mean they can build a real company.”
No truer words have ever been writ. In fact fully half the executives in corporate America have made careers of doing exactly this…
I too find the post a bit harsh, based on half-evidences, and wagger-style.
@Erick : leave that kind of TC journalism to Mike. I truly enjoy both your styles (good cop, bad cop, ya know). But as much we enjoy Mike’s badass banter, we have come to expect the duly researched reporting from you.
Now you’re absolved, because even great people have their momentary downfall, and this applies to Erick as well as to Dick.
Dick is an undisputed leader in trying to solve the online identity riddle ; one of the most present issues on the net, where Sxip is further than Google, or Yahoo, or M$. Not being acquired speaks more of the ineptness of the bus (un)dev guys at those shops, than on the true merits of Sxip.
Unfortunately for those of us with higher ideals, it s easier to build a business out of wearing masks (e.g. the carnival of bragster.com) than out of letting those masks down (currently, anyone on the net can be a dog, or a dick, as pointed by #40).
Dick has cleverly managed to save some of his valuable assets, and I m sure when Identity is solved, he will be part of it.
(PS: maybe I ve inhaled too much Gillmor dope, if find my own writing under influence…
Dick built and sold a company for like $27M in 02, so I wouldn’t write him off.
He’s also a super genuine and cool guy on a personal level.
Hi there…Man i just love your blog, keep the cool posts comin..holy Thursday . Sasha Cohen
I’ve updated the post with Hardt’s response. Even though this was more of a commentary on my part, rather than original reporting, I still should have contacted him before I put it up.
The issue here is not Hardt and whether he’s smart (he is, I’ve met him) or had successes in the past (he has). The issue addressed here is simply Sxip and its ugly unraveling.
I’m sorry, but in my book, an insolvent company being reorganized is a failure.
Can anything good come of this failure? Of course, it can. Read Hardt’s response to find out what that may be.