Re:Dear Dumb VC
by hga on Saturday May 25, 2013 @06:13PM
(#5769059)
And the herd mentality is not new, in the '80s there was overinvestment in PCs and disk drives. If my memory is not failing me, at one point there were around 40 (sic) mostly? entirely? VC funded disk drive companies (not that most actually got a product to market). It was a really crazy time, some/many of them shipped a lot of drives that they knew didn't work, and MiniScribe, a fairly well established one that had been cooking the books for a few years after losing an IBM contract, ended by "shipping bricks" (!!!; http://en.wikipedia.org/wiki/MiniScribe):
"The primary scandal erupted in the final weeks of 1989, when after failing to procure short-term financing, the company executives decided to embark upon a fraudulent course of action to bring in the financing unwittingly from their customers. As each unit sold was tracked via serial numbers and also sat uninspected for some weeks inside warehouses in Singapore awaiting use in production, the decision was made to ship pieces of masonry inside the boxes that would normally contain hard drives. After receiving payment, MiniScribe then planned to issue a recall of all the affected serial numbers and then ship actual hard drive units as replacements, using the money received to meet financial obligations in the short term.
However, MiniScribe embarked upon a round of layoffs just before their Christmas shutdown, including several of the employees that were involved in the packaging and shipping of the masonry. These people immediately called the Denver area newspapers...."
"The primary scandal erupted in the final weeks of 1989, when after failing to procure short-term financing, the company executives decided to embark upon a fraudulent course of action to bring in the financing unwittingly from their customers. As each unit sold was tracked via serial numbers and also sat uninspected for some weeks inside warehouses in Singapore awaiting use in production, the decision was made to ship pieces of masonry inside the boxes that would normally contain hard drives. After receiving payment, MiniScribe then planned to issue a recall of all the affected serial numbers and then ship actual hard drive units as replacements, using the money received to meet financial obligations in the short term.
However, MiniScribe embarked upon a round of layoffs just before their Christmas shutdown, including several of the employees that were involved in the packaging and shipping of the masonry. These people immediately called the Denver area newspapers...."