CyberTech Rambler

December 13, 2009

Message to TechCrunch : Beware the double-edged sword

Filed under: Uncategorized — ctrambler @ 3:26 am

TechCrunch confirmed that they had filed lawsuit against Fusion Garage over the CrunchPad. Unfortunately, that post was a double-edged sword. While it painted a very negative picture of FusionGarage, it also calls into question why TechCrunch got involved with what they now called a shadowy company.

Yes, I understand that when the relationship turn sour, parties start calling others name. Compared to SCO’s lawsuit, TechCrunch’s position is clear and can be said to have evidence to support their position. The filing itself is full of supporting evidence, not vague accusations as we see in SCO’s case. However, as TechCrunch already says (to their credit), there are two sides to the story.

Finally, hindsight is always 20/20, and we are in hindsight “mode”.

I already blogged that the involvement of VC would had help in bring in management expertise. It appeared that TechCrunch has been having it for free. VCs had flagged up issues with FusionGarage, including the background of the founders, and its financial position. What would a sound management brings to TechCrunch? Let’s see what is happening with VC and Pegatron. VC will not back the project until a device is available, and Pegatron cuts its loses by terminating its contract with FusionGarage when it cannot settle its debt.

To be fair, it is not unusual for startup to have financial problems and requires infusion of money. In the case of Fusion Garage, TechCrunch is their source of fusion money. It is also not unusual for potential investor (TechCrunch in this case) to inject capital into companies they might be acquiring. Perhaps the mistake here is to not to make sure the strongest possible legal document is drawn up to protect TechCrunch’s position.

Fusion Garage is a Singaporean firm. I am Malaysian myself and know how Malaysian and Singaporean companies operate in particular, Asia in general. What you see with Taiwan and to a certain extent Hong Kong firms operate is not representative of how Asian companies work. Taiwan in particular plays to Western rules. Not elsewhere. That was why I was wondering whether TechCrunch was a victim of cultural crash. That is not really that unusual. For example, a lot of companies flag up that Mainland China’s companies does not see delivery date as rigid deadline as in Western culture and expect a certain amount of flexibility in delivery date. In this case, the need to defend yourself from someone stabbing you in the back. It is not unusual to have people taking your money and expertise to bring a product close to fruitation, then crash the company, start a new company which cuts you off to exploit the product. One can say TechCrunch is already at the receiving end of being cuts off, but my feeling is it is at the stage where their ex-partner is going to crash the company. However, I decided that cultural difference has nothing to do with it. First, a western company would had probably done the same thing and second, the VCs appear to be aware of this potential problem and their management, when doing their due-diligence, do have preventative measure put in place for this type of problem.

My overwelming feeling after reading the post and the legal filing is TechCrunch was the naive lamb to the slaughter, or is undergoing a baptisim by fire.

TechCrunch says that Fusion Garage has yet to hire a lawyer to defend themselves. I am actually wondering whether they will. They will probably allow a default judgement against them. That would not matter much if you are preparing to go out of business anyway.

I won’t buy a pad from Fusion Garage. Not so much that I do not have a need for such a gadget, but I think TechCrunch has a genuine greivance and Fusion Garage handling of it is bad and sounds like SCO : A lot of smoke, no substance. I don’t want to do business with such a company.

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