Matchmine CEO Comments on Shutdown—Company Was “Collateral Damage” of Financial Crisis
After publishing my report last night about the death of Needham, MA-based Matchmine, I wrote to CEO Mike Troiano, whom I’ve interviewed a couple of times over the past year, seeking his comments about the sudden shutdown, which he announced yesterday in the company’s blog.
Troiano wrote back this morning. He explains that Matchmine—which had built an online recommendation system based on preferences actively expressed by users, rather than on the preferences of people like them, as in the older collaborative filtering systems used on Amazon and other e-retail sites—was a direct casualty of the ongoing financial crisis on Wall Street. Troiano says he felt that after nearly two years in business, the company had finally found a formula that worked, and was about to reduce its burn rate drastically to cope with economic conditions. But the startup’s main backers, the Foxborough, MA-based Kraft Group, were forced to shut down the company to improve the group’s cash flow amidst the economic turmoil. The Krafts “made a tough business decision, and I understand it,” Troiano says.
Troiano also corrects an impression left by one sentence in his blog post yesterday in which he wrote, “It’s one thing to be failed, quite another to have been deceived.” Xconomy, TechCrunch, and others interpreted that as a hint that Matchmine had been misled by the Krafts about the status of the company’s financial backing. But that sentence “was not about the Krafts at all,” Troiano says—it was an attempt to convey to the company’s partners that the discussions going on as late as last week about prospective business deals were in good faith, since the company’s unraveling over the weekend was entirely unexpected.
Here’s Troiano’s full message:
“Hey, Wade—Saw your piece. It was a bit harsh, but more accurate and fair than most.
“I published a comment in the matchmine blog after I read the article to clarify that that sentence (‘It’s one thing to be failed, quite another to have been deceived’) was not about the Krafts at all. I was concerned that the partners we were engaged with—and the prospective partners we were still pitching as late as Thursday—might feel deceived by us. We may have failed them, in good faith, but that’s different than lying through our teeth knowing we were going to shut the company down on Monday. Hence the failure vs. deception distinction.
“As for the Krafts, they made a tough business decision, and I understand it. I still have nothing but respect for them, as business people and as human beings. In the end it really wasn’t about matchmine, it was about improving cash flow across their interests in the face of an unprecedented financial market crisis. Matchmine was just collateral damage.
“That’s the bitter pill here from our perspective. We did struggle for a while to find a formula that worked, but anyone whose tried to build a business on the back of a capability knows that’s the way it goes sometimes. Along the way we probably spent too much money, and there’s learning in that for me and my team. But in the end—just as we’d found the button, and were about to take the burn rate down just like everyone else—it ended over the course of a weekend.
“It’s going to take some time to accept that, for me, and my people.