Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

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ArsDigita

Agency that built solutions for e-commerce

General Information
Category
e-Commerce
Country
United States
Started
In 1997
Business Failure
Business Outcome
Shut Down
Closed
By 2002
Cause of Failure
Lack of Experience
Founders & Employees
Number of Founders
Seven
Name of Founders
Philip Greenspun, Tracy Adams, Ben Adida, Eve Andersson, Olin Shivers, Aurelius Prochazka, Jin Choi
Number of Employees
Between 51 And 100
Funding
Number of Funding Rounds
1
Total Funding Amount
$35M
Number of Investors
3
Description

ArsDigita was a Massachusetts based Web Development Company established in 1997. Its fundamental product was an open source toolbox called the ArsDigita Community System (ACS) that aimed to help support entrepreneurs who had an online business with their group sites by introducing the ArsDigita database. The database would prompt smooth exchanges processing, with consistent work process in every aspect of the E-organizations. The positive development of ArsDigita prompted the formation of the ArsDigita Foundation, that awarded ArsDigita prize yearly to secondary school students. The foundation also supported post-high school students to undertake a one-year software engineering course at an undergraduate level.

Cause of Failure

Following three years of successful business, ArsDigita began encountering a descending pattern in April 2000. Their decline was ascribed to the procuring of an inexperienced external CEO and the enablement of more power to the financial supporters of the startup. The new group of leaders utilized twofold the speculation beforehand, declined a lucrative offer by Microsoft that could set the organization upon an upward trajectory, and disliked the key organization item, ACS, even though it had repeatedly been used to take care of genuine business issues and made the organization one of a kind and effective.

To exacerbate the situation, they supplanted the ACS with another, mostly closed-source programming bundle that was difficult to utilize, had genuine execution issues and met just a little part of the business needs. Also, they fundamentally expanded the cost of the task by multiplying the number of representatives and making new, generously compensated official positions. The new administration likewise misused the funding. The situation kept on deteriorating until the company finally shut shop in April of 2001.

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