Thursday, April 18, 2013

KIT Digital Files For Bankruptcy

So it seems that KIT Digital has finally bit the bullet and, supported by its leading shareholders, will file for Chapter 11 bankruptcy so that it can re-organise and re-appear as a new company called Piksel.

It seems that, as ever in the history of the company that started life in Australia as Roo Media, the real loosers are the shareholders since Piksel will need to keep suppliers and employees onside if it is to trade on successfully.

The company has easily gone through a couple of hundred million dollars of shareholders' funds and returned nothing to date. It's difficult to see what might change in the future. There's little doubt that there is good technology, a great client base and some very good people which will give Piksel a fighting chance. But I hope this time there will be real leadership, a quality sadly lacking all along with this company. It will also need a better business model in a crowded market place where self-build seems to be a preference.

Building a successful and profitable business is as much about what you don't do as what you do, and it's also about knowing if deploying money will make money, otherwise you may as well stand on the street corner burning hundred dollar bills, which is pretty much all this business has done from its inception.