MediaMax/TheLinkup death spiral dogs Nirvanix

business model, Harr was excited about its technical prowess.

"It was managing a petabyte and a half of storage and had done that well," Harr said. "But the company began to outpace itself and couldn't scale on its older technology. The engineering team had turned over twice. Its business model was very broken. And I was flooded with customer complaints. I give Steve a lot of credit, but he pushed the envelope too hard, too quickly and didn't check in with the market."

Iverson remained passionate about selling MediaMax as a consumer product. Harr advocated letting it "gracefully die" and creating a new company selling "cloud" storage to paying enterprise customers, he said.

More trouble happened on June 15, 2007 when a Streamload system administrator's script accidentally misidentified and deleted "good data"along with the "dead data" of some 3.5 million former user accounts and files. It would take until October 2007 for a third-party firm to recover 96% of MediaMax customers' files and bring them back online, Harr said.

Despite the ongoing problem with customers' files, on July 1, 2007 Streamload's board of directors split the company into two independent businesses. Streamload changed its name to Nirvanix. It kept many of the former company's physical assets and employees, and secured $12 million in initial venture funding.

The MediaMax consumer product and its disgruntled customers went to Iverson as CEO of a "new" business that adopted the product name. MediaMax, Inc. had only about $500,000 in working capital at this point, Iverson said. Programmers started working on the fifth version of the product. The "new" company planned to disable its free online storage service and to convert customers to a $6 a month subscription model. Iverson sold his Nirvanix stock for "a small amount of money. I didn't wait for the home run," he said.

However, MediaMax Version 5 didn't score. Some customers were irate that the old free service was disabled before they retrieved their files. Others were upset that the V5 product, despite having some interesting features, isn't meet basic needs. Like Version 4, iMediaMaxVersion 5 suffered from feature creep. By October 2007, Iverson blogged"on version 5 we added features that people didn't want, we didn't focus on making our core functionality the best it could be."

By April 8, 2008 with the popularity of social networking soaring, Iverson decided to re-launch 10-month-old MediaMax, Inc. as a new company called The Linkup - marketed as "a social networking site based around storage." This final move unraveled the company. Iverson told customers they had three weeks to use the MediaMax Version 5 "mover"tool to migrate their personal files to TheLinkup's new data center,but the code didn't work correctly. The files - stored on servers owned by Nirvanix but not part of the Nirvanix storage delivery network product - wouldn't transfer, Harr said.

After more than two months of fending off angry customers and failing to write code that moves the files, TheLinkup is closing next Friday.

"No one has the time, money, or inclination to do the engineering to figure out why the files didn't migrate," Titus said. Paul Scott of Windward Ventures, acting as the company's chief financial officer, is contemplating filing company bankruptcy and other strategies to wind down the company and pay creditors, Iverson said.

Iverson said he hasn't had much time to contemplate what he's learned from the death spiral of his first company other than "MediaMax and Nirvanix didn't share the same vision for their relationship. I overlooked it, thinking it will work itself out. This has been painful,but all the successes along the way outweigh that pain in the long run."