Omnidrive: Lessons in Failure

Aside from the occasional Valleywag and ReadWriteWeb post very little has been said publicly about the downfall of Australian startup Omnidrive. I use the word downfall as opposed to failure because if Nik Cubrilovic is to be believed the service is still going strong. No matter what the current status of Omnidrive (and it has been deadpooled more than once) the company has failed in its communication strategy.

Ostriches Don’t Succeed in a 2.0 World

Omnidrive, and Nik by extension (and as perhaps the companies only remaining employee outside of some Romanian sub-contractors) for what ever reason decided to take the ostrich path (burying your head in the sand) when things started going wrong. Indeed Nik’s sole communications path has been to only comment on blogs when others have written the company off, as opposed to pro-actively discussing the issues upfront from the start, and from a marketing/ message perspective leading/ melding/ controlling that discussion.

In a 2.0 world of blogs, social networks, microblogging, FriendFeed, chat, Skype not offering transparent information is a dangerous strategy. People will always talk about your startup/ site/ and even personal life, you can participate in that discussion and even seed it, but ignoring it means your message never gets the platform it deserves.

It’s sad that Omnidrive has gotten to this stage, but instead of opening up and being transparent, Nik has turned people away who would have supported him, and others in the community who may have sympathized with his position.

Cultural Issues?

Even if we accept that Omnidrive has a future, no one doubts that something went wrong with the company last year and into this year, and yet as far as I’m aware Nik has never once conceded this (with the exception of failing to renew the domain). I wonder, particularly after the concept came up on a panel at CeBIT yesterday, whether the Australian culture of never admitting failure and where failure is frowned up (as opposed to the Valley) is holding Nik back?

The People Equation

It’s one thing not admitting failure, it’s another thing feeding yourself and not paying staff for 5 months; that’s Phil Morle’s story and as it has been made publicly it can be repeated. In not paying a staff member Nik has someone who is well liked in the Australian tech community making it clear to everyone what they think of him. Phil is walking/ talking negative PR for Omnidrive, and the longer the pay dispute has gone on the more damage his story has caused. It’s impossible to completely avoid staff leaving on bad terms, but pay (or lack there of) should never be a thing they can use against you.

What should have been done differently

Nik should have been talking about what was going on. He could have explained what was going on, walked through the reasons why, and even at the worst case closed the company before the losses had gotten out of hand. The same is true of any startup: if things are going wrong you need to be talking about them, as Twitter (as an example) is sort of learning at the moment after another serious web lynching. Ultimately Nik could have failed with grace and maintained some respect in the broader community.

Disclosures: I’m not an investor in Omnidrive, however I was previously a contractor to Michael Arrington who is. I also have options in a site part-founded by Clay Cook, another investor, although I ceased to participate in the site in December 2007 following Cook deciding to visit his Nik frustrations on me. I also regularly podcast with Mick Lubinskas, who is Phil Morle’s business partner.

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