While the industry’s leading trade organization attempts to put its best face on Rhode Island’s technology sector, some of the industry’s most prominent companies are either going out of business or are being sold.
Count among them Mesa Systems Guild. After a decade of promise and industry leadership, it has closed, another victim in an international technology downturn that indiscriminately seems to claim more and more victims daily.
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And Mesa Systems joins Tradesafe.com that went out of business a year ago, and eBT that has announced plans to liquidate in August. Network Six recently announced it was being bought, and DefendNet was sold to a Massachusetts company.
Quietly, without any announcements and with virtually no rumors in an industry that seems to thrive on rumors, Mesa Systems, a company that grew from its first floor office in an East Side Providence double-decker to its most recent home on Quaker Lane, Warwick, closed in April.
Providence Business News was alerted to problems when phone calls last week disclosed that the phone lines had been disconnected with no forwarding number.
Mesa Systems is a company that had attracted more than $7 million in venture capital funding, had grown to a high of 60 employees, was a leader in the Rhode Island Technology Council, and a founder of the software association that preceded RItech.
At its close in April it left $700,000 in debt, and 25 employees without work.
“It was a matter of being ahead of our market,” said C. Clark Jordan of East Greenwich, the former director of the Executive/Professional Education Center at Carnegie Mellon University, who became Mesa’s president and chief executive officer a couple of years ago. It was also a matter of “facing a great reduction in the expenditures the company devoted to our product. Perhaps there were some miscalculations on our part in terms of position and pricing on the product.”
And Mesa Systems was also, Jordan said, a victim of the times. “The economic downturn is one factor in this. The Internet and the use of the Web became much more difficult than companies had anticipated. Companies were much slower in adopting Web technology than anyone anticipated. It was the same for dot coms and integrated systems.”
Mesa’s product, mesaVista software, was an Internet based collaboration system for product development that would allow engineers virtually anywhere in the world to exchange information drawing data through the company’s Intranet.
Among Mesa’s customers were some heavyweights – Lockheed Martin Corp. of Bethesda, Md.; Lucent Technologies, Inc. of Murray Hill, N.J.; and MediaOne Group, Inc. of Englewood, Colo.
At its close, Jordan said, Mesa was left with $700,000 in debt. “We simply turned the keys over to the bankthe debt was secured by the intellectual property of the company. PNC Venture Bank owns the intellectual property now, basically the code of the mesaVista, the customer contacts, the right to anyone who might want to buy it from the bank.”
It seemed a rapid turnaround for a company that a year or so ago was predicting it would quadruple revenues to $8 to $10 million after posting revenues of $2.3 million in 1999.
And quite a turnaround for a company that had been attractive to venture capitalists. In March 2000, Mesa Systems received $5.6 million in venture capital from SpaceVest II LP and Mid-Atlantic Venture Funds, both of Reston, Va., and North Atlantic Capital of Portland, Maine. It was the company’s second round of funding. The first was in September 1998, when the company received $1.5 million from Jordan and Mid-Atlantic Ventures.
Additionally, Mesa Systems received a $200,000 loan from the Rhode Island Industrial-Recreational Building Authority, a state board administered by the Rhode Island Economic Development Corporation. The company had planned to pay back $150,000 of that loan from its second round of venture funding.
This was a company that from its founding by three former Cadre Technology Engineers – Alan Hecht, David Fortin and Brian Brady — as a small consulting firm grew to a product development company.
It was the kind of company that Rhode Island technology advocates would often spotlight as among its best successes. Even with a string of what could be considered losses, RItech’s executive director remains upbeat.
“My sense is that we have a solid critical mass in the state that is growing and hiring extremely bright people,” said Rick Kovar Ritech’s executive director. “There are signs that we have a strong industry, but we just don’t know the scope.”
That scope just got a little smaller, and the pool of extremely bright potential employees a little larger.
When Mesa shut its doors in April, it left 25 employees looking for work. Jordan said some found jobs with other companies, but some are still looking in what he described as a slow market. The employees were left with no severance pay.
For a company that began with such promise, the end was abrupt, Jordan said. The business “just came to a close.”
