Wise Startup Blog

We’re currently in the midst of a recession/downturn and are facing some major companies taking huge dives, see: Bear Stearns).

And now that we’ve got some pretty conclusive evidence we’re in a downturn, everyone is looking at what was the initial sign there were bad times to come so we can use this a historic evidence to help us predict the next downturn.

Back in July of last year, Amp’d Mobile announced they had blown through all their $360 million in capitol and have no more operating cash and will have to shut down. In efforts to create a competitive advantage, they had an interesting strategy that was poised to have them triumphing over the likes of Verizon, etc.:

The company’s founder chief executive, Peter Adderton, known for dashing in and out of Los Angeles with a helicopter, searched his business for bottlenecks to the company’s growth. The big one he found: Credit checks. While his company’s carrier partner, Verizon, checked customers’ credit to make sure they had enough cash to pay their bills within 30 days, Amp’d decided to relax the requirement to 90 days for its own network.

Amp’d Mobile was going after the same market as the subprime mortgage lenders were, and what do you know? They didn’t pay their bills and companies were left in Chapter 11. It’ll be interesting to see if the subprime mess went well beyond those people who were subprime loans and is affecting speculators, second-home owners, families taking home equity loanes, etc.

Any other companies in this space that have gone down in the past 2 years that might have been an indication of our impending doom?