FasTV Shuts Its Doors

Internet video portal FasTV.com closed its doors Friday, leaving 79 employees scrambling for jobs over the holiday weekend.

According to FasTV President Tim Winter, the company couldn't close its latest round of funding. On Friday afternoon, Winter was notified by Chairman Prince Khaled Al-Nehayan that funding would be cut off immediately and that the company needed to terminate employees that evening. Unfortunately, many employees had taken the afternoon off for the long July 4th holiday, leaving just about 10 people in the office.

According to one ex-employee, Winter called the remaining staff to a meeting Friday, where he shook his head and said simply, "It's over."

Things apparently happened quickly last week. Just on Wednesday, Prince Khaled assured employees that things would be fine and that they would be taken care of. Then came Friday.

Who's left at the office now? "Nobody, we're all just here sending out resumes," said one glum-sounding ex-employee on Friday.

Origins

FasTV was originally formed in 1997 as a desktop learning company under the name Worldwide Broadcasting Network, in Cambridge, Mass.. In March 1998, WBN started using video search engine technology, and Chairman Prince Khaled Al-Nehayan decided to take the company to the Internet. In late 1998, WBN became FasTV and moved its headquarters to Los Angeles, Calif..

When it launched last year, FasTV positioned itself as a portal site where end-users could come to search for current news and other video content. The company's customer list included some big names: CNN, Reuters, Capitol Records, Merill Lynch, the Weather Channel, and Fox. But the portal strategy proved too difficult to maintain and required partnerships with a wide variety of content companies.

But trouble seems to have been brewing for a while. "We all thought the company lacked in direction," said FasTV QA manager Marco Huerta. The company switched business models (from portal to service provider), yet never managed to shake the blues.

There was a point where nothing really happened in the company, Huerta said. "Decisions we wanted to make in a week were shot down by the chairman," he said.

Scrambling for Revenue Model

Perhaps FasTV's biggest problem was its revenue model. The company started off as an ad-supported business with banners and gateway video ads (which appear before a video clip is played). But the users just didn't materialize, and the flow of money began drying up. FasTV then turned to a service provider model, video-enabling customers' sites. "We realized we could generate a lot more traffic and revenue by providing [our customers'] own video back to their sites," says Winter. He pointed out that FasTV powered the recent Masters golf tournament, as well as Wimbledon coverage at Wimbledon.org.

Unfortunately, says Winter, the company just never had the time and money to prove it could make this new business model work. Winter says FasTV will continue to maintain partner web sites, but didn't say for how long.

According to Heurta, the reason is even simpler: The chairman (who was the company's principal investor) simply grew tired of losing money, he says. "I guess they felt they lost enough money, so they got out while they could," said Huerta.

What's Next?

As for the employees, Winter says that he is having a job fair of sorts, letting recruiters come in to the FasTV offices Thursday. Workers, naturally, are bitter, saying they didn't have enough warning. "Some of us knew that something was up," said Huerta, "but nobody expected it to come so sudden. I had great faith in the product and we all worked our butts off."

Not all is lost, however: There is a faint hope of a buyer, says Winter. He said he spent all of the holiday weekend talking with interested buyers. "We are actively engaged with a number of customers that want to buy all or part of FasTV," he said. He refused to comment on who those potential buyers were, however.

Lessons Learned

Many will see FasTV's demise as yet another dot-com failure, in the wake of DEN, APBNews.com and others cutting jobs or folding altogether. What does this mean for the streaming sector? Recently launched streaming search company SingingFish.com is not concerned. "We're entirely different from FasTV," says Mark Lipsky, vice president of strategic relations and marketing. "They are a destination site, which we are not and we will never be. We don't have to deal with maintaining a web presence."

SingingFish.com essentially partners with companies to map their existing content and provide a way for users to find it easily. Even in pre-launch mode, the company says it has the largest selection of streaming files (Real, Windows Media, QuickTime and MP3) in its database. "We far exceed FasTV in terms of breadth," says Lipsky.

But is there a lesson to be learned? Winter says it just comes down to having a company with the total package: great management, great investors, and a great team. Anything less spells trouble. "What we're seeing now is a classic case of Darwinism--survival of the fittest," he said. Having a clear path to profitability is also important, he said.

Lipsky sees FasTV's demise as a confirmation of SingingFish.com's business model. "There are a lot of reasons to not do what [FasTV] did," he said "and a lot of reasons to do what we're doing."

Winter expressed regret, saying the company had gone so far, but just didn't have the time to prove its worth. "I hate to drive the ball to the one-yard line and not punch it into the end zone," he said. "Unfortunately, the well ran dry before we had a chance to prove it out. If we can make the right transaction [with a buyer], I'll feel satisfied with that."