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Erick Schonfeld put up a post at TechCrunch last night about Cambrian House — the Calgary-based crowdsourcing software company — and how it was heading for the dead pool after failing to raise financing and being forced into a “fire sale” of its intellectual property and other assets. Since I know co-founder and CEO Michael Sikorsky, having interviewed him a few times (he was also on a panel at the mesh conference last year), I thought I would give him a chance to respond before jumping on the “Cambrian House is dead” bandwagon. According to Erick’s description in the TC post, what happened is that:

“After unsuccessfully trying to raise a new round of capital, it is our understanding that the startup has negotiated a fire sale of its intellectual property, assets, Website (and whatever community remains after the sale) to Spencer Trask, an old money, New York venture firm.”

Erick goes on to say that the Cambrian deal started with talk of an investment, then devolved into a simple asset sale. He adds that Spencer Trask is “basically buying the Cambrian House platform and its community for a fraction of the $7.75 million that investors have already put into the company” and plans on taking the assets and rolling them into VenCorps.com, a startup that is planning to take a crowdsourcing approach to venture capital, and that Toronto venture consultant Sean Wise will run VenCorps and “whatever is left of Cambrian House.”

The story Michael tells — which he has also put in a comment on TechCrunch — is different in several key ways: For one thing, he says Cambrian was able to raise money, and that the company turned down Spencer Trask’s original offer, not the other way around (as far as I can tell, Spencer Trask also isn’t related to the financier who backed Thomas Edison, although the company says it was “inspired” by him). He also says that Cambrian hasn’t sold any of its intellectual property, and will continue to develop the assets that it has, including several of the ventures that came out of the Cambrian fold.

At the same time, however, the Cambrian CEO admits that “our model failed,” in the sense that while Cambrian came up with lots of good ideas, there wasn’t enough follow-through in terms of developing them and turning them into companies or products, primarily because the crowd never stepped forward to do the developing. That’s the idea behind hooking up with Spencer Trask and Vencorps, he says — so that the venture company can locate willing entrepreneurs and match them up with worthwhile ideas, or at least that’s the theory.

Does this mean that crowdsourcing startup ideas doesn’t work? I don’t think so — but it shows that simply coming up with good ideas isn’t always enough. Someone has to execute them.

Update:

I got some more responses from Michael in an email, so I thought I would add them. Aidan Henry has also posted on Cambrian, as have others.

Q. There has been an asset sale to Vencorps/Spencer Trask of some of Cambrian’s assets?
A. YES. In particular: we sold a specific instance of our platform targeted exclusively at the Venture Capital industry.

Q. But not the IP or the existing community?
A. YES. However, we are encouraging our community to move to VenCorps because it represents the next iteration of the model. And, we obviously have a vested interest in it.

Q. And the idea is that Vencorps can better find teams to follow through on some of the ideas that the CH model brings forward?
A. YES. By evolving the model to VenCorps we accomplished the following: a) a scrub of our CH brand. a lot of people found it hard to type, hated the vikings, etc. b) no ideas without teams will be funded.

Q. Does CH continue as a corporate entity and if so what does it do?
A. YES. CH INC. continues, almost looking more like a VC or a holding company – take your pick. We have our handful of portfolio companies to manage which all use crowdsourcing, and one of them, chaordix is all about licensing/selling crowdsourcing platforms.

About the author

Mathew 2430 posts

I'm a Toronto-based senior writer with Fortune magazine, and my favorite things to write about are social technology, media and the evolution of online behavior

14 Responses to “Cambrian House: Failure or evolution?”
  1. […] Mathew Ingram has a post with some updated information about the Cambrian House situation after speaking with […]

  2. So basically Michael is saying that the model failed rather than the execution? That was the main thing I wanted to find out…

    Cheers,
    Aidan

  3. […] said ‘our model failed’. I am not going into this but you can read all about it here, here and […]

  4. […] Cambrian House of Calgary closed its doors recently leading many to suggest that is was crowdsourcing that was to blame, but I think Mathew Ingram hit the nail on the head: Does this mean that crowdsourcing startup ideas doesn’t work? I don’t think so — but it shows that simply coming up with good ideas isn’t always enough. Someone has to execute them.–Cambrian House: Failure or evolution? » mathewingram.com/work | […]

  5. […] more expensive) you’re limiting that process of innovation. Some people disagree with this, but the failure of Cambrian House, once again seems to demonstrate the vast gap between ideas and execution. Cambrian House was a […]

  6. […] pronouncement by TechCrunch that Cambrian House is deadpooled (additional coverage here and here). It’s not obvious what’s going on right now… though recently it was brought to […]

  7. […] expensive) you’re limiting that process of innovation. … [A]s the founder of [failed company] Cambrian House admitted in explaining the company’s changing plans, it wasn’t difficult to get people to come up […]

  8. […] enjoyed savouring new connections.  Reconciling Dragon’s Den, Sean Wise, Will Pate and VenCorps as consistent was fun.  David Jones & I connected through our ‘hood.  I am […]

  9. […] enjoyed savouring new connections.  Reconciling Dragon’s Den, Sean Wise, Will Pate and VenCorps as consistent was fun.  David Jones & I connected through our ‘hood.  I am […]

  10. I think Cambrian's biggest lesson learned is how to create incentives for it's communities that will keep them coming back. Everyone at their core is searching for a sense of purpose and want to create something that will better business or society. Having started a couple of crowdsourcing projects myself I have learned that just because I understand the value of my crowdsourcing project and how it will benefit my communities, it doesn't mean that my communities will. I believe you really have to put yourself in the shoes of someone who knows nothing about what you are doing and ask yourself what it would take for you to participate? Not only participate, but spread the word to their friends and associates that they have to get in on whatever you are doing. Just a thought.

  11. I think Cambrian's biggest lesson learned is how to create incentives for it's communities that will keep them coming back. Everyone at their core is searching for a sense of purpose and want to create something that will better business or society. Having started a couple of crowdsourcing projects myself I have learned that just because I understand the value of my crowdsourcing project and how it will benefit my communities, it doesn't mean that my communities will. I believe you really have to put yourself in the shoes of someone who knows nothing about what you are doing and ask yourself what it would take for you to participate? Not only participate, but spread the word to their friends and associates that they have to get in on whatever you are doing. Just a thought.

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