UPDATE - Software Failure Closes Clayton Internet Startupgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Fair use for educational and research purposes only
Software Failure Closes Clayton Internet Startup Source: St. Louis Post-Dispatch Publication date: 2000-05-20
* Moses.com, an online trading Web site that was founded by Huntleigh Financial Services, filed suit against Comprehensive Software Systems in February over the failure of its trading software. The Web site had raised about $9 million from private investors.
Moses.com, an attempt to start an online trading Web site, has flopped amid a lawsuit, leaving 165 investors to wonder if they'll recoup their $9 million investment.
The Clayton startup was founded by the leaders of Huntleigh Financial Services as an attempt to provide unlimited online trading for a flat $19 per month.
Jim Winkelmann, chief executive of both Huntleigh and Moses, blamed the problems on Comprehensive Software Systems, which was supposed to provide the trading software.
"As you know, the CSS software simply did not work. Period," Winkelmann said in a letter to shareholders dated Wednesday. Moses.com filed suit against CSS in February.
Officials of CSS, based in Golden, Colo., and their attorney could not be reached for comment Friday.
Winkelmann said the failure of Moses will not affect the financial health of Huntleigh Securities, another division of Huntleigh Financial. Huntleigh Financial owned a majority of Moses.com.
In its lawsuit, Moses.com said CSS promised that it could provide the trading software. Based on that promise, Moses said it raised more than $8 million from private investors last year. Many of the investors were Huntleigh Securities clients.
The company launched a marketing effort and reserved ad space for this year's Super Bowl.
"Last year, if you would have to bet on Moses making it or the Rams making it, Moses would have been the bet," said Winkelmann.
The firm canceled the Super Bowl reservation long before the game.
The company hired 50 people, some moving from as far as San Francisco, and bought about $1.8 million in computer hardware. Most workers are being laid off.
According to Winkelmann, the CSS software could handle stock trades but couldn't do the back-office functions needed by a brokerage. Winkelmann put his own personal account on the system and it kept getting his balance wrong.
Winkelmann said the company has developed a new business plan for Moses.com, but "we're also out of money."
In the letter to shareholders, Moses.com said it is more than $1 million in debt to its vendors and is explaining the situation to them.
"Our strong preference is to seek the honorable, right way of conducting business, which at this time we believe precludes the bankruptcy option," the letter said. "At this point our decision is to maintain Moses.com in a 'dormant' state."
A Huntleigh Securities executive vice president, James Snowden, sits on the board of Pulitzer Inc., which owns the Post-Dispatch. Huntleigh has also provided investment banking services for Pulitzer.
-- (Dee360Degree@aol.com), May 20, 2000