Friday, June 22, 2018
Business

Deja vu: Are Savtira's startup woes repeats from CEO's past?

Timothy Munro Roberts burst onto the Ybor City business scene like an entrepreneurial rock star.

A visionary computer geek with the gift of gab, he had an idea to revolutionize online commerce. It sounded good, at least to enough investors to get rolling. He hired dozens of tech employees and then announced he would need hundreds more. He predicted lots of sales. A billion dollars worth, actually.

The spending was conspicuous. He sponsored parts of the Outback Bowl and Guavaween parade.

It looked like success. Big success.

All that heat has given way to a cold reality. The company, Savtira, can't make payroll. The Labor Department is investigating. Former employees paint a picture of narcissism run wild. Investors want a pound of flesh.

Entrepreneurs fail a lot. Startups go bad all the time. Tech startups, in particular, fight in a tough weight class.

But Savtira's downfall is raising questions about Roberts' entrepreneurial history, which includes allegations of false promises, grandiose plans and stock price chicanery.

Is the sorry saga emerging at Savtira a case of deja vu all over again?

• • •

Savtira promised trendy "cloud computing" technology for businesses seeking to sell their goods online. Instead, the company is stuck in a deepening mire. Some of its investors desperately hope to salvage their stakes in the company. They are eager to convince Roberts to step aside. They know he controls a majority of shares and shows little inclination to listen. If necessary, some investors say bankruptcy may be inevitable even if it means losing their money.

Many Savtira employees were stuck at home last week awaiting some word from Labor department officials about their back pay. Former employees tell how Savtira's product, intended to help businesses sell products online, looked promising on paper. In reality, they say it still has too many bugs to entice many corporate customers.

Roberts, 42, counters by pointing to an April press release. It claims Savtira will provide online shopping capability to Bebo.com, described as "one of the world's top 10 social networks." Roberts calls Bebo a gamechanger for Savtira because, he says, it is a big mainstream company.

That's not the same Bebo many Internet analysts see. These days Bebo is more like MySpace, a once trendy social network that is fading fast.

The disappointed want payback. Former Savtira executive and investor Geoff Bicknell is suing to recover money he loaned the company. Customer Austin Hurst of the Sarasota tablet computer company Tabulous Cloud says he paid the company $300,000, but it failed to deliver most of the e-commerce platform.

Amid such allegations of mismanagement, where is Roberts?

In an interview, he is quick to tell how high-tech startups are fraught with hurdles and headaches. He says cash flow problems are not unusual and, yes, they can interrupt payrolls. He claims the company is about to sue "greedy investors" for "lowball tactics" that want to bankrupt Savtira and buy its patents and technology on the cheap. Any day now, he argues, fresh investors will arrive.

He reminds me that nine out of 10 startups fail. He laments not starting Savtira in California where, by contrast, venture capital seems to grow on trees.

He has told both investors and employees who caught wind of his troubled business past and run-in with federal regulators that he is reformed. He's learned his lessons, he says.

Roberts also likes sports metaphors to describe his plight at Savtira. "We're rolling with the punches in an 18-round fight," he says. "I feel like we are 10 laps in the lead and running out of gas at the finish line," he later adds in a reference to the company's lack of funding.

In a past business startup, Roberts gave himself the titles of chairman and "chief visionary officer." He can be a very convincing salesman, as many former employees admit.

He must be. The blemishes in his business background would probably ruin lesser startup players.

• • •

So here's the question: Is Savtira destined to become just the latest house of cards? Or can this company be revived?

Roberts' many past startups may hint at what lies ahead.

He got his early start in St. Louis co-founding Savvis Communications in the late 1990s. But he left that business soon after.

Next stop: Another startup called Intira Corp. It would file for bankruptcy in 2001. It sold for $7.8 million, a fraction of the $385 million it raised from investors.

Then came a business called Broadband Internet Group, better known as BIG. Roberts, then 29, said he would attract more than $1 billion in investor money and employ 300 technologists. BIG sponsored a car in the Indianapolis 500. It recruited Hollywood actor Tom Arnold as an investor and to BIG's advisory board. The company announced plans to buy a $35 million office building but never completed the deal.

When the Internet bubble burst in 2000, BIG closed after going through $18 million of investor money in just nine months.

By then, Roberts was in Florida living in a 5,000-square-foot house on Longboat Key. He started a business in 2002 called Infinium Labs, a public company in Sarasota that raised millions of dollars to develop a video game system called "The Phantom." No gaming consoles were ever sold.

Then Roberts got caught in an alleged "pump and dump" stock scheme. According to Securities and Exchange Commission documents, he hired a stock promoter to fax thousands of potential investors with misleading information about the new company. That's the "pump." When the stock rose from all the hype, Roberts sold $422,500 of his own shares. That's the "dump."

Roberts says it's coincidence he sold shares at that time. Still, he stepped down in 2005 as Infinium CEO. What's left of the company is now called, appropriately, Phantom Entertainment.

In 2008, as a penalty for his pump and dump, the SEC banned Roberts from being involved in another publicly held stock company until 2013.

Now there's Savtira, a private company.

• • •

In a Nov. 18, 2000 story in the St. Louis Dispatch, Norman Steinman, who was laid off at BIG, told how company employees joked that their philosophy was "fake it 'til you make it." In other words, the story stated, the company would spend money to give the impression it was a viable enterprise even while it was not, hoping that clients eventually would come.

Sound familiar?

Robert Trigaux can be reached at [email protected]

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