From Startup To Shutdown:What ultimately caused govworks.com to fail?

Greg Drocz

Strategy

While watching the movie it becomes apparent that GovWorks’ strategy is flawed. The first thing that stuck out to me was during the visits to the venture capitalists. Kaliel and Tom made it look like amateur hour and did not convey that they were truly serious about running a business. From not being on the same page and contradicting each others statements with regard to the purpose of the business to not being able to get in contact with their lawyer, Kaliel and Tom’s actions showed they did not have a concise plan. Even when told that their plan was flawed by highly respected venture capitalists, they shook it off as the VC’s not understanding or not knowing. A second questionable strategy was to invite the competition into the office and give them a tour, allowing them to see the inner workings of GovWorks. This allowed the competition to get a handle on where GovWorks stood at that point in time and also allowed for the competition to launch their product prior to GovWorks. This in turn put pressure on the company to release a service that was flawed and not ready for launch. I still believe that the burglary that occurred was a direct result of Kaliel’s “strategy” to bring the competition into the office. The competitor had the opportunity to see where everything was and, as seen in the movie, the burglary was highly focused in certain areas – mainly Tom and Kaliel’s offices.

Professional vs Personal Relationships

As with any business, dealing with friends from a professional standpoint – especially when working together, is extremely difficult and can often lead to the downfall of the business. Relationships such as these are found at GovWorks – friends who created a business and now are working together. The first evidence of the mixing of professional and personal relationships can be seen when Kei, one of the original creators, is bought out of his share of GovWorks. In order to do so Kaliel and Tom entered into negotiations with Kei to buy his shares. Rather then play hardball and stick to a price, Kaliel and Tom let their personal relationship with Kei get in the way and ultimately wound up paying money out of their own pockets to satisfy their friend’s demands. Personal relationships also hurt not only the professional relationship between Kaliel and Tom, but GovWorks as a whole. Kaliel knew that Tom had no business being in charge of the technology aspect of the project as he had no experience. However, rather then bring in someone from the start that knew how to handle the technology, Kaliel let his personal relationship with Tom override the professional relationship and let Tom stay as head of that project aspect. This ultimately hurt GovWorks by having a subpar service launched. Kaliel would later realize his mistake and bring someone else in – however at that point the final nail in GovWorks’ coffin was already there.

Leadership

Leadership was another important factor in both the original success of GovWorks and also its decline. Kaliel is a born leader. He has poise, fire and determination. I suspect this is precisely why Tom brought Kaliel in as CEO. From television interviews to meetings with the venture capitalists, you could just tell that Kaliel had a vision for GovWorks. He inspired those who worked around him and they felt apart of something big, something special. Tom on the other hand was the complete opposite. It appeared his idea of leadership was a retreat to listen to the wind through pine needles. By the looks on his co-workers faces, you could tell they thought Tom had lost it. Tom’s lack of leadership skills is also evidenced when threatened with the idea of getting fired, his professional reputation being tarnished, and GovWorks going under. Tom’s response of brushing it off and not caring shows his inability to be a leader.

Technology Readiness/Software Testing

When watching startup.com, it becomes clear that GovWorks was far from being an operational site and service at the time it was launched. Search features, such as Ask, were extremely flawed and the design was poor. Tom who had no experience in the technology aspect, as previously mentioned, was in charge of this aspect. It should take weeks, if not months to test a service website in which people will be paying through – not days. After spending 8.5 million dollars the website should’ve been flawless. In an environment where the user is choosing you over the competitor you need your business to run smoothly, or else the customer will go to the competitor. It just seems to me that after seeing their competitor launch their site, that GovWorks was just eager to put whatever they had on the web rather then be left behind.