ArsDigita

ArsDigita provided open-source solutions for integrated web applications in e-commerce, enterprise management and education.

eCommerce
1998 – 2001
Cambridge, MA
Founded by Philip Greenspun
Raised $35 million in 1 round
Backed by 2 investors

Reasons for Failure

Internal feuds between investors, founders, and others on the board.

Their customers suddenly began to go out of business.

Employees were confused about who was in charge.

The VCs cut too many corners and it came back to harm the company.

Twisted legal issues: shareholders were sued by managers and the lawsuit was funded by the company’s own money.