VCs are focused on paying back their fund. They know that most of the companies they fund don't have enough assets to get anywhere near making a dent.
Maker has a half decent brand, and if the company isn't forced to shutdown, it is possible they could reach profitability and find a way to be a huge cash cow in the future. Or, that they would just continue on, or sell for a penance one day.
The point being, I don't think, and I'm happy to hear a good argument otherwise, that VC is to blame for the bankruptcy.
VC money gave Maker enough money that they could operate and have a shot at becoming something big. How do we know Maker could have built up what they have built without that support initially?
It's a good point: why is it so hard to scale back? Dale says in the article that he is trying maintain control of Maker assets, which makes me believe the other option is a sale. Clearly, Dale wants to continue trying to build (even a break-even) business, but it's possible that the investors want to sell the assets, preventing this, so there is tension between someone running the business and someone funding the business. Dale says "It started as a venture-backed company but we realized it wasn’t a venture-backed opportunity." Who knows if it could have survived without VC backing, but this statement seems pretty clear that the investors weren't interested in the original direction of the company, and tried to put it on a higher growth trajectory -- hence my reading that the options were growth or death. On the product side of the business, the first customers of the magazine and faire were already Makers, and the interest was very high. Then, there was a big shift to package up all of this maker stuff, and sell it to general public. It didn't work. Had the business focused on the smaller niche group, it may have been viable, but not interesting to VC since the opportunity is limited to people who are already makers. Once the VC is accepted though, it's no longer an option to stay niche, and business decisions (such as opening a physical storefront in SF) only make sense when viewed with "huge-or-bust" mentality. It's mostly speculation, but I've been exhibited at Maker Faire since 2007, have written a handful of articles for the magazine and have friends that worked there.
Rapidly depreciating assets can change this equation. In that case it’s vastly harder to scale back to breakeven.
Think of a VR arcade at a local mall, at the point the decide not to buy new equipment they have effectively already failed. The question is simply do they get more money from liquidation or continue running the business into the ground.
