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InsideTrack: Verari Systems out of business [UPDATED]

Verari Sytems logoDuring SC09 a well-connected friend told me that Verari Systems was in trouble for lack of access to capital — essentially the same immediate cause as SiCortex. Then in response to my post a couple weeks ago asking if anyone had seen Verari at SC09, I got a tip that they had registered for booth space but never showed up. I really don’t like posting speculation about going out of business, since a good rumor like that can actually make itself come true. So I waited.

Today I’m hearing that Verari is locking (or has locked) the doors. First, VerariGuy has this Twitter stream over the past 22 hours

These execs should be arrested
about 4 hours ago from web

Conference call at 9am PST to let everyone know we’re done. If I knew I wasn’t talking to myself I’d have half a mind to post the phone #
about 6 hours ago from web

Well everyone, #Verari Systems is now dead. The doors are locked, and people have taken out anything not nailed down
about 22 hours ago from web

Then on my blog just a few minutes ago, a comment on the SC09 post left by reader “foo”

Verari is out of business s of today at 5:00 pm cst!

Also I’ve tried contacting folks I knew at the company with no success. No one is in their offices, and the corporate headquarters in San Diego was routed to a phone message that says I’ve called outside “normal business hours” when I tried to call at 1:00 pm Pacific. That’s enough evidence for me to put them in the deadpool, at least tentatively. If you have more info, leave a comment. Meanwhile I’m continuing to try to contact the company.

[UPDATES]

1. VerariAlumni.com also indicates that the company is out of business

Since Verari is no longer around, I’ll be using this area to communicate anything I believe my peers may need to know about, or may find of interest. This section will be built out more and more as time progresses. Of all the pages on this site, this will be the one updated most often so check back in.

2. Subsequent calls to the company by a friend did raise a person who said “I have nothing to say.” Which isn’t a denial.

Comments

  1. Wow… Wonder what’s going to happen to hardware in the field? How large was Verari in the end? (eg, how many laid off?)

  2. Verari client, former. We are waiting patiently for news on contracts and replacement gear. They have sold gear as few 3 weeks ago without hinting of anything.

  3. ExEmployee says:

    True. We are closed. David Wright and the cronies he brought with him should be prosecuted for what they did to us this past 3 years. The places we will go are the unemployment line just before Christmas. Thanks for the gift. Con Call at 9am the 11th stated we were doing a “controlled restructuring” and unfortunately that meant we were all “terminated” as of the 11th. With all his buddies getting nice 6 figure salaries, Wrights secretary included, 13k airline seats, not living in San Diego so hotel bills, meals and “entertainement” expenses all charged back to the company, what did they expect would happen with over 16 vice presidents. We are all so angry about how it all went down.

  4. VerariGuyFan says:

    ExEmployee is right. This huge management structure was brought on more to make the org chart look good to a potential buyer than to continue to be a profitable company that we once were.

    We had some execs that (IMO) did nothing, and I mean absolutely nothing. We added a ton of ‘seasoned’ sales staff that brought nothing, and I mean noting, to the table and were kept on the whole time.

    Add to that same decisions that crushed the sales force and caused that engine to stall (I won’t go into all of them, but when sales are kicked in the teeth, you no longer have the ability to support the bloat), and it’s only a matter of time.

    Sadly the tealeaves pointed to this happening a few times and we could have done something about it. We didn’t. We could have done a major house cleaning to become a (once again) lean and profitable company. We didn’t. Instead we made a few token layoffs.

    When the people that should be let go are responsible for deciding who’s let go, you’re not going to do well.

    If Verari is important enough to ever look back at as a case study, I really hope it’s not poor product or tech or staff (minus new staff) that’s looked at as the cause of failure. This is a perfect case of young healthy company having heavy sloppy management piled on that had no idea what to do or what made us great, that finally made one too many bad decisions.

  5. VerariGuyFan says:

    Foo: I feel very bad for you personally. I know people in sales and they were not given any direction as to what to do. Each had to make their own decision. I know some basically quit selling as they had a feeling we couldn’t delivery or wouldn’t be around. Some gave up a while ago which compounded our problems. Some pulled the company line till the end out of hope or ?

    I say this again as someone that truly feels bad for any customer left hanging. I don’t think any sales person sold anything with any malice intent.

  6. Lone Ranger, I worked for Verari for 14 years – longer than everyone save for maybe 1 or 2 people. I also managed the (likely) “fr” customer in question. While their buying slowed, that was a rather recent trend. By the time they slowed their buying, they were a much smaller % of the company revenue as they were years back. Meaning the impact of their decreased buying lessened as they began to slow. I don’t want to share what % they were, but it was less than 10%.

    Basically what I’m saying is their slowing down accounted for little to none of the reasons Verari failed.

    I assume some of these other posters are ex Verari people and their explanations have a lot more to do with what happened then a single customer slowing down their buying. I’d add some other reasons that are my personal opinions, but I don’t feel its appropriate for me to do publicly.

    The story would really make a good book. Maybe I’ll write it since I have lots of free time now…

  7. VerariGuyFan says:

    “but key members of Verari management are going to that new company.” Great, the same group that f’d up Verari before? Sounds like a great place to work.

    Thought I guess that depends on who the ‘key members’ are. I could count the number of good members of management on one hand, and that’s after a few fingers had been chopped off.

  8. We saw this coming couple of years ago and some of us were lucky to jump off this sinking boat. The whole structure of this company was wrong, and you didn’t have to be an excutive to realize it. There were more useless VPs and Managers than ppl that do the real work. Most of those idiot execs never cared about growing the company and make it successful, their only goal was to SELL it and cash out their stocks.

  9. Codename Zebra says:

    I have to agree with Mister Y. And may I add that David Wright seems to have a hard on for Dr Seuss books. He loves to read those to “the troops” probably because he hasn’t learned to read anything more advanced. Seriously he sounds like Officer Barbrady from South Park trying to read Timmy the Timid Taxidermist. Thanks Dave for spending all that money having an event at the hotel in La Jolla and bringing in a freaking marching band.

  10. I heard Dell are hiring people in this space……

  11. VerariWasCool says:

    Mark,

    How do you know there are 5? Where did you hear about the date Jan 15th? Where is the “list” of what’s for sale?

    Lets say I wanted to buy something, how do I find out all the details?

  12. I don’t see CSCO buying Verari. One of their big customers was/EMC who is building their cloud infr using net virtualization from LineSider Tech..verari couldn’t extend to LineSider UCS/nexus already has and scaleability is being addressed

  13. Re: Last 2 posts . . . Read the previous posts by former employees. No loss of any particular customer caused the demise. Verari had a very healthy backlog of business on the books. Just no money to execute on fulfillment. Poor financial management by Verari execs in good economic conditions lead to a cash crisis as the economy worsened.

    Uh, Mark. That’s the same line that Verari management had been doling out to the employees for months. That part about “just need money”, thats key. And, no entity to date has wanted to throw their cash down the porcelain convenience.

    Maybe now that Verari has stiffed their employees for back wages, expenses and options and reduced their debt by screwing over their suppliers the pig has lipstick. At least the container piece – assuming its not the same management.

  14. Unless you put Dave Driggers and Vic Hester back in charge of the company, it isn’t going to go anywhere EVER again. Those DW folks don’t have a clue on how to run a company without unlimited cash flow with no consequences. They are better off reading Dr. Seuss books to children at Barnes and Noble and trying to motivate them to go to preschool. Seriously every meeting that guy ever had, was pointless. Nobody understood what he was saying, and he didn’t have the balls to show his face for the past 3 months of company wide meetings. What kind of leader is that? He was like a broken record and did a tap dance to say everything was ok for the past year, when it wasn’t. It wasn’t just the DW staff that screwed over the company, it was the MAJORITY of the engineering staff that spent money like no tomorrow, complained if they didn’t have a massage chair at thier cube, they had steering wheels attached to thier desks and played guitar most of the day. NOT to mention thier smoke breaks that had to take up ATLEAST 95% of thier day. The company had such potential but was held back by OLD…really old business executives who liked to have company wide meetings for everything and everybody that ever quit,was hired, was promoted, was in the military, marching bands, etc. What a shame, such a waste!

  15. Codename Zebra says:

    I wouldn’t blame the majority of engineering I would blame whoever dictated that they were to design XE. They spent half a year and millions of dollars to get that up and running as quickly as possible and no one ever bought it. The same thing happened with FE.

  16. Another Ex says:

    I see no comments from the people in the warehouse… I worked there years ago and couldn’t be happier that I no longer do. The Management at Verari was foolish to say the least. The environment in the warehouse for an employee should have risen a red flag to how all this was going to end. Blind eye turned to it all, hope the good people who worked there find something quick. Writing was on the wall years ago folks, all the good ones got out before all this hit the fan. Alot more in put but don’t want the risk of the truth bring on more issues.

  17. What about the warehouse? Do tell. I felt something was up ( as a former customer) when they wouldn’t give us spare blades and parts took forever to come in…

  18. Chace Jones says:

    I wonder what Verari’s VP of sales would say to his customers that are waiting to hear whats going on. Maybe they should ask him:
    Vince 847-508-8507

  19. One more Ex says:

    Just in case there are other ex-Verari Systems’ employees who didn’t get this email and like me are using these news feeds to find out information.

    From: Verari Systems [mailto:verari.systems@verari.com]
    Sent: Thursday, December 17, 2009 6:50 PM
    To: All Employees (Regardless of Location)
    Subject: Notice Theft of Personnel Files

    Dear Former Employee:

    We regret to inform you that in the early morning hours of December 17, 2009, a laptop computer was stolen. The computer contained personnel information, including employee names, addresses and social security numbers. A police report was filed, and the authorities are seeking to recover the computer.

    We wanted to promptly inform you of this theft and to encourage you to alert the credit rating agencies of possible fraud on your account.

    You should contact the fraud units of the three principal credit bureaus, Equifax (www.equifax.com), Experian® (www.experian.com), and TransUnion(SM) (www.tuc.com) to request that your file be flagged with a “Fraud Alert”. Tell them to notify you before any new accounts are opened or any existing accounts are changed in your name.

  20. One more Ex says:

    Laid off from job because of reckless executive spending: – 65k/pr yr
    Stiffed on paid time off: -$2500
    Stiffed on last pay check: -$2200
    My personal information stolen from Verari Human Resources and used for identity theft: f-ing priceless

    Thank you for a Merry Christmas David B. Wright

  21. X in the room says:

    Yes it is a sad day to see the good people go from Verari. The writing was on the wall.
    At first light of DW were the words “read Good to Great.” Unfortunately the book deals with companies who have cash to pay to put good people into positions to move the company forward. DW just does not have start-up vision. Maybe he did but the spark is long gone. He also did not possess the skills of a level 5 leader. A level 5 leader would not rip apart his VP’s infront of others due to his ego. I do believe that some of the VP’s were good. The only other major issue other than CEO was the VP of sales. Not sure if he suffered from the same lack of startup vision. All that we got were empty promises and no sense of reality.

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