Tim Seager and Suzanne Delaney joined the ranks at Spike when the company they headed up, New Toys Multimedia, was acquired by Spike in 1999. Seager and Delaney eventually quit and set up Rethink Solutions and several clients of Spike took their business to Rethink in the wake of their departure.
In retaliation, Spike opened-up its chequebook and let its lawyers loose on Rethink, accusing Seager and Delaney of contract violation and claiming that it had poached some of its most valuable clients.
-[Spike] got upset that we left and clients followed, and were trying to prove that we poached them, but that wasn't the case," Seager told ZDNet Australia. -I think they were just trying to wear us down. They had a lot more money to spend than we had. They spent a small fortune on lawyers. It's always the lawyers who win."
After Spike became insolvent, the litigation fizzled out, but not before the companies had spent hundreds of thousands of dollars on lawyers, according to Seager. -When it's not your money it's easy to talk about lawyers and litigation," said Seager.
The deep pockets of Spike's owners was one reason the company eventually failed, according to Seager. -They weren't nimble enough and because they had a cash cow it was always next month we're better, next month we're better, it doesn't matter because we've got this money coming in," he said, suggesting that Spike didn't adapt quickly enough to the changing market.
-They listed in a buoyant time with huge expectation, and then the market crashed around them, and rather than just taking that on the chin and recognising that there had been a market crash, they tried to keep the dream alive by keeping all the offices open and the marketing hard, and of course that burnt the cash. Eventually they just ran out."
Spike may have been a victim of its own hype, having to constantly chase growth in a marketplace not conducive to it, in order to appease investors who were sold on a vision of growth, according to Seager.
After its Initial Public Offering (IPO) in 1999, Spike merged with Pacific Century Cyberworks and was later sold to TechPacific.
-It is bad management yes, but when you've done an IPO people expect results, and then when you sell the company to someone like Pacific Century Cyberworks they expect results - they don't expect you to scale back and preserve cash. Each time you sell the company you sell it on a grand plan and a grand vision," said Seager.
In addition to the pressure to post strong growth after each sale, the constant change in ownership could have contributed to successive changes of direction, according to Seager.
-Within a 14-month period there were seven changes of senior management, either CEOs or MDs," said Seager of his time at Spike. -Each one would have their own take on what the marketplace should be, and their message to the marketplace, so they were continually changing direction. They just sent confused messages to the marketplace and clients," he said.
-I just don't think they got anywhere because they had too many changes of strategy, and too much money to burn."
The administrators, Ferrier Hodgson, were approached to comment on behalf of Spike, but failed to respond by press time.
