Condition One founder unexpectedly kills business model, lays off half of its staff

By Erin Griffith , written on May 10, 2013

From The News Desk

Things looked promising when immersive-video startup Condition One graduated from TechStars New York last year. The company had built a very cool immersive-video technology that allows video content to be swiped and viewed from multiple angles. The plan was to license it as an enterprise solution to sportscasters, news services, broadcasters, and advertisers.

The company had raised a $500,000 round of seed funding from Mark Cuban before TechStars demo day. Later, the company raised invested $1.85 million from angel investors including investor George Kliavkoff, an executive vice president at Hearst Entertainment.

Condition One hired several business development and sales people and began to execute on its mission to make more of the video that media companies produce immersive. Meanwhile, the company hired a handful of engineers in Palo Alto to continue building out the technology. CEO Danfung Dennis moved to Park City, Utah.

The sales team had closed deals with a few publishers, including Popular Science and Discovery. The sales cycle with major broadcasters is long, but Condition One had a strong pipeline and was close to closing deals with a major cable network as well as several brands and agencies, people familiar with the company said.

But two weeks ago, the company suddenly laid off its entire business development and sales team and scrapped its business model. Condition One announced on its blog this week that it will pivot to focus on a consumer-facing strategy. The reason is a little confusing.

Condition One originally built its product for video to be taken on and viewed on mobile devices, but Dennis explained in the blog post that the processing capabilities of mobile video, "while impressive for their size," just aren't good enough. Mobile phones, he wrote, "are currently not capable of the type of graphics-intensive user experience that is at the core of the C1 experience." That is particularly confusing considering a consumer-facing product would presumably be built to use video taken with, and viewed on, mobile devices.

The move to close the New York office was a surprise to the team -- they had just hired a new salesperson a month ago. While Condition One raised $2.35 million, it now has no revenue coming in as it transitions its tools into a consumer-facing product. Going after a consumer play is even riskier amid the dreaded Series A crunch, but Dennis noted in his blog post that the company has significant runway remaining. "We have a complete vision that is guiding us into the future," he wrote.