RealTime IT News

HotOffice Sees Red, to Close Doors

Another firm fell prey to the venture capital drought this week as virtual office provider HotOffice Technologies said it would close its doors soon.

But rather than hang their heads and slink away without a whimper, the firm has taken steps to make sure its customers are not left in the lurch. Though HotOffice will close its doors indefinitely on Dec. 19, it has referred its intranet licensees to chief rival Intranets.com, an idealab! offspring. The transition process is being carried out on a page on Intranets.com's site here.

Beginning Thursday, Intranets.com said about 750 HotOffice clients had begun the transition over to the host company, with thousands more expected to sign on before HotOffice closes shop.

Raising the white flag of surrender, the firm posted this notice on its corporate Web site:

"To HotOffice.com Customers and Visitors: HotOffice.com will cease operations on December 19th. Like many Internet companies, despite intensive efforts, our inability to raise capital in the current market conditions left us without options. We have enjoyed serving our customers and are doing everything we can to ensure a smooth transition."

Benificiaries of a Dying Dot-com

Rick Faulk, vice president of marketing for Intranets.com, said he knew a month ago that his firm's rival was having problems when it laid off about 50 employees. Faulk, of course, praised HotOffice highly Friday.

"It's unfortunate -- it's a great company with a great product that just ran out of money," Faulk told InternetNews.com. "Fortunately, they were in a position where they were able to make a lot of referrals. And it's unusual. This is a great example of how two competitors are working together for the best interests of their customers. It looks good for them because they are helping their core clients transition and of course it's good for us because we are fortunate enougth to have all of their referrals."

While HotOffice will save clients in the hard times, the same cannot be said for its employees, with nearly another 40 percent or so of its staff trimmed down to a skeleton crew of less than 10 until the Dec 19 judgment day. Will Intranets.com consider hiring some of these workers before the holiday rush? Not yet.

"We have no plans yet to hire HotOffice employees," Faulk admitted. But he was quick to add that Intranets.com was looking to fill some business development positions, possibly to help with the added clientele. However, Faulk noted that Intranets.com looks to fill bytes -- not bodies -- first.

How Time Expired for an Industry Leader

So, what led to the demise of HotOffice? Was it the business model of free intranets that did the firm in, as rival Planet Intra's Product Manager Tim Dorey suggested to InternetNews.com Friday. Dorey, too, acknowledged the clamp on cash.

"We knew somewhat that they had problems," Dorey said. "We wanted to create a business that was not just a free service and not rely on banner ads. We figure any company going that way would have a tough time. The money is harder to come by now. A year ago you could get funding for just a good idea. Hopefully the new year will be better for everyone."

HotOffice Senior Vice President of Marketing Mickey Freeman disagreed with Dorey's statement.

"Truthfully, most of our revenues were derived from subscriptions," Freeman said. "I agree that relying solely on banner ads is not a viable business solution."

Freeman said HotOffice knew it was in trouble in June, a year after its last round of funding. It eked out its existence "in tactical retreat mode," as Freeman described it, since then until it couldn't hold on any longer. The firm slashed about 50 jobs in November before quietly making its doomsday announcement this week.

Freeman was crestfallen when reached at his office