Companies fail all the time. Sometimes with little warning. But companies that are highly profitable and only weeks removed from a record-setting venture capital investment? Not so much. Yet in Geosign's case, the cuts that began last May continued through the summer. Late last year, fewer than 100 employees remained. Today, Geosign itself no longer exists, its still-functioning website an empty reminder of its former promise. And while the national business media has, until now, overlooked the story - surprising, given the size of the investment and the fact that Google played a direct role in the outcome - within Canada's technology and venture-capital communities, the $160-million investment is known as the deal "that didn't go well." When the collapse happened, even jaded industry watchers accustomed to financial debacles in the tech sector were stunned. "I've seen a lot of meltdowns," says Duncan Stewart, a technology and investment analyst in Toronto. "But something happening like this, over just a few weeks, that's unprecedented in my experience."
The same question occurs to everyone: How did a business making $100 million a year, a company so full of promise, disintegrate so quickly? With Geosign, it turns out, there's more to the tale than anyone directly involved has so far been willing to say. And much of it revolves not around its plans for a content powerhouse, but the story of how the Guelph startup found a loophole in Google's vaunted advertising model, enabling it to make boatloads of cash - until Google decided enough was enough.
