Wang Laboratories, First Virtual, and Napster may sound familiar. Or you may never have heard of them. Each company changed the way we use computers.
But not all fairy tales have happy endings—each ended up filing for bankruptcy protection.
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- Started in 1951 by Chinese immigrant An Wang, Wang Laboratories began as a calculator business.
- They went public in 1967 at $12.50 a share. The first day of trading closed with Wang Laboratories at $40.50 a share.
- The company led the charge in office word processing, debuting the 3300 computer in March of 1971.
- The 3300 could support 2-16 users and had a 4K memory drive.
- To expand the company, Wang took out millions in loans, as many other businessmen did in the 1970s and ‘80s.
- Wang Laboratories failed to keep up in an ever-growing, ever-changing industry.
- After years of job cuts and profit losses, their revenue hit $3 billion in 1988.
- An Wang fired his son as president and named Richard Millard to lead the company in restructuring after a $424 million loss.
- Wang Laboratories teamed up with IBM, one of their largest competitors, in 1991. The company lost $386 million in the partnership.
- On Aug. 18, 1992, the company filed for Chapter 11 bankruptcy (announcing a $550 million debt).
- Modern word processing
- Then-college student Shawn Fanning was struck by inspiration in mid-1999.
- He feverishly coded the first-ever music file-sharing program, Napster, despite everyone he mentioned it to saying it would never catch on.
- Napster reengineered how people share files (specifically music) online.
- In less than a year of operation, Napster exceeded 25 million users.
- Usership surpassed 70 million in 2002.
- What had once been a minor irritation to the music and movie industry became a huge problem.
- Metallica and Dr.Dre both filed copyright infringement lawsuits in early 2000.
- By July of 2000, Napster was shut down by an injunction filed by the Recording Industry Association of America. The Ninth U.S. Court of Appeals stayed that injunction.
- Napster partnered up with Bertelsmann AG to develop a payment system for artists.
- In 2001, the Appeals court ordered a stop of sharing, but allowed Napster to remain in business.
- Layoffs ensued.
- On June 3, 2002, Napster filed for Chapter 11 bankruptcy. Their assets amounted to $7.9 million in cash and $101 million in liabilities.
- Bertelsmann AG bought the company for $8 million and forgave Napster’s $91 million debt.
- Any P2P file sharing site.
- Started in 1994, 3dfx pioneered the industry in graphic chip developments.
- Their graphics chips—Voodoo especially—became the darling of gamers everywhere and the new industry standard.
- The chips were the first generation of modern-day graphics, accelerating game speeds and rendering.
- As one MIT hardware reviewer put it, “Blood has never looked this good.”
- Delayed products and lackluster reviews crippled sales, prompting layoffs.
- In late 2000, rival Nvidia bought out patents, brand names, and graphics chip inventories for $70 million and $1 million in common stock.
- 3dfx filed for Chapter 11 in October of 2002.
- Modern computer graphics as we know them.
- Advanced shading.
- Realistic texture rendering.
- Detailed lighting effects.
- 3D rendering of complex models in real time.
Bankruptcy's Not All Bad
Bankruptcy has a bad reputation, but it has helped many Americans and many companies get back on their feet.
Check out our report on how bankruptcy helped these businesses (including Continental Airlines and General Motors).