Naked stripped bare – startup runs out of cash, enters liquidation

Next Story

First screen shots of BioShock for PS3

Naked, a UK-based social messaging startup, has entered administration and the assets of the company are to be liquidated. Sources say the company ran out of money at end of April and an administrator was appointed in May to wind up the company, which went into liquidation last Friday. All 12 employees were made redundant at the beginning of May. Begbies Traynor has been appointed the administrator (they can be contacted here).

The news is tragic timing – the site was launched in February with private beta testers but was only just poised to release a full public beta at the start of next month. We will now probably never know what Naked was capable of.

What happened?

Naked’s stated aim was to give users a better way to communicate with people they really care about, more freely, in private. Tools included were status-updates, private messages and group messages – a sort of combination of Twitter and e-mail, aimed at a more mainstream audience (if that’s possible, now that Twitter is getting bigger).

Naked demo’d its application at the Mashup Innovate on April 1st. (Anyone got any video or record of that?)

But on May 7 they emailed their own private beta users saying:

Our start-up has run out of cash. Just weeks before opening up the service more broadly and igniting the buzz… However, we haven’t given up the faith. We will need to regroup, see who’s still on board, and work out a way forward. In the meantime we’ll do everything possible to keep the service going. We’ll update you when we have more news.

Co-founder and engineer James Salmon (who is now looking for a new role) had also been blogging about Get Naked and on May 7 blogged the following:

Naked update…
Naked has had a tough few days – we’ve run out of cash and are facing some very disappointing consequences. And all this comes at a time when we were literally a few weeks short of opening up the service as a full Private Beta. I’m therefore exploring all options to see what can we can do. No-one ever said start-ups were easy ;-)

On Tuesday this week, official Naked blogger “Biff”, wrote a final post, A Line In The Sand:

It’s been quiet on here of late. The reason being that I am no longer Naked Community Voice. There may also, very soon, be no more Naked. It’s gutting getting so close to something you’ve worked intensely hard for, and then losing that to forces beyond your control. To put it painly, Naked ran out of cash. Liquidation has started. There may be a possibility of Naked carrying on, but I don’t think I will be a part of that. But then again, who knows.

Why and how did Get Naked come to this point?

One source told me that the company was too reliant on CEO and main backer Robert Bonnier as sole investor and he was unable to secure additional funding from external sources within the time frame needed to keep the company afloat (about three to six months).

Who is Robert Bonnier?

2265449940 72F65E05Cf

Robert Bonnier was CEO of Get Naked. I called him at midday today for comment on his mobile, he said he’d call me back but so far he has not returned my call as of 3.30pm.

Bonnier was one of the stars of the first dotcom boom.

The Dutch-born entrepreneur who started and exited was also once a financier for the Swiss Bank Corporation in the mid-1990s. He was investigated, and cleared of any involvement, in an insider-dealing scam during that time. At the height of the dotcom boom his stake in Scoot was worth more than £150m. But in 2001 this stake was seized to repay Scoot’s debts and Scoot eventually fell on hard times. In 2006 Bonnier ended a five-year exile from the financial markets (in 2004 he was fined £290,000 for market abuse) to become chief executive and the largest shareholder of £130m Aim-listed cash shell Future Internet Technologies.

Who is Tom Vandendooren?

Vandendooren – Brussels-based technology marketer by background – was COO of Naked and says he was the originator of the ideas behind Naked. Speaking to me via Skype today he said Naked started out as a “unified messaging client with a key focus on mobile”, along the lines of Nimbuzz. But the complexity of developing a Java client for the many hundreds of mobile handsets proved to much, so the strategy was switched to “creating a messaging environment to open up to close circle of friends they care about.

Development work started in September of 2007 on Ruby. The implementation and execution was more web based with messaging from email and mobile”.

They got to an alpha in early January and finally a private beta version end of February, early March. But by then they had run out of cash. He says: “Naked was funded entirely privately via the investor Robert Bonnier”

The “idea was to go from private funded to public beta then start a formal external financing round. But because of a very personal issue with Robert, who was going through a nasty divorce which came out of the blue, his assets were frozen in that process and we were forced late in the process to reach out to external funding sources. Given the time frame we were unsuccessful. We were left with only a few weeks but had to honour staff and costs.”

Did Naked fail because they ran out of cash or because the application was no good?

It looks like the application never really got a chance.

Vandendooren told me that the feedback they got from investors was that it was either too early or too late for them to come in to a financing round. It was too early for some, in that although the application could be demonstrated, there was too little validation from user numbers, as it was till in private beta: “They wanted us to go through public testing first for a few months.”

For other investors it was too late “because this was a second version and we had already put in significant amounts of cash and it was therefore too late to seed as an angel round. So it was an in-between stage for external investors.”

But Vandendooren says “I haven’t come across anything that does what Naked does. We were very much at the intersection of microblogging, messaging, and social networking. Crossing in the middle is the compartmentalisation of social lives and exchnages. Being open to share intimate things based on relationships and context.”

Is there a buyer?

Right now, there does not appear to be a buyer.

Vandendooren would like to re-start Naked some how, possibly out of Belgium, but he acknowledges he has “no more rights to the assests than anyone else.” He says he would not plan to work with Bonnier on any re-started version of Naked.

User experience agency Clearleft had worked on some design for Naked, and New Bamboo had worked on the platform, though its doubtful either of these players will be interested in taking on Naked’s assets.

One former employee tells me:

Naked was a good idea but a bad brand (the constant conflict with porn). They are trying to sell the IP/code but there is so much competition these days and even open-source projects that do a similar thing. Maybe someone in the adult industry would be interested in the domain name.

What about the application?

2456476289 7Baf620224

What appears to be the case – from what I understand about a beta that was never shown to me – is that the application “had legs”, especially give that the general trend in social messaging and networks is towards contextualising and adding privacy controls. But we may now never know.

What’s left now?

All that is left of Naked now is the old site, the blog, and some Flickr photos. The office in St. John’s Square, Clerkenwell, London has been vacated.

Update: The former development team can be contacted here, though luckily many are already sitting on job offers.

2449173234 E23082Bcc1

  • Tamlyn

    Great article! Next you’ll be donning your trilby and greatcoat and smoking cigars while leaning against shop windows pretending to read the newspaper… :D

    I had a look at the Naked demos and it looks very similar to Pownce. Taking it mobile would have been kinda cool but as a web-only offering it probably wouldn’t have got very far.

  • Steven Livingstone

    Still want to know how a startup who hasn’t yet gone beta runs out of cash. Not saying it doesn’t happen, but would like to see where the costs lie.

    If it is employees then surely they would get down to the core few who will go with the idea and surely the other stuff can be bootstrapped?!

    I’ve got 15,000+ users on and i’m bootstrapping where i can. If this kind of crash is common the story would be useful for those of us moving on that direction!

  • Mike Butcher

    Tamyn – Thanks.

    Steven – It may be they changed direction too much, or that the seed funding wasn’t that much. I think there may also be more to this, but this is all I have right now.

  • Steven Livingstone

    ok – thanks Mike – always very interesting to read this kind of story (keeps our feet on the ground). I liked that you actually went into quite a bit of detail on the background as well as the company itself.

  • Neil Robinson

    I also found this story very compelling reading…….great stuff, keep us informed of any murky developments…….

  • Martin Montague

    Always a shame to see something like this go down, I would say not getting enough first round funding. Then falling behind schedule technically (as everything takes twice as long as expected and costs twice as much). Followed by a lower than expected appetite for further investment due to the credit crunch….

    But just a guess !

  • Jonathan Markwell

    From where I’m sitting it seems that maybe they had too much money too early.

    Spending cash on 12 employees and two excellent but premium-rate web agencies at such an early stage doesn’t make sense to me. If the founders built their own product they could have saved the money until they really needed it – after launch.

    There are plenty of stories of start-ups running out of cash and coming back from the brink – the story of Ev Williams and Blogger fits particularly well. However, having so many liabilities that you go into liquidation before launch is absolutely crazy.

  • Richard Keen

    I took part in some focus group testing of Naked during their alpha phase and all of our group were pretty certain within 10 minutes of using the app that it wouldn’t be a success. It was effectively a very poor implementation of Facebook walls (with group support) mashed with some lifestreaming (which I seem to remember was unimplemented at that stage). It was shocking to see quite how wrong they had got the user experience, for instance the only way to see messages sent to you by your friends was to visit your friend’s profile page — you weren’t even notified of new messages! For what it’s worth they were working out of a very swank South Kensington apartment at the time… :)

  • ASG

    Very sorry to hear the news.

    I’ve met James Salmon on several occasions and he’s extremely sharp. I was very much looking forward to the formal launch of Naked (although I must say, I never quite understood the choice of name).

    I’m sure James and the team will be in high demand for their services.

  • Ruslan Zalata

    I believe they failed because they 1) hired too many staff: 12 ppl for a bare bone startup is too much! 2) they used services from expensive agencies and web studios, and 3) rent an office in London known to be the most expensive place in the world. I guess they were spending at least 200k GBP a month running the company.

    The other problem is that their CEO overestimated his abilities to acquire funding in time. Totally lame and definitely not the way to go when you are tight on budget and have zero paying users.


  • Sam Mathews


    What happens to the office.. UGAME is looking to move london in the very near future and were looking for leases! :D

  • David Petherick

    Nice coverage, Mike – good legwork.

    I’m not trying to score any points here, but The Next Web covered this story (but held off on the gory details for legal reasons) on the day the first email to private users appeared, May 7th – see

    I have had a personal interest in this project since meeting with Naked at StartupCamp in London in March, and Next Web staff have used the beautiful beta version of Naked, and I personally find it very useful. Indeed, those who have been invited to use it can (and do) still use it, and can (and do) invite others to use it. So when you ask what’s left – well – I have to tell you – Naked is still 100% functional and ‘all there’ – you just need an invite. (You could ask me nicely – david at thenextweb dot org).

    The feedback I have had from the associates I have ‘been naked with’ has been very positive – and they like the way that the people you want to share information and updates with don’t need to actually USE the service to benefit from it – they can just get emails from you (or choose not to receive them). People can, if they wish, register their mobile phone to get updates, and switch their contacts on and off and vary contact methods and notifications easily, as they go mobile or are away, or just don’t want updates from somebody.

    It’s the way one can have simple, intimate contact with close friends or project teams that sets Naked apart – you can keep close contacts up to date with just what you want to tell them about – rather than updating everyone with one status message or notice that will, by definition, be either relevant, or irrelevant to many of those that know you. It’s relevance that Naked brings, and simplicity – it’s also very nicely designed, and the real-time updates it delivers are great when kicking ideas around.

    It’s worth noting that the liquidators cite their primary role as ‘Corporate Rescue, Restructuring & Recovery’ and I think Naked’s future may be rosy if it widgetises its functionality, and adds strategic partners in the mobile sphere – but I think it very definitely ‘has legs’ as you say, and I don’t think it deserves to disappear. Certainly it does not deserve to have all the good work come to nothing simply because its funder (allegedly) had his assets frozen by a bitter wife/ex-wife just at the wrong time for Naked’s cashflow.

  • David Petherick

    Edit: That URL got scrambled for some reason:

  • David Petherick

    Just to clarify that URL for The Next Web story:

    It got scrambled in my original post and posting the correct URL a moment ago did not seem to work.

    – David

  • Why we did not publish The Naked Truth

    […] news is that TechCrunch covered this story yesterday, three weeks on, with a classic play on words: “Naked stripped bare – startup runs out of cash, enters liquidation” — having established the fact that the company had officially gone into liquidation. […]

  • Mike Butcher

    Ok, so before the lights go out at Naked I’m going to get anyone who’s interested invited into the private beta so we can all check this sucker out.

  • Steven Livingstone

    Mike – can you send me an invite pls. Very interested in seeing what they are doing.

  • Mat Morrison

    me too, please Mike.

  • http://NitroVentures Hello Mike

    Hello Mike, please can you send over a login. We would be interested to see if there are any further investment opportunities within the business, thanks

  • Mark

    would love an invite if still poss.

  • Kerstin Baker-Ash

    Hiya Mike, don’t know if it’s still possible, but would be interested in an invite. :)

  • http://NitroVentures Hello Mike

    Hello Mike

    Can you please send over a login pass?


  • Babul

    Me too please mike

  • Sylvia

    I commented on twitter but not sure if you saw it. I’d be interested in having a look.

  • tom

    Hi Mike – be great to get an invite – I’d be keen to have a look.

blog comments powered by Disqus