Five years ago, Jim Clark left the speculative bust of the tech industry for the speculative promise of the real estate industry. A founder of Silicon Graphics, Netscape, and WebMD, the Web billionaire decided to build condos in Miami with former Excite@Home CEO Tom Jermoluk. Well, it looks like the two should have stuck to technology startups. Reports the NYTimes:
The first two projects by their company, Hyperion Development, are plagued with delays and unhappy buyers. Some residents at the first tower, named Blue, are threatening to sue the company for not delivering on amenities, while other owners at the 330-unit complex are trying to sell their condos for less than they paid.
Blue’s problems have hurt Hyperion’s reputation so much that consultants say some buyers who put down deposits at the company’s second tower, the 516-unit Marina Blue, may decide not to close. Other Marina Blue buyers have sued to get their deposits back.
The problems raise questions about the ability of Hyperion to repay a $110 million construction loan as well as its ability to develop future projects in the Miami market. They also offer a look at what can happen when entrepreneurs try to trade on their reputation as they branch into other areas.
Jermoluk blames rising steel and concrete prices for cost overruns. He should add easy credit to that list. Market timing is everything in business, and Clark and Jermoluk weren’t as lucky with real estate as they were with the Internet. Will they be tarred as mere speculators now in both realms?