Three years ago when Web 2.0 began proliferating, Israeli startups used eSnips
as the poster child for their case that a successful social network could be founded in Israel. Based on the criteria in those days, eSnips was in fact delivering: It was able to convince top tier VCs to buy into an advertising-based business model, it leveraged user-generated content (the main activity is sharing personal media), used free storage as a hook, traffic was rising steadily, and it became a press darling domestically and internationally. As we say in Israel, “It was all honey”.
Now fast forward to Q4 2008. A shell of its previous self, eSnips is now a startup train wreck: Founders divorced and dismissed, threatened litigation courtesy of a record label and, with no possibility for further funding, the company was unloaded for approximately $750,000 to the Logia Group.
In the past three months I have spoken to a number of sources close to the company and have managed to reconstruct the circumstances that brought the company from its zenith, to its nadir.
