A Spiral & A Rabbit Hole

Regardless of one’s thoughts on the content of Limbaugh’s remarks*, there’s something interesting about gloating over the alleged fallout from a critical response to a critical response that caused fallout for a radio personality.

By which I mean, you can’t call it just desserts when you are saying that the markets are acting irrationally against Carbonite, but criticize Carbonite for acting irrationally against Rush Limbaugh.

Nor can you really call stockholders or customers that pull support due to a political statement (market-)rational while supposing that pulling ads from controversial radio personality is (market-)irrational, since they are both largely putting their money where their ideology is**. Someone who quits Carbonite because of politics is not substantively different than Carbonite pulling its advertising. If you treat them differently, I’d actually have to say that leaving Carbonite has less merit than pulling Limbaugh ads, given that the latter is a political entertainer/figure and the former is a software company.

Customers are absolutely within their rights to “punish” Carbonite for the CEO’s politics. Just as Carbonite is within its right to punish Limbaugh for what he said. There’s really not much moral high ground beyond one’s thoughts on the comments that started the dominos or shirts vs. skins.

(I have no great love or loathing for Carbonite. I’d never use their service, but their wedding commercial is awesome.)

* – And please, I am not trying to rehash where Rush’s comments themselves were unconscionable or misunderstood or whatever.

** – This assumes that Carbonite’s troubles are significantly related to the Rush incident. That’s a very, very heavy assumption, but the article makes it.

Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.


  1. Like I said before, most sponsors on talk radio seem kinda scammy (some like Goldline and Lifelock subject to periodic fraud lawsuits), so Carbonite’s stock price trajectory doesn’t surprise me – you could say the proximate cause was just a fluke.

      • The irony(?) is, WashTimes has its own fundamental business model and management problems. (that nearly caused it to go extinct a year or two ago)

  2. This assumes that Carbonite’s troubles are significantly related to the Rush incident. That’s a very, very heavy assumption, but the article makes it.

    The graph in the link article looks like a very normal post-IPO trajectory to me.

    • Mr. Schilling, you’re right about the graph … but Carbonite’s fundamentals are bleagh!
      See the following …


      This dot-com disaster was doomed well before Rush Limbaugh’s dust-up with Sandra (pay-for-my-birth-control) Fluke.

      Carbonite’s first public Annual Report (2011) reveals a seven-year-old company steaming ahead into insolvency.

      NASDAQ:CARB reports that it is $100 million in the hole, burning $2 million per month, and that there is no end in sight to its losses!

      “We experienced net losses of $19.2 million for 2009, $25.8 million for 2010, and $23.5 million for 2011, respectively, and have an accumulated deficit of $100.4 million as of December 31, 2011.”

      “We have not generally achieved positive cash flow from our operations or reported net income, and we do not expect to be profitable for the foreseeable future.”



      Between 2005 and mid-2011, Carbonite vaporized $88 million of venture capital.

      Having only six months to live ($11 million cash in the bank), Carbonite announced a ‘Hail Mary’ IPO for a staggering $122 million – an amount that would have both covered its losses and stuffed 18 months’ worth of spending money into its near-empty piggy bank.


      But nobody wanted to invest, and so Carbonite wound up pocketing only $55 million of folding green stuff … and nearly half of that came ‘under the table’ from existing venture capital investors!

      The WSJ reports that there were serious insider disclosure delay issues associated with the IPO:

      “To get the deal done, online storage company Carbonite not only cut the offer price significantly, but it also sold nearly half of the new shares to existing investors.”

      “But these investors didn’t fully disclose their larger ownership stakes for weeks, meaning the level of genuine, external interest in Carbonite’s shares wasn’t nearly as high as some may have thought.”



      In Apr 2011, Carbonite’s founding CEO told an interviewer that he had personally solicited Rush Limbaugh as an advertiser!

      “How Carbonite Got Over 1 Million Paying Backup Customers – with David Friend”
      http://mixergy.com/david-friend-carbonite-interview/ (29 Apr 2011)

      Friend described Rush’s due diligence and excitement about Carbonite:

      • “Rush Limbaugh will not advertise any product.”
      • “He’s spent a good deal of time trying Carbonite, thinking about it, because his reputation is on the line.”
      • “I can remember sitting with Rush, showing him how he could access all of his files on his iPhone.
      • “He was like, ‘Holy mackerel, that’s what I’ve always wanted.’”
      • “And then when he goes on the air … he’s genuinely excited about this product and it come throughs in the delivery.”
      Friend also described his dot-com ‘first-mover’ business plan: Carbonite as a perpetual motion “money machine!”
      • “I’m sure that Carbonite will have a big payoff.”
      • “Right now we’re, kind of, number one in the market so it’s ours to lose.”
      • “It’s not like we’re catching up and there’s some big huge company out there that’s going to step on us.”
      • “It was pretty clear that we could spend a dollar on marketing and get three or four dollars of customer value back.”
      • “So I said, ‘Holy Mackerel, we have a machine here where you can put a buck in the top turn the crack and three
      or four dollars comes out — I want to start shoveling money into the top of this machine as fast as I can.’”
      • “I’ve always been a good pitchman, and I love getting people on board with whatever it is that we’re doing.”
      • “I talk about things that are in the future as if they’ve already happened today.”
      • “[Entrepreneurs] don’t see the future as possible; they see the future as probable or already happened in some cases.”
      • “If you’re completely convinced that what you’re doing is going to happen then it’s very easy. You can just speak from your heart
      [saying]: ‘This is what’s going to happen. So let me explain to you why I see this as so inevitable.’”


      Carbonite is an unlikely target for acquisition because of its $100 million “accumulated deficit” and $2 million monthly losses.

      Carbonite’s subscribers are free to migrate elsewhere without penalty – about 1,000,000 of them will have the opportunity to leave in the next 12 months. Carbonite will almost certainly be 2012’s Biggest Loser in the online backup industry.

      When its piggy bank is empty, Carbonite must either go bankrupt or be liquidated in a fire-sale auction of its tangible assets.

      By withdrawing its ads from his talk-radio show, Carbonite has spared Rush Limbaugh the embarrassment of being associated with the collapse of a yet another grandiose “spectacular dot-com flameout.”

      • How does burning < $15M a year amount to a “spectacular dot-com flameout”, rather than the far more common "good technology, can't find a business model that makes it pay, slow slide into dissolution"?

  3. Those who advertise on talk radio are now faced with an interesting conundrum. Talk radio is constantly pushing the edge of civility. People listen to it for many of the same reasons they watch NASCAR races: it’s a vicarious thrill. Greg Biffle hasn’t won a race this year but he’s won ten poles. He’s at the top of the stack but ultimately, Greg Biffle is just a rolling advertisement for 3M. Get him out of his car, he’ll take off his helmet and they’ll slap a 3M cap on his head.

    As with NASCAR, you don’t have to finish first in talk radio. You need fans and advertisers, it’s strictly a numbers game.

    I don’t grok talk radio: if I wanted a sermon I’d go to church and expect the pastor to behave himself in the pulpit. The pastor has his own problems keeping people’s asses on the pews. They aren’t there for him. They’re on that pew for their own reasons: Jesus, their friends and family, sociology can tell us more about why they’re there but I can assure you, churches will dispose of a pastor who alienates the congregation faster than Rush Limbaugh’s sponsors cut him loose.

    Terry Ponick is an effete little weenie who ought to stick to theater reviews. Moonie Times has its own problems with advertising. Nobody will ever confuse it with reputable reporting.

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