User group bankruptcy ends with pennies
March 20, 2009
HP's longest-standing user group finally experienced its death rattle this month when the Interex bankruptcy case resolved the outstanding debts to thousands of creditors. US government notices arrived in mailboxes of companies as large as Hewlett-Packard and as small as single members like the Hungarian News Agency. The March 18 notice was the last shoe to drop in a death dance that began in the summer of 2005.
Creditors who spent money with Interex received about 10 cents on every dollar owed, according to the latest documents filed by the US Northern District of California court in Santa Clara County, California. Hewlett-Packard took one of the larger losses, at $200,000, while a handful of major hotels across North America failed to collect six-figure deposits or never saw payments for hotel rooms which were either reserved in blocks or occupied during conferences.
Losses closer to home in the 3000 community came at software and services vendors who paid for booths at the suddenly-closed HP World show of 2005. Birket Foster of MB Foster said that "Interex took our booth deposit and kept it," he reported earlier this month. "We'll get a check for approximately 10 percent of everything."
Foster and others noted that the Santa Clara County tax collector got $8,700, then bankruptcy trustees, the accountants hired by trustees, and lawyers "all made out fine in this," since Interex assets and cash on hand went first to settle taxes and then to pay court officials. Interex closed its doors owing $4.1 million with assets on hand of less than 10 percent of that. The group folded up two weeks after its final deadline for payments for booth spaces.
The financial troubles mounted over more than a year at the user group that was founded at the same time as the HP 3000 was being launched by Hewlett-Packard. The vendor absorbed its losses in part because it created a user conference to compete with HP World. The first HP Technology Forum and Expo was scheduled to open just one month after the 2005 HP World. User group insiders said that HP's expo space was being sold as a vendor-sponsored alternative to HP World.
The Interex name was not listed as part of the assets sold to pay creditors. Even though the goodwill in that brand has probably evaporated after the group went broke and killed off its Web information overnight, some value might remain. Interex.com and .org now belong to the exhibit design and fabrication maker InterEx, while interex.net is the home of a designer selling capes, shawls and cloaks. The last user group to use the name, HP Interex-Europe, ended business under that title when it became part of the new Connect alliance of HP user groups last year. A computer cable company operates under the name, among other businesses.
Near the end of Interex's life, the group claimed to have 118,000 members. As debts mounted and the group chose to remain separate from the user group consolidation that HP desired — and took less sponsorship money from the vendor — even a large membership wasn't enough to keep the 31-year-old group's doors open. Unlike HP 3000 customer AIG, Interex was not "too big to fail."
Community members said in 2005 the user group’s management dealt itself mortal wounds by encouraging members to combat the vendor, rather than sparking close collaboration.
“The only chance Interex had to survive so long was through collaboration,” said Duane Percox, co-founder of K-12 school software company QSS and a volunteer at the Interex Solution Symposium conferences. “If you take a combative approach it will work for a short period, but then the vendor will tire of that.”
Percox was one of several in the 3000 community who cited HP Executive VP Ann Livermore’s advocacy as a reason Interex could let its users grill HP managers in roundtables. Some HP managers once had a bonus plan based on Interex advocacy survey results.
Interex had promised a “No Marketing” lineup of talks at the HP World cancelled. “This [closing] was an example of marketing beating the engineers,” Percox said. “People wanted stronger marketing from HP. Stronger marketing people don’t like it when you have independent user groups,” he added.
Connect operates on a different business model than Interex, which chose to manage all its own operations. Connect, and the Encompass enterprise user group before it, has contracted with Smith-Bucklin's user group management division ever since early in this decade. The group has named Speedware director of marketing Chris Koppe as president-elect for 2010 and vice president for the current Connect board. Kristi Browder, who served at Encompass president for several years, recently took over as Executive Director and COO of Connect.