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You don't get $360 million worth of investment money and suddenly file Chapter 11 with $100 million in liabilities without some serious spending issues. As the implosion of L.A.-based Amp'd Mobile, a hip and happening cellphone reseller, is still being sorted out, Valleywag has one possible explanation: Founder and CEO Peter Adderton used to commute to the Los Angeles headquarters from OC - by private helicopter. And on Amp'd Mobile's dime. Well, I'll be. The company confirmed this week that Adderton is no longer CEO. From Telephony's Wireless Review:
Adderton brought his novel idea of a hip, young mobile carrier from his original company Boost Mobile, which launched prepaid MVNOs in Australia and over the Nextel network in the U.S. before it was acquired by Nextel and eventually Sprint. Starting from scratch, Adderton focused on a bigger-spending class of customer, targeting young adults as well as teens with the Amp’d service and focusing heavily on mobile media and data services.
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But as Amp’d grew close to the 200,000 subscriber mark it encountered problems. Amp’d Mobile’s official statement was that its back-end infrastructure couldn’t keep up with growing subscriber volumes, but court documents show that the problem was deeper. A majority of Amp’d customers were locked into 18-month post-paid contracts, many of which stopped paying their bills during their contract periods, according to Amp’d Mobile’s filing with U.S. Bankruptcy Court. Amp’d eventually calculated that 80,000 of its customers, according to the filing, were likely to default on their bills, about 40% of its customer base. Amp’d sought additional financing from its private investors but was turned down. Compounding the crisis, Verizon Wireless--which is now Amp’d Mobile’s largest creditor, owed $33 million--declared Amp’d in default of its wholesale agreement and demanded a $4.5 million in payment. Otherwise Verizon Wireless would shut off network access, effectively killing the Amp’d service.
Let's also not forget the helicopter commutes.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.