Chief Executive David Bohrman told the Web-broadcasting company's 175 staffers in a meeting that the company had run out of money and that "as of today, we are all former Pseudo employees."
The company, which ceased operations after shopping itself around the last two months, still is "aggressively" exploring the possibility of a sale, said Mr. Bohrman. The most likely buyer: a media, broadband or technology company.
Pseudo is the latest in a string of high-profile companies producing original streaming video content to go under in recent months. Rival Digital Entertainment Network in Los Angeles shut down in May because it, too, ran out of money. Potential competitor Pop.com, backed by Steven Spielberg and Ron Howard, called it quits in September without ever launching.
Founded in 1994 by Josh Harris, co-founder of Internet market-research firm Jupiter Communications (jptr), Pseudo underwent a series of strategic shifts in the last two years aimed at turning the company into a viable business.
In the early days, when Mr. Harris and a small team of angel investors funded the company, Pseudo was as widely known in for its wild parties as it was the edgy original content it broadcast live on the Web accompanied by uncensored chat. Aimed at 16- to 34-year-old males, Pseudo's niche programming focused on trends such as hip-hop music and digital games.
But that was hardly the type of fare that brought in big advertising bucks or loads of viewers. For six years the company has been unprofitable, seen a trickle of revenue and drew too few viewers for the site to be counted by Web measurement firms such as Media Metrix. It's also difficult to track the number of users who visit sites with streaming video.
In early 1999, Pseudo brought in Larry Lux , a veteran Internet executive, to steer Pseudo on the road to profitability. Mr. Lux introduced more mainstream programming, such as the site's football channel, which attracted big name advertiser Levi Strauss & Co., and raised $18 million in venture capital financing from the likes of Tribune Ventures, Intel Corp. (intc) and Prospect Street Ventures.
But culture clashes erupted between Mr. Harris and Mr. Lux, now chief executive of Playboy.com Inc., and Mr. Lux was ousted nine months later in December 1999. In January of this year, Mr. Bohrman, a former executive vice president of CNNfn, was hired to run the show.
He too appeared to have some momentum behind him. He swiftly canned less popular shows, consolidated the site's content, redesigned its programming model, slashed 17 percent of Pseudo's 250-employee work force and raised $14 million in a round of funding lead by LVMH Moet-Hennessey Louis Vuitton's media group, Desfosses International.
But by summer, Pseudo was hemorrhaging money. Investors had turned a blind eye to Internet content companies and Pseudo, which had a burn-rate of $2 million a month, had trouble raising cash. Its banker, CIBC World Markets, was asked to explore other options, but Pseudo was forced to shut down before a white knight materialized.