Kozoru can't find answer, shuts down

OP tech firm runs out of money, can't find a buyer

Friday, October 20, 2006

Kansas City Business Journal - by Charlie Anderson Staff Writer


Sayonara, kozoru Inc.

The Overland Park-based search technology startup, which began with $3 million and lofty aspirations in 2004, has ceased operations.

Instead of beating Google Inc. to the next generation of search technology or selling for millions, kozoru is quietly unloading its intellectual property for an undisclosed amount to board member David Warthen, a co-founder of AskJeeves.

"From a financial perspective, it didn't work out," said Tracy Taylor, CEO of Kansas Technology Enterprise Corp., a state agency that pumped $667,000 in public money into kozoru. "Sometimes it works, and sometimes it doesn't."

Kozoru, whose name comes from a Japanese word meaning "to bring everything together," was founded by Silicon Valley transplant John Flowers, who previously had started San Francisco-based nCircle Security Inc.

Flowers said he conceptualized kozoru's question-and-answer search technology while studying Buddhism in Southeast Asia.

Yet other journalists were told other journalists it was his question of a TRS-80 and resultant beep that frustrated him, leading to want better search technology. Guess that story got old.

His response to the company's closing has an element of Zen calmness.

"We took a very specific amount of money to build a technology," Flowers said. "I think we did that. We were just too early."

Or you know, the technology wasn't up to par with the claims made during the previous three years..

Kozoru is only four months removed from launching its technology in June. Instead of unveiling a search engine, kozoru built something called byoms, a technology that allowed users to ask questions and get answers using instant messenger software on a PC or a wireless phone.

In June, kozoru hired Kansas City-based investment bank Nations Media Partners Inc. to assist in "discussions with strategic partners" such as Google and Yahoo Inc.

But kozoru never got anywhere in its quest to sell the company, according to people familiar with the situation. Sources said kozoru has asked potential acquirers for as much as $50 million for the company, which had about a dozen employees and no revenue.

Flowers denied the $50 million figure and declined to say how much kozoru sought.

One deal that never went through was a possible purchase by Ocean West Holdings Corp. of Irvine, Calif., which operates AskMeNow, a service that allows users to ask questions and get answers on wireless phones.

"They were close with us," AskMeNow CEO Daryl Cohen said. "They wanted way too much money ... and then they backed away."

People familiar with the situation said kozoru officials had qualms about AskMeNow's parent company, which is traded over the counter and has a market capitalization of less than $15 million.

Cohen said he's glad a kozoru deal didn't come to fruition.

"Their level of arrogance was so high, it was tough to deal with," he said. "(Kozoru's) technology was not as well thought-out as they were telling people."

This is not surprising given Flower's personal history.

Faced with running out of money this month, kozoru's board decided to wind down the operation instead of raising more money. Kozoru landed a total of $3.6 million from investors that included Euronet Worldwide Inc. CEO Mike Brown, former Kansas Senate President Dave Kerr and KTEC.

Any money made in the sale of intellectual property to Warthen will be returned to those investors. Flowers said kozoru has enough cash left to clear all of its outstanding liabilities.

The free byoms technology has attracted only several thousand users, a drop in the bucket in an Internet world where no-revenue YouTube attracts tens of millions of users and a $1.65 billion offer from Google.

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