You Have Carbonite Sickness, But Your Sight Will Return Shortly – or, why Limbaugh didn’t really kill Carbonite, and the Left hasn’t really killed Limbaugh

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Tod Kelly

Tod is a writer from the Pacific Northwest. He is also serves as Executive Producer and host of both the 7 Deadly Sins Show at Portland's historic Mission Theatre and 7DS: Pants On Fire! at the White Eagle Hotel & Saloon. He is  a regular inactive for Marie Claire International and the Daily Beast, and is currently writing a book on the sudden rise of exorcisms in the United States. Follow him on Twitter.

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34 Responses

  1. Avatar Mike says:

    I think you were reading into something in that PJ Media article that you linked that just isn’t there.  That article didn’t try to make the case that the stock price was a result, either directly or indirectly of the decision to drop Limbaugh.  Nor do I think there is an actual right meme about Carbonite being crushed under ditto-head boot heels.

    What the conservative blogosphere has been on fire about is using their own right to boycott companies that they view as hostile to them.  Carbonite is only one of those companies.  HBO is another.

    Carbonite is a company that has spread it’s advertising dollars pretty evenly among left and right talk radio.  For whatever reason, they seem to view talk radio audiences as a natural for their services.  But regardless of the ideological leanings of the company’s CEO, their decision to drop Limbaugh was a panicked reaction to the bad publicity Limbaugh generated, not (at least in my view) an ideological coupe de grace.  Otherwise they wouldn’t have been advertising on Limbaugh in the first place.

    I think both Limbaugh and Carbonite will ride out of this just fine.  Although they have had a mutually profitable relationship over the years, they do have alternatives for the other.Report

  2. Avatar North says:

    Yep definitly overreading on both sides of the aisle. That said this event does represent an unusual blow to the normally undeflatable Limbaugh so I wouldn’t begrudge the left their enjoyment of this unusual event.Report

    • Avatar Tom Van Dyke in reply to North says:

      If/when Carbonite crashes & burns, Don’t Muck with Rush will be a viable meme.  It’s premature to dismiss the thesis as premature:  It could be that Rush was helping keep the doomed company afloat.   Rush was closely involved with Carbonite, giving it his personal due-diligenced recommendation.  He read the ads [Paul Harvey-style] and put his name on the line endorsing it.

      It wasn’t merely Carbonite buying time on the Limbaugh show for their self-produced ads like most ad arrangements.  It wasn’t just pulling or suspending ads like that.

      It was the lefty CEO, David Friend, after personally roping Limbaugh in,

      http://mixergy.com/david-friend-carbonite-interview/

      personally denouncing him.

      Perhaps David Friend will enlist more sympathetic lefties than he loses righties outraged at his perfidy, but I doubt it.    I was considering Carbonite meself, but that little weasel isn’t getting a dime from me.  And as we all know from Jonathan Haidt’s upcoming book, lefties don’t value loyalty very highly anyway, so I would expect any added support from the left to be a dead-cat bounce at best.

      If I were a Carbonite shareholder, I’d want David Friend’s scalp immediately.  I don’t dispute that Carbonite’s stock price was likely in a death spiral anyway as Mr. Kelly’s graph suggests, but it appears far more likely now to become worth nothing.  Zero, nada, crash and burn, use the stock certificates for toilet paper.

      Rightie tax prof blogger William Jacobson has been all over this one—there are far more elements than the newly-minted center-left Conventional Wisdom is keeping track of.

      http://legalinsurrection.com/2012/03/carbonite-and-howard-stern/Report

      • Avatar Michael Drew in reply to Tom Van Dyke says:

        “And as we all know from Jonathan Haidt’s upcoming book”

        What does that even mean?Report

        • Avatar Dubliner in reply to Michael Drew says:

          Probably something to do with the left being less prone to go with ‘tradition’ and authoritarianism and more inclined to evaluate individual scenarios based on evidence and compassion when determining values.Report

        • Avatar Brandon Berg in reply to Michael Drew says:

          It’s been Haidt’s schtick for a while now. Leftists value care and fairness, conservatives value loyalty, purity, and authority. Relatively, anyway. The paper I saw showed a difference between extreme leftists and extreme conservatives of no more than one point on a six-point scale for the perceived value of any of the five foundations.Report

          • Avatar Brandon Berg in reply to Brandon Berg says:

            That said, the questionnaire Haidt used in his research appears to introduce bias by asking questions about issues that appeal only to left-wing or conservative sensibilities. For example, two of the six questions regarding loyalty were about loyalty to one’s country, with no corresponding questions aimed at left-wing loyalties (e.g., crossing a picket line). One of the care/harm questions was about how bad it is to harm a defenseless animal, but there was no question about how bad it is to harm a defenseless fetus.Report

          • Avatar Michael Drew in reply to Brandon Berg says:

            Right on.  In that case, it would sound less weird to say, “as we all know from Jonathan Haidt’s research,” but whatever.Report

          • Avatar Chris in reply to Brandon Berg says:

            I respect Haidt because he’s been somewhat of a pioneer in moral psychology, even if his own research hasn’t carried it very far. His work in political psychology, however, is pretty much as bad as most of the other research in political psychology. The only people who you see using it to draw the sorts of conclusions it was used to draw in this thread are the people for whom the research itself does not matter, only the fact that it conforms to their preexisting prejudices.

            By the way, a difference of 1 point on a Likert scale is every social psychologists dream.Report

      • Avatar sonmi451 in reply to Tom Van Dyke says:

        Rush was closely involved with Carbonite, giving it his personal due-diligenced recommendation.  He read the ads [Paul Harvey-style] and put his name on the line endorsing it.

        Carbonite used to advertise on Slate podcasts – that’s how they did it too, the people on the podcast read some stuff about the product the company offered (I forgot what it’s about, I wasn’t really paying attention). I doubt it’s a “personal due-diligenced recommendation”, maybe it’s just how this particul;ar company does its ads, no separate advertisement done by the company played during the program,  just whoever running the program reading some stuff.Report

        • Avatar BSK in reply to sonmi451 says:

          A lot of talk radio iuses this approach. Some guys are pretty convincing with it, making it seem like a personal plea and less of an advertisement… Until you hear the exact same wording from a different personality. It is what it is… Advertising. Nothing more, nothing less.Report

          • Avatar sonmi451 in reply to BSK says:

            Yup, the Slate podcasters do this too, after reading what they had to read, they’d talk about personally using the product, how awesome it was bla bla bla. But come on, everyody knows it’s just business and not really a personal recommendation.Report

        • Avatar Mike Schilling in reply to sonmi451 says:

          Due diligence might have occurred.  No one has ever said their stuff doesn’t t work, just that they can’t sell it profitably.

          You know, the opposite of Microsoft.Report

          • Avatar sonmi451 in reply to Mike Schilling says:

            Come on, do you seriously believe Rush Limbaugh and the Slate folks were diligently researching the product to make sure they work or whatever before accepting the ad?Report

            • Avatar Mike Schilling in reply to sonmi451 says:

              Carbonite’s CEO said that they showed Limbaugh how to use it to back stuff up.  I have no reason to doubt him (except that he’s a hypocritical backstabbing commie leftist , of course.)Report

              • Avatar BSK in reply to Mike Schilling says:

                Mike-
                They might have indeed used it, found it worked, and chose to advertise it as a result. That doesn’t change the fac tha they clearly used canned statements, which is made clear by rhe use of repeated sayings and phrases by different on-air personalities on different shows. This latter fact mkes the former hypothesis harder to accept. But, yea, sure… It’s possible.Report

      • Avatar Katherine in reply to Tom Van Dyke says:

        And here is another example of why I can’t believe you make this guy one of your writers, and why it’s an unwise decision if you want to continue to be a site for serious, thoughtful commentary.Report

      • Avatar Rufus F. in reply to Tom Van Dyke says:

        Yeah, this is a good point. People on the left are pretty horrible people.Report

      • Avatar Jason Kuznicki in reply to Tom Van Dyke says:

        If/when Carbonite crashes & burns, Don’t Muck with Rush will be a viable meme.

        And if it’s a viable meme, then hey, who cares whether or not it’s true!Report

  3. Avatar Erik Kain says:

    Nice post, Tod. I moved the “More” divider up a couple graphs though. As your local formatting Nazi, it’s important to remind everyone to place that divider up high in the post.Report

  4. Don’t underestimate this movement- and david friends numbers will go back up.

    He is on lists all over the internet as ADVERTISING w/limbaugh- but the carbonite name is being moved off of those lists  … we aren’t going to stop – join us – ours is just one one of hundreds like it ….http://boycottrushlimbaughssponsors.com/Report

  5. Avatar Brandon Berg says:

    When I read the quote from Pajamas Media about Carbonite’s stock price, I immediately stopped reading and looked it up myself. It took about two minutes. It seemed like the obvious thing to do. It wouldn’t have occurred to me not to.

    It doesn’t say good things about our media corps that I have been conditioned to do this.Report

  6. Avatar Eliot Ness says:

    “Carbonite is a financially strong file-backup service company, going along it’s merry way …

    WRONG!

    Here are some SEC statistics about Carbonite, and some grim conclusions.

    –> In a nutshell, Carbonite was doomed long before it left Limbaugh.

    THE CARBONITE ‘TITANIC’

    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.”

    http://www.sec.gov/Archives/edgar/data/1340127/000119312512101462/d277280d10k.htm

    ‘HAIL MARY’ IPO

    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.

    http://www.sec.gov/Archives/edgar/data/1340127/000095012311049041/b86123sv1.htm

    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.”

    http://online.wsj.com/article/SB10001424052970204485304576643433842326332.html

    ‘VISIONARY’ FOUNDER DAVID FRIEND

    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’S GRIM FUTURE

    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. Because of the Limbaugh flap, 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.”

     Report

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