I was reading Inc's fascinating article about Harmonix, the developer of the first two Guitar Hero games and the current smash Rock Band games. It's a terriffic read--Harmonix went from being a company that hadn't made a dime in almost a decade, to being one of the most successful video-game developers ever.
But one portion I think is quite revealing in terms of just what we have to lose from this current economic crisis. This excerpt describes what Charles Huang, founder of Red Octane, the former partner of Harmonix and designer of the little plastic guitars that launched a million fingers, had do to keep Guitar Hero alive:
"I remember talking to my wife and saying, 'Honey, I want to take out a second mortgage on the house to fund Guitar Hero,' " Charles Huang says. "She asked me, 'Where will our kids live if the game doesn't sell?' I said, 'I think it'll sell.' " Maxing out credit lines, the Huangs scraped together $1.5 million to fund and market the game."
Would Huang have been able to do that in 2008? We don't know. But there's plenty of indication that it'd be much more difficult today to fund a business the same way. How many other innovative startups are never going to bring their projects to fruition due to the lending and investing climate today? It's a blow to the economy that cannot be measured.
So I hope Paulson knows what he is doing with this next phase of TARP. Unfortunately, his track record thus far is not encouraging.
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