Marathon Tech aims for endurance
After declaring bankruptcy, the co. gets venture capital infusion
Four years ago, Marathon Technologies Corp. filed for federal Chapter 11 bankruptcy.
The 8-year-old computer hardware company was faced with mounting debt, and was offering products that seemingly no one wanted to buy.
That's the way it goes sometimes with private high-tech companies funded by venture capital firms, which know their investors' money is at risk. High risk, but often the rewards are equally high.
The companies funded by venture capital are at least perceived to have great long-term growth potential.
And for Littleton-based Marathon, that's still the case.
Turning a corner
The company wasn't killed by bankruptcy. At a time when most companies might curl up in self-preservation mode, or die altogether, Marathon decided to take another risk and reinvent itself.
Now, the company expects to be profitable by the end of the year. It has doubled its staff in the last 15 months, is adding 20 new engineers to its staff this year, and recently received $12 million from the venture capital firms that support it.
Marathon does something it says no other company does, and that's what made it attractive to Sierra Ventures, Atlas Venture and Longworth Venture Partners.
Marathon software instantaneously and unnoticeably backs up Microsoft Windows-based networks.
"We're the only ones doing it in software," said Gary Phillips, the company's president and CEO.
Marathon's software makes a working, usable copy of everything a company's computer network does. So, when things go bad, all of the company's work and information isn't lost.
Phillips said the company's product line ranges in price from $7,500 to $16,000, and is expanding.
Among the people recently hired by Marathon is someone to help build the company's business with the federal government, Phillips said.
"We have several customers in government, federal, state and local," Phillips said. And Marathon software seems like a natural for national security and defense.
Being the only player in a market in which the federal government could see a benefit bodes well for the company's finances, said Peter Shannon of Atlas Venture.
"It's difficult to replicate the technology that Marathon has developed," Shannon said.
That technology, "addressed a specific power point in a relatively large market, and the trends are only going to continue in Marathon's favor."
Phillips arrived at Marathon about a year and a half after the company filed for bankruptcy.
"The company had come out of Chapter 11, and it was kind of a re-launch...it was a total re-start."
Phillips said Marathon had fallen into the trap of offering one very expensive, niche product to a very limited customer base.
In doing so, it stopped being able to pay the rent at its old facility in Boxboro.
In its bankruptcy filings, Marathon reported debt up to $10 million owed to creditors ranging from its landlord, which was owed nearly $400,000, to its lawyers, insurance providers, researchers, public relations companies and advertising agencies.
At the time of bankruptcy, Marathon claimed total assets between $100,000 and $500,000.
Now, "we're committed to being a partner-friendly channel," Phillips said. "We're at a price point that's very reasonably priced for the kind of protection we can offer, and we've become more than a one-product company. We offer products outside the high-end, and in the high-availability sector. ...The range of products gives us more to sell."
WBJ Web Partners
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