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« Edlon LLC = ? | Main | Yep, Uncle G's/Winona Sandwich Co. closed »

October 16, 2007

Hardcore Computer + $200,000 loan

Remember Al Berning's new business, Hardcore Computers, that I wrote about a while back?

It booted up a pretty good loan last night.

Here's some form the story by Jeffrey Pieters:
Hardcorecomputerguys_2

A Rochester start-up planning to develop high-end computers for the video-gaming industry will get a $200,000 low-interest loan in exchange for creating 25 or more jobs.
Hardcorecomputerlogo_2
The Rochester City Council voted 7-0 to approve the subsidy on Monday. The aid includes a $150,000 Minnesota Investment Fund loan and $50,000 in previous MIF funds the city had retained for use in a revolving loan program.

The recipient business is called Hardcore Computers, a business co-founded by Pemstar founder and former chief executive officer Al Berning and three partners.

Berning told council members the high-end desktop computers his company will develop are initially intended for use in video game consoles, but could see their use expanded to intensive graphic-design and engineering practices.

The economic aid requires the business to hire 25 people at a minimum hourly salary of $10.67 each. Those hires are required within two years.

The company plans to hire 50, according to Berning, and the wages will “far exceed” the required minimum, said Terry Spaeth, an assistant city administrator who reviewed the company’s aid application.

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Not to be a downer.......but...

Does anyone (except the people running the business) expect this company to last more than 3-5 years?

Love the concept, but with Alienware (Now a part of Dell) Falcon Northwest, Velocity Micro and VoodooPC (Now a part of HP) already "ruling" such a small niche, it's not going to be easy.

Why does Berning need taxpayer money? Why is the City Council bending over for him?

Why? "...in exchange for creating 25 or more jobs."

We must have some technologically inept counsel members if they can’t see the writing on the wall for this deal…
1. They get their money and start the business
2. They hire 25 people from out of town that move to Rochester
3. They find out that the market they are trying to enter is pretty much owned by Alienware etc…
4. They go out of business and now Rochester has 25 less jobs and 25 more people looking for a job, not to mention never seeing the tax payer money again because they go bankrupt.

I hate to be a downer also...but hasn't this been tried and tried before? If you look at the gaming market, PC games are losing out big time. Look at the amount of new games that come out for consoles vs. PC. It's a shrinking market.

It's also hard to see 25 jobs...ones that probably won't be around in a year. Kudo's to them if they can actually sell anything.

Don't get me wrong. I'd rather play computer games than PS3 or XBOX seeing the graphics and gameplay are better than anything those companies can throw out. But the games just aren't there for PC.

I'd love to see a company foruc more on HTPC (home theater PC). I really think there is a huge niche with 1080p HDTV's out there along with all the other household things the computer can run for you...If only a company would do this...wait a minute...I could I guess...anyone with me?

I just love these armchair businessmen that find it so easy to criticize anybody trying to start a business, probably because they don't have the guts to do it themselves. Stay in your little cubicles, fellas, because I think I'M going to put some money into this thing!
(Just as soon as I cash out my Uncle G's investment)

Chad, actually the PC game market IS growing but just not as fast as some of the console market.

And if you think there is a big market for HTPC then go start a company and go for it!

Oh, BTW, about 90% of new companies fail. Will this one fail? I'd say there's a 90% probability that it will.

That 90% rate that is so often quoted is basically a myth.
Rhonda Adams (USA Today) quotes Professor David Birch's statistics for business SURVIVAL (not failure) rates as the following:
• First year: 85%
• Second: 70%
• Third: 62%
• Fourth: 55%
• Fifth: 50%
• Sixth: 47%
• Seventh: 44%
• Eighth: 41%
• Ninth: 38%
• Tenth: 35%
I suppose eventually 90% of businesses do fail—maybe over a 75 year period.

Just for the record, I’m not sure Al Berning has such a great track record—at least according to what happened to my PEMSTAR stock.

"Depending upon which statistics you believe, the chances of a new
[small] business surviving for five years are between 30 and 50
percent.” (“Starting a Small Business,”
http://www.montana.edu/wwwpb/pubs/mt9510.pdf )

”According to the U.S. Small Business Administration, over 50% of
small businesses fail in the first year and 95% fail within the first
five years.” (“Are You Ready?” United States Small Business
Association: http://www.sba.gov/starting_business/startup/areyouready.html
)

“Although many people believe that 80 percent of all small businesses
fail within five years, statistics from the U.S. Census Bureau reveal
a different story. The Census Bureau reports that 76 percent of all
small businesses operating in 1992 were still in business in 1996. In
fact, only 17 percent of all small businesses that closed in 1997 were
reported as bankruptcies or other failures. The other terminations
occurred because the business was sold or incorporated or when the
owner retired.” (“Small Business in America,” U.S. Department of
Labor: http://www.dol.gov/odep/pubs/ek00/small.htm )

Wow, so much negativity and it's only Wednesday, can't wait to see posts on Friday!!!

Best of luck to Hardcore Computers. I've got a feeling there is a much larger market for this new technology than just high-end gamers.

Is this really going to be a business or just an idea with no real employement. I have driven by the address previously provided. There's no such thing.

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