Riding Out a Dot-com Downturn

Nobody's getting paid. There are no investors left. The rent money is running out. But George Molho and company are hanging on, hoping that with a good product and just a little luck they'll strike it rich.

George Molho is hurtling down U.S. 59 South in his black Land Rover SUV, the one he drives because he "likes to be up high." He is a large doughy man with a moon face, dark hair combed forward and dark eyes to match. Just last week he turned 30.

The beginnings of a bad cold are starting to set in, but that's not preventing George from talking. If there is anything George can do well -- and George figures he can do lots of things well -- it's talking. As he drives, he says things like:

"There are some people who are meant to blaze a trail and some who are meant to settle. I'm not meant to settle."


"I enjoy fighting the impossible fight. That's when I'm at my peak: when there's no way to win and death is imminent."

George is talking a lot about the impossible fight these days, and the odds for victory for the company he helped found: Acesync.com. Even as dot-coms tank around him and the phrase "the new economy" begins to sound as faddish as "my pet rock," George insists the odds for Ace are very good.

George and some of his buddies from as far back as junior high founded Ace in November 1999. Their business plan calls for them to provide schools with a product line of tests and tutorials that students and teachers can use on-line -- in the classroom and at home. George is the president of the small company, and he and the brain trust at Ace say they're unique because their software was developed with the guidance of teachers and superintendents from the Houston area, making Ace's product something teachers will want to use.

But what does not make Ace unique is that like so many dot-coms before, it is struggling to stay alive. There is no funding. There are no investors left. Nobody is getting paid. The bit of money remaining to pay the rent on their office space will last for just a handful of months.

Even though George knows this and admits it to be true, as he drives he has nothing but positive things to say about Ace. About most everything. He talks in exclamation points, as if the steering wheel in front of him were really a pulpit and the sermon for the day -- for any day -- is that George Molho never gives up.

"Look at marathon runners," George is fond of saying. "What's the difference between the one who wins and the ones who don't? They all train the same. The one who wins has heart! The one who wins wants it!"

It is the day after the Fourth of July, and George is one of the few Ace staffers in the office. Ace is on the fifth floor of an office building at the corner of Richmond and Montrose, across the street from a Diamond Shamrock and several floors above a bank. The rent is $4,000 a month. Most of the furniture is standard IKEA fare, and many of the desks were purchased used. It is clean, spacious, color-coordinated and nice, but not too nice. Unlike the legendary dot-com start-ups of the mid- to late '90s, there are no foosball tables or vending machines stocked with free food.

"We did everything the right way," George says. "We used our money wisely, or we wouldn't be here now."

George is talking about the $1.3 million in initial capital Ace gathered from friends, personal savings and investors. The money is gone now, but that isn't stopping George from trumpeting how much he believes in the future of Ace. He says he and his partners are "on the side of the angels," because they want to help kids. They just can't fail.

The genesis of what was to become Ace got its start in the early '90s when George and his old high school friend Tim Heckler would sit out on their balcony along Memorial Drive overlooking the park. Smoking cigarettes, they'd brainstorm about businesses they could go into together as George took notes.

In 1995 Tim went on to co-found Hypercon, which grew into one of the city's largest Internet service providers. George was working for his uncle's chain of health clinics, and he left to work for Tim in the Web development department until Hypercon was sold in mid-1999. A few months later Tim, George and a few other folks from Hypercon decided it would be the perfect moment to birth Ace.

It was a heady time. George, Tim and the four other founders -- Ali Davoudi, Keith Yezer, Kathy Pounds and Sean Stoner -- would gather in Sean's apartment in the Rice Lofts downtown. They drew up detailed business plans. It was the dot-com glory days, and start-ups everywhere were rolling in venture capital money like pigs in you-know-what. The NASDAQ peaked just as Ace started pulling in its first round of funding. Fresh-faced kids just out of college were suddenly worth millions, at least on paper.

It felt like a good time to be starting a dot-com.

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