Milwaukee-based
Marathon Machines, Inc. went from raising a $2.7 million seed funding round in late 2020, to
launching two models of its combined washing machine and dryer in 2022, to being completely shut down and liquidated this past summer.
When asked what led to the company shutting down, its founder and CEO Glenn Reid said Marathon Machines got caught up in the onslaught of challenges brought on by the COVID-19 pandemic – as a story not unlike countless other small businesses.
“It was a slow-motion trainwreck,” said Reid.
A past director of engineering for Apple Computer, he formed Marathon Machines in Silicon Valley in 2016, later relocating to Milwaukee to save money.
Navigating supply chain issues that were caused by the pandemic proved to be too difficult a task for the young company. Reid said his team was spooked when several of the startup’s vendors told them they would stop making certain components indefinitely.
This caused the company to overbuy inventory in anticipation of upcoming supply chain shortages. Marathon Machines eventually ran out of operating cash, Reid explained.
“We just got snared in that. It’s a risk for any business, managing cash flow and inventory. When you take a small startup and big pandemic, it’s too much to manage,” said Reid.
He was surprised when some of Marathon Machine’s investors in Chicago didn’t want to provide the startup with any follow-up capital, instead opting for more risk-averse investments such as family-owned businesses. Reid said this was the downside to starting a startup in the Midwest, where the general mindset is more “risk averse.”
“They weren’t used to putting more money into a deal and wouldn’t do it. I got caught flat-footed,” he said.
Reid is still trying to sell some of Marathon Machines’ assets to large manufacturers who might be interested in making his combined washing machine and dryer. He’s also been doing some consulting work with a handful of area startups and organizations.
Reid said the biggest lesson learned from the launch and closure of Marathon Machines is the need to be extremely cautious when scaling, particularly when it comes to what you’re investing in.
He believes the Milwaukee region needs to find a better balance between risk and reward when it comes to investing in and supporting startups.
“I see a real cognitive dissidence between the optimism and cheerleading here in Milwaukee…some of it’s a little bit hollow,” said Reid. “Everyone wants to be your friend when they think you’re this wildly popular startup from Silicon Valley, but when things go bad, they back off a bit.”
