Some time ago, when I was actually considering/looking for VC money, I penned: “Step Away From the Machine, Give Me the Keys”, which was an honest reflection asking:
Say you were an entrepreneur and someone came to you and:
- offered you $10M in funding but asked that you had to stay on for 3 years as a condition. Three years isn’t long, but it is an eternity online. YouTube went from URL registration to $1.65B in about 18 months…
alternatively,
- what if someone else came to you and offered you $10M in funding but insisted you had to step aside and make room for their new hand-picked CEO.
Would you accept either offer? Or better yet, which offer would you prefer?
If you want more on that soul-searching question, read the whole post here. You might be surprised at what I said.
- Anyway, incidentally, since I penned that post, Next New Networks’ CEO Herb Scannel has stepped down, “voluntarily”.
- Today, Turn Here’s CEO Brad Inman has stepped down, “voluntarily”, as well.
N3, TH and WatchMojo.com (where I’m CEO / founder) are all broadly in the video content production space… though I don’t consider us three to be competitive, since we’re all trying to create viable businesses out of made-for-web video content, meaning we’re all in the same boat: using a paddle to get to shore. Of course, with $25M and $7.5M in funding respectively, N3 and TH have paddles (and engines) to spare. We don’t. It’s ok.
Interestingly, throughout 2007, when I was looking for some added funding (I’ve funded the company myself thus far), we also spoke to:
- N3 investors Velocity Interactive Group and Spark Capital,
- TH investors Venrock.
I’d like to say I told those investors to go packing, but that would be a lie. I guess I was not desperate enough for VC money to accept draconian VC clauses, but the reality is that all of those investors did not like me enough or like what our company was doing, so they said “thanks, but we’re not in investment mode”. One-by-one, days or weeks (or in one case, hours!) would pass by as funding news would hit the wires. Nice.
In the end, as I suspected, they looked under our hood but then invested in them. So be it. No hard feelings towards those companies or VCs, of course.
But it does make me wonder: if these VCs invested in these companies but are now pushing out their CEOs (note to PR people of those companies - don’t bother emailing me to clarify that these CEOs left voluntarily, please), what does that say about the VCs?
Don’t answer that question, it’s a rhetorical question.
Instead, let me point you to Exhibit 1 - Revver: $12.7M in funding, exit of $5M. Or better yet, Podtech, whose VCs pushed out CEO founder John Furrier after raising $7.5M, selling for $500K. Double Nice.
As you can tell, aside from pride, I have a thick skin. Now that we’re practically breaking even, I don’t think I will ever raise a penny in VC. Why bother? That ship has sailed; the door has shut close. The VC track record in general is not an enviable one, in video, it’s borderline criminal.
Yes, you can call this sour grapes… other than the fact that victory (regardless of how you define it) is sweet. To me, starting a startup, victory initially means self-sufficience, not raising money.
They say never say never… ok, I won’t say never. But I will say “darn unlikely”.
If you read my post on CEOs leaving companies after they raise VC, you will see that I sincerely didn’t mind one day stepping aside… but if I do, it’s because I assembled a team and built a successful company, and not because some VCs don’t seem to have a faint or foggy clue as to what they look for in the people they invest in (hmm… if they did, why are the CEOs of these firms stepping down?).
In fact, if there is one advice here for entrepreneurs, it’s this: I was so busy trying to raise money, because that’s “what smart entrepreneurs do” (ie. use other people’s money) that I did not notice we were building an actual business, with clients, revenue, and profits.
Ah yes, the fog subsists: Revenue (and preferably profit) is the anti-VC. Kryptonite, so to speak. Find it, use it.
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