Being the CEO of a company is a lonely gig. To placate yourself from the loneliness, you find people who believe in you and your vision and they back you by giving you money for a share of the business. They are supposed to stick with you through thick and thin… it doesn’t always work out that way.
It’s never easy having outside investors, regardless of whether they are VCs or angels. I wouldn’t know, partly because I am an ineffective fundraiser, but mainly because I refuse to agree to draconian terms. That decision is something that has nearly killed WatchMojo.com on a few occasions. But as hard as it has been to get the company to where it is today, as every day goes by, I am pretty thankful about that.
I met Scott Rafer just a month ago at a Paid Content cocktail and I would have never guessed it then, but today he blogged about shutting down Lookery. Scott is a very smart guy and a nice guy to boot. He’s had his share of successes, one of them being Yahoo! buying his old company.
Lookery’s initially problem was being a Facebook-reliant company, this is something I have long criticized and warned entrepreneurs against. I’ve even ridiculed VCs for drinking the kool-aid. I won’t link back to those in this post.
What I will link to is Scott’s post, I suggest every entrepreneur and investor read it here.
Lookery raised $3.15 million in angel funding over the past two years, from notable investors and VCs including Charles River Ventures and former FCC Chairman Reed Hundt.
To me, that is a lot of money, and half the problem.
But Lookery avoided institutional money and terms, which I think probably gave Scott more options. I found out today that one of our VC-backed clients was shutting down/fire-selling (who is that? I am not saying, at least not yet/not). I am not going to write about the details today, but as I learn more about the details of that unwinding, I realize some thing stinks. So in the end, I think shunning VCs gave Scott to go out with class, courtey and on his own terms.
This probably doesn’t make things less painful for him right now… but I wonder: Scott’s post on shutting Lookery down is titled “Couldery Shouldery”, I don’t know Scott that well, but my advice to entrepreneurs who are in a position to fund their own companies and avoid outside money altogether is Should Have, Could Have, Would Have Funded It Yourself.
After all, as much as WatchMojo.com has turned the corner, if I had outside investors, they would have shut down us down ages ago (just to be clear: if I was an outside investor and not the CEO, who knows, maybe I would have shut us down, too, due to the main disconnect at one point between our operations and our finances).
But by really putting my neck on the line, it forced me to find a business model and stick to my guns to make it work. Today we announced supplying Coca Cola with videos on their microsite on MySpace. As proud as we are of that, we will be unveiling something bigger next week. You have 24 hours in a day and one life to live, if you can live it without outside investors, here’s the sad but true reality: do so.
The other half of the problem is that once you raise any kind of money from outside investors, you give up a lot of rights in subsequent fundraising efforts. You have one company to grow, but these investors have a handful to dozens of companies to worry about. If they don’t want to fund in follow up rounds, you might be screwed.
As a student of business and history, I can count on my finger the incidents where outside investors actually help beyond money. I won’t make any friends by saying that in the investment community, but I can also count on my fingers how many people in said community I can count on.
The good news for Scott is what doesn’t kill you makes you stronger. The bad news is that while starting a company isn’t easy, keeping it afloat is even harder… but if the past 10 years show us anything, it’s that having too many notable investors is a sure-fire recipe for disaster.
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WatchMojo NewsletterWould you feel bad for a man who has $4M? Probably not. But what if he was worth $100M a year ago?
Hard to feel pity, I know… but what if you knew that like you and I he puts on his pants one leg at a time, but unlike you and I, he kills viruses all days.
Jokes aside, that is the story of John McAfee. Yes, that McAfee. Read more. Being rich just isn’t what it used to be, literally:
According to the DailyTelegraph
“Electro-pop star Harris, who rose to fame on MySpace before signing to major label Sony Music, used the innovative “Humanthesizer” to play his latest single Ready For The Weekend.
15 women use their bodies as switches on large circuits laid out on the studio floor.
They can safely conduct electricity across their skin using a special type of body paint, developed by students at London’s Royal College of Art (RCA), which channels the current without electric shocks.
By clapping and stamping their feet on electric pads, the women complete the circuits which are hooked up to a computer. “
This week, MySpace.com launched a branded microsite to promote Coca-Cola’s “Open Happiness” campaign. The key theme of the microsite reveals The Formula for Happiness. The microsite includes interactive features with a focus on Music, Fashion, Video Games and Movies, as well as daily prize giveaways and one grand prize of an all expense paid trip to MySpace’s upcoming “The Release” show. Each section required relevant content that reflected the brands message of “Happiness”. WatchMojo.com had the privilege of providing original and exclusive video content to power the microsite’s Fashion Section. WatchMojo was challenged to find entertaining and informative fashion videos that closely matched the overall feel of Coca-Cola’s brand and message and would help increase user engagment. WatchMojo scanned its complete library of content to single out the best fashion videos we had to offer. The result, WatchMojo’s content integrated flawlessly into the microsite, adding precious value to Coca-Cola’s “Open Happiness” campaign.
You can see the microsite that went live Thursday August 20th, 2009, here: The Formula for Happiness
