Kazaa/Skype/Joost - and I guess Joltid - founders Janus Friis and Niklas Zennstrom are richer than God. Let’s get that out of the way.
Kazaa was a disruptive and destructive force in music that took the baton from Napster after the RIAA killed the popular file sharing software. But Kazaa’s fate was no different than Napster’s.
Skype, on the other hand, was not only disruptive but also wildly profitable. The duo cashed out admirably in a sale to eBay. It turned out, of course, that eBay bought everything but the underlying technology.
Joost was a disaster from Day 1, and as one of WatchMojo.com’s distribution partners, that was clear from Day 1. We try to tell them all of the things they were doing wrong, to no avail.
Regardless, even if every other project they touch fails, they have made their mark - and earned their fortunes - with the sale of Skype. However, I wonder if this has made them lose their senses.
In fact, I think that it’s a good thing that they two seem to have begun to focus on investments through their Atomico Investments, because I think they are damaging their own reputation as entrepreneurs and businessmen with the way they have handled everything since the sale of Skype.
For one, selling eBay the company without the technology is just bad form, even if the clueless Meg Whitman didn’t see a problem with this. I understand Friis and Zennstrom planned to use the underlying Joltid peer-to-peer Global Index technology for subsequent projects, including Joost, but it is simply bad form. What they should have done is worthy of a separate article.
However, the fact that they are now suing former Joost CEO and Chairman Mike Volpi is also bad form, because I don’t think that they will be able to recruit as many would-be CEOs in the future. By the looks of it, if what they allege is true, Mr. Volpi has also acted questionably, but at some point, you cut your losses and walk away.
As an entrepreneur, I inquired with Atomico way back in the day (full disclaimer: Atomico since invested in DECA, another content producer, though in no way really competitive with WatchMojo.com), but seeing how they have gone about this eBay/Volpi mess… you have to ask yourself, if you are an entrepreneur, does this saga make you more or less interesting to partner with them?
If they are now investors, the answer to that question should trouble them.
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One of my hobbies is pointing out that VCs hurt entrepreneurs as much as they help them, but I disagree with 37 Signals CEO Jason F’s notion that VCs forced Aaron Patzer to sell Mint.com for $170M to Quicken.
After all, who in their right mind would reject an offer like that after three years of startup life? Apparently, I’m not alone.
I was in attendance when Mint.com launched at Tech Crunch two years ago (2 years ago people!) and thought it was neat but not the top startup, nice to see how much I knew… by the way.
But all in all, I am pretty sure their VCs didn’t want to sell, they had invested $31M in capital as recently as a few months ago at a valuation of $140M… I think Mint.com sold because their twenty-something CEO just thought it would be best to cash out. However, I think that VCs need to “clear the decks” and having invested at some lofty valuations before the market correction, any liquidity transaction is welcome, but suggesting Aaron was forced seems crazy.
Ultimately, Mint.com seems like a cool product to sign up for but I did read about some users that lost interest; but either way, their spike in net users did enough to pique Quicken’s interest and honestly, Aaron and his backers deserve a lot of props.
Amazing story, as well, by Tech Crunch on how Mint.com bought the URL for $2M in equity (I always wondered how much they paid for that URL). Last but not lease, check out Aaron’s version of the facts here.
Again, hats off to everyone involved. Hopefully Quicken won’t mess up this M&A as many acquisitions do.
