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They never really figured out monetization and they didn't manage to get the traction of tumblr, plus with the loss of a founder it was a hard position for them

by ig1 15y ago

They never really figured out monetization and they didn't manage to get the traction of tumblr, plus with the loss of a founder it was a hard position for them to be in. I doubt the investors made a return.

deleted 15y ago
[deleted]
- danilocampos 15y ago
  Spicy. Care to elaborate?
  - deleted 15y ago
    [deleted]
    - ceejayoz 15y ago
      That's a very different statement than saying someone's departure put you on the path to success. The way you originally stated it implied fairly heavily that the departed founder was a negative influence holding you back.
  - nikcub 15y ago
    looks like i missed the best part of this thread
- ig1 15y ago
  EDIT: I just realized we might have crossed-wires, I was referring to the loss of Garry Tan and not the loss of Brett Gibson. Obviously you have more knowledge of Posterous than I do, but generally a founder leaving tends to have negative implications (it scares potential investors, damages momentum). I use both Tumblr and Posterous and from a user perspective when Posterous pivoted to be focused on "spaces" it seemed like the decision was panic driven. The reason that Tumblr was succeeding over Posterous wasn't due to the feature set of Tumblr but rather the community that Tumblr had. Posterous had advantages over Tumblr and in many ways it's the better blogging platform, but rather than playing on those strengths and improving them Posterous instead went after the social aspects that Tumblr was succeeding in without fully appreciating that it couldn't just take a social feature set and foist them onto it's user-base.
  - deleted 15y ago
    [deleted]
AznHisoka 15y ago
how much do you guess they were acquired for?
- ig1 15y ago
  No idea, the following is all speculation: I'd guess somewhere between $5m-$10m. Given the number of employees and the amounts they've raised I guess their burn rate was around 250-300k/month (that's probably on the large side). Their series B was only raised 6 months ago so based on their burn rate I'm assuming they've still got 3m-4m of that in cash so that would be the lower bound for the acquisition. Given the company probably had 12 months of cash left I suspect the Series B investors would only have agreed to a sale if they got all their money back (they'd have liquidation preference anyway so they'd get their money back first), so that probably means a lower bound greater than $5m (the size of the Series B). Anything over $10m would be high for a talent acquisition so that's probably a decent upper-bound.
  - jpdoctor 15y ago
    > they'd have liquidation preference anyway so they'd get their money back first Liquidation prefs are rarely exercised, at least when the acquirer is clueful. (The company spending the money wants the incoming employees to be reasonably incentivized, often that takes the form some delayed payout. They really don't care if the investors make their money back or not.)
    - bentlegen 15y ago
      The acquiring company can always just give them bonuses irrespective of the acquisition.
      - jpdoctor 15y ago
        Of course. But the acquirer usually has no incentive to line the pockets of the investors, so they'd rather lower the price by spending the M&A nut on the team instead. It's usually among the first things to go in a negotiation.

by ig1 15y ago

deleted 15y ago

[deleted]

danilocampos 15y ago
Spicy. Care to elaborate?
- deleted 15y ago
  [deleted]
  - ceejayoz 15y ago
    That's a very different statement than saying someone's departure put you on the path to success. The way you originally stated it implied fairly heavily that the departed founder was a negative influence holding you back.
- nikcub 15y ago
  looks like i missed the best part of this thread
ig1 15y ago
EDIT: I just realized we might have crossed-wires, I was referring to the loss of Garry Tan and not the loss of Brett Gibson. Obviously you have more knowledge of Posterous than I do, but generally a founder leaving tends to have negative implications (it scares potential investors, damages momentum). I use both Tumblr and Posterous and from a user perspective when Posterous pivoted to be focused on "spaces" it seemed like the decision was panic driven. The reason that Tumblr was succeeding over Posterous wasn't due to the feature set of Tumblr but rather the community that Tumblr had. Posterous had advantages over Tumblr and in many ways it's the better blogging platform, but rather than playing on those strengths and improving them Posterous instead went after the social aspects that Tumblr was succeeding in without fully appreciating that it couldn't just take a social feature set and foist them onto it's user-base.
- deleted 15y ago
  [deleted]

AznHisoka 15y ago

how much do you guess they were acquired for?

ig1 15y ago
No idea, the following is all speculation: I'd guess somewhere between $5m-$10m. Given the number of employees and the amounts they've raised I guess their burn rate was around 250-300k/month (that's probably on the large side). Their series B was only raised 6 months ago so based on their burn rate I'm assuming they've still got 3m-4m of that in cash so that would be the lower bound for the acquisition. Given the company probably had 12 months of cash left I suspect the Series B investors would only have agreed to a sale if they got all their money back (they'd have liquidation preference anyway so they'd get their money back first), so that probably means a lower bound greater than $5m (the size of the Series B). Anything over $10m would be high for a talent acquisition so that's probably a decent upper-bound.
- jpdoctor 15y ago
  > they'd have liquidation preference anyway so they'd get their money back first Liquidation prefs are rarely exercised, at least when the acquirer is clueful. (The company spending the money wants the incoming employees to be reasonably incentivized, often that takes the form some delayed payout. They really don't care if the investors make their money back or not.)
  - bentlegen 15y ago
    The acquiring company can always just give them bonuses irrespective of the acquisition.
    - jpdoctor 15y ago
      Of course. But the acquirer usually has no incentive to line the pockets of the investors, so they'd rather lower the price by spending the M&A nut on the team instead. It's usually among the first things to go in a negotiation.