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You imply that you could have done better. So please share your relevant comparable experience. Ever raise $10M and bear the weight of those investor expectatio

by sutro 17y ago

You imply that you could have done better. So please share your relevant comparable experience. Ever raise $10M and bear the weight of those investor expectations? Ever been CEO of a multi-million dollar company? Ever launch a manufactured consumer product? I suspect that it might be a bit difficult. I suspect that what is best for your investors, your partners, your employees, your customers, your family, and yourself might not always be the same thing, which I suspect might lead to many difficult decisions along the way, decisions which unfortunately will later get called into question by a peanut gallery of HN readers who consider themselves business experts because they've built a couple of websites.

christofd 17y ago
Well, I've raised and received an acquisition offer of about that number, but the startup team quickly disintegrated. Guess what, I don't put this on my resume! It was a failure and caused a major fallout under several friends! Regarding the "built a couple of websites" - I've worked for startups in bioinformatics/ AI and for public research projects with several million bucks funding. I'm sorry but my heroes are company owners that can sustain a business for a long time and give back to the community. Not quick scams that screw over investors. I know quite a few startup founders (in IT) here in Ontario, Canada, that know how to support their people. And these aren't guys building websites, but in the 'top 10 awards, up and coming in Canada'.
- sutro 17y ago
  The guy hung in for 6 years on a modest salary, not quitting until his hand was forced when the bankruptcy court rejected his buyout offer. How is that a "quick scam?" He kept the business close to the edge of solvency because he was optimizing for growth rather than profit on the entirely defensible theory that he needed to quickly get the business to a size where economies of scale would work in his favor. (It's a strategy that Bezos used at Amazon in the early years too, consistently forsaking profit in favor of growth and operating in the red to do so.) Investors know the risks involved. Nothing in the article suggests that they were "screwed over" as you claim. In fact the "risk it all, go for broke" attitude that you blame on the CEO is more likely attributable to his investors, who are going to push for strategies that result in a 5x-10x ROI.
  - christofd 17y ago
    Sorry, for the long comment in advance. But this issue is something that has been bothering me for a long time. Agreed, I give the guy all the credit for hanging in for 6 years and as mentioned before his strength in raising capital and marketing. He's definitely not ordinary. But in the end - does he have a sustainable business, where he gave back to the community? Is he in the ranks of a stable company owner, who can finance his children's and his employees's children's college education etc.? I know people like this and I don't know that much about how hard it was for them to outlast. But this is the measure of success. Not the 'almost' go-big-go-bust success displayed annoyingly in many American business zines (Inc, Fast Company, Business Week, Wired etc.) during the dot-com era... and this recent article. Daimler-Benz, Siemens, GE... they are all still here and it took them a long time to grow. History is on my side on this issue: 2 major market crashes - dot-com and now real estate. My family lost a good portion of their retirement money as many others have. The end result of so much hype in the market is hazardous to society. Summarizing, raising capital with inflated growth targets is a thing of the 90s. Growing a business slowly is the way to go, unless you have a major technology or product breakthrough. I must add - this is a personal view. Many others will still achieve success growing quickly.
    - sutro 17y ago
      Your concerns about recent economic down-cycles are misplaced. Our economy needs more not less entrepreneurs like the CEO profiled here. He ultimately failed but he went down fighting to keep alive a new business that provided new jobs. And he pioneered a new market segment whose inheritors will employ many more people in the future. That growth-creating ripple effect will leave a bigger impact on his "community" than most people can ever lay claim to. There are plenty of villains worthy of your scorn, from banksters to bureaucrats to politicians. Yet you blame a business-building job-creating entrepreneur for trying to grow too quickly? Daimler, Siemens, et al were once the size of Switch Beverage Co, and their initial investors also took big risks for the expectation of big returns. Had this guy succeeded in creating the next Coca-Cola, you probably would have been singing his praises ten years hence. It sounds like what you really object to is failure. BTW, the next time you try to raise money, be sure to show deflated growth targets to your prospective investors, then let us know how that works out.

by sutro 17y ago

christofd 17y ago

Well, I've raised and received an acquisition offer of about that number, but the startup team quickly disintegrated. Guess what, I don't put this on my resume! It was a failure and caused a major fallout under several friends! Regarding the "built a couple of websites" - I've worked for startups in bioinformatics/ AI and for public research projects with several million bucks funding. I'm sorry but my heroes are company owners that can sustain a business for a long time and give back to the community. Not quick scams that screw over investors. I know quite a few startup founders (in IT) here in Ontario, Canada, that know how to support their people. And these aren't guys building websites, but in the 'top 10 awards, up and coming in Canada'.

sutro 17y ago
The guy hung in for 6 years on a modest salary, not quitting until his hand was forced when the bankruptcy court rejected his buyout offer. How is that a "quick scam?" He kept the business close to the edge of solvency because he was optimizing for growth rather than profit on the entirely defensible theory that he needed to quickly get the business to a size where economies of scale would work in his favor. (It's a strategy that Bezos used at Amazon in the early years too, consistently forsaking profit in favor of growth and operating in the red to do so.) Investors know the risks involved. Nothing in the article suggests that they were "screwed over" as you claim. In fact the "risk it all, go for broke" attitude that you blame on the CEO is more likely attributable to his investors, who are going to push for strategies that result in a 5x-10x ROI.
- christofd 17y ago
  Sorry, for the long comment in advance. But this issue is something that has been bothering me for a long time. Agreed, I give the guy all the credit for hanging in for 6 years and as mentioned before his strength in raising capital and marketing. He's definitely not ordinary. But in the end - does he have a sustainable business, where he gave back to the community? Is he in the ranks of a stable company owner, who can finance his children's and his employees's children's college education etc.? I know people like this and I don't know that much about how hard it was for them to outlast. But this is the measure of success. Not the 'almost' go-big-go-bust success displayed annoyingly in many American business zines (Inc, Fast Company, Business Week, Wired etc.) during the dot-com era... and this recent article. Daimler-Benz, Siemens, GE... they are all still here and it took them a long time to grow. History is on my side on this issue: 2 major market crashes - dot-com and now real estate. My family lost a good portion of their retirement money as many others have. The end result of so much hype in the market is hazardous to society. Summarizing, raising capital with inflated growth targets is a thing of the 90s. Growing a business slowly is the way to go, unless you have a major technology or product breakthrough. I must add - this is a personal view. Many others will still achieve success growing quickly.
  - sutro 17y ago
    Your concerns about recent economic down-cycles are misplaced. Our economy needs more not less entrepreneurs like the CEO profiled here. He ultimately failed but he went down fighting to keep alive a new business that provided new jobs. And he pioneered a new market segment whose inheritors will employ many more people in the future. That growth-creating ripple effect will leave a bigger impact on his "community" than most people can ever lay claim to. There are plenty of villains worthy of your scorn, from banksters to bureaucrats to politicians. Yet you blame a business-building job-creating entrepreneur for trying to grow too quickly? Daimler, Siemens, et al were once the size of Switch Beverage Co, and their initial investors also took big risks for the expectation of big returns. Had this guy succeeded in creating the next Coca-Cola, you probably would have been singing his praises ten years hence. It sounds like what you really object to is failure. BTW, the next time you try to raise money, be sure to show deflated growth targets to your prospective investors, then let us know how that works out.