3 ms·

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!

• 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.
      • christofd 17y ago
        I can certainly see your point. But yes, I do blame an entrepreneur setting a bad example trying to grow too quick and burning through lots of cash. I inherently do not see this as such a big admirable success story. Further, I strongly object to the sensationalist reporting of such business magazines. Why don't we hear more about the quiet guys slugging it through and building something lasting? Also, I don't fancy yet another beverage product on an already overcrowded consumer market and the tendency of the business owner to believe that he can only succeed by growing big fast. Why doesn't he believe in the strength of his product. If it's good, people will buy. He inherently believes people only will buy it if it's big. And that's wrong with the picture. He has not created any new knowledge on how to make beverages and trained specialized staff accordingly, which would create positive skill feedback loops in the region of his plant. He's buying juice wholesale and outsourcing production to a local plant that makes everything from Coca-Cola to beer. This is just all marketing: take two kinds of juice, mix em, carbonate it and market the crap out of it. Where are the jobs created out of that? And I don't think he has created a viable plan for young people to follow his footsteps: the plan was to go big and he went bust. His only lasting legacy seems to be staff turnover. Further, I suspect flaws in his management style, because it seems like he's putting out fires constantly. Something's not right here. I don't think the world needs more entrepreneurs like him. He's clearly a very financially motivated guy, who doesn't believe in growing a great product organically. We need more great product companies instead! (Ironically, "the switch" does sound like a really neat product: 100% healthy juice) Historically, companies that had product experts (engineers) in management have outperformed MBA run companies many times over. The lesson here is: build a great product and the rest will follow in time. I have the stats to back this claim over a 50 year period (study done at MIT comparing MBA-run companies to engineer-run companies). Yes, I don't want to ever again create a business plan and pitch to VC's based on the growth curve of the Internet. What a f*ing joke. But that's my mistake.