Management · Leadership

Should founders air their complaints on social media?

Anonymous

April 13th, 2015

I saw a tweetstorm/article that Lane Becker, Cofounder of Get Satisfaction released last week about how his company sold (he left/was pushed out many years ago) and he and his cofounders did not find out or get a dime. And he was not happy about it. On the one hand I appreciate his honesty in world where everyone just says "congrats" on any sale. On the other hand, it seems a bit immature to air your dirty laundry on social media. How do others feel about this tactic and whether or not it's appropriate?

Christi Muoneke Corporate Counsel | Advisory Board

April 13th, 2015

I see this as a great public service to other founders. Sometimes the highest priced offer/valuation isn't the best deal.

David DeMember Co-Founder at Toi

April 13th, 2015

Lane's a good guy and sadly his story doesn't seem uncommon.  I don't think "airing dirty laundry" is an adequate way to describe the situation.  Most people seem to think raising money is just about how much can you get. Ironically, the season premiere of Silicon Valley addressed this last night.

Lane Becker Director of Products & Startups for Code for America

April 13th, 2015

Hiya, everybody. I wish I had a good answer to this question, but despite being its genesis, I really don't. I have no idea whether it was a good idea or not. Time will tell, I guess.

I can say that the firestorm of attention was unexpected and has been extraordinarily stressful. I wrote the first couple of tweets because, when the first "Congratulations!" hit my phone early in the AM-from a good friend, no less-it just sucked, and I couldn't stand the thought of spending the whole day fending off people who wanted to celebrate me on a day when I just wanted to hide. Did not expect the level of attention this whole thing has gotten, and I am officially weirded out by people who spend their days trying to get this kind of attention on social media. 

I do really hope the story was instructive for other founders, and if this means the next time a board is selling a company for less than they'd hoped and washing the common stock out, that they'll remember this day and instead give common at least a few pennies on the dollar in consideration. That would be a big win.

Also, Michael, correct: Liquidation preferences did us in, and no hush agreement. Clearly. :)

Alexandra Damsker Innovative blockchain marketplace

April 13th, 2015

I think Angie Hicks of Angie's List had 1.5% when they exited.  Not exactly the same as Mark Zuckerberg's story.

Moral:  know how much you'll need to get to exit (or at least be in the ballpark), and work your way backwards when planning fundings.  Keep that cap table as clean as possible, or you'll get diluted out.  

In terms of disclosure, agree with John Seiffer - tone (and discretion) are key.

Kind regards,
Alexandra

Benjamin Olding Co-founder, Board Member at Jana

April 13th, 2015

There's no right answer here: social media is personal branding.  Do you want to be edgy, drop f-bombs and "tell it like it is?" There's an audience for that who will love you.  Do you want to be the connsumate professional who always says the right thing no matter the circumstances?  There's an audience who will love you too.

No one who has poured their life into a business is likely going to judge him, no matter what he writes.  I think describing it as a "tactic" is to not quite understand what he's likely wrestling with emotionally.

Kristy Sammis Founder, Chief Innovation Officer - Clever Girls; Entrepreneur, Author & TEDx Speaker

April 14th, 2015

I'm grateful for Lane (hi Lane, nice to meet you) because I'm grateful that there's a voice from the "other side."

Frankly, it's exhausting living here in/among SF and The Valley, where the ONLY lauded companies are those that seek and get funding (no matter how overvalued), and then exit (no matter what the loss). 

In my personal experience, being a successful "lifestyle" business around here simply isn't interesting or credible. I hope that this "firestorm" breathes new life into the notion that not all businesses need, want, or should be dependent on VC. 

And for what it's worth, the advisors we met with early on who were most ardent in their opposition to our taking VC were VCs themselves.

John Seiffer Business Advisor to growing companies

April 13th, 2015

An investor I know said that after the A round - subsequent raises only dilute the founders. True they also give the company rocket fuel - the idea being founders will own a smaller piece of a bigger pie. But it's hard to grow the pie big enough and fast enough. And with liquidation preferences the valuations of later raises aren't always true. Not that they are false but with liquidation preferences and participating preferred, later investors often take less risk than the numbers would indicate at face value. 

+1 for bootstrapping. 

John Seiffer Business Advisor to growing companies

April 13th, 2015

I don't know the tone of what he wrote. If it was vindictive or personal then perhaps unwarranted. But if informative then great. People need to hear that side of the story.

As an angel investor I've been pitched to by serial entrepreneurs with exits in their history, who didn't get much themselves. 

Alexandra Damsker Innovative blockchain marketplace

April 13th, 2015

I think it's not a great idea.  While I complete understand the motivation, all communities are small, and eventually you may want to be involved in another startup - investing, operating, or even as an employee.  Tempers are short, but memories are long - and the internet is forever.

As an example, remember when the the Reddit employee tried to do an "I was laid off" AMA, and YISHAN WONG came in and blew him out of the water on reasons for being fired?  Horrible for the employee, an HR nightmare.  While the parties may want to forget this, it's forever searchable (thanks, Google!), and juicy enough to hold interest for a long time. 

https://np.reddit.com/r/IAmA/comments/2iea97/i_am_a_former_reddit_employee_ama/cl1ygat?context=3

Bad idea.  Just bad.

Kind regards,
Alexandra

Julien Fruchier Founder at Republic of Change

April 15th, 2015

Thank you Lane for sharing your story. It's how we learn. 

Lessons from such stories and my own personal experience raising funds for three ventures: 
  • bootstrap as long as you can
  • don't hand out equity like it's candy - guard it like the incredibly valuable thing it is
  • be careful who you get into bed with and on what terms
  • funding is a marathon not a sprint - don't give up too much too early or you'll run out of gas before the finish line
  • having an exit strategy is akin to planning your divorce before you get married
Entrepreneurs revere people like Zuckerberg, Jobs and Gates for what they built but bother to study how they go there. In addition to the technologies they created, they were all extremely astute in engineering financial structures that ensured they retained control past their formative/funding years.