Mattermark (YC S12) to shut down after selling to FullContact
techcrunch.com
techcrunch.com
Take, for instance, this post, in which she seemingly boasts of the company’s massive burn rate: https://medium.com/@DanielleMorrill/is-my-startup-burn-rate-...
Or this post, in which she shames a number of “Zombie Unicorns” (including WeWork): http://www.businessinsider.com/mattermark-names-troubled-uni...
Why be so publicly hostile and truculent?
Also, it appears that the CEO lacked focus: according to her Twitter profile, she’s a VC and a very prolific angel investor. I’d be upset as an employee of the company receiving $0 for my common stock that the CEO was effectively hedging her Mattermark bet with a number of side gigs. The CEO’s job is to be singularly focused on the success of the company.
This is the stuff that gives SV a bad reputation- the sense of entitlement. That of course we deserve “others people’s money” to do with what we please and should be praised for it.
This is real money @sm !!
Unfortunately, people have made that into a marketing strategy -- I'm not sure it is something to really hold against Mattermark in particular.
Dear Mattermark Common Shareholders,
I’m reaching out to share some great news: Mattermark
is being acquired by FullContact!
... lorem ipsum ...
Common stockholders will not be receiving anything in
this deal (cash or stock).
"We are happy to have found an exit for our shareholders"
But not all shareholders.
1. Their database is terribly outdated. A company that was funded by X two years ago did not show up in a search for companies funded by X.
2. Their "show contact info" feature wasn't working. That's not an easter-egg feature; that's the feature they're selling!
After several frustrating minutes I thought, "People pay for this?!" Evidently not.
To be clear, I don't wish this on anyone. I have friends who've had to sell their company for peanuts, and I had a pleasant chat with the Mattermark CEO just recently, but what do you expect when you enter a crowded market with a product that isn't delivering on its basic promise?
"I tried out this product. It had this bug I noticed that affected me a lot. By extension, this entire company will fail."
That's like saying, I went to a restaurant. I noticed the silverware is a bit dirty, thus the shop will close down.
Usually the commenter is someone who works in a specialized day job. Like an engineer :) Or silverware washer at a restaurant. Someone who sees and handles a narrow part of the picture.
There are many possible reasons why Mattermark closed down. I am sad to see it. But it is probably not due to a specific feature or bug. There are probably reasons beyond the description in the article that led to the disappointing outcome. I hope Techcrunch will be able to find the reasons behind this so other startups can learn and avoid future tragedies :(
> We’re told that it was hard to convince people to pay for the business intel in a competitive landscape that includes Crunchbase, PitchBook and CB Insights.
It's that it's hard to convince people to even buy pizza. That's a much bigger-picture issue than saying "pizza not fresh, so they will close down".
Put another way, making the pizza fresher, is not going to substantially improve the situation. Fixing the issues you saw (e.g. update the database to be super fresh, fix the contact feature so it is 100% working) will not get Mattermark out of it's current situation (unfortunately)
Data business is hard for a few reasons:
1. Data is a commodity until it is not. People's contact information is a 'done to death' problem but not solved yet (and probably not solvable completely)
2. Data is capital intensive
3. Data businesses (and the modern ones at that) are more annuity businesses and less like SaaS. Monthly recurring patterns take time to emerge and you need investors that understand this dynamic. They will if you prove that your core hypothesis works and customers are buying more (if not following a strict monthly pattern).
4. You need to have enough money and execution speed to prove your hypothesis. Unlike software where customer development and execution discipline can help you launch a good product, in the data business you need to stitch partnerships early on with data sources. That's not easy.
You tried. Again, I'd love to read your reflections on what you could've done differently.
+1 to a reflections blog post! Hope you succeed in the future--the best is yet to come.
Also, I’ll miss the newsletter
Back in April when I was looking for jobs I did get the chance to interview at Mattermark, though. Kevin Morrill and the rest of the engineers that I met all seemed very friendly and bright (they ultimately rejected me, which is good because [1] I would have accepted their offer, and [2] I ended up joining Flexport, which I love). Even at the time I got the impression that they may have a tough road ahead, but I'm sorry to see that things turned out this way.
For a number of reasons, I believe this.
* You don't get the rush of external validation
* You are heads down trying to make things better at the company and blog posts don't help (enough)
* It's hard enough to share bad newest with employees and investors, who wants to share it with the world
* You may fear scaring off customers ("I was going to mattermark but then they seemed like they were going out of business so I used competing project")
Say what you want about the company, product, and executive leadership, but for a time Mattermark was a fairly influential organization in the Valley and elsewhere.
Mattermark can probably serve as a case study of how good written content can really bolster a company's credibility and positioning in a market.
> The deal additionally included a stock transaction
Tough outcome.
Typically, founders and early employees are issued only common stock, while investors are issued "preferred" shares. Unless the founding team invested their own capital alongside the angels and professional VCs involved in their rounds, it's not likely that they were preferred shareholders.
Preferred shareholders are first in line to get cash payouts after liquidation. Common shareholders are able to access cash only after all of the preferred shareholders have been paid.
I wrote a series on the subject I could share if you're interested.
There's something especially difficult about a business like this. It doesn't feel like a finished product on offer, but more of a raw material for making of it what you will.
Because when you look at their home page as a potential end customer, there isn't much in the way of real benefits on display. In fact, the main "features" are:
-Automatically enrich leads in Salesforce
-Customize your experience with API
-Export Mattermark data to spreadsheets
-Right Data. Right Format. Right now.
3 of those 4 are purely meta-features around accessing the data (which is presumably the core feature), but there's virtually nothing about why you'd want to or how to make it easily actionable. They're saying "here's a bunch of data and a bunch of ways to access it. Go make it do something for you."
That's a tough sell because it doesn't answer an immediate need wherein you simply sign up and a problem is solved. Even if you are able to connect the dots WRT how you might make use of the data, you're now left with the task of building something on top of it.
I'm not sure how many customers can do that. Seems the only way to make it work is to pull in very tight partnerships to build finished apps in specific verticals, through which you license the data/API.
Ps. Not you.
This is disgusting. Remember that this letter is:
1. for common shareholders who will get absolutely nothing out of this deal.
2. yet it's asking them to sign so that they can go ahead with the deal.
3. And to top it off, "I'm reaching out to share some great news"? Are you kidding me?
To be clear, I support all entrepreneurs regardless of what ridiculous business model they're trying to pull off. I even think Magic Leap should be given a benefit of the doubt and they may be able to pull it off.
Also I think it's great that silicon valley celebrates failure. Without this type of environment it's hard for founders to shoot for the stars.
That said, people have taken this too far, and it's become ridiculous. It's no longer about it being ok to fail, but it's about "I failed, so what? I'm the genius and I totally deserve it and you just paid to tag along."
I totally despise bullshit like this. If you lost, just say you lost. And say sorry. Don't bullshit people about how "it's a great news that I'm asking you to sign this letter so that other people--not you--will get the money you actually deserve".
Though I suppose, perhaps, if those common stockholders are employees who want to keep their jobs rather than be laid off, that might be one reason, though an individual wouldn't learn whether they'll be retained until a later stage of the acquisition.
Well, if the reader is an employee holding Common stock, and the employee signs just to keep her job, then she would have signed regardless of what the letter said anyways.
Basically, it's hard for me to see a Common stock holder reading the letter, and then going "Ya that makes sense, I'd buy this. Let me sign it now."
Be human, chill on the assumptions. Startups are hard and you don't have all the data so Danielle deserves the benefit of the doubt, not some vaguely related ranting about responses to failure.
But please enlighten me. What kind of conversations could have possibly happened before this letter that could justify saying something like "You invested money (or time) and we've just lost all of it. You will be getting $0. But I need you to sign this so that other people CAN get some money. Oh by the way, it's a great news!"
Most common stock holders are probably former employees (whereas preferred stock holders are VCs). At this point I'm sure they didn't expect much out of this anyway, but they were once people who truly believed in the vision. If I were one of those people I wouldn't be happy to hear this fake facade about how this is a "great news". Phrases like this you should only use it for PR you send to Techcrunch, saying you had an incredible journey. But not to former employees who made a lot of sacrifices. To those people you be honest.
This reminds me of when my father's employer went out in the wake of the 1999 bubble popping. A couple of years later, the CEO sent him a very nice email saying "hey, mind signing over your stock please" and he was about to do it. I thought it was fishy that the ex-CEO want something worthless back, so I called my uncle who invests in SMEs on the side of his job and he agreed that we should ask for something back in return.
So we asked, and got, a few thousand for his stock, without a whisper of complaint from the ex-CEO (guess we asked for too little).
No what they can leverage from doing that is a different story--blood from a turnip and all that. But, there's nothing that says they must take the deal as offered.
Also, the claim that the amount paid would go towards company wind-down makes you think that plan would be negated through a drag-along, as some of the cash would "leak" to common holders.
In fact, it's actually curious that they are the acquiring the company in earnest vs. just acquiring its assets. Not sure why they would acquire the liabilities to the tune of $500K just to shut-down. Just pay for the assets and let the company use the funds to shut itself down. But, who knows? Maybe there's something (like paying customers) that they are finding difficult to transfer as an asset for some reason.
Remember -- common earned a salary, and judging from the burn, a good one, so it's eyes-wide-open in these things. Why hold a grudge and make it difficult for the company to move on?