Secret Shuts Down
techcrunch.com
techcrunch.com
Secret cofounders David Byttow and Chris Bader-Wechseler were both veterans of Google+. Byttow, in particular, I recall being quite well-respected as someone who got shit done, quietly and efficiently, by the rest of the G+ team. I didn't know him personally, but I had a few professional dealings with him where I found him to be a straight-shooter that was remarkably effective and helpful. When I heard of the product concept for Secret, my first thought was "Woah, somebody's finally decided to take the other side of the stupid Real Names policy and build a social network that's completely anonymous."
Apparently that doesn't work either, and when you do that, people hate you just as much.
My take-away from this is that social software is remarkably hard, and that whatever you do, people will hate you. The social sites that survive - like Reddit, Flickr, and Facebook - are those that very carefully balance everyone's competing desires, making just enough changes to keep everyone slightly disgruntled but not enough to leave the site. The ones that die - like Secret, G+, LiveJournal - are the ones that either do nothing to moderate or that introduce heavy-handed blanket policies. (4chan, as always, remains inexplicable; somehow it is still going strong despite being a cesspool. Maybe that's the whole point of it, though, to be the Internet's honey pot of bad behavior.)
(There are certainly parts of it that are risky clicks though)
Maybe it's just me - but I think the irreverent self-aware toxicity has it's advantages.
4chan's /b/ is seen as "the cesspool" and nobody tries to make it better because nobody wants it to be better. It just needs to be that place where the EMT that spent his day dealing with life and death can relieve his stress and let go of what's plaguing his mind with "lol, tits or gtfo"[1].
Because in the end, it's all a big joke.
1: Can't find back the exact screenshot were a /b/ user was saying this, sorry.
The reason 4chan has survived has been that it promotes anonymity and hence genuine expression. After dealing with it, for a while, you get to kind of know different types of people. You can go to a containment board and find people that are genuinely, for example, homophobic and antisemetic with complete seriousness. They compete for space with people that are just trolling, and both compete with some genuinely level-headed people. It's fascinating to watch.
Meanwhile, in other boards, you'll find people snarking over guns (/k/), bicycles (/n/), anime (/a/), otaku and general Hikikomori behavior (/jp/), making things (/diy/), and on and on.
Because everything is anonymous and the boards move so fast, there's no advantage to the sorts of politics and forking you see in Reddit or whatever--instead, you just develop a sort of hang-out culture and occasionally interact with invaders. It's fun.
Unlike other more oppressive moderation schemes (cough reddit hackernews cough), 4chan just accepts as cost of doing business that people are going to want to be shitheads.
So, you have boards specifically for people wanting to be shitheads. Over time, that becomes board culture, and often raises to a level of self-parody that they become easy to spot when they leak. Imagine, if you will, an island whose sole form of humor is hyperbolically racist, sexist, classist, or materialist. If you can contort yourself into that headspace and engage the art on its own terms, it is a never-ending source of creativity and amusement.
The best part is, if it shows up somewhere else, you can just tell them to "go back to <whatever>", and they don't get a persecution complex about it, because they're not being censored.
The idea of individually singling someone out to make their lives miserable, for something stupid they've done, seems anathema to 4chan's culture. Or at least what makes 4chan's culture work. I see no problem with 4chan's mods removing dox.
You're an idiot, so are we all, but people don't forgive as easily as they should.
So have an upvote, make another post, and try again! Stick around Giorgi.
Some of the very large subreddits such as /games and /askscience have actually retained very high quality. They just require very strict rules and heavy moderation.
Just compare the frontpage of http://reddit.com/r/gaming with http://reddit.com/r/games — granted one is about twice as big as the other in terms of active users, but /gaming has been full of low-quality submissions since before it became a default subreddit.
It just comes down to having proper rules and enforcing them.
Now, reddit and 4chan are very different in the regard of perceived quality. If you heavily moderate a subreddit the low-quality submissions will for the most part only be viewed by those that browse the queue of new submissions. This isn't really true with 4chan since the low-quality submissions that are buried will still be viewed by everyone (although this kind of depends on if you've configured the order of submissions).
As an interesting aside, you can actually significantly impact what submissions get buried in a subreddit with very few votes since there's not a lot of people that browse the new-queue.
http://www.journalism.org/2014/10/21/section-2-social-media-...
If the numbers there are right and only 4-6 million people are using it as a social network it isn't very surprising that Google would be "giving up on pitching Google+ as a social network"
[1] http://www.businessinsider.com/what-happened-to-google-plus-...
Every time I want to create a new playlist, I create a new G+ profile, then delete it immediately afterwards. It is tedious. I'm sure many other people, when faced with roadblocks like these, create a do-nothing profile but don't bother deleting afterwards.
Or don't use playlists and find other websites.
Just sayin'..
> My take-away from this is that social software is
> remarkably hard, ...
> and that whatever you do, people will hate you.
In particular, successful communities often have places where similar members can congregate and effectively shun people who don't fit in. Call it a clique, call it a subreddit, but really its about finding a mental space to be.
Smaller communities could make for more specialized content, and everybody living on the edge of a bubble means theres plenty of opportunity for valuing middleman-style culture sharing (AKA reposts.)
So really, all of the two things that I suggested are things that reddit doesn't do.
http://www.ribbonfarm.com/2010/12/07/socratic-fishing-in-lak...
The relevant point is the dynamic balance between "plazas" (highly accessible areas to anyone) and "warrens" (areas accessible only to an accultured in-group). "Evaporative cooling" is the phenomenon of the best contributing members "boiling off" and leaving due to frustration from excessive noise, flame wars, etc. From the post:
"Warrens are like rabbit warrens: low global visibility, highly personalized corners where small groups can aggregate/self-segregate. Plazas are like grand public town squares with lots of global visibility. Warrens are maze-like: it is hard to break out of your current corner, and it is easy to get lost. You couldn’t get lost in a plaza even if you wanted to.
[...]
'Warrenizing' a site undeniably slows evaporative cooling, by allowing groups to self-segregate. On Sulekha, we had a warren of individual topic boards, and a firehose plaza that consolidated the entire discussion stream at the landing page. When flame wars got too hot, we used to simply turn the plaza stream off, so people were forced to go directly to individual corners. Things would immediately get quieter. Groups would get sequestered, and therefore less likely to leave because of unpleasant activity elsewhere that they didn’t like."
Over a period of time I learnt to ignore trolls and baits
I would be surprised if the founders get to contractually retain the entire $3MM taken off the table in that funding round. It is possible that this is the case (and so maybe not so surprising) but given the often unique terms in startup funding, I would be surprised if this were the case here.
When Secret came out, the addiction bug bit me hard too -- it was _extremely_ compelling. I posted. My friends posted. Everyone was checking Secret obsessively. People were "communicating" with their exes (or so they thought), people were guessing who was posting what. It was fun. It was interesting. It pulled some emotional heartstrings (I had a few interactions with "friends" who I was pretty certain I would never have spoken with in real life - i.e. bad breakups, etc.)
Then it took a nasty turn. There was gossip, there were attacks. They didn't get too bad, but the tone changed.
Then they released the Android app. More users signed up. It started to take on a high school feeling ("omg my crush winked at me"). It got more popular.
Then, at least in SF, it started being almost entirely about gay sexual fantasies. Friends in my circle started using it less, so it got less interesting to me. Eventually I stopped using it when nobody I knew was posting.
After that, I stopped following. They did some massive redesign which seemed terrible, and I didn't really pay attention after that.
In the end, it was a niche fad that had particular appeal if you were a tech person in SF. All the gossip - as taboo as it was - was interesting and compelling (I admit it!). It was a fun, exciting, interesting fad, but it succumbed to the sort of thing fads usually succumb to -- time.
The problem with these sorts of things - flash in the pan community-specific fads - is that they're _incredibly_ hard to sustain, and even harder to monetize as a business. I certainly understand the instinct of VCs to throw money at a hot app experiencing meteoric growth (and I doubly understand the response of the founders to take both the investment and the secondary $), but it was a longshot to start with.
Frankly, I admire them for giving it a shot, recognizing the reality, and returning the leftover capital. Well and rationally played all around, me thinks.
And all of that, from what I recall, in the course of maybe three months. It wasn't hard to predict the decline -- the Greater Internet Fuckwad Theory has been around since what, 2004?
Maybe the investors who dump money into this kind of flash-in-the-pan stuff ought to wait a few minutes before signing the term sheets. But, oh yeah...because we're in a white-hot investment market, the Fear of Missing Out (aka Fear of the Greater Fool) doesn't let you stop to think.
So yeah, VC's do take heat for investing too early, too late, too much and too little. It isn't a contradiction -- it's what people do when they act as a herd.
The herd behavior comes from everyone having more-or-less the same metrics for what constitutes success: people using your product. If that metric isn't evident, you fall back on the fundraising strategy for people who don't have traction: try lots of VCs and hope that one buys into your vision enough to invest. If the next better metric - lots of revenue - is evident, then it's too late and chances are that someone else has already invested, or they don't need investment.
You can't explain things like (for example) Meerkat raising a big round and cratering the very next week without considering the importance of hype. Meerkat and Color and Secret are walking out the door with big checks while lots of other entrepreneurs with great metrics are waiting for their fifteenth meeting...because they're not in the tech gossip rags.
Say what they will in public, I'll bet you that Meerkat's investors are wishing they'd sat on that term sheet for a couple of days.
This happened in Boston as well. It was really odd how rapidly it changed from a mix of different types of posts to nearly all gay sex posts.
I wonder if that won't flow over to Yik Yak now that Secret has shut down?
Yaks can be raunch as all get out, but there has to be something for the average person to relate to. If you follow it closely, you'll see there are many posts made while the author has lost their mind with hormones, but they're voted off in about 120 seconds.
It sounds like the moderation was working for the good of the community, even if it meant some individuals (such as yourself) suffered for it.
I think there's definitely room for this type of service and the original Secret was fairly well-executed.
Needless to say, I wasn't a fan of the app afterwards.
Makes you wonder if they didn't spread their net too wide too quickly. Perhaps "Gay Secret for the SF area" might have taken off -- and given the team the chance to tweak/nail the experience.
when you mention the injection of android users, aren't you really talking about inner city high school kids using the app on boostmobile and metropcs phones?
1) A social app like this, which is essentially hype-based and self reinforcing. Success seems entirely down to virality and adoption, followed by monetization.
2) Some very vertical market focused SAAS offering which can be developed with minimal outside capital, own a niche, and where capital can then be applied to expand to other verticals, accelerate the sales process, etc. (Say, a scheduling application for vets)
3) A capital intensive project in a well understood field (IAAS, hardware, lab stuff, etc.)
4) Entirely new technology deployment (not discovery, which tends to be hugeco or lab, but first commercialization)
Clearly there are some commonalities, but there are a lot of areas like employee vesting periods, how you recruit, etc. which probably should be different in these different kinds of companies, but tend to be the same.
Secret raised their B last July at a post valuation just over 130M (http://i.imgur.com/jNXw5PZ.png). They had some major investors backing them up, and then the hype train just... stopped.
I remember so many people being so high on it when it launched, with several friends all raving about how fun/addicting it was, then just poof it disappeared from conversation.
Hearing that the founders got some cash off the table (article from last summer - http://www.businessinsider.com/secret-founders-pocket-6-mill...). While I always thought that seems like a good thing, I can't help but let my mind wander a bit as I know if I were given a nice chunk of change like that so early, it might be kind of hard to keep focus.
Taking money off the table in a B makes sense for the founders, and I can't blame them for leveraging their situation.
Ultimately this falls on the investors for biting on hype, and not having a deeper understanding of the product (and it's potential)or the founders (and their potential).
edited for clarity.
Here was the intended use of the $25M: "The funding will be used to implement two new features, a Facebook login and the ability to follow posts on a certain topic". This is what is wrong with Silicon Valley today. An afternoon project for a single developer gets $25M from investors. Please, someone give me just $10M....I've already implemented Facebook login for my apps.
https://www.google.com/finance?q=NYSE%3ABOX&fstype=ii&ei=IQp...
So go for it!
$25M.
For TWO features.
Hell, ignore my previous offer. I'd have given them a 92% discount and done that for a cool $2MM.
You're already asking for a price so low you might end up barely scraping $100,000 an hour.
The purpose of the money was to grow the company. For a business < 1 year old it's impossible to predict what they'll need, so they just fill in the blank with some random sentence that no one cares about.
it's very easy to believe the worst of others. but it's beneath you.
Pure speculation, but I think trolls/frauds took it over. I say this as a Secret troll myself. I knew the odds of the data (linked to my FB account) becoming public was too high to post real secrets, so I used to just experiment with what got people liking or leaving comments instead. Which was amusing.. until I could tell a lot of people had started doing the same. So I stopped using it.
The post also includes the phrase "incredible journey" verbatim.
> Companies go broke all the time. It’s unfortunate and it may mean a service you love will close. But some things just don’t work out. [...] This is what is galling. A company that can afford to pay millions for some new staff but not for what those staff built. The people who used the service, and invested their belief and time in uploading photos, or forming friendships, or logging data, are left to find new virtual homes while their former hosts enjoy a nice (if possibly delayed) payday.
-- http://ourincrediblejourney.tumblr.com/post/89180616013/what...
Although admittedly, from an end-user's perspective, the effects are the same no matter the reason for the shutdown.
I can't be sure, but it seemed to me that the "upvote/like" mechanism boosting posts to the top (with no validity required) turned Secret into an enormous, "Who can say the most absurd clickbait thing" contest. It got tiring, and I deleted the app.
Having talked with a few other people about Secret, they said the same thing.
It was simply not compelling content, so about two weeks in I deleted it.
I wonder if there was something in the marketing or the initial group of people that created some zeitgeist that eventually killed the idea? I'd be interested to know if they actively made some effort to try and get out of that rut.
Although assuming muted users continue to post controversial things, in the long run it may just lead to less reporting.
Recently, we did some analysis (sensitivity, type, potential audience and linguistic characterists) on the content posted on anonymous social media like Whisper [0]. Most of the posts were about Confessions, Relationships, Meetup and QnA/Advice.
[0] http://socialnetworks.mpi-sws.org/papers/anonymity_shades.pd...
The key difference between anonymous vs non-anonymous (or pseudonymous) media is lack of unique identities and/or profile information.
This seems to be something of a meme.
The Bay Area is a truly unique and bizarre place. People are incredibly busy and tech-savvy, and they're willing to spend way more on minor conveniences than people elsewhere.
It seems like lots of companies raise on their explosive growth in and around the SV community. It may extend to people with similar demographics in other cities, but it's still a niche.
I'm also thinking of all those gourmet snack-delivery companies, laundry-delivery, etc. Those might make a few million in revenue some day, but they're never going to have high margins or universal appeal.
At first with the start-up community that's very connected to SF used it for internal gossip and anonymous whining and dissing.
Then it expanded naturally to young creative types (developers, designers, bloggers, journalists, etc) who are connected to the start-up scene, and became big in the gay community in Tel-Aviv, that highly overlaps both groups.
And then the mainstream media started raving about it, and it exploded with the masses and especially teens. At this point it just became a cesspool of online bullying for teens, and I lost interest in following its path. There was even a proposed law banning it in Israel or something (http://pando.com/2014/08/28/israel-becomes-latest-country-to...). But seeing this expansion graph over a period of 2-3 weeks last summer was fascinating.
pg says that great ideas often look like bad ideas. But I think it's also true that bad ideas often look like great ideas.
I would love to see their series A and B pitch decks -- how were they able to convince investors to hand over so much cash with no serious monetization strategy and nothing more than a temporary download spike? Add that to the fact that they were able to take 6m off the table. I can't see any rational investor thinking Secret for Business was actually going to bring in revenue? Props to Mr Byttow for raising the money, building out a great product, and returning the capital when he ran out of options... Can't wait to read the post-mortem.
Minus the $6M the founders took off the table?
If they keep it.. if ever there were a case for blacklisting founders, this is it.
It is definitely NOT cool to pull a move like that. You want to cash out early a little because you've been boostrapping, ok, but if you then bail on the company and shut it down within a year, then you start to look like a fraud who knew the company was in trouble and took advantage of investors.
It's always controversial, and never more so in my memory than here.
In fact, when executives sell a bunch of stock right before public companies announce bad news or go bust it often warrants an insider trading investigation.
It would be nuts to try and claw back that money. The founders surely had remaining equity which is now worthless, everyone is taking a hair cut.
> In fact, when executives sell a bunch of stock right before public companies announce bad news or go bust it often warrants an insider trading investigation.
They didn't just do this, the last round was in July 2014. It was a flash in the pan.
Secret isn't a public company. Secret's investors are insiders themselves.
I'm not close enough to Secret to know whether the system functioned as intended here. It's possible (and suspicious, given the timing of the rounds and subsequent redesign that trashed their brand) that Secret rode the hype machine, cashed out at the top of the Secret bubble, and left investors holding the bag. But it's also possible (and likely, given public statements made and their hiring behavior) that this was a good-faith investment by VCs seeking a return in a company that honestly thought they were on to the next big thing and cashed out so that their risk-tolerance would be aligned as they shot for the next big thing. In that case, the founder cash-out functioned exactly as intended, it just didn't have the outcome anyone was hoping for.
2. It is ridiculous to assume they pulled any move. Startups are a high risk gamble and the VCs who put money in them know it better than anyone else does. So they didn't pull a move on anyone.
3. Let's say a company raises $1M on a $3M valuation. Then in one year the valuation goes up to $300M. Would you be calling for blacklisting of those investors? Because by your logic, they should know the company was going to be so successful and should have given the founders a better deal.
However, founders who would pocket $6M from a not-even-close-to-profitable company are probably not good founders, or they don't believe in the company. Either way, their behavior doesn't inspire confidence.
Most founders are extremely protective of their startup. It's their baby, and their livelihood. They'll do anything to keep it alive. Most "poor"(<$5M in the bank) would prefer a 'safe' acquisition to gambling on being a world changer. A good accusation can change a persons life forever $10M verses $100M? Who cares? Either way it's a lifetime worth of fuck-you-money. But investors what entrepreneurs to "go big." So if an investor finds a company and team that they think has a chance of making it they will give the founders fuck-you-money. It says, "ok, your safe, nothing can hurt you. Now take the chance of building a company that can change the world!"
When you see a founder take a big chunk of cash from an early round, you shouldn't think, "they don't believe in what they're doing." You should think, "These investors (who know these founders a lot better then I do) think that they are so awesome, and have such a high chance of doing something transformative, they are basically giving them enough money that they will never have to worry about money again."
That sort of thing in the public markets would prompt an SEC investigation for insider trading (despite it being "their money"). In the startup world it comes down to, these are not folks investors should be trusting.
Or "trust these guys: if they fail, they won't bullshit you and just give you the money they have remaining back."
It's all about perspective. Luckily, most investors don't think like you. Ones that do don't survive that long in the business.
I'm the sort of founder that thinks it's my duty to return value to shareholders. I should make money when my investors make money. I would argue that is the only perspective that survives the long term in business. Riding hype waves to enrich one's self without producing real product, that's not sustainable.
I know we're all founders here and would love to get the kind of deal the Secret guys negotiated (or Groupon, etc.). But it's not healthy for our industry. Basically the arguments in support of these guys is, well the investors knew what they were getting into. But that could be said for any scammy move by a founder. If they're trying to "do the right thing" they should return all the money to investors, minus a reasonable salary.
You can be a founder that thinks it is your duty to return value to shareholders and still take money off the table. In fact, there are situations where not taking money off the table hurts your shareholders.
Example: you're a poor founder with $400K in loans and 0 in saving, you're running a startup with good traction. You get a $20M acquisition offer and you accept it thinking it lets you clear debt and not be super poor anymore. Problem? Your investors barely get their money back so an exit you consider successful is not that successful of an exit for your investors.
Now imagine the investors let you take $1M off the table to clear debt and get a little comfortable. Now when the $20M offer comes in, it is easy for you to turn it down because you aren't in debt and you have a decent life. As a result, you end up building a $500M company. Your investors come out ahead because the equity they got for $1M cash you took off the table made them $10M, not to mention it gave you the mindset to turn down the $20M acquisition offer.
For many funds, they would rather you fail trying to make a company that is valued at $500M than be successful in building a company that is only worth $20M. Letting founders take cash off the table can help founders think as big as their investors do about the max potential of the business.
As Mark Suster put it, "Not FU money, but 'feed the family' money." What these guys got was FU money.
And the definition of "money off the table" is "keep it if things head south," so it's pretty hard to begrudge them for obeying the terms of the deal.
And bailing while returning a significant sum to investors takes courage. It's easier to sit in board meetings and pound the table and tell them how you're going to turn things around, even if you don't believe it.
I don't know if that's true. They have $3 million in the bank "off the table" money -- given that, it's probably easier to chill for a while and then start another company than waste time on a company you don't like anymore.
Hell no to this horrific and toxic idea that we should blacklist anybody who sells equity and then fails.
Can you please identify yourself, so we can all be well-informed that if we go into business with you, we're going into business with somebody who believes in the public shaming and blacklisting of those who take chances and fail?
You're not cool dude. Not cool at all.
And I say that as somebody who always thought secret was disgusting and value-destroying.
When doing FU calculations, you have to figure out how much you can earn from investing it, then factor in cost of living increases over the next 40 years.
Put it another way, if they invest and get 4% annually that's like earning a salary of 72k. Good luck living on that in SF with rent increases. (Starting salary for a new CS graduate at bigco in the Bay Area is like 105k).
With that said, with Odeo, one thing that went down in history books is how Evan Williams graciously purchased the shares out of his personal fortune, thus making every investor even.
...oh, right, only founders get to do this. Everyone else (who had <1% equity to begin with) gets zilch.
Here they are going home and saving some money too. Would you have the same view if Secret went on to make billions and require the Investors to pay the equity back to the founders. 6m could have been a billion there.
The only negative is if investors think the founders lacked imagination to put the money to use with a innovative Pivot.
Maybe there was no pivot in sight and then the best option is to return the rest of money and keep the 6m money the Investors gave up earlier for their big bet.
In fact, the investors probably let the founders take some off the table precisely to prevent the cashout. I suspect that Secret had an offer in hand from someone, but the investors wanted a bigger return.
The problem is that the little people who also had stock/stock options never got the opportunity to cash out and they would have almost certainly made the same choice as the founders.
Why did the investors allow the founders to take cash off the table? To align interests. Meaning, to swing for the fences instead of making safe, conservative decisions and building a lifestyle business that would minimize the chance of shutting down.
With the money off the table, the founders would have the freedom to try risky things, to manage the company such that the chance of failure was very high but the payoff for an unlikely success would be even higher.
The company shutting down is exactly the outcome everyone expects to be a likely outcome. The investor has a portfolio of such investments, and does not care that the founders cashed in. The one hit they get will pay for all the founders they pay out.
In fact, investors won't want to blacklist these founders. The message that would send is, "even if you get to take money off the table, you should still manage conservatively, because you will be screwed for life if you have to shut your company down."
Investors do not want founders to be terrified of shutting down.
Curated! #help
I have always been curious about this part. What are the reasons you think one can not monetize anonymous messaging?
VCs backing startups whose primary hope of a major return is to get enough eyeballs to make Facebook nervous enough to buy them deserve to take losses more than most.
May I indulge in a bit more? In these anonymous social apps, it is made explicitly clear that you are anonymous but traceable. It means that the service can identify your unique mobile device identity as it wishes to. You are ONLY anonymous in the eyes of the users of the app; in terms of the service provider there is NO difference.
That artificial media boost brought users and huge expectations, but users did not stick.
Wow. I guess their round was oversubscribed so they were able to sell this to the vcs. This is the first case where I heard of where a startup failed recently after founders took significant money off the table. I wonder if vcs will be able to use this as an argument to combat founders wanting to do the same in the future.
I have mixed feelings about the whole affair but I have to hand it to the founders. That was really smart of them to take life changing money when they could.
So yeah some VC's may use this argument but if the startup isn't desperate its the VC who will have to make the concession.
Yik Yak and After School have taken a small step to the left by focusing on specific geographic areas (schools) and that has worked well - a community centered around a shared context/life experience. Secret also took a step to the left with the "Friend" and "Friend of a Friend" concept - one which was ultimately unsuccessful, I think because it threatened to pierce the veil of anonymity, so many people didn't feel safe posting their real "scandalous" content.
And of course with all of the anonymous apps you have the problem of bad behavior. So far we've seen community solutions to this (flagging, downvoting, karma - like here, Reddit, Yik Yak) and company solutions (moderating with 100 people in the Philippines, like Secret and Whisper - http://www.wired.com/2014/10/content-moderation/). It would be interesting to think if there might be others.
So the current "anonymish" apps have started from the right (anonymous by default) and either stayed there or moved to the left a bit. One of the things I've been thinking about recently is what would happen if you started from the left (Real Identity/FB) and moved to the right? Would the outcome be any better? I'm actually going to try it out and see with a new mobile app I've been working on - http://www.IAmOffTheClock.com
And as for them taking money off the table in their funding round - good for them. They weighed their offers and took one that eliminated their risk while giving the company enough cash to grow and still giving them a chance for a big payday. If Secret had hit it big, that would have been a very expensive $3M they took off the table. Investors wanted more stock, founders wanted some small amount of liquidity, and at the time everybody was happy, everyone believed, the graphs were all up and to the right, and nobody had a perfect crystal ball.
[0]: http://iamping.com/
Doesn't that put a red flag on how the investors should look into it? Or it's just the hype & hockey stick presentations that doesn't matter to some investors?
People posting nude photos and stuff.
I think the curation of content was a huge challenge for them., and also not to mention the new app design was not at all intuitive with lots and lots of bugs.
But having said that, I had lot of hope in this app.
Can I build a cross platform GUI application? Is there a servlet container? How about an IDE?
Giving back the money is ridiculous, especially when they pretend to be guided by the motto "Innovation requires failure".
It's likely the investors were investing in "the next big social network". When it became clear that this wasn't going to be successful, they were faced with the choice of get 80% of their money back, or to "invest" (as it were) that money in the remaining team.
Maybe the remaining team had an idea, but the investor didnt want to invest in that idea. Or maybe the team was tired and didn't want to continue, and the investor would prefer their money back then try to force the team to continue.
Arrogant, mean, shameless...
I'm happy to see that this happens, when they cloned yik yak it was one of the most pathetic moves I have ever witnessed in the silicon valley
Legal reasons? Altruistic reasons? Selfish reasons (maybe that keeping it would hurt their reputation and make them feel guilty)?
But I've known entrepreneurs who made the decision independently, feeling it was the right thing to do.
And it is the right thing to do if the company has no other prospects or the team is falling apart.
But even so, returning the balance just keeps some salt from the wound. It doesn't make anybody happy.
Why do you say that? If for moral/altruistic reasons, that doesn't make sense to me - if you have $x million, do you really think the best place to donate it would be to VCs? I don't know anyone who donates to VCs, so I assume the answer is no. (sorry if I come off as harsh, I don't mean to - I just don't know how else to put it)
I mean, unless you are talking about the money for the personal shares the founders sold, the money, as it was said, that they "took off the table" - if that's the case, then I'm completely with you (but I didn't see any indication that they were giving that money back.)
The thing is, though, even when you control the majority of the company you do have some legal and ethical obligations to the minority shareholders.
Really, one could ethically do either one of those things; it's just that depending on the situation and your perspective, well, probably one or the other is the better choice.
Now you seem to be arguing that the choice between continuing to run a company or not is not one that has an 'admirable' option. And maybe from you point of view, it doesn't really matter.
There's a stadium down the way from my house. when the football player makes a home run or whatever, well, personally, I don't see how that matters; I don't care, and I'm mildly pissed that I'm going to have to pay for the bonds to build the eyesore. But even so? I don't go to football forms and tell people that the large man getting the ball in the hole or whatever isn't an admirable achievement. It's the game those people want to play, and that's fine.
I personally find business really interesting, really in a similar way to the football fan. Most of this stuff doesn't really matter. Some of it does, but even that stuff doesn't matter as much as people say it does.
To me? the decision to give the money back to the founders, rather than shitting the money away when you know you have been beaten, is admirable because investors seem to select for overconfidence; quitting before you've spent every cent implies that you were able to project that overconfidence to the investors, but that you were able to remain a rational person.
I mean, it's not world peace, sure, but it implies some attributes which within the context of the business game are pretty important.
It does seem odd that he/she did that, but maybe it was just a mistake.
Anyway, thank you + others - I understand now. I now see that donating to others wasn't an option, and that the choice was between a) running the company into the ground or b) returning the money to investors. Given that, I'm inclined to agree that b) is the admirable choice. And probably also the selfishly strategic one too.
You want me to delete/edit my previous post? there, I did; I'm not sure if that's more appropriate or less.
You make a good point with the guidelines; I'm far too cynical and negative to participate in these sorts of discussions with this sort of a community.
The other option is they keep the company alive until $0 is left and return nothing.
Donating to charity isn't an option.
Spending it on any personal mission not related to core business (whether charity, space travel, new car or hookers) is a great way to get some headlines with your name attached to words fraud and embezzlement.
You can certainly try to circumvent that by paying yourself a bonus out of the company money, and then donating that to charity, but it seems even shadier and introduces wonderful tax compexities with IRS come next year.
Each case is specific though, but at some point, if the product has no growth and key talent has left the building, even if you do have six-seven digits in the bank, new employees are not exactly knocking on your door, users are not over-running the servers, remaining employees quietly send out resumes, so what would you be spending that money on?
Was it — Julie Ann Horvath's decision to disclose big cultural problems at the company GitHub?
Was there anything else?
It's a really, really silly thing to say.