What Happens When Your Co-Founder Finds a New Best Friend
Its about that time again in the cyclical world of technology ... when founders divorce their first love and move on to prettier, younger, more interesting other founders... if only because grass always seem greener. There are so many backstories that I have yet see any other blog cover... perhaps its not the right time to piss on the parade or perhaps its just too close to heart. Skobee is headed down that path ... but perhaps an even more text book and high profile example... it’s whats going on at Edgeio. I have no inside information, and everything is just gleamed from reading and observing. Even more so, this is not an indictment on business models, the company, or the people involved ...it is a fact of life .. . and I’ve been through it myself on both sides...
So what the hell is going on with Edgeio and Crunchboard (or Mike Arrington & Keith Teare)? It is kinda of obvious that Mike no longer spend much of his effort at Edgeio ... trying to turn CrunchXXX into a media empire. Has he given up? Does he not believe in it anymore? Or at the very least, he thinks CrunchX is more interesting and have higher upside ... Even more telling to me is that
EDIT: Apparently Mike is not a founder of Edgeio, he is a board member. As a result, his involvement is not meant to be on a daily basis in the first place.
1) ChrunchBoard is not being aggregated by Edgeio (there are no CrunchBoard listings in Edgeio)
EDIT: This is not correct, I could not find crunchboard listings at crunchboard launch but that is no longer correct.
2) ChrunchBoard’s new aggregator vision is decidedly Edgeio-esq (As Alex Bosworth points out)
The same story played out during the whole social networking crazy between Six Degrees, Friendster, LinkeIn, and host of other G1 social networking companies... all the founders were friends, sat on eachother’s boards, invested in their companies, and eventually took spins from an original idea and launched their own potentially competitive ventures ...
This post is not about Techcrunch etc ... its about using it as a case study to see what entrepreneurs can do ... So what to do? What to do when your co-founder has ADD and moves on to the next new new thing before finishing the current committment? How to you communicate to your investors when your co-founder move on (remember VC’s like to say they invest in teams, so if 50% of the team moves on, 50% of the investment thesis also disappears) ... Even worse, how do you raise the next round? What kind of message does this send to VC’s who are comtemplating investing in the next round. Saying that your co-founder just like to “start companies” and not execute is just an excuse ... its the same damn excuse VC’s feed the press when they force out a founder (remember the official spin Tribe gave for Pincus leaving) ... besides what is starting companies ...its executing really fast :) ... VC’s can smell their own bullshit a mile away. This is what VC’s calls a “hairy” deal ... they have twenty other companies to look at, they dont want to deal with a cap structure with baggage...
Ofcourse this shows that its extremely important to have vesting schedules for ALL co-founders so that no one can walk away and still own as much as the next guy. (I touched on this before) . But beyond that, what else can you do? Play nice, spin it as well as you can, and hope the business fundamentals/metrics will make it attractive enough to sustain the cashflow (through operations or financing). Ofcourse, pick your co-founders carefully, and know their value add (short term/long term) before jumping in bed ... founding companies is by definition a risky venture ...you have to truly believe ... having one leg of the table being taken out can wreck havoc on the culture and morale of the company... (there is probably less than 10 employees) if your co-founder has a “put option” he or she might not be the best candidate ... unless you are planning for it ... still its hard to pitch to a VC and tell them that one of they guy they are talking to is leaving ... LP’s dont like having partners leaving midstream either ... they have clauses that let them take money one in case it happens... so VC’s understand ... No founder leaves $100M in equity on the table just because he/she likes to “start companies” (if ~20% /= $100M VC’s aint interested in the first place).
I’ve been the ADD guy before, and I’m probably still am... but I’m extremely self-aware ... I tell myself to focus, execute, build everyday much more than telling myselg to think bigger and have a new vision.
I dont like it (the people (sometime me), the thinking, and the culture that promotes this) ... there is a HUGE difference between serial entrepreneurs and ADD entrepreneurs ... starting companies is not a scarce resource/skill ... BUILDING companies are ...