shit like this just fucking hurts:“It’s not all going great,” Mr. Wilson told The Observer. “You know, companies are failing. A couple of high-flying entrepreneurs came crashing to the ground recently. Justin Shaffer of Hot Potato and Sam Lessin of Drop.io—both of those companies essentially failed. Both of them ended up ‘selling’ their businesses to Facebook, but those were really just—Facebook wanted to hire those people, and they wrapped it up in a ‘sale.’ But those companies were unsuccessful. They failed. So there is failure out there—like, right in front of us. We can see it.” (Hot Potato’s former lead web engineer Matt Langer responded, “Maybe Fred and I have different definitions of ‘failure.’ Justin and Sam both built companies that Facebook considered valuable properties … when the single most important company on the Web considers it worth their while to acquire the product you’re building and the people you’re working alongside the absolute last word that comes to mind is ‘failure’.”)
Like, whoa bro. Whoa. That is some serious excessive endzone celebration shit right there. “Crashing to the ground”? “Failure”? “Unsuccessful”? Really?!
I’m just happy they could be reminded a sentence later that all their hard work on those unsuccessful failures got bought by literally the biggest site on the entire fucking internet and, hey, you know, that’s nothing to scoff at!),
there’s just absolutely no conceivable angle—not that of an investor, a founder, a co-founder, or a former employee—from which they could be considered such.
(it pains me weigh in given that Matt & I recently reconciled despite our stubborn personalities)
I find it hard to disagree with Fred’s point about these startups being failures as businesses. (But Matt, please don’t read my use of the word failure as a value judgement of the effort, the people, or the outcome, but rather as a clinical assessment at an attempt to create a lasting business)
In the “Drucker-sonian” sense, you’re not a business until you have a customer. And you’re not a viable business until you’ve got enough customers. So HotPotato, which attempted to explore its way into identifying a business, was acquired for the value it accumulated, and at a price greater than the speculative investment. In this sense, it’s a successful speculative venture… but not a successful business.
Drop.io is harder to pin down. My sense (as a far outsider) was that they had a business, and were close to viable. If that’s the case, Fred’s remark can be read as more scathing: the sale of Drop.io destroyed a real business value. If Drop.io was not viable, then it places it somewhere closer to HotPotato.
I respect what Fred is saying, and glossing over the fact that VCs returns aren’t coming from IPOs (but perhaps from FB acquisitions), perhaps he’s expressing disappointment at the missed opportunity for the creation of lasting businesses?