Death With Dignity Or Stupidity?
from the your-call... dept
I didn't post the story of Kibu going out of business, because there are plenty of other sites that deal with continual failures of companies. However, there was one difference in the Kibu failure as compared to many other dot coms: they gave back some of their money to their investors. So, instead of spending it all, and then shutting down, they gave up early. The article behind that link points out that this was actually a really dumb move, and I think I agree. They claimed that times have changed, but a good management team understands the facts that times do change and your job is to change with the times. I think giving up was a lame move. Yes, there's a part of me that respects realizing when you're in over your head, but if these people were good enough to raise $26 million from KP, you would think they would be smart enough to figure out a way to do something with the company rather than just give up. Then again, if the management team was so lame that they knew they wouldn't be able to change with the times, then I guess it's just as good that they shut down. I just wonder what they'll do now. I'm not sure I would trust them with money again.
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Not entirely ethical to take the $,run
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Re: Not entirely ethical to take the $,run
Simply "giving up" because market conditions change is a lame excuse. Figure out a way to stay in business. That's what smart businesses do.
If these guys were so incompetent that they couldn't change strategy mid-stream then they never should have received venture funding in the first place.
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More on Kibu
It does make a good point though on a quote from an employee that five months is not nearly enough time for a company to try to prove itself.
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Get out while the getting's good...
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Re: Get out while the getting's good...
This is not a situation where people put a lot of thought and effort into this and finally realized that it was an impossible situation. This looks to be the case where someone had a get-rich-quick scheme which didn't work. If this really was a great idea, then the people behind it would be able to at least have some ideas on how to do *something* with it. If it wasn't such a great idea and the people weren't good, they shouldn't have gotten the funding in the first place.
In business you should invest in people who can make good things happen even in bad situations. These people just gave up. Yes, there is a point at which things can be hopeless, and there is a point at which you can see the writing on the wall, and you make your decisions. I don't see any evidence however that anyone at Kibu even had a chance to make something happen. Instead, they just realized that this might actually take some thinking, and they gave up because it wasn't going to make them rich quick. If you really believe in something, if you really believe in an idea, you can work very hard to make it happen. In this case it seems obvious to me that the people didn't really believe in the idea, they just wanted the quick money. That's my point. If they really believe in it, they would have figured out a way to make something happen.
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Re: Get out while the getting's good...
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Totally off topic...
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Re: Totally off topic...
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Re: back on topic...
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Re: back on topic...
1) If I were the VC in this case, I'd appreciate them giving the money back if they themselves thought they weren't going to do anything with it. BUT, I agree, I probably would _not_ do business with them as a team b/c they obviously don't work well together. (I'm assuming that if they did work well as a team, they would've come up with a way to change their business ENTIRELY and work it out with me as the VC.) I'm not sure about how other VCs should view the individual members of the company, b/c I'm not sure that this failure is any worse than any other business failure. "Lameness" for this issue of giving the money back is, in my opinion, not relevant. They made a risk assessment and a decision. It's not "lame" that the outcome meant to give back the money. In my mind, anytime you sold an investment, then you'd have to admit "lameness" cuz you didn't stick with it.
2) Where the "lameness" really lies, in my opinion, is the original concept of the venture. Maybe my sense of valuation is screwed up, but I just don't believe that an internet portal devoted to teenage girls is worth $26M. There's a reason why their capital market was drying up... The "tulip" market is crashing!
3) But yes, you can argue that they still could've done SOMETHING with the money. I agree. That's what my first post was trying to address. Is it ethical to do ANYTHING? Obviously not. (Although the author of that article seemed to suggest "anything short of robbing a bank" was okay.) So the problem is what's ethically between anything and something..? If you think Kibu could have survived doing anything short of completely changing their "teenage-girl" focus, then keep buying those tulips... But I think some serious overhaul would've been needed. And I'm not sure how ethical a complete business overhaul is...? Any opinions on that? I'm not sure how the relationship with their VC was... Not good, I suspect, so the ethical implications of complete overhaul might've been a little more touchy?
In the end, I rarely ever completely disagree with Mike. And I'm not competely disagreeing here. Yes, business is hard; entrepreneurs need to adapt. But entrepreneurs who aren't insanely devoted to their cause aren't necessarily _always_ lame. I think entrepreneurs who make objective risk assessments fall into the non-lame category. Both of you mention that "being smart enough to get $XM" somehow implies validation of a good team/idea combo. I disagree. Some companies get a lot of money and don't deserve it. If you don't deserve the money, and your company looks DOA, I think it's fine to return the money especially if you don't believe in your own company. I don't think that's lame, but that may not be the case here. How about: you deserve the money, the company looks DOA, and you don't believe in the company? I also don't think that's lame if you give back the money in that case. And I think that's the case here. Now: you deserve the money, the company looks DOA, and you DO believe in the company... If you give the money back, then you're either stupid or lame. The difference is that you're giving up on your convictions.
But maybe you guys think that if you deserve the money you should be able to force yourself to believe in the company...? I don't think that's necessarily true either.
Maybe these guys are losers, I don't know. But I'm not willing to condemn them....just b/c they failed to try.
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Re: back on topic...
Using that as my assumption, I think it's lame that they gave up. What I was really doing was making a point by setting up unreasonable assumptions. Chances are the people behind Kibu really didn't believe in it that much and just thought it was a get-rich-quick deal. Thus, when it suddenly became apparent that it might not be such a scheme they gave up (or were pushed into it by the VCs, according to some).
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Re: back on topic...
Or maybe there are four lights...
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Re: back on topic...
P.S. The reason for the lag is of course the 8 hour time difference.
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