Odeo, a San Francisco-based podcasting start-up has decided to call it a day. The company started by Pyra Labs (Blogger) co-founder Evan Williams has completed a management buyout. Evan Williams, Biz Stone and other Odeo employees have started a new company called Obvious Corp., which has acquired Odeo assets from podcasting company’s venture capital backers. The news was first reported by Valleywag. (Update: Ev outlines his plans and vision on his blog. George Zachary of Charles River writes about the deal on his blog.)
Odeo had raised millions in funding from Charles River Ventures, Mitch Capor, Josh Kopelman and Ron Conway amongst others in August 2005. Obvious Corp is full funded by Williams, and now owns the assets of Odeo and Twitter.com. It was a move that should not come as a surprise to readers of GigaOM.
Sources familiar with the transaction say the VCs and angels investors were made whole (they made their money back) and some common shareholders such as Odeo co-founder Noah Glass have made a modest gain on the transaction. Obvious will continue to operate Odeo.com and Twitter.com.
Our sources say that the parting was very amicable. The reasons for this management buyout, according to sources on both sides of the transaction was Williams desire to run a less structured and more experimental startup. Despite starting out as a podcasting startup, recent blog posts on Evan Williams blog hinted his disillusionment with the opportunity in the podcasting space, and if it really justified a VC investment. The company apparently tried to shop itself, though, we have not been able to identify and confirm their dance partners. In the end Williams put his money where his heart
Williams’ very public mea culpa at the Web Apps conference was an example of his willingness to zig, when everyone zagged. In private conversations, he had expressed doubts about the current model – where everyone wants to sell to an Internet giant. He wanted a model that was different – small, experimental and almost lab like. Future plans, according to those close to the company, include charging for all new things they come-up with. Given that a handful of engineers came up with Twitter in a few days, Williams might be onto something.
There will be some debate about if this is yet another example of a broken VC model. My personal belief is that is not the case. Williams had the means (Google dollars) to do the right thing by him. For others the in-fashion “flip it” equation of selling to large players will still be the preferred exit ramp. For some, building a profitable operation will be the ultimate goal. As far as Odeo is concerned, the reasons are Obvious.