In case you missed Halloween–because you were working!–we offer you this bit of entertainment to launch your weekend: A founder’s ghost story, authored by Sean Cier, steward of a budding startup called jectiv.
I think the business world — particularly the high-growth startup world — needs more myths, and particularly more ghost stories. So I’ll do my part to fix this oversight. This isn’t a parable nor an allegory — don’t try to take it too seriously. Best to read it in the dark, by the light of a flickering screen saver.Not long after the millennium technology bubble burst messily, a struggling but determined web startup was intent on raising a Series B financing. We’ll call them Flickster. Without this financing, their burn rate — despite repeated belt-tightening and cutbacks across the board, including selling off their expensive chairs and switching to employee-purchased sodas — would sink them within a quarter, maybe less.
The CEO, having already steered the company past many jagged rocks hidden just below the surface with only a few gashes in the hull to show for it and a boat that was only taking on a little more water each day, was confident, and when you looked into his haggard eyes you saw only a bit of desperation lurking behind their assuring shine. Perhaps just a bit more desperation each day.
It didn’t help, though, that their primary VCs — let’s call them Smithers-Jones, as revealing their real name would be unwise, as you will discover — had shown no interest in leading a new round of financing.But recently there was good news: another firm was offering to fund the Series B almost completely. The only catch was it was at a somewhat lower valuation than the inflated price Smithers-Jones had assigned to the company when they had led the previous round.
Flickster’s CEO met with Smithers-Jones. Things didn’t bode well from the start; the meeting was being held at nearly the end of the business day, in the smallest conference room on the outskirts of Smithers-Jones’ impressively large and labyrinthine offices. Things only went downhill from there.
The partner and junior associate broke the news to the CEO that S-J had decided not only not to participate in the new round, but in fact to block this latest offer unless the valuation was raised; otherwise Smithers-Jones would be, in effect, losing money. They could indeed block it if they wished, as they held a majority of the board seats — a foolish and shortsighted concession on Flickster’s part during the previous rounds.
“We love your product,” they said. “We believe in your market. You have a great team. We don’t feel that the timing is right to do a new round, not for us, not right now. If you can find a VC to provide funding at a reasonable valuation, you’ll have our blessing.”
The CEO’s eyes, already ringed deeply from chronic lack of sleep, seemed to sink deeper into his sockets as he listened, quietly.
“We’re depending on you,” he told them. “If you can just help us pull through this final stretch, this last challenge before our product bursts forth and revolutionizes the market.”
But “No,” they said. “We’ll be happy to provide introductions to possible buyers.”
Their eyes twinkled harshly, but sadly, as though comforting a lame pet. Better to cut their losses than to continue to bother with a losing bet. The word firesale hung in the air, unspoken.
The CEO’s left eye twitched, twitched again. He rose from his seat suddenly, began to pace the room, mumbled entreaties and platitudes and empty optimism. The Smithers-Jones partner and junior partner began to shift in their seats with discomfort or impatience, while the pathetic desperation was left unanswered. The CEO’s despair shifter to denial, then suddenly anger, and his pleas turned to accusations and demands.
The shouting could be heard outside the conference room and echoed down the impeccably maintained hallways, but that far wing of the building was deserted by this hour. Likewise, the screams of the partner and junior associate died unheard in the expansive office.
The next morning, the receptionist arrived first to find the Flickster CEO lounging in the chair of the front reception desk, looking more peaceful than he had looked in months. The bullet had gone directly through his skull and left a red splatter on the wall opposite, while the small but apparently sufficient gun lay in a red pool on the floor where it had been dropped by his lifeless hand.
The partner and junior associate were found in the windowless conference room illuminated only by the light of the projector, still glowing with the image of a revenue projection graph. The junior associate’s empty eye sockets had been desolated by a ballpoint pen, while blood stained the floors where it had flowed from the partner’s jugular, sliced cleanly through with a shattered shard of a pitcher of ice water.
Flickster had that firesale a few months later, of course, and the few remaining employees held an alcohol-soaked wake for the company and the late CEO. This, however, is not the end of the tale.
Several months later,another foundering startup went under after a long, slow decline of its once-promising customer base. Curiously, that startup had also been funded by Smithers-Jones. Its assets were sold at a bargain to a much larger competitor. Nobody thought much of the incident, as the technology field is littered with the corpses of failed startups.
Later in that same quarter, a very promising young company had its market inexplicably turn sour and business dry up quite suddenly; it too ceased to exist within months. This company, too, had been funded by Smithers-Jones.
But nobody took notice until a third firm — a small but stable B2B company which had developed a revolutionary new bit of search technology and was itself in search of funding to rebrand and relaunch — spiraled out of control, as if possessed, until its business shriveled and died.
Only after this did some begin whispering of something strange going on. This startup, you see, had never received Smithers-Jones funding, but its founders had recently attended an exploratory meeting with the VC firm: it was a meeting which none of the S-J partners had actually attended… held at the end of the day in a windowless conference room in an isolated wing of the vast offices.
The founders had been seen exiting quite suddenly, their faces pale as the moon, as though they’d seen a ghost. The next morning, the janitorial staff had a terrible time removing the drops of blood found surrounding the seats in which two murders had occurred months before.
Nothing was to be done, of course; everything was supposition and rumor, and the founders in that meeting refused to discuss it. Nevertheless, every few months since then a promising startup finds itself out of control, its revenues strangled inexplicably, all starting shortly after a late meeting in a small conference room, a meeting of which Smithers-Jones has no record.
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