Comments on: When innovators sell out http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/ by Jeff Jarvis Fri, 05 Dec 2008 10:11:01 +0000 http://wordpress.org/?v=2.5.1 By: racetalkblog.com » Is a Lack of Exit Options Killing Innovation? http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373480 racetalkblog.com » Is a Lack of Exit Options Killing Innovation? Thu, 17 Apr 2008 16:10:55 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373480 [...] was some great debate in the blogosphere last week on how a lack of exit strategies for start-ups, that need to return on [...] [...] was some great debate in the blogosphere last week on how a lack of exit strategies for start-ups, that need to return on [...]

]]> By: How To Fix Venture Capital, Part 2: The Opening is As Important as the Endgame « SmoothSpan Blog http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373386 How To Fix Venture Capital, Part 2: The Opening is As Important as the Endgame « SmoothSpan Blog Tue, 15 Apr 2008 15:45:14 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373386 [...] by smoothspan on April 15, 2008 Umair Haque has a post getting a fair amount of attention on “How to Fix Venture Capital.”  It is in response to Fred Wilson’s post about [...] [...] by smoothspan on April 15, 2008 Umair Haque has a post getting a fair amount of attention on “How to Fix Venture Capital.”  It is in response to Fred Wilson’s post about [...]

]]> By: As I May Think... http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373305 As I May Think... Mon, 14 Apr 2008 15:28:32 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373305 <strong>Of Liquidity, Competition and Platforms...</strong> Fred Wilson, of A VC recently sparked a great deal of controversy with his post: We Need A New Path To Liquidity. Fred suggests that with the IPO market closed, we now need new thinking about how to reward innovators... Of Liquidity, Competition and Platforms…

Fred Wilson, of A VC recently sparked a great deal of controversy with his post: We Need A New Path To Liquidity. Fred suggests that with the IPO market closed, we now need new thinking about how to reward innovators…

]]> By: Mads http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373228 Mads Sun, 13 Apr 2008 10:48:42 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373228 Google rather quickly realized they had something of real monetary value and hence the urge to cash in was not too big. The same could not be said about the others who more or less all struggle to deliver what's essential in a business context: Real revenue and profits. In that respect you could say that these other examples, you mention, got the max value out of their start ups: They got someone else to pay their bills... Google rather quickly realized they had something of real monetary value and hence the urge to cash in was not too big. The same could not be said about the others who more or less all struggle to deliver what’s essential in a business context: Real revenue and profits. In that respect you could say that these other examples, you mention, got the max value out of their start ups: They got someone else to pay their bills…

]]> By: Rosenblum http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373215 Rosenblum Sun, 13 Apr 2008 00:31:15 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373215 If ONLY I could sell out! If ONLY I could sell out!

]]> By: adsl http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373206 adsl Sat, 12 Apr 2008 15:01:33 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373206 yeah but they are all millionaires. selling out is good who cares if all the content i get is from fox / viacom / aol they give me my free content . yeah but they are all millionaires. selling out is good

who cares if all the content i get is from fox / viacom / aol

they give me my free content .

]]> By: Clyde http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373187 Clyde Sat, 12 Apr 2008 04:11:17 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373187 Sam: your missing the point a little bit. The Point of the article was about the little guys selling out too quickly. Of course once you sell to a bigger corp the bigger corp will just look it the smaller corp as another asset in its portfolio. Plus all the companies you named were sub-niches of web 2.o not big enough to be a Google in their own right. That is the main reason this is a silly proposition. You have to a company that 1) is making ridiculous cash NOW 2)It has to be the type of site that people will return to on a daily basis so that you can communicate your new ideas to them. YouTube.com was the only corp big enough to do 2 but did not generate cash. Still hasn't. Plus all the lawsuits its going to have fight off. It could not survive as a stand alone. Yes guys the problem with investors is they demand profits. Spoken like some one is not now nor ever will have wealth. Sam: your missing the point a little bit. The Point of the article was about the little guys selling out too quickly. Of course once you sell to a bigger corp the bigger corp will just look it the smaller corp as another asset in its portfolio. Plus all the companies you named were sub-niches of web 2.o not big enough to be a Google in their own right.

That is the main reason this is a silly proposition. You have to a company that 1) is making ridiculous cash NOW 2)It has to be the type of site that people will return to on a daily basis so that you can communicate your new ideas to them.

YouTube.com was the only corp big enough to do 2 but did not generate cash. Still hasn’t. Plus all the lawsuits its going to have fight off. It could not survive as a stand alone.

Yes guys the problem with investors is they demand profits. Spoken like some one is not now nor ever will have wealth.

]]> By: Michael K. Miller http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373170 Michael K. Miller Fri, 11 Apr 2008 19:19:34 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373170 Incisive. What is the Dem parade to 2009 saying about this? (For a perspective on what it means to writing, content management, and content production, see: "The Googling of America: Soliciting Writer Whores to Turn Cheap Tricks" at http://www.associatedcontent.com/article/558671/the_googling_of_america_soliciting.html ...) MKM Incisive. What is the Dem parade to 2009 saying about this? (For a perspective on what it means to writing, content management, and content production, see: “The Googling of America: Soliciting Writer Whores to Turn Cheap Tricks” at http://www.associatedcontent.com/article/558671/the_googling_of_america_soliciting.html …) MKM

]]> By: carson http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373166 carson Fri, 11 Apr 2008 17:57:28 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373166 I agree with Jeff. Sarbox changed everything. Enormous elephant. What's needed is the right access to capital, and that means having more options than M&A and IPO. It stifles growth and the creation of new markets. If something like GSTrUE, or OPUS-5 can work, then you have more options. As a result, your decision process changes for the better. They have the potential to help mid-stage companies go the distance without the hassle of going public. That could be huge. When a mid-stage company with real revenue and a short path to profitably wants access to capital for growth it has limited options; VC, Strategics, Debt, and later-stage investors. VC may not be the best route if the future return doesn't fit their 5-10x model and you have to take a terrible liquidation preference in return. Strategic investment may require giving away important strategic information that limits your edge should the strategic investor be in direct competition with you. Debt is dangerous, especially now. Later-Stage investors are more attractive than the other three, but they want an exit event eventually and right now it's either selling the company to a bigger concern, or taking the company public. The company may not want to do either. These new private markets could benefit the mid-stage company by providing liquidity to early and later-stage investors AND provide further access to capital at the same time - and without the hassle of going public. That is far from selling out - it's having the right access to capital to grow markets and companies. By providing this kind of access and liquidity, VC's can look at deals in a new light. The entire capital supply chain of creating new markets can function better. I agree with Jeff. Sarbox changed everything. Enormous elephant. What’s needed is the right access to capital, and that means having more options than M&A and IPO. It stifles growth and the creation of new markets. If something like GSTrUE, or OPUS-5 can work, then you have more options. As a result, your decision process changes for the better. They have the potential to help mid-stage companies go the distance without the hassle of going public. That could be huge.

When a mid-stage company with real revenue and a short path to profitably wants access to capital for growth it has limited options; VC, Strategics, Debt, and later-stage investors.

VC may not be the best route if the future return doesn’t fit their 5-10x model and you have to take a terrible liquidation preference in return.

Strategic investment may require giving away important strategic information that limits your edge should the strategic investor be in direct competition with you.

Debt is dangerous, especially now.

Later-Stage investors are more attractive than the other three, but they want an exit event eventually and right now it’s either selling the company to a bigger concern, or taking the company public. The company may not want to do either.

These new private markets could benefit the mid-stage company by providing liquidity to early and later-stage investors AND provide further access to capital at the same time - and without the hassle of going public.

That is far from selling out - it’s having the right access to capital to grow markets and companies. By providing this kind of access and liquidity, VC’s can look at deals in a new light. The entire capital supply chain of creating new markets can function better.

]]> By: Simon Owens http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373165 Simon Owens Fri, 11 Apr 2008 17:44:17 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373165 I read The Google Story and if I remember correctly Google tried to sell out to Yahoo for $1 million when they originally came up with the algorithm, but Yahoo didn't think search was worth anything so rejected them. I read The Google Story and if I remember correctly Google tried to sell out to Yahoo for $1 million when they originally came up with the algorithm, but Yahoo didn’t think search was worth anything so rejected them.

]]> By: Sam http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373164 Sam Fri, 11 Apr 2008 17:39:37 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373164 But Google is also really guilty of killing innovation. Whatever happened to Grand Central? Or Jaiku? Or Feedburner? All of them continue to exist, but none have done anything since selling to Google. But Google is also really guilty of killing innovation. Whatever happened to Grand Central? Or Jaiku? Or Feedburner? All of them continue to exist, but none have done anything since selling to Google.

]]> By: James Robertson http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373157 James Robertson Fri, 11 Apr 2008 16:34:34 +0000 http://www.buzzmachine.com/2008/04/11/when-innovators-sell-out/#comment-373157 Jeff, You missed the elephant in the room: Sarbanes-Oxley. That law changed the game, and made the move to being a public company a lot more expensive than it was previously. When an entire segment of the market responds the same way, it's not about "selling out". Something bigger is going on. Jeff,

You missed the elephant in the room: Sarbanes-Oxley. That law changed the game, and made the move to being a public company a lot more expensive than it was previously. When an entire segment of the market responds the same way, it’s not about “selling out”. Something bigger is going on.

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