#DCTech 1776 Merger or House Cleaning?
Is the Benjamin’s Desk, 1776 Merger a merger or is it something else? The deal that has been in the works for 2 months finally closed today. After much consternation, wrangling and negotiated face-saving for the vanquished 1776, Benjamin’s Desk kindly allowed Evan Burfield to pretend he’s not been pushed out of that which he’s burned to the ground. My sources report that Evan’s face-saving measures have been a contributing factor in the delay of closing the deal.
Is it a merger of equals? Well, it’s a merger of equals if you don’t take in to account 1776’s dire financial straights and incredible operating losses under Evan Burfield’s stewardship. It’s a merger of equals if you want to insult Jennifer and Anthony Maher who appear to be growing a credible business. It’s a merger of equals if sick equals healthy.
Here are the facts we know about the Benjamin’s Desk – 1776 Merger
- The press release says it’s a merger
- Press releases report spin… it’s up to others to divine facts
- A merger is to a takeover what a poop-filled toilet is to rose. You can call that toilet full of smelly doody a rose but it still smells like shit
- 1776 has been reportingly losing $500K dollars per month while Benjamin’s Desk is operating on a total invested capital raise of $150K total.
- Benjamin’s Desk hasn’t raised enough total capital to afford 1 junket to Dubai for Evan Burfield
- Benjamin’s Desk has not raised enough outside capital to pay one quarter’s worth of salary Burfield’s salary
- Benjamin’s Desk total outside capital is only enough money to keep the 1776 doors open for 9 days
- That’s because one of these two companies is financially strong and spends within their limits.
- When you don’t need to be acquired you are the acquirer in a “merger” of parties when the other party is out of business if not “merged” no matter what you call it in the press release
- Every month for the past year, 1776 has seen major executives jump ship… before it sank. 1776 employment has been dropping while at the same time, Benjamin’s Desk employment has grown
- Called a “merger” earmarked with quotation marks exactly like I refer to the bit vomiters at Nibletz as “journalists” (Never heard of Nibletz? They make the rest of the Tech Press look like Woodward and Bernstein)
- 1776 has been hemorrhaging cash for the last 3 years (as much as losing $500K per month)
- Andy Medici, a journalist without quotes, digs a little deeper than the press release and reveals some interesting facts
- Benjamin’s Desk and real estate company JBG Smith Properties are the largest investors, not 1776, Revolution or any other entity that controlled 1776 by choice (JBG got stuck with 1776 when they “merged” with Vornado’s DC real estate properties
- Steve Case and Revolution are no longer mentioned as a major investor
- Great news for JBG because they appear to have found a management team that understands how to run a co-working space
Here’s what we can assume about the Benjamin’s Desk – 1776 Merger
- Evan Burfield has a history of being pushed out of companies while retaining meaningless face savings titles (i.e. when his investors fired him from Synteractive but allowed him to retain the ceremonial title of Queen of England and Chairman of the Board)
- When Donna Harris left 1776 in a hushed-up ugly squabble (Donna is hampered to speak out by a non-disparagement clause so you won’t hear this from her) she retained the ceremonial title of Board Member in order to make it look like everything was groovy at 1776
- Do not make assumptions about the name change. Benjamin’s Desk (BD) is making the move from a Philadelphia company to a global player. 1776 makes more sense as a new name than the Philadelphia-centric moniker, Benjamin’s Desk in this new phase of the company
- One of the few things of value that BD acquires in this deal is the hype buzz and all the wasted time, money, and energy 1776 put into PR versus operations. They might as well capitalize on the hype and assume the name (I think you call that good will… 1776 has great goodwill and lousy cash flow. The lesson? You can’t eat goodwill)
- Despite the title, “Executive Chairman,” it is clear that the company is controlled by its major investor, Benjamin’s Desk, and the two lead executives from Benjamin’s Desk, Jennifer, and Anthony Maher who were named Co-CEOs
- This thing isn’t so big it needs an Executive Chairman and 2 CEOs and I guarantee the CEOs will not require any approval or oversite from Burfield
- Evan is now the CEO of Union Software. A company that has 200 clients, which my sources say use the product at no charge. Paul Singh couldn’t make this dog (previously named Disruption) hunt and so his investors passed that baton to Evan. Evan isn’t going to do any better.
- If the investors thought Union was an asset, they would have found someone new to run it instead of making a symbolic investment and throw this bone to Evan as another face-saving move. It’s a way of paying him off to go away.
- When Evan has pitched Union to Universities and Companies, demanding license fees between $230-400K, he’s been laughed out of the room
- Mr. Burfield better focus all of his energy on Union to get that dog that can’t hunt to hunt
- I’ll take 14 months until Union fails in the office pool
Here’s what to look for to affirm that Benjamin’s Desk acquired the failing 1776
- Which CFO stays and which CFO exits… if Steve Graubart, the last responsible adult left at 1776 is not the surviving CFO of the “merged” company this is a takeover. UPDATE Graubart last day at the company was 10/27/2017
- How long does an executive chef, remain on the payroll. 1776 is overstaffed and is the only peanut butter palace in startupland that ever had an executive chef. Benjamin’s Desk seems to run a fiscally responsible operation. If they add a second executive chef, then it’s a merger if they lose an executive chef it’s a “merger.” UPDATE as of 11/02/2017 the executive chef is still on staff
- Look for more departures from the overstaffed 1776 to bring expenses in line with revenues. UPDATE: On 11/01/2017 the Washington Business Journal reports 20 people are leaving 1776 see the article here.
Lastly… who you going to believe? The guy who told you this was going to happen a month ago (that’s me) or the guy who kept saying it’s never going to happen (that’s Evan).
Note: I’m extremely proud to announce that Today I’ve received one of the best endorsements ever from the chuckleheads at Nibletz! The Top “Journalist” at Nibletz which is like being the smartest Ameba in the Petri Dish, said this, “First, don’t get it twisted. Technical.ly reported earlier in the day that Glen Hellman’s Driven Forward originally broke the news that Benjamin’s Desk was in talks to acquire 1776. For starters, Hellman is the most anti-startup community person in Washington DC. He also has some kind of stick up his ass about 1776 founder Evan Burfield. Personally, I’ve known Burfield since the Startup America days, we have never been buddy buddy, I was always closer with Harris, but what Burfield has done with 1776 and Startup America before it, catalyzed the Washington DC startup community, and startup communities across the country.”
Then the crack team had this to say! “It would be repugnant to shed any negative light on this merger between two great startup organizations, especially considering that now, the collective entity, is the largest support structure for startups on the East Coast and one of the largest across the country.”
Wow! That’s some pretty hard-hitting “journalism.”
Thank you, Kyle Sandler! For everyone in the world who hasn’t heard of Nibletz (that’s everyone in the world except Bert in Albuquerque and Fred in Chicago)… check out this old post.