Evan Burfield Part 4 – Sink or Swim Time

The End of Burfield’s 1776 Dream

Part 4 finds Evan Burfield at a crossroad… it is sink or swim time. The prospects for Burfield, a man who has tried 3 times and still can’t swim aren’t good. He failed in his first startup, NetDecide and the investors fired him. He went on to get fired for shady dealing on his next try at Synteractive. The last straw was leading 1776, DC’s “Flag Ship,” Iconic representation of startuphood to financial ruin. For the third time, Burfield’s investors experienced Bull Shit Fatigue. They were tired of being told how good it was going and fortunate to find a white knight for a graceful exit. Enter Benjamin’s Desk the company that rescued 1776 original investors from a sink-hole, allowing them to retain some equity and place 1776 in the competent hands of a team that has a proven history as operators.

It was perfect for the investors. Here was a face-saving deal that allowed Steve Case, to claim that DC’s participation in “Rise of the Rest,” was alive and well. He can now relabel this loss and call it a merger. It meant the end of stroking never-ending checks for an Evan Burfield led sinkhole and there is now a possibility there may be a positive return on investment.

For Evan, it was a catastrophe. It was his third and most visible failure. It exposed him as an unreliable spokesman by contradicting his constant protests to the press that, “everything at 1776 was super-de-duper,” and “1776 is not for sale.” It confirmed 1776 was broke and therefore sold-off in a fire sale.

When the deal was first uncovered, it was expected to be completed in two weeks. It took more than twice that amount. How much of the delay was Evan’s meddling in the process to try and protect what remained of his reputation?  How much of the delay was Evan maneuvering to obfuscate his failure and present his incompetence as a win? We may never know. What we do know is that Evan lobbied heavy to characterize this bail-out, buy-out as a merger of equals… it is not. He tried to remain a relevant part of 1776… he is not. In addition, as has become his standing operating procedure he was awarded a meaningless cosmetic title to polish his turd.

Evan walks away from calling a 1776 fire-sale a merger and his termination of his employment as a promotion to a purely cosmetic title of Chairman of a non-operating Board of Directors.

Union – Burfield’s Next Failure

But really, Evan’s been exiled to the land of unwanted toys. Benjamin’s Desk didn’t want Evan or his little toy called Union (or the Dubai office which was Evan’s excuse for exotic travel). What do you get when you mix a stupid business model with a serial failure? You get Union!!!

What is Union? To quote Union, “The UNION platform connects startup founders, mentors, investors, and corporate innovators around the world.” What is Union? If you ask the folks at the entrepreneurship centers of major local universities they’ll tell you it’s an overpriced, mentor-matching program with hundred’s of competitors, many of them available for free, with no technical barriers and no revenue traction.

But Glen, you say, Steve Case was said to invest $650K in Union. What about that? That’s a small price to pay to get Evan and the 1776 boat anchor off the books. Hell, it cost $500 in monthly negative cash burn just to keep that 1887 turkey going. He basically gave Evan 6 weeks of cash burn in return for the pleasure of being able to say adios muchacho. Now 1776 can continue as a “Startup Hub” under the management of Benjamin’s Desk, and Steve gets to cut Evan off, free to sink or swim on his own, with a little insufficient $650K bone. That’s chump change considering that 1776 was losing a reported $500K per month.  If Case was serious about funding this turkey, instead of just paying Evan off to go away, he would have funded with real money. Evan can’t live on $650K?

But Glen….  Union has hundreds of “Customers.” Users…. yes…. paying customer….nope. What’s your definition of customers?  If you define customers as people who use the software, then they have hundreds of customers…. but I call non-paying customers users because they’re using you. If your definition of a customer as people who pay money to use your product, then I don’t know of any real customers.

So Let’s count all the issues with Union

Issue #1 Crappy Market

Here’s the problem, Union is designed for Startup Hubs…. which derive their revenue from startups. One of the reasons 1776 failed so miserably was because startups are a horrible target market.

  1. They’re Cheap
  2. They Often Don’t Pay
  3. They Go Out Of Business

A startup selling to startups is like a drowning man saving a drowning man from drowning… two drowning men do not a swimmer make.

There are hundreds of competitors in the mentor matching world. Evan tried to sell Union to the University of Maryland, UMD balked at a quoted $230K. They then went and bought a much more reasonably priced solution, TrustedPeer. How many competitors are there? Well, a cursory search of Capterra (A DC Tech company acquired by Gartner) doesn’t list TrustedPeer or Union. This is a low margin market focused on a niche that is not willing to pay big money. It is highly likely that when Union attempts to convert all their non-revenue customers, like Benjamin’s Desk, those “customers” willing to use your stuff for free will use someone else’s software for free. Mentor matching isn’t strategic to Universities or Coworking spaces… it’s a nice to have. Union’s users have proven what they’re willing to pay for Union… Zero. There are multiple free, open source solutions.

Very few the multiple companies in this market have received any significant VC funding…. there’s a reason for that. VC’s know you there’s no money in startup mentoring.

Got that?

  • Mentor Matching Software is not strategic to the mission of its target market (If a person’s heart stops working, a heart transplant is strategic. AIf a person has a headache, aspirin is helpful. If a person wants a cupcake they can do without it. Union is a cupcake)
  • Price Sensitive Customers
  • Startups Go Out of Business…. Low Life-Time Value
  • A Multitude of Competitors Including Free Open Source
  • Very little money invested in the large group of competitors (VC’s have not validated Mentor Matching as a Market)

Issue #2 Crappy Leadership

It is said you learn more from Failure than you do from Success…. if that’s true then Evan’s learned a lot. He’s founded 3 companies and failed at all three. He has not yet worked for a startup that succeeded, with a profitable exit. He has no experience with success on which to model a win. Hell, the only time he met expectations was when we didn’t make a profit leading an intentional non-profit, Startup DC.

Issue #3 Top Heavy Management Team For a Startup

I’m going to be politically correct so I’ll eschew the Native American euphemism for a nautical one… Union is staffed by too many Admirals and not enough Sailors. Startups start lean, with founders that are willing to get dirty, clean toilets, take out the trash as well as strategerize. They don’t take high salaries. How will this limited-funding and limited-revenue, over-stuffed startup make it when it has few worker bees and tons of queen bees?

I conservatively estimate the salary, taxes, benefits just based on the eight employees named in this report by the Washington Business Journal as at least $80K per month. That’s before rent, computer, communications. travel expenses and before Evan hires a new Executive Chef and Masseuse.

If my conservative estimates and the $650K of funding as originally reported are correct… this company has less than 6 months runway.

Staffing:

  1. Evan Burfield
  2. Steven Graubart – I had heard that Graubart was not joining Union but the Andy Medici WBJ reports different.
  3. Dominique Taylor 
  4. Garrett Johnson
  5. Morgan Gress Johnson
  6. Yuriko Horvath
  7. Margaret Shepard

If you wonder why anyone who’s worked with Burfield would continue to work with Burfield, I would separate them in one or more of these categories:

  1. They were not offered jobs at 1776 so they signed on to Union until they can get a real job and as soon as they get a real job they’ll say adios
  2. They know not what they do
  3. They don’t care about the taint by association
  4. They are Burfieldish in nature

Toast May Be A Better Name

Burfield may call it Union but I think it would be better named Toast.

Summary

Burfield’s Effect on DC Tech

It’s impossible to guess where DC Tech would be if there was never a Burfield. We have fewer DC’s Today than when Evan became a community leader in 2012. We have fewer great new Startup Stories. I can’t blame that on Burfield.

What I do know is that Burfield created nothing of lasting value. No companies of any value exist that wouldn’t have existed without him. His $2500 investment didn’t make Social Tables. Social Tables wasn’t a real 1776 member, they rented their own private space upstairs from the main frat and quickly moved on. They were funded before 1776 and will thrive without them. I’d be happy to hear the story, arguments and supporting facts from any great startup or leader that can say they owe it all to Evan.

Evan created a big distraction, created a huge Personal Public Relations vehicle and now that he’s gone, the effect will make the kind of waves in this market that a grain of sand leaves when you drop it in the ocean. Gone in 60 seconds.

He’s now in Sink or Swim mode because the city doesn’t need a community leader. He’s back to running a company, building something people want, selling it to them for a profit.

As far as our tech ecosystem is concerned. We don’t need a leader of a nexus of kickass startup citizenship. DC needs heads down entrepreneurs focused on building great companies. Great companies build a great community. So Evan… go forth and swim! Make Union great! Maybe it will be part a foundational block of a great DC Tech Ecosystem. If you make it work… I promise I’ll sing your praises because you are riding a dead horse.

Let’s not forget that there are a host of bodies in this town that Evan has used, abused, and cast aside when he was done with them. There are tons of people rooting against him, unwilling to help him. One source said of Evan that if he was on fire, “I wouldn’t pee on him to put it out.”

Good luck with that Evan.

Evan Burfield – Wolves of Startupland