Wolves Of StartupLand – #DCTech-style
The Wolves Of StartupLand
What’s wrong with Mr Cranky? Why is he always crying Wolf? Is he like Peter in Peter and the Wolf? Are there really Wolves in StartupLand? Is he just crying Wolf? Absolutely YES and on Thursday’s for the next few months I’m going to make my episodic case to that end in a series of blog posts that detail what puts the Crank in Mr Cranky. Why is he so mean to that poor startup founder. Why is he such a bully. Although I prefer to think of me as more of a Proceed With Caution Sign than a bully but that’s just me. You make up your own mind.
Over the next few months, I’m going to be dedicating my Thursday Blog Posts to multi-part stories telling the tales of The Wolves of StartupLand. I’m talking about the people who game the system, fudge the truth, may have squirreled away with the money of others… the Beltway Version of Wolf of Wallstreet… serialised… startupised…and DCTechicised.
Why Mr Cranky?
The State of the Business or Startup Tech Press
15 years ago there was a robust business press corps. Then budgets got slashed, the instant-on, have-it-now generation with attention spans shorter than Donald Trump’s Pinky demand and get linkbait in place of long story editorial content. DC is down to a precious few real journalists, if any, who have the time and resources to dig and develop real stories of value and note.
In today’s DCTech a generation of cheerleading reprinters of press releases replace hard hitting journalists. The “Journalists” of DCTech…. DCInno, Technail.ly DC, Tech.co, even national tech rags like Mashable and Tech Crunch rarely if ever ask a tough question… or what politicians now call gotchya questions like “what do you read?” They’re fluffy linkbaiters.
As far as business coverage goes The Washington Post no longer pursues the business equivalent of Watergate-like intrigue.
Steven Overly at the Washington Post is gone and poor Tom Heath is stretched thin and spending more time on the human interest angle of business versus the ugly life forms you find when you turn over a rock. On the national scene the train wreck that is politics, the scandal of the hour takes all the headlines and sucks all the oxygen from the room. In DC, only the Washington Business Journal has a local startup business beat guy, Andy Medici who does some digging but with the amount of stories he must produce in a week he is like a one arm armed, one legged, paper hanger in a shit kicking contest who came in second in an axe fight (no offense intended Andy).
Lately the investigative political work of the Washington Post and the New York Times highlight the need for a well funded, well armed press. In terms of DC business journalism barely has a pulse, let alone their hand on the pulse of DC Business… especially small business. But we are seeing the power and effects of good journalism shining the light on squalor. Business journalism could use a dose of that. Now don’t get me wrong, I’m not a journalist but I sure would like to shame the “journalists” to become journalists and the thieves to go legit.
Even when institutional investors place million dollar bets, nefarious executives can fudge numbers and mislead a board for years (I’ll be covering eTensity as an example in future posts). 15 years ago Startup Investing was almost exclusively a very rich man or institutional investor’s game which meant more money invested and more influence and oversight for investors over portfolio companies. Today because the cost to get to market is much reduced and crowdfunding has opened investments to widows and orphans the financial bar is much lower to start a company enabling poor dumb mooks like me to write $5,000 to $25,000 checks in Dumpster Fire companies. Back in the day a Startup needed $3 million to get started. Now $300 thousand is a good start. Back in the day checks were minimums of half a million now Evan Burfield invests $2,500 in a company and he calls himself a Venture Capitalist.
The problem here is a $25 thousand investor has little rights and visibility into the real state of a portolio company. That lack of transparency, the lack of a strong board exercising serious oversight in early stage Angel and Crowdfunded companies muddies the water for amatuer investors. This lack of oversight opens the door for those with larceny in their hearts.
Enron pulled the wool over investors with billions invested. The SEC, large institutional investors, the board and auditors did not keep the wolves at bay. How can we expect better oversight in a company that raises $2 million when the largest investor is either in-on-the-con or has no say because they are one of 100 investors who wrote $20,000 checks? When there are no independent auditors and the SEC doesn’t have the bandwidth to oversee the companies like Enron, shit happens.
Mr Cranky as Casual Observer of The Wolves Of StartupLand
In 2003 I took over a failing Ikimbo as the 4th and final CEO only to uncover emails that constituted a side deal with a vendor, DDLabs. This crooked deal gave the 3rd CEO… my predecessor an equity stake in DDLabs if the CEO could execute a favorable sale of Ikimbo to DDLabs. That was an eye opener. That’s when I realized that not everyone shared the same values.
I may have been complicit when I stood by and watched a faux VC knowingly pitch his failing non-working, scotch-taped together demoware portfolio company to a novice small VC fund investor in order to puff up Mr Faux’s IRR at the expense of the novice. I kept my mouth shut. Soon after the portfolio company failed miserably ensconced in turmoil and charges of fraud. The company died a worthless carcass. I knew as I watched that the novice was being scammed… I stood by and watched that happen and I feel dirty. I didn’t say, “Warning! Don’t Do it!”
Eyes Wide Open
Even with my eyes wide open I still fell for a huckster who convinced me to invest alongside him and his “VC” fund in the worst company I have ever been involved (100% my fault).
So am I just a troll…. maybe. But I think I serve a purpose and yes… I get way more web hits when I call BS on a Bullshitocrat… my trolling may be linkbait… but it serves a purpose. I want to open more eyes, create more skepticism, slow down the serial con-men and hopefully make you, as you kids say today… woke to the wolves of startupland. I want you to ask gotchya questions. I want you to question everything and accept very little at face value. I want you to pay it forward and save some other poor slob like me from investing in a Dumpster Fire.
So Look to the Thursday Series on The Wolves of StartupLand!
- Episode 4 – A History Of Malfeasance – Turn Of Century #DCTech Part 1
- Episode 1 – Jonathon Perrelli – Fortify Ventures Part 1
- Episode 2 – Jonathon Perrelli – Fortify Ventures Part 2
- Episode 3 – Jonathon Perrelli – Life Fuels Part 3
- Pretangel Alert – Fake Investors or Wolves in Sheep Clothing
- Danny Boice – Harvard Faker Part 1
- Danny Boice – Trustify Part 2
- Jen Mellon – Trustify Part 3
- Trustify Demand Letter – Trustify Part 4
- Fact vs. Opinion – Trustify Part 5