Valleywag, Monitor110 and Telling it Straight
Few things irk me more than shoddy journalism, lousy research and bad intentions, and these three neatly came together in a piece by Nicholas Carlson published today in Valleywag. The thesis: Monitor110 wasn’t brought down by the issues I raised in my post-mortem, but because our lead VC failed to live up to a financing commitment. This was the story-line Mr. Carlson was hell-bent on writing about, and that he did. He reached out to me, people that know me and people that might know me concerning the lead he had gotten from somebody, and received a “no comment” from everyone I know that he touched. Somehow my “no comment” was twisted into a “he did not deny (the “facts” of his article).” Nice inference, Nick. But that didn’t stop him. A paucity of facts and understanding of the situation together with a total lack of knowledge of early-stage operations made for a most forgettable article. But I can’t forget it. Because words have power, even in the tabloids, be they off-line or online in nature. And using that power irresponsibly pisses me off.
Here is a total cut-and-paste of the article that ran today:
Why did investor-news aggregator Monitor110 go under, taking $20 million in funding with it? Read early investor Roger Ehrenberg’s surprisingly humble and informative blog post about the ordeal, titled “Monitor110: A Post Mortem,”
and it sounds like the startup fell prey to the usual pratfalls — too
much PR, weak leadership, and a confused product vision. Probably all
that’s true. But what’s also true, a source tells us, is that
Monitor110’s own investors, specifically Draper Fisher Jurvetson, which invested most of that $20 million, ensured Monitor110’s failure during its final months.A source familiar with the venture capitalists tell us that after
Monitor110’s last funding round, the company began to burn through cash
faster than expected. Fortunately for Monitor110 CEO Brennan Carley,
the company’s primary investors at DFJ were very understanding. They
promised — “truly promised,” our source tells us — Monitor110 a bridge
loan to get the startup through until its next funding round.
Monitor110 went ahead and spent the money, “with DFW’s “assurance the
bridge was coming,” our source says. But it never came.Instead, DFJ killed the bridge loan and — as is being reported today
— funded Monitor110’s direct competitor Skygrid instead, leaving
Monitor110’s other investors, like Ehrenberg, with nothing better to do
than write humble postmortems. Ehrenberg, reached for comments, did not
deny any of the particulars of this story.The real lesson of Monitor110, then, is this: Never trust a venture
capitalist. Why isn’t Ehrenberg telling us this story? He wouldn’t say,
but the most likely explanation is that he knows he might do business
with Draper Fisher Jurvetson again, and he doesn’t want to be
blackballed. Far easier to play the humble martyr, and gain popularity
by licking his wounds and sharing anodyne lessons learned.
Here are the real facts:
- Monitor110 was burning cash more quickly than expected, not due to cost overruns but due to revenues falling short of projections.
- We did have a disagreement with our VCs about a bridge. The contingencies they thought were baked into the commitment were different than those we perceived. Did this suck? Yes, it certainly did from management’s side of things. But did it cause Monitor110’s ultimate demise? No. Poor execution did. And I’m not sure simply adding more capital would have enabled us to grow out of our deeply-seated problems.
- If the company had generated revenues within spitting distance of our revised projections, the issue of a misunderstanding concerning the bridge would have been moot because our VCs would have gladly come up with the money required. They’re not stupid; they invested to make money, not drop millions on a neat idea that couldn’t be successfully commercialized.
- The new CEO, Brennan Carley, came into a very difficult situation and played the hand he was dealt the best he could. His was the role of rationalizing the business, increasing efficiency and reducing costs in order to provide some extra runway for achievement of revenue milestones. He did a great job; it was just too little, too late.
- Skygrid is a fine company and Kevin Pomplun is a smart young guy
doing some interesting stuff. I have sought to provide him input and
counsel as a member of the same community, facing similar challenges and possessing similar interests
over the past 18 months. I hope he has better results than we did, and
I trust my input has and will be helpful in this regard. I begrudge
both him and his investors nothing and wish them only success.
- I don’t need DFJ to do my next deal or any other deal and the issue of being “blackballed” is beyond a red herring. It’s moronic. I have money. I have access to lots of money. I have access to plenty of non-VC money. If someone (such as myself or any of those at Monitor110 with whom I’ve worked) is smart, ethical and acts with honesty and integrity then the “blackballing” of which Mr. Carlson speaks is a non-issue.
- I am not “playing” the role of martyr or anything else, and the popularity issue is almost hilarious. Nobody was more shocked than me at the response to my earlier post. The fact that many found it helpful was terrific, surprising and fulfilling. And if Mr. Carlson had ever read my blog, he’d know that the post-mortem was completely in-character and consistent with both the intent and ethos of my writing over the past two years.
- I am an angel investor with a portfolio of 25 investments, several of which are undeniably successful, some of which have achieved successful exits, and precisely one of which was a total write-off: Monitor110. Am I really licking my wounds, Nick? Is that really what I’m doing?
Why should I care what a muckraking reporter wants to print? Because words have power. And with that power comes responsibility, at least as far as I’m concerned. Mr. Carlson chose a single issue in a much larger, more complicated situation as a vehicle for both damning our VCs and implying that my post-mortem was something less than ingenuous. It’s writing like this that gives Internet journalism a bad name. Issues of reputation and relevance are paramount in separating the good from the crap (and this is an area I know pretty well), and it’s hard enough separating the good from the really good than having to deal with the lousy masquerading as good. My post will do absolutely nothing to stop the tabloid-style journalism that seems so popular today, but if you are shooting for lots of clicks then at least get the facts straight, ok? And if you lack the facts may I suggest a three-step process: stop; breathe; and think. Either get more facts or don’t write the story. This is what real journalists do.
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COMMENT:
AUTHOR: Mark Harrison
EMAIL: Mark@yourpropertyexpert.com
URL: http://markharrison.wordpress.com
DATE: 08/08/2008 05:02:31 AM
Roger,
Thanks for this. While I’m not based in the Valley, it’s good to know you have the same issues as we do in the UK.
One minor point - is “successful exists” (final bullet) a typo, should it have been “exits”… or is this another phrase that doesn’t quite translate over the Atlantic?
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COMMENT:
AUTHOR: chris
EMAIL: christs@netspace.net.au
URL:
DATE: 08/08/2008 06:09:43 AM
Hi Roger,
Those who can, do. Those who can’t, write. (i.e. Mr Carlson)
Enjoy your work. Keep it up.
CT
Australia
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COMMENT:
AUTHOR: Jeff Frese
EMAIL: jeff.frese@gmail.com
URL: http://www.freshmanfund.com
DATE: 08/08/2008 09:23:13 AM
He printed it so it must be true!! Everything you read on VallyWag is true; right?
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COMMENT:
AUTHOR: Byrne
EMAIL: bhobart@gmail.com
DATE: 08/08/2008 11:14:05 AM
I think he’s seeing whether or not he can draw you into the Valleywag orbit — if he knows he can get a rise out of you, he’ll just keep prodding every few months.
On the other hand, it’s nice to know that the Valleywag guys can play “Journalist” by actually calling their sources, instead of just writing whatever comes to mind.
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COMMENT:
AUTHOR: Dave
EMAIL: frieddave@gmail.com
URL:
DATE: 08/10/2008 09:57:20 AM
I don’t really know anything of the specifics of this issue, as I have not followed your Monitor110 saga.
However, I would question your contention that irresponsible journalism occurs primarily on the web. Irresponsible journal is as old as newsprint itself. I understand that web-based journalism has the potential to reach more people more quickly than conventional media but it is also true that many of the most egregious examples of irresponsible journalism have been perpetrated by dead-tree writers.
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COMMENT:
AUTHOR: Nate Westheimer
EMAIL: nate.westheimer@gmail.com
URL: http://innonate.com/
DATE: 08/11/2008 06:45:47 PM
Roger,
Take it from me: Nick is not known for being a good reporter.
The best advice I got on the matter (the guy has tried to trash me too) is that it’s actually a good thing for him to trash you, because people have so little respect for him and his work that it makes you look good!
Nate
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COMMENT:
AUTHOR: John Doe
EMAIL: john@doe.org
URL:
DATE: 08/17/2008 06:36:04 PM
Everyone knows ValleyVag is one those gossip news sites/blogs, but thanks for the details.
However, it is interesting that Draper may have invested in both comapnies.
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COMMENT:
AUTHOR: Greg Battle
EMAIL: gbattle@gmail.com
URL: http://gbattle.tumblr.com
DATE: 08/18/2008 10:06:12 PM
Hey Buddy-
Some people live by the maxim of “you must kick a down once it’s down”, while others remain above the fray. You have nothing to prove or defend. Your record speaks for itself.
I would love to see Jeff go back to his original idea of using much of the same technology you’ve developed in an area where value is more stargazer driven than investor driven. Public branded verifiable metrics within the entertainment industry would kick ass. You guys would pwn MSFT’s crappy X-Rank, Google Trends and the dusty-but-trusty Q-Score.
GB
Just a thought
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COMMENT:
AUTHOR: MJ
EMAIL: jenksster@gmail.com
URL:
DATE: 08/22/2008 11:43:24 AM
Hah!
I attended college and graduated with Nick Carlson (aka Nick the Dick). In a school of only 1700 students, everyone knows everyone. He wrote for the school paper with similar irresponsible journalism … I always felt his articles were all about sensationalism rather than reporting. He fits right in at ValleyWag.
I guess he hasn’t changed much since graduating.
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2 years ago
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