Re: Change is inevitable, but the timing could be better

[<puff -at- guild -dot- net>]

Maggie Secara writes:
> OK, so , fine, I have learned my lesson.  I left a perfectly ideal set-up
> (100% telecommuting) for a dot.com, and look what's happened.  They're
> either going to be sold or liquidated before the end of the year (we'll know
> on Wednesday).  So long and thanks for all the... well, you know.  Happy
> Christmas.
> 
> Now I must say that most of the dire warnings I was given did not apply in
> this case.  I'm not sure what the issues have been, in fact.  When I hired
> on in October they seemed to be on the upswing and the staff all were happy
> to be here.  Oh well.  So I'm lookin' again in L.A.

     Good luck, though I'm sure you won't need it.  There should be a
lot of opportunities in LA-la land.

     As far as what the issues may have been, the most likely thing is
that the company plans they made were predicated on a sequence of
funding rounds which were likely (at the time) but which have become a
lot trickier since the market tanked.  The internet isn't dead by a
long shot, what we're seeing here is just the VCs waffling.  The
success hype was fed by VCs who switched from $5 million investments
to $50 million, and the gloom & doom hype is now being fed by the same
VCs crying over their mistakes.  The result is that the VCs would
would, even in the current market, normally be willing to invest, are
now skittish as hell (and/or maybe afraid of looking stupid).

     While I'm sure a lot of the dot.coms being shaken out were a bit,
ahem, shall we say "optimistic", I'm also sure that a lot more were
proceeding on a plan that the VCs dictated.  It was usually along the
lines of:

     "Okay, you need to take this first round of funding and build a
development organization, put together the first version of the
product."

     "Then what?"

     "Then you come back to us for the second round of funding and
that'll pay for the stage of selling the product and starting to
generate some revenue."

      "So we'll need to be making a profit at that point?"

     "Not a profit, just some cash flowing in to show you have
something concrete, that you're real and you're not selling vapor.
Then we do a third round of funding that pays for scaling up the
company, hiring more sales and marketing folks, building a
professional services division to sell after-market consulting
services, etc."

     Etc, etc, ad nauseam.

     None of this is necessarily a *bad* thing, btw, if done in a sane
and sober fashion.  The problem comes from all the hype the VCs
themselves generated (both to sell the stocks and because of all the
money they generated for themselves).  

     When I was a kid, I used to think that the stock market was an
inane thing that just served to let people make obscene profits off
the sweat others by pushing paper around.  Then I met an old guy who
used to be a stock trader (at this point he owned a comic shop, though
whether that was his retirement or his hobby I don't know :-).  He set
me straight on this; the stock market is a way for people who are
trying to produce something by the sweat of their brow to get the
financial flexibility they need to do their job.  The stock investor's
contribution is to take on some of the financial risk, but in doing so
he enables the success of the job.  

     The point is that risk is not just part of the picture, it's the
investor's fundamental job in this situation.  All of the hype in this
situation is annoying as hell to those of us trying to just do our
jobs.  This doesn't excuse the people doing the actual work at the
dot.coms, although once again the responsibility has to lie a bit more
on management's shoulders (but hey, that's why they get paid the big
bucks) than on the development staff.  

     Then again, while you hear plenty of gee-whiz stories about how
some programmer made a million in stock options, nobody bothers to
write about the VC firm that made hundreds of millions (or billions),
because after all, that's not really much fun to write about, is it?
It's much more fun to write about janitors who now make a hobby of
collecting ferarris (the janitor at netscape :-) and to make smug,
setentious "I told you so" pronouncements of doom.

     Personally, I'm glad the bubble has burst, now I'm just wishing
the bursting would be over so we can get on with actually building
something.  

Steven J. Owens
puff -at- guild -dot- net


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