The latest from TechCrunch
- I Will Honor The Embargo
- Memo to CEOs & Founders: Stop Being Such Cheap Bastards
- YC-Funded Crocodoc Makes It A Snap To Share And Mark Up Documents
- Video: The Early Days Of Pyra Labs / Blogger (Featuring @Ev Williams)
- Does Citibank Suffer From Homophobia Or Just A General Dislike For Startups?
| I Will Honor The Embargo | Top |
| Our constant rants on the PR Industry do not go unnoticed. In return our tips box is filled with humorous anecdotes, articles and now, a video. Here are two we’ve received in the last week. Which we’re posting in honor of Yahoo breaking it’s own embargo , and the AP sending the launch of CODE advisors completely sideways by breaking an embargo by nearly 24 hours. Outcast PR was on both stories. First, the job description. Even a decade ago everyone thought PR was just about the worst job around. Forbes did a roundup called “Five Crappiest Tech Jobs,” and “PR account executive for a dot com startup” was on the list. Other winners included “porn sifter for filtering company” and “packer for dogdoo.com” (a site that actually sold dog excrement online): PR ACCOUNT EXECUTIVE FOR A DOT-COM STARTUP—Here’s the perfect job for people who want the worst of all worlds. For starters, everyone hates flacks. Journalists hate them because they think they’re incompetent whores. Businesspeople hate them because they think they’re incompetent whores. And flacks hate themselves because deep down inside they suspect that they might be incompetent whores. But what’s particularly bad about doing publicity for Internet startups is that everyone in the media has already heard every story with every angle about every product and every service a thousand times and never wants to hear from another PR firm as long as they live. But flacks can’t explain this problem to their nitwit 23-year-old CEO clients because the CEOs have all persuaded themselves that their generic success story is the stuff of legend. Flacks get personally abused by clients, insulted by journalists, stiffed out of their fees by customers, ridiculed by colleagues, and humiliated by their superiors. One flack for a major software company says her boss got so upset that he ordered her to attend charm school. Another had to go shopping for underwear for a skivvy-less journalist. How uncouth. All in all, being a dot-com flack is exactly like being a whore, except the hours are worse. Second, this video (in fact created by TechCrunch Europe Contributing Editor Steve O’Hear ) which recreates a conversation between a PR professional and a blogger or journalists. We have this same conversation oh, five or more times per day: Our past rants: The PR Roadblock On The Road To Blissful Blogging One PR Firm’s Lack Of Ethics: Reverb Caught Astroturfing The App Store The Reality Of PR: Smile, Dial, Name Drop, Pray. Meet Lois Whitman, The Poster Child For Everything Wrong With PR Death To The Embargo The Last Has Fallen. The Embargo Is Dead. | |
| Memo to CEOs & Founders: Stop Being Such Cheap Bastards | Top |
| This is an anonymous guest post from a well known startup executive: When we split the atom, Einstein remarked that everything changed but our way of thinking. You could make the same argument about acquisitions and option pools. As Mark Suster recently noted , employees will never see a big payday at most startups unless the company shoots for the moon. This is probably why investors' case for a company to sell early focuses exclusively on the founder : in most early-stage acquisitions, the liquidation preferences and deal-sweeteners only work for investors and founders. Back when some companies sold at $50 million and others went public at $250 million, we could all agree that this was just how the cookie crumbled. But now that we live in a world where early-stage acquisitions are the only outcome to which most startups aspire, we have to re-allocate this smaller cookie. The elephant in the room is that that founders and CEOs take almost all of it for themselves. I've looked at three or four deals recently as an adviser; in every case, the founder or CEO was taking more than half the company for himself, and leaving 10% for everyone else. Why aren't we surprised when three months later that company can't hire enough engineers? Even when the company succeeds, the big-shot with the big payday may regret it. The difference between $10 million and $20 million in practical terms — whom you can date, where you can go, what you drive — is zero. But if you give an extra $10 million to the folks who fought shoulder to shoulder with you, everyone will feel better about what you accomplished together. You want your startup to end like Trading Places, with Eddie Murphy, Dan Aykroyd and their butler sipping drinks on the beach. This has always been true, but now that more startups are being bought, it has become less common. Consider the proceeds of a $50-million acquisition for a 100-person company that has raised $14 million with a typical liquidation preference: Because of the liquidation preference, the investors get $14 million right off the top. The remaining $36 million is divided according to equity ownership. Investors own 50%, and get $18 million, split between two firms The two founders own 33%, and split $12 million The 3-person executive team, including a CEO if one was hired, owns 10%, and splits $3.6 million. The team gets another $3 million as a severance payment or an earn-out, to sweeten the acquisition offer. The remaining 95 employees split 7%, each earning $27,000. Unlike the founders, the employees have to wait until their grants vest, working at a company no longer of their choosing for two years. Now consider what would happen if the same company raises another $10 million, expands the employee option pool to hire more executives and to support 300 people. It is worth $250 million at the time of a public offering. There is no liquidation preference, severance payment or earn out. Everyone is paid according to the number of shares he owns. Investors by now own 60%, or $167 million, split between three firms The two founders own 20%, and split $50 million The executive team still gets 10%, but now splits it among 5 people. Each executive gets $5 million. The remaining 290 employees own 10%, with the first 100 employees hired getting the lion’s share, of say $200,000 each. The point is not that this is a better outcome for all. Any fool would take the higher price if he knew he could get it, but you don't know when or whether you ever will. The point is that employees at least stand a chance at a nice gain when a company is built to last, whereas founders benefit disproportionately from a quick flip. So in a world of more quick flips, we need to increase the size of options pools, eliminate liquidation preferences – which just get picked up in subsequent rounds of financing by new investors, who screw the old ones — and provide better acceleration for everyone. Otherwise, nobody will want to work for a startup. But the reverse is happening. VCs want their pound of flesh, and entrepreneurs do too. In fact, the 20% of company ownership that was once considered the standard allocation for executives and other employees is now more likely to be at 10%. If we're all a little less greedy now, we'll build bigger companies later and everyone will make more money, and feel better about it too. | |
| YC-Funded Crocodoc Makes It A Snap To Share And Mark Up Documents | Top |
| There are plenty of collaborative document editors out there, but when it comes to getting input about a new document or PowerPoint deck, many businesses still rely on the tried-and-true method of printing them out, handing them around the office, and asking people to scribble their notes directly onto their printed copies. If that situation sounds familiar, you’ll probably want to check out Crocodoc , a Y Combinator -funded startup that’s launching today. Crocodoc makes it easy to share and mark up virtual documents the same way you would on a piece of paper, and it only takes a few seconds to start using it. Crocodoc is an extremely straightforward service, and you don’t even need to sign up for an account to use it — just upload a document, and a second later you’ll be in the Crocodoc editor. Markup tools include Sticky Notes, a highligher, text strikeout, and the ability to leave your own comments (a ‘pen’ tool is on the way). Editing a document should be very familiar to anyone who has used Adobe Acrobat or Apple’s Preview. If you’d like to try marking up a sample document, you can use this demo . By default, the service assigns each uploaded a document a unique, “unguessable” URL, which you can use to share the document with friends, who can mark it up and add their own comments. But there’s one catch to the free version of the service: if you lose the document URL, that marked up document is lost for good (remember, you didn’t create an account to sign up). Fortunately Crocodoc also offers a ‘Pro’ version, which lets you create an account that includes an archive of your previously uploaded documents. It also allows you to password protect your uploaded docs (as opposed to just relying on the hard-to-guess URL for security), and to use SSL encryption. Pro Accounts cost $8/month or $36/year. And for companies that are wary of uploading sensitive files, Crocodoc offers intranet deployments, which means that these customers can run it inside their firewalls on their own servers. My only gripe about Crocodoc is the limited number of collaboration options — you can share your documents with as many people as you want, but everyone will be editing the same one, which seems like it would get messy fast. This will be fixed in the near future, when Crocodoc starts allowing you to review edits on a per-user basis. Crocodoc’s still quite basic, but that might be exactly what its customers are looking for. And they may well be willing to spend $36 a year if it means they’ll have to print out fewer stacks of paper. CrunchBase Information Crocodoc Information provided by CrunchBase | |
| Video: The Early Days Of Pyra Labs / Blogger (Featuring @Ev Williams) | Top |
| We got a tip about a video from the same people who made us – and subsequently, you – aware of Biz Stone ’s 2006 video-recorded attempt to explain ‘Twttr’ when the service that became Twitter was still in diapers. This time , it’s Twitter’s other co-founder, Evan Williams , who appears in a video with developer Paul Bausch , Meg Hourihan , Alberto González and some birds, recorded way back when. More specifically, the recording dates back to 1999, the same year Williams co-founded Pyra Labs – the company behind Blogger , acquired by Google in 2003 – together with Hourihan . If you’re low on time, skip to the 3:17 mark, when we catch a glimpse of the Pyra Labs office in its early days, and witness the glorious arrival of a brand new server for the Blogger service. (Thanks, Grigoris!) CrunchBase Information Pyra Labs Evan Williams Information provided by CrunchBase | |
| Does Citibank Suffer From Homophobia Or Just A General Dislike For Startups? | Top |
| I just finished reading a very unsettling blog post by serial entrepreneur Jason Goldberg , whose new startup fabulis has apparently had its bank account blocked by Citibank over posting “objectionable content” on its company blog , at least according to a bank employee he spoke to on the phone. (see update below) Fabulis is described on the blog as “the social network that helps gay men connect with amazing experiences nearby and around the world”. Could that be what Citibank is objecting against rather than the content on the blog, which is perfectly innocent any way you look at it indeed? Now, in case you don’t know Goldberg: he’s an accomplished Internet entrepreneur, who had stints at the White House, AOL and T-Mobile under his belt before founding Jobster (and raising more than $50 million for the startup) and after that socialmedian (which he sold to Xing in December 2008). For his latest startup fabulis , Goldberg has raised $625k in seed funding from the likes of Washington Post and Venture Partner at Mayfield Fund Allen Morgan , and essentially aims to become the leading social network and lifestyle website for homosexual men. Which is challenging if your financial institution freezes your bank account and marks it for immediate termination after reading a couple of your – again, perfectly harmless – company blog posts. This is Goldberg’s take on the blocking of the account: In a bit of strange and disturbing news, fabulis discovered today that someone(s) at Citibank had decided arbitrarily to block fabulis' bank account due to what was described to us on the phone as "objectionable content" on our blog. In fact, the account — it turns out — was blocked a few days ago without anyone letting us know about it by phone or email. Huh? Mind you, fabulis is a serious business, backed by some serious players, and for the life of us we can't find anything "objectionable" on our blog besides some good humor, some business insights, and some touching coming out stories from some great and fabulis gay people. So, what gives? And wtf. When did Citibank start reviewing blogs to decide who can bank with them? Calls into Citibank tonight resulted in a temporary lifting of the block while a compliance officer is asked to re-review our website on Thursday. Stay tuned … we'll update you on this shocker as we learn more. WTF indeed. Whatever update comes, this is a PR nightmare for Citibank, and I’ll be curious to see what the company has to say about this atrocity. In a comment on Hacker News , Goldberg says he doesn’t think Citibank is being homophobic, and calls out moronic behavior instead: Do I think Citibank or Citigroup is a homophobic malicious company? No. Do I think some compliance officer is a moron who made a really stupid decision? Yes. Three hours of trying to sort this out provided even more comedic insanity than I even revealed on the blog post. Including a bank manager who didn’t want to talk about this because she was uncomfortable talking about the content of our blog over a recorded phone conversation. Oh, and we’ve learned that the account was marked to be a cancelled by said compliance officer for this “objectionable content.” wtf. All we know so far is that we finally got someone to lift the block on the account, but that the best she could promise is another review of the situation today. insanity. Very uncomfortable for sure, but mostly for Citibank, who for the record, apparently does not want to be reached by e-mail even by press. So even if there’s a perfectly reasonable explanation to this – that the bank’s allowed to share publicly – I can only hope to reach someone by phone when it’s morning in the U.S. who can look into it and tell us what’s up. Update: In a new blog post , Goldberg says that he spoke with a Citibank employee about the issue, and was told that the bank had decided to terminate the startup's account because the "content was not in compliance with Citibank's standard policies." He adds that the bank's management promised to review the situation later today. Update 2: A second update on the fabulis blog says a representative has called and apologized. According to Goldberg, the bank spokesperson said that "all 3 of the citibank individuals who over the past 24 hours each individually claimed that fabulis' account was to be terminated for compliance issues around the content of our site, were all wrong to have said what they said." No kidding. As Goldberg concludes: “Hmph. Something smells.” Update 3: Goldberg now received an apology by e-mail from a Bill Brown, who says he’s responsible for the Citibank Branches in Manhattan, and the entrepreneur says he’s accepted the apology. This is what the e-mail read: Jason, We have not been formally introduced and I imagine that this is a poor way to become acquainted. I am responsible for the Citibank Branches in Manhattan and have just learned today of the challenges you have experienced in opening an account with us. I apologize for any confusion about the status of your account and the Fabulis website. Whatever statements that were made by any Citi representative related to the content of your website were inappropriate and made in error, and I will review in detail what happened. You have my firm commitment on this point. I truly regret any unintended message that my employees may have conveyed about your new business venture. I place great value on your business and assure you that Citi is committed to the gay, lesbian, bisexual and transgender communities. In fact, this week Citi has announced the financing for the True Colors Residence, a housing facility for homeless GLBT youth in New York City. I recognize that, to this point, this dialogue has been carried out on the internet via postings. You may choose to post this apology, however, please do not doubt the sincerity of my message and the responsibility I have for ensuring our customers do not encounter a similar experience. Safe travels, Bill Brown I still say they should move to another bank just to make a solid point. (Thanks to GigaOm for pointing out the updates to this story first) CrunchBase Information Fabulis Jason Goldberg Information provided by CrunchBase | |
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