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ArsDigita Founder Responds to Closing 304

Posted by michael
from the moral-of-the-story dept.
An anonymous reader sent in: "Net celebrity and ArsDigita founder Eve Andersson has written a brief history of the firm, documenting its downfall from her point of view. Fascinating reading, and yet another example of how a good thing can go so wrong."
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ArsDigita Founder Responds to Closing

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  • by digitalunity (19107) <digitalunity@yahoo . c om> on Sunday February 10, 2002 @02:57AM (#2981458) Homepage
    I guess I'll just have to get my MCSE now.
    • I guess I'll just have to get my MCSE now.

      MCSE? Uhmm.. That would be 'Arse University' wouldn't it?

    • by yeOldeSkeptic (547343) on Sunday February 10, 2002 @04:53AM (#2981618)

      A small group of developers earning lots of money, making clients happy, and developing and releasing a useful software product is wonderful, but ... to make a substantial impact on the world, you gotta grow.

      This is where it all began. ArsDigita had earnings, had satisfied clients and had a useful software product. What they didn't have was an impact on the world. What I'm saying may not be popular, but it seems to me that after an initial success, egoism got the better of them. It isn't enough that they are a big fish in a little pond, they gotta be a big fish in a big pond.

      There is nothing wrong with growing, but Greenspun and cohorts should have realized that as ArsDigita grew, it will change its character: It will need funds, it will need expert managers, it will need a longer list of clients.

      Funds: Conservative companies don't go to venture capitalists for funds. They go to financial institutions for that. VC's ask too much control in return for their cash. FI's only ask that you present them a viable business plan and a reliable payment schedule. Perhaps ArsDigita never went to the large FI's because it couldn't present a viable business plan? Or because their ego told them that bricks and mortar FI's are not the way to growth in the internet-age?

      Clients: So they got three or four big clients initially. Considering that ArsDigita had no office, no letterhead and had only 5 employees, that's a big deal. But if they grew to a hundred full time employees and an office, even 10 big clients won't be enough. Did they have a plan to increase their client list or at least knew where those clients will be coming from?

      Expert Management: The most important rule for entrepreneurs: This company is your baby, you gotta take care of it, nurture it, and help it grow, because no one else will. When the company grows, the owner's expertise must grow with it. ArsDigita was forced to grow so fast that the owners never had a change to gain the expertise to manage the enterprise. ArsDigita had to hire outside ``experts'' whose only probable interest is how to bail out with a golden parachute.

      If ArsDigita didn't try to match the company's size with the owners inflated ego, it would be probably still be profitable today. Compare ArsDigita with John Carmack's Id Software and you'll understand everything I just said.

      Just my half cents worth. ;-)

      • by dinotrac (18304) on Sunday February 10, 2002 @09:42AM (#2981898) Journal
        Yes.
        This rant, though I'm sure it's full of truth, does manage to excuse the founders of responsibility.

        It sounds like their company was doing well enough to fund its own growth, albeit at a slower pace.

        They could get richer faster, just not as richer as faster as they'd like.

        Of course, they might now still be around as the economy recovers. Might still be in a position to make big scores that are available in the wake of all the companies that joined them in the merry rush to VC money and are not longer around to compete.

        But no.
      • Funds: Conservative companies don't go to venture capitalists for funds

        If you think a bank is going to loan you money to start the type of company typified by Ars, you are crazy. Try it. Try any bank in your city. People go to loan sharks for a reason. Also, VCs can give you a great deal of expertise and assistance, but the arrogant mentality of /. precludes them thinking that they would ever need assistance getting cheap office leases or HR services, right?

  • by Anonymous Coward on Sunday February 10, 2002 @03:05AM (#2981467)
    Eve's story was an interesting read, and it's quite similar to the history posted by Greenspun. To make a long story short, greedy VCs drove an otherwise good company straight into the ground. Greenspun's account of the action has been removed, but a cached copy [archive.org] is at archive.org.

    If you want to know what really happened, I'd say that a combination of the two journals is likely a good start.
  • Typical.... (Score:1, Redundant)

    by Obliterous (466068)
    vc's get ahold of a company, and everything goes to hell.... they hada good buisiness model, once...

    All hail the ACS!!!!!
  • by Anonymous Coward
    What about nepotism? I mean, Eve is an okay programmer and one hell of a girl geek but she sucked (no pun intended) so bad at the managerial position. Believe it or not, she was a joke as a team leader and everybody on the team hated it.
  • Fault? (Score:4, Insightful)

    by smashin234 (555465) on Sunday February 10, 2002 @03:40AM (#2981506) Journal

    Another classic example of the group project that falls apart because no one can fall apart.

    The company was doomed the minute they brought in the "VC's" because their vision of the company's future was drasically different then the people who started the company.

    Just like getting into bed with someone who has different views on sex is a bad idea, so is going into buisness with people who have different views on buisness.

    It may work for a little while, but eventually everyone is going to get disillisioned and go do their own thing.

    • Know your VC... (Score:4, Insightful)

      by poemofatic (322501) on Sunday February 10, 2002 @04:18AM (#2981572)
      VC's are gamblers. They're not intersted in funding the expansion of Jim's Donut Shop, even if Jim makes a good profit every month.

      Their business model is that a very small fraction of their businesses hit the jackpot while the rest fail trying to get there. The real world business model is that most successful businesses are like Jim's. No jackpot. Now, what happens if, for some reason, Jim manages to get a lot of VC cash. Well, you'll see Jim opening up dozens of franchises, building donut-baking warehouses, buying trucks, etc. Odds, are, Jim will fail.

      Now in the Internet Bubble there were a lot of good, sound businesses that were really more like Jim's and less like eBay. Duh. In fact, I think the internet is more suited for small profitable outfits -- it doesn't scale very well. With an office, some good coders, a few routers and you can reach the world. But you don't see enormous revenues, and getting 10x as many good coders as when you started is impossible. It's very hard to scale up on the net. But the surreal economy fooled a lot of people into shooting too high. It's hard to imagine ArsDigita -- basically some support for a community database/website -- taking over the world. So the VC's drove it into the ground.

      • It's hard to imagine ArsDigita -- basically some support for a community database/website -- taking over the world

        This is like saying "Its hard to imagine an auction [ebay.com] website taking over the world." ArsDigita's target market had the potential to satisfy VC's required returns many times over.

        The VC's didn't have to start hiring people at .com boom salary levels, abandon aD's existing products, and ignore the developer community. They chose to, because that's what everybody else in the VC community was doing at the time.

        And that brings me to your first statement: VC's are gamblers. Nothing could be further from the truth. VC's try to avoid risk like the plague. But for them the biggest risk is getting left behind by other Venture firms. So they act like lemmings, out of fear that deviating from the norm will get them in trouble. The tactic works quite well. Although some Venture investors are irrate over the the collapse, most firms are getting off the hook by saying that everybody else made the same mistakes. (Of course some [mcventurepartners.com] did so poorly that even this excuse won't help).

        The collapse of aD will go down as a classic case of VC's (Two of the most prominent in the business) acting like lemmings at the expense of common sense.
        • hmm (Score:3, Interesting)

          by poemofatic (322501)
          This is like saying "Its hard to imagine an auction [ebay.com] website taking over the world." ArsDigita's target market had the potential to satisfy VC's required returns many times over.

          I think the market for online auctions -- basically people selling stuff, could be estimated as on the same order of magnitude as classified ads -- pretty big. How many organizations will develop these community message boards and be willing to pay for a service contract with aD?

          Also, you have two "first on the market" players. Ebay has an advantage (just like slashdot) because it organizes people, so it snowballs (scales) better. People sell stuff there because its the biggest and so people buy stuff there, etc. This amplifies the advantage of being the first on the scene. The advantage of being the first on the scene with aD is a prestige factor. This doesn't scale as well as soon as, say, IBM or RedHat started offering support as well (the code is GPL'ed). So it's harder to scale and a smaller market in total.

          VC's try to avoid risk like the plague. But for them the biggest risk is getting left behind by other Venture firms. So they act like lemmings, out of fear that deviating from the norm will get them in trouble

          True, but this is just a finer distinction. They act like lemmings because of the risk. Just like gamblers develop strict rules of when to take an additional card. Everyone knows the rules and, apart from small personal tweaks, the rules are followed obediently because of the great risks involved.

          This is not to argue with your other points, and the fact that often VC's make horrible managers and don't understand the market well. My point was that some of these decisions (getting rid of GPL software, etc.) make sense if you're willing to take any risk to for a shot at exponential profit growth. The others are just bad management.

      • Re:Know your VC... (Score:3, Insightful)

        by King Babar (19862)
        Now in the Internet Bubble there were a lot of good, sound businesses that were really more like Jim's and less like eBay. Duh. In fact, I think the internet is more suited for small profitable outfits -- it doesn't scale very well. With an office, some good coders, a few routers and you can reach the world.

        Actually, it's even better than that. If you've got the right business, you can ditch the coders and routers and just get an ISP to set you up something ultra-basic. There's a fabric store in our town that is now moving into a higher rent district because they became part of a business called "bridalfabrics.com". As best as I can understand it, they make surprisingly good money by selling bulk fabric suitable for wedding gowns and things like bridesmaid's dresses over the web. The reach of the 'net meant that some dorky little fabric store in Columbia, MO could now outsell Walmart in a carefully selected niche market. Yow.

        And then there are all the small independent bookstores who owe their fortunes in no small degree to amazon.com. We have one of *those* in town, too. It was an okay small independent that is getting run out of the mall by a Barnes and Noble. But not run out of business, since their thousands of carefully chosen, slightly odd-ball titles are turning over at a much better rate given national exposure that cost them basically only a database merge of some kind. Now they'll get a store that's twice as big a couple of blocks away from campus, and I suspect they will do just fine. Basically, it looks as thought the internet is best at selling things that end up in random locations but can be pulled off of shelves and shipped. Weird books on Missouri archeology? Somebody wants those. Import CD-single from Europe? Yup, that too. Aunt Esmerelda's Limoge china? That's a bidding war on e-bay. Anything you can get from Target or Walmart? No, let's just drive down to the store and pick it up, thanks.

        There's no deep message here, but it's amazing that so many missed it so wildly.

  • by egumtow (410320) on Sunday February 10, 2002 @03:44AM (#2981511)
    quote

    "In late March 2001, ArsDigita received $38 million in financing... In early April, Allen Shaheen... took Philip's place as CEO.

    'ArsDigita University was one of the primary reasons I decided to join ArsDigita Corporation.'
    - Allen Shaheen, early April 2000"

    end quote

    What the heck is that? Shaheen commenting on the company a year before he joined? All the quotes in the "Venture capital and new management" section are screwy like that. Is Eve trying to pull a fast one, or is it a mistake?
    • i am pretty sure it's just a typo. if i do recall correctly, Mr. Shaheen did not make that statement until April of 2001, shortly after he took control of the company.

      As for that VC and new mgmt section... it's probably screwy because that is most likely the section they throw the new guy on who has way too much else to do than proofread something that the majority will not be interested in reading. seems like they would be more careful, since that would be what stockholders would want to see. of course, i'm not sure if they ever went public or not, so stockholders may not be an issue.

      • "Allen is ArsDigita's president and has been with the company since April of 2000."

        So, it was quite obvious by 2001 that Shaheen was driving aD into the ground. Why then was Philip "quite happy to let a 'professional manager' step in and take over some of his day-to-day management duties..."

        The entire piece reads of Shaheen destroying aD over the course of 2000. Yet Eve and Philip are happy to let Shaheen take control?
    • Probably a typo. There's more at the end of her story: February 7 2001 where it should be 2002 (I think).
    • She means to say "in late March 2000". ArsDigita had the VC money in 2000. Allen Shaheen was running the show by July 2000.
    • by DeathB (10047)
      I worked for aD back in 2000. Both the VC funding and Allen should be for 2000 not 2001, it's just a typo.
  • Philip Greenspun's story [archive.org] (not surprisingly) agrees with Eve's, but provides a very different point of view.
  • Grain of salt (Score:2, Informative)

    by Anonymous Coward
    Just as note - within the company itself, Phil was widely known to be a bastard and an incompetent manager as well as a mediocre coder. Eve was basically known to be a joke. No one was particularly sorry when she left; when Philip left, people cheered. Note that, in her article, Eve compares the prosperity of aD before the dot com crash with the downfall of aD afterward; and blames it solely on the VCs. While I agree that the VCs have some hand in this, the basic reality is that companies like aD (no product, no strategy, no clue) do not fare well in the harsh climate of the "new new economy". I'd suggest taking Eve's rosy view of the situation with a grain of salt.
    • and yet posted anonymously. What bravery we displayed here. Take authorless words with a grain of salt
    • Re:Grain of salt (Score:3, Insightful)

      by cheezehead (167366)
      ...Phil was widely known to be a bastard ...

      Well, I don't know the guy, but I've read a lot of what he has written (see here [photo.net]). It appears to me that his manner is a bit rough around the edges (I've wanted to send him flame mail myself on some occasions), but he hardly seems to be a bastard or a jerk. There's this story about how he paid [greenspun.com] MIT students their tuition money (for one class) back, out of his own pocket . Amounted to more than $2000, if my calculations were correct. How many people would do that? Also, he seemed genuinely devastated by the death of his dog [photo.net]. People who are that civilized are usually 'good' people in my experience.
      • It appears to me that his manner is a bit rough around the edges (I've wanted to send him flame mail myself on some occasions), but he hardly seems to be a bastard or a jerk.

        He settled the lawsuit with caring what would happen to his friends who were also founders once the VCs owned the majority of the shares. How's that for bastard?
      • Well, I don't know the guy, but I've read a lot of what he has written (see here [photo.net]). It appears to me that his manner is a bit rough around the edges (I've wanted to send him flame mail myself on some occasions), but he hardly seems to be a bastard or a jerk.

        Different strokes for different folks, I guess. My first exposure to him was through an old professor, who had worked with him, and suggested I read Greenspun's stuff and pay attention to what he was up to. This professor was a bit of an interesting character himself, so perhaps I should have taken his endorsement with a grain of salt.

        But in any case, it was precisely his conduct and attitude on photo.net that led me to the conclusion that Phil is indeed a bastard, dead dog notwithstanding. He strikes me as wilfully uninformed (outside of the handful of topics where he maintains an opinionated flavor of domain expertise), grossly insensitive to others, and xenophobic.

      • Re:Grain of salt (Score:2, Interesting)

        by rodgerd (402)
        I was of the same opinion until I saw the memo where he attempted to explain the workings of aD by an analogy with Nazi death camps, sent as a company wide email.

        I can see why people working under him might perhaps hold a less than rosy view.

        (And Philip is the guy who makes snotty, racist sideswipes at Germans and Arabs because he believes they're universally anti-Semitic. Sheesh).
    • Re:Grain of salt (Score:3, Insightful)

      by BlackHawk (15529)
      I'd suggest taking Eve's rosy view of the situation with a grain of salt.

      An Anonymous Coward logs in to trash on two people whose profitable company was driven into the ground? And then has the nerve to tell us to take Eve's account with a grain of salt? That is cowardice, in its most purified form. C'mon, pal, if you're going to make comments like that and expect to be believed, put your name forward. Otherwise, how do we know you're not just some flunky from that VC coalition, trying to blunt the edge of some rather pointed commentary? Mind you, having your name on this message wouldn't prove that you weren't, but to anonymously make these kinds of comment shows a lack of guts that Eve, regardless of what you think of her, didn't exhibit.

  • Not really (Score:4, Informative)

    by Anonymous Coward on Sunday February 10, 2002 @04:07AM (#2981556)
    In her article, Eve seems to make the assertion that the ACS-TCL was a fine product, and that the ACS-Java that replaced it was terrible because java is merely a "fashionable" language, not a useful one.

    The reality is that the TCL version of ACS was abysmal. It did not scale in any reasonable way; it leaked memory like a sieve (we actually had to write a script to restart the server periodically), and it was a pain to use. Worse than that, the code was an ad hoc spaghetti mess, full of hacks that work around bugs introduced by other hacks. For example, a common joke among the developers was that any method prefixed with "philg_" could be replaced by the pseudocode "if(rand() > 0.5) crash();" Eve's own code was in the same league.

    When the same people who wrote this monstrocity got their hands on Java, they made all the same mistakes -- hence, the failure of ACS-Java to accomplish anything remotely useful. The VCs are not the only ones to blame for aD's failure.

    • Re:Not really (Score:2, Informative)

      by Ed Avis (5917)
      ACS Tcl was a monstrosity, but a monstrosity that worked and *made money*. Some parts were pretty terrible (esp. philg_anything as you point out) but the basic idea (let Oracle do the difficult stuff) seemed to work well. The codebase isn't beyond redemption, the OpenACS guys are having some success turning it into a respectable open source toolkit.

      The Java version was at least an order of magnitude more idiotic, IMHO.
      • Re:Not really (Score:2, Insightful)

        by Anonymous Coward
        Right, as has been said before, http://www.joelonsoftware.com/, rewriting a whole project from scratch is stupid. Tcl is a great language that has withstood the test of time, and while it might not have all the buzz of Java, it Gets The Job Done (AOL are still using it). It's a natural fit for the web - strings go in, strings go out, so a language adept at dealing with strings is a good fit (which is why Perl has been successful as well).
    • Because coders can do no wrong, right? (cynicism)
  • by Anonymous Coward on Sunday February 10, 2002 @04:10AM (#2981558)
    Anyone with an interest in Greenspun's ideas or the ACS should come over to OpenACS.org http://openacs.org where the FULLY GPL OpenACS 3.x and the (currently in late alpha) 4.x are developed and maintained by a talented global developer community and several companies.

    For general info read first: OpenACS FAQ
    http://openacs.org/faq/one?scope=public&faq_id=6

    Aolserver is the native webserver of OpenACS, but you can use Apache if you like
    http://openacs.org/software.adp

    A list of companies that offer various OpenACS (and ACS) services and support
    http://openacs.org/companies.adp

    We all hang out at http://openacs.org/bboard

    Come check it out for yourself.
  • by chip_s_ahoy (318689) on Sunday February 10, 2002 @04:13AM (#2981563)
    Eve characterizes Phillip Greenspun as being victimized by the evil VCs.

    But according to her story,he was victimized to the tune of 7.6 million dollars from a company about to go fuckedcompany? Not so bad.

    His story (see link above from solman) doesn't mention money changing hands, so what do you believe?
    • Given that her post mentions Phillip Greenspun receiving the money along with a non-disclosure agreement, I'm not surprised he didn't mention it. I can't think of anyone who'd be willing to endanger a settlement of that size.

  • by Thagg (9904) <thadbeier@gmail.com> on Sunday February 10, 2002 @04:15AM (#2981566) Journal
    My company is committed to not growing, and it's amazing that I found so few other companies with the same princples, given the obvious success of the idea. ArsDigita is just one of any number of companies that went through the same trajectory.

    My partners in Hammerhead Productions all worked at the same company, Pacific Data Images, before they closed their LA facility. I started with PDI when it was quite small, and was terribly fortunate that the management of PDI was committed to open books -- that is, they allowed the employees [at least the early employees, more on that, later] to see exactly what the revenues and expenses were. PDI was committed to growth, as most companies are.

    The thing is that the company as the company went from 8 people to 100 people, the profits went down. They went down on a per-capita basis, but they even went down on an overall basis -- more people are much more expensive, as you add layers of overhead and spend much of your time on internal communication. Personally, I found the company less and less interesting -- as people you hired for their creative talents ended up supervising others instead, so you lost the spark that made the work interesting. I would point out over and over again, at meetings, that growth was killing us. I'd try to correct the historic graphs for inflation, to show that the numbers were even worse than they appeared at first glance. This made me quite unpopular at these meetings.

    When we started our new company, we decided that we'd never grow. We've stabilized at about 10 people over the last five years, and it's worked out marvelously. The people we have are talented, creative, and are allowed to exercise their talents and creativity. The company is reasonably profitable, and shows every indication of staying that way. We are small enough that our overhead is low, so we can pick projects that interest us, instead of being forced to 'feed the machine', as larger facilities have to do.

    The author of this article, Eve Andersson, says 'to make a substantial impact on the world, you gotta grow.' This is a well accepted fact, that just happens to be untrue. Even in the world of film visual effects, dominated in many ways by ILM (1500 people) and other big companies, Hammerhead holds its own. For the last two years, we've been in the Academy's Visual Effects Bake-off, showing that we can compete with those big companies.

    When contracting with a company to do work, often it is more important to the person paying for the work to get a few key people working on it, rather than a slaveship of hundreds of drones.

    I've gone on long enough. Just think, when you have to decide whether to grow or not, that there are substantial good reasons for staying small. Don't ignore the numbers, if the numbers are telling you that growth is killing you.

    Thad Beier
    Hammerhead Productions

    ps. Ok, ok, PDI went on to make 'Shrek', which needed 300 people. I still stand by my thesis.
    • Just think, when you have to decide whether to grow or not, that there are substantial good reasons for staying small. Don't ignore the numbers, if the numbers are telling you that growth is killing you.

      Yes. Capitalism teaches that growth=good, and this is rarely questioned. However, there have been many solid companies that were growing too fast, the original founders got bought out or left out of frustration (Apple Computer and Steve Jobs comes to mind), and the company eventually crashed and burned. Growth is often a good thing, but not always. And big companies can make a big fall (Enron).

      • Yes, some large companies like Apple and Enron can end up crashed and burned... but some giants keep chugging along (IBM and especially Microsoft).
        • Sure, just because a company is big does not mean it will fail. I was just trying to point out that being big does not guarantee that you won't go bust.

          Having said that, some big companies do have a hidden protection (by governments) against bankrupcy. To name two examples, Airbus is essentially subsidized by the European Union, and Boeing is essentially subsidized by the US government through military and space contracts. Why? Because they produce a strategic resource (commercial airliners). Neither Europe nor the US can afford to be in the situation where they have to rely on a single foreign source for commercial airplanes.

      • by s390 (33540) on Sunday February 10, 2002 @08:59AM (#2981838) Homepage
        Yes. Capitalism teaches that growth=good, and this is rarely questioned.

        Most decent business schools teach the parameters of sustainable growth. A _good_ MBA or CPA (who stayed awake in class and doesn't have a personal agenda or divided loyalties) can make these clear. Any startup or small company needs to trim its sails - review its business plan - at least quarterly if not monthly, and reviewing the sustainability of its growth curve must be one of the principal objectives, because this simply boils down to its continuing viability as a going concern.

        A small company seeking capital has to find "angel" investors - people who will inject money, have the patience to watch the company grow, and eventually take out a somewhat higher profit than they could get in the big bond and equity markets. You will often have to give such "angel" investors some equity in the company, but your negotiation objective should be to give them as little equity as they will accept, and meanwhile you must retain control. The "angel" investors know this game, but if they like you and your company business plan, they will agree to let you keep control. After all, they're investors - if they wanted to run a company, they'd do that with their money instead.

        But if you get VCs (Vulture Capitalists) involved before you're on the brink of explosive growth, well... get ready to lose your company. The VCs won't invest small sums - that would lead them into too many investments - and they like to closely control their favored few. The VCs will seek out piggish equity stakes and executive control. They want an Initial Public Offering (IPO) and a quick turnover of their big stock holdings for astronomical profits. They need your company to grow 200-300% with no limit in sight in order to unload their stock on the mass of investors. They're always looking for the next Apple, although they'll kill ten small companies for every one that hits the bigtime. That's the moral here, folks. Beware of the VCs. They'll kill you.
    • Hammerhead Software (Score:3, Interesting)

      by green pizza (159161)
      Cool that you offer some of your software for sale. Also interesting to see that it is available for the SGI MIPS/IRIX platform. We primarily use SGI Octanes in our (research) institution but the bigwigs are pushing for a move to x86/Linux for PR reasons. (Though next week they'll probably jump on the XP bandwagon). Interesting thing about our situation is that our current workstations are already much faster than we need... the limiting factor, the bottleneck in our case is on the human end.
    • by Zeinfeld (263942) on Sunday February 10, 2002 @12:14PM (#2982351) Homepage
      My company is committed to not growing, and it's amazing that I found so few other companies with the same princples, given the obvious success of the idea. ArsDigita is just one of any number of companies that went through the same trajectory.

      Actually there are lots of professional services companies with the same approach. A lot of legal, accounting and engineering practices have a 'no growth' or 'slow growth' policy.

      The reason is that professional services companies do not become more profitable as they become larger. A PSO company sells the professional skills of its employees. In a typical PSO company there is a pyramid of expertise. For each senior partner there might be two junior partners, four associates and the same number of support staff. That ratio does not change much if there are a hundred senior partners or one.

      The problem for the PSO company is that a senior partner has to be paid pretty well or else they will go off and start their own outfit. At the bottom of the tree an associate might be paid $400 a day and be charged out at $1,600 - a markup of 400%. But at the top of the tree a senior partner is likely to be paid more than their charge out rate, their real job being to bring work into the practice. A senior partner might charge out 100 days a year (i.e ahlf the normal rate) at $5,000 a day, but they can keep busy 4 associates at a profit of $6,400 a day and 2 juniors at a profit of $3,600 a day, so they actually contribute to the practice an average of $12,500 a day and take out maybe $6,000.

      The reason PSO firms have to grow is that as the people at the base of the pyramid get more experience the only way of maintaining profitability is to either increase recruitment at the base or to restrict the number of promotions. That is why a lot of accounting companies have 'up or out' policies. If you don't make the next step in the ladder by a certain date you are told to look for work elsewhere.

      All in all VC should never be funding pure PSO companies. Most PSO companies are organized as partnerships for good reason - the company itself actually has very little value, the value is all in the knowledge of the employees. And those employees can and will walk out the door with it unless they feel they are rewarded for it.

      PSO can add a lot to a growth company's bottom line, but only as a supplement to product, not as a replacement. In general the markets tend to be sniffy about companies that make more than 20-25% of their revenues from PSO. An Oracle or an IBM can make a lot of money from PSO, even run a pure PSO division. But that works because the customers (and consultants) know that they are buying more than just the consultant's time.

      The other problem with PSO is that it is economically a pretty risky proposition. A typical PSO company operates on a margin or 20%. If there is a downturn they don't have much scope to cut costs without layoffs.

    • The author of this article, Eve Andersson, says 'to make a substantial impact on the world, you gotta grow.' This is a well accepted fact, that just happens to be untrue.

      Regardless of it's truth, is impact a goal you want to aim for? I'm perfectly happy making little impact on the world, as long as I'm feeding myself.

  • by Anonymous Coward on Sunday February 10, 2002 @04:18AM (#2981571)
    A company grows from 5 to 50+ in a year, then seeks VCs to accelerate growth. That's not greedy? Wasn't the first stupidity going for the VC money when things were going well?

    Her story sounds like the classic "if I ran the company, everything would be perfect" rant usually heard from holier-than-thou engineers covering for their own incompetence.

    And poor, poor baby had to take three months off to travel before coming back to be sacked. I know we all weep for her and her dire plight. If only everybody else were as competent, intelligent, and insightful as she....

    *yawn*

  • by davmoo (63521) on Sunday February 10, 2002 @04:44AM (#2981607)
    I've just finished reading Ms. Andersson's account, and most of the comments currently posted here at the time I write this.

    I don't know Ms. Andersson, nor have I had any connection with her company, so I can't say whether her account is correct or not.

    I have noticed a lot of negative statements about her, though, in these comments. And I find it interesting that the vast majority making those negative comments have chosen to be wimps hiding behind the name "Anonymous Coward" (a very appropriate name).

    Even if Ms. Andersson is wrong, at least she has guts enough to put her name on her comments.
    • I second your post. I wasn't there (though know someone who was) and tend to disdain the ACs in this war of public relations. Putting one's name to it means a heck of a lot. Philip and Eve seem to do that on a regular basis.
    • by Anonymous Coward
      Philip and Eve have enough money between them to last comfortably the rest of their lives. I do not. Therefore, I will not jeopardize my chances for future employment by posting "in person". Does that make me a coward ? Of course. But you are free to browse at +3 and ignore me.
      • Does that make me a coward ?
        Yes.
    • I guess if you've squirrled away a few million dollars in the bank, its easy to spout off and take the credit. Most of us, however, have things like rent or a mortgage, maybe a family, and definitly a future to worry about. Especially if you have inside information, you can't always afford to have your name tied to what you say. I usually post under my name now but for a long time, I was only an A C. There are still occasional issues where my comments will be without my nick. Some of the A C's are clearly lowlifes but others have things to say that are better or more safely said minus their identity. I don't automatically disregard the A C's but check out what they say first (well, at least if they somehow get +1 where I browse).
    • My name is Terry Lorber.

      So there.

      I did a three-week boot camp at aD. They didn't
      hire me, that might color my reaction.
      I found that the culure of aD was dominated by
      people who were self-righteous and arrogant.
      This might possibly be b/c they're all from MIT.
      They were generous in their help, but afterwards,
      I felt dumb. Granted, I did meet some nice people.

      Andersson et al. are such a bunch of cry babies.
      They signed up for the $40M. They weren't forced
      to go to the VCs. By all accounts, aD was doing fine
      without the outside help. It was the founder's greed
      that got aD into the mess.

      To complain that people don't want to work more
      than 40 hours a week is ludicruous. To brag about
      one's performance review is shameless. While
      Andersson's article started out well, it spiraled
      into mudslinging at the end.

  • For those of us who read Greenspun's account of the lawsuit [fluxent.com] this isn't to surprising. The two forces of PHB VCs and a weakened (to say the least) dotcom economy were probably way too much for the company to handle.

    I think if the company had stayed private, they probably could have pulled through the worst of it, but they didn't. Oh well.

    It's always nice to hear about the downfall of people you don't like though :P

    (there's a german word that would apply here, but I couldn't spell it for the life of me :P)
    • Re:Not to suprizing. (Score:2, Interesting)

      by Qbertino (265505)
      The word is "Schadenfreude". Interesting now that I really can't find an english equivalent. Even though I'm a native speaker of both languages.

      Sort of like trying to translate these into german: "airborne" and "sophisticated"

      BTW: "Schadenfreunde" is the german name for the fun one has seeing others fail or expieriencing any smaller or larger amount of misfortune.
      The larger the misfortune is, the more Schadenfreude is considered imoral. Of course.
      • Re:Not to suprizing. (Score:3, Interesting)

        by pmc (40532)
        Interesting now that I really can't find an english equivalent

        Schadenfreude is the English equivalent - it's been adopted into the language (at least according to my dictionary).

      • BTW: "Schadenfreunde" is the german name for the fun one has seeing others fail or expieriencing any smaller or larger amount of misfortune.

        In English, it's called Jerry Springer.

  • Interesting read, although I would not be surprised if she would get sued for libel or slander. It is very hard these days to call some business-boy al liar without seeing your lawyers...



    Dirk

  • I don't think we have to wonder much why this company ran into trouble, like so many others. ArsDigita apparently worked reasonably well, and it was one of the first complete systems of its kind. But the company apparently was largely about consulting, and there just isn't that much demand right now. Furthermore, Tcl+Oracle isn't exactly cutting edge technology (I know--it was later converted to Java and other databases). The Internet bubble burst, and it's hard to survive now as a large Internet software vendor even if you have a unique product. And standards have moved on--there are dozens of popular solutions for dynamic database-backed web sites available now. The soap opera we hear about seems more like a symptom than a cause. I suspect, though, that when all is said and done, the founders probably made out alright.
    • by Anonymous Coward
      Tcl works just fine, thankyou very much. Maybe you missed the part where it says how many hits per second the thing handles? AOLserver is what drives aol.com, you know - hardly a site to laugh at. Maybe not "cutting edge" in the sense of the latest buzz-thing, but it works well, dammit.
      • It doesn't matter how good it is, it matters whether you can get trained developers for it. Tcl is just not very popular anymore.

        Beyond that, in terms of theoretical hits-per-second, that's an overrated metric, of little relevance to real web sites, and most embedded scripting languages will do about the same anyway.

    • You don't use cutting edge technology to serve web pages. That's just silly.

      Dynamically generated web pages are the simplest little things there are. They are a short text file. They can be produced in any language. (Indeed, Microsoft selected BASIC for their web server. Talk about "not exactly cutting edge technology")

      Here's something to remember about "cutting edge technology". It is big, slow, and crashes a lot.

      It is big and slow because developers these days know that they have access to amazingly fast CPUs so they get code whiz-bang features that slow it way down rather than making small tight code that is all you need to serve up little text pages.

      It crashes a lot because it is new and hasn't had the bugs worked out of it yet.
  • by Anonymous Coward
    There were several ArsDigita offices throughout the world when the company began to contract (or implode) in the last half of 2001. The office I worked in was staffed by some of the nicest, smartest, hardest-working people I have ever enjoyed coding with. We wrote unit tests. We pair-programmed. We refactored. We were starting to create something that looked credibly like commercial software.

    I have been told that even source control and release management were considered "fashionable but not really useful" back in the TCL era at AD, and that ACS users were expected to grab a tarball and start hacking.

    Remember when you were a wet-nosed little code monkey and thought that grinding out twenty functional points over a sleepless weekend meant that you were "productive?" Forget that the code was too slow and buggy to be released, or that it was so over-engineered that every programmer who had to add to it or use it squandered countless hours figuring out the architecture.

    Slowly, if you learned at all, you discovered that all the boring stuff you disdained at first enabled you to actually bring products to market in a repeatable, cost-effective way. (Oh yeah, and no 80-hour weeks debugging, either).

    ArsDigita was just beginning to learn these lessons and grow up into a real development organization when RedHat acquired it.

  • by RobPiano (471698) on Sunday February 10, 2002 @05:27AM (#2981654)
    Someone else gets hurt.

    Eve really did write a beautiful article, and I thank her for writting it. She did, however, try to wipe her hands clean of all responsibilty. Not to say she is responsible, but ArsDigita's death was not due to just the capitalists that sealed its fate, but the capitalists within.

    ArsDigita was one of the few net companies actually developing a useful product that people wanted. It should have weathered the dot-com bombs, but it fell into a cycle of greed. Rather than making modest earnings, they wanted to get richer faster. It was easy to ignore the fact they were making tons of money, and doing a good job. They had the potential to make more, and being good young american capitalists they went for the opportunity.

    A web developer no matter how talented is not actually worth 7 million dollars. This is not to say they aren't "the best" or any other such nonsense, but rather 7 million dollars is a HUGE amount of money.

    Think of ID games. They keep their number smalls, their business controlled and make solid, strong, modest, earnings for the most desired product of its kind. They are extremly successful and will continue to be because they hold similar ideals to ArsDigita.

    ArsDigita, however, let it be controlled by big fish who offered to front more money. More money, more profit, everyone's happy? No, because everyone was trying to get rich quickly. Sure you were trying to make a good product, but you were so bedazzeled by the money that ArsDigita's creative control was lost. If you invite sharks into your pool, expect to get bit.

    Eve I'm sorry you got screwed. You did your job well, but no matter getting rich quick means someone else is paying for it. Your company tried to raise too much capital, too fast. You got your ass kicked by the best, but we're all alittle wiser for it.

    Oh well, I invite you to join my world. A soon to be college graduate looking at a very tight job market because a few dot-commers wanted little red sports cars.

    Welcome,
    Rob
    • You base this on? (Score:2, Insightful)

      by Ars-Fartsica (166957)
      ArsDigita was one of the few net companies actually developing a useful product that people wanted.

      Did you ever use the product? How would you know?

      Eve I'm sorry you got screwed. You did your job well, but no matter getting rich quick means someone else is paying for it.

      Really? According to people who actually worked there, she was mostly absent and often toxic. Once again, what are you basing your opinion on?

      Oh well, I invite you to join my world. A soon to be college graduate looking at a very tight job market because a few dot-commers wanted little red sports cars.

      Yes, thats right, its the rest of us who have spoiled everything for you. How could we have been so thoughtless. You'd be a millionaire today if not for our greed and arrogance.

  • My father's company got some venture capitol back in the late eighties. This was not for a cash infusion, but to start the company.
    When they started they had over 20 customers in such diverse areas of POS maintenance, GPOS maintenance and HVAC. After 6 months they had net profit of over $60,000 a month.
    Within two years the VC had let the HVAC guys run off with all of their equipment and customers for nothing. The gasoline guys left because they could not tolerate the VC.
    Three years later my Dad and his friend bought the POS part of the business for pennies on the dollar from the bankruptcy(sp) sale.
    For the new company they never even THOUGHT of getting any type of VC...

    Five years later my Dad sold his share for a cool $250,000.

    BWP
  • Sounds like MDK (Score:2, Interesting)

    by Anonymous Coward
    This story sounds pretty much like the Mandrake
    one except that Mandrake's founders succeeded in
    firing the VC CEO at the right time.
    What seems clear is that the professional
    manager are useless if they don't know what's
    going on.
  • by rsklnkv (532866)
    I would spend hours late at night listening to Eve tell me all she thinks about it. I'm no religious man, but the fact that my name is Adam...c'mon! it just makes sense that we hang out and geek, no? Anyway, I found her bold stateents in relation to the people that screwed things up admirable, even though 'big-business' scares me, I feel for the whole crew that made it a success in the first place. That would have been a great opportunity for some of the young minds wasting their time on /. Good luck Eve!
  • Eh... VC's etc. (Score:3, Insightful)

    by Sleeper (7713) on Sunday February 10, 2002 @07:29AM (#2981779)
    I am not particularly familiar with the ArsDigital company but a lot of stuff i've read in the Eve's sounds familiar to me. I just want to tell that we should go with not our emotions (although I think for Eve that would be quite difficult at the moment). We should stop and think.

    Look we went through two bubbles. First DotCom bubble bursted then Telecom one (that was the one I went through). A lot of people got greedy, a lot of people lost their money, some people made a lot of money. And a lot of people, mostly engineers (hardware, software take your peak) saw their dreams comming to the crushing end for a moment. Not just dreams of financial stability but dreams of making something that a lot of other people will need. There is a lot of lessons to be learned here.

    First of all VC's are not evil and very often are neccessary. NSF and DARPA are not limitless money pits and not every one can have 30 credit cards to run his/her own company. May be in software for a while you can operate from you basement but if you talk about hardware you talk about some significant burt rate almost from the start.

    But when you start dealing with VC's you have to remember a few things. They are people with money (well, duh) but for them money make money and this is as far their thinking very often goes. That is when they give you money they expect substential return and FAST. This is veary banal thought I agree but this is where a lot of people stumble. This is what driving most of them. And the most important thing they do not understand the tech (although they think they do). They understand it on such level that it would make geeky kid from high school laugh.

    Just an example a few years back I've overheard a conversation in student cafeteria between a bunch MBA students. First they were talking about getting internship at Morgan-Stanly and other "nice" places then they started a "technical" argument. The point was: "who the hell needs optical fiber communications when everything goes wireless?" Well hello!?

    But you know what? I bet in a few years somebody may be me may be you will knock on one of those guys door with a buisness plan and really really high expectations.

    For them the most important thing is to catch a trend invest some money and get lot's of it in return a few years later. So their understanding of thech goes as far as somthing like "everybody will need high bandwidth right into their living room" and that's it.

    There are few exceptions like Intell or IBM when you meet a guy with real engineering experience who actually would come to your place at work and will actually understand what you do down to very small and unglamorous details. You get this guy you are lucky but be warned ppl like that don't take bullshit.

    Other than that they know nothing so they hang on to the people they know be it consultants from universities managers CEOs etc. And if they don't know you they don't "feel comfortable" with you for a long time. Hell, I've witnessed one very good manager being demoted just because the board did not know him. So instead we've got people with "names" who drive that guy, me and many other people I work with crazy.

    So naturally when everybody was plaing IPO game they wanted growth. And if there was no real growth you were supposed to show it. Like for instance, I don't know about other places but in Bay Area two years ago there was a formula. Each Ph. D. automatically ment extra 3-6 millions of dollars to valuation of the company. Naturally everybody was hiring. When market fell a lot of people got two hours to clean up their desks.

    So don't say you got screwed by VC's. You just went along with their game and neither them nor you actually new the rules

    So any way learn your lessons. Get rich quick schemes won't work for a while (and may be this is actually good). One thing did not work move on and start a new one. Be good at what you do you will survive one way or another.
  • or "Slash 'n Burn your way to financial success©"

    1. Get an MBA
    2. Find a startup
    3. Front some money to succesful startup
    4. Get on startup's payroll
    5. Fire everyone
    6. Divide profits generated before your arrival amongst your VC friends
    7. Run company into ground, walk away
    8. Find a startup...
    • 6. Divide profits generated before your arrival amongst your VC friends

      That's not really a fair accusation by Eve; it sounds like the VCs brought in a lot more money than they spent. Which makes the claim of "they spent our profits" a little silly.
        • it sounds like the VCs brought in a lot more money than they spent. Which makes the claim of "they spent our profits" a little silly.
        I have $5. You take me to dinner at Dave & Busters. You bring $2,000. During the course of dinner we consume $50 worth of food, but you have this love of Veuve Clicquot [bacchuscellars.com] and order 3 bottles [yahoo.com] ($5,343.75). We owe $5,393.75 plus tax and tip. You can't leave until you pay. You convince the management to allow me to leave. I have to get a cab to go home and spend $25 for the privilege. You spent my money even though you brought a lot more to the table.

        Moral: avoid rich people with expensive tastes.

        • So for 30 bucks you got to enjoy a great dinner, and several glasses of Veuve Clicquot. And the 25 bucks you knew you were going to spend to get home anyway, so spending it isn't exactly my fault.

          I'm sure Eve made plenty of money in her time there, and the VCs lost plenty of it.
  • by wuliao (75540) on Sunday February 10, 2002 @09:24AM (#2981867)
    Wow. I've been on the product team at ArsDigita for almost three years now. From my perspective, there are a gazillion egregious inaccuracies in the article. Anyway, I just wanted to say that Eve/Philip/etc. represent only one side of the story, and that there are many other sides to the story as well.

    I have tremendous respect for a lot of people at ArsDigita. Her story is absolutely insulting to the people who have worked so hard to ship something, and it has certainly caused any remaining goodwill I have towards her (because I do think she IS a nice person) evaporate. Her indictment of Richard Buck and Michael Yoon is completely unfounded and complete bullshit. One stunning example is that Richard Buck is a poor manager because he was not able to "motivate the product team to work more than 40 hours/week." I find this to be disgusting and utter nonsense. One, just because you don't drive your employees like slaves doesn't mean you suck. Two, Eve was never at the office, so how could she know how long we worked? She was too busy working on her VoiceXML book that she told no one about!
  • First off, one reading of one webpage does not the story of decline and fall make. That said, it does appear to me that the venture capital took the usual, successful, model and misapplied it to this company.

    However, consider the perspective of the Venture Capitalist. He usually has control of a good deal of funds with which he tries to hit home runs (well, usually he does not exist but is a pool of funds). Furthermore, in the best and the worst of times roughly fifty percent of companies that attract venture capital end up failures. Roughly ten percent ever make enough profit to be considered successful. It is on those ten percent that the fund, or funder, makes the money. The venture capitalist knows that the majority of ventures do not return anything because the original management of the company possesses too much control. They, usually, simply do not know how to run a large business. Furthermore, if the venture is successful then the original manager will be better off (in terms of wealth) with 15% of the success than with 70 - 100% of a company that never takes off. Running a large business takes talent in sales, management, supply chain, accounting, legal, the list goes on and on.

    Now, another point about venture capital is that it takes a small and marginally profitable company with a good product or two (or several, or whatever) and figures out how to bring those to market and sustain the viability of the firm. It does not appear to me that these were particular problems in this case. This company already had high profile clients, a good revenue stream and profits, and it had decent pool of leadership to sustain itself. It appears to me that they needed to bring in a few MBAs to manage sales and that kind of thing, and not go after venture capital. It appears to me that this was a case of the owners and the venture capital getting caught up in the speculative excess of 1998 - 2000.

    Actually, on thinking about it before submitting, one more thing appears to me. The venture capitalist saw that he had been approached by, or that he had found, a firm with good revenue and profitability, and probably figured he had a real good cash cow on his hands. That blinded him to the question of whether or not venture capital was a good idea in this case. A firm actually concerned about business viability would have perhaps been more deliberate in this case.

  • by scumpacom (241910) on Sunday February 10, 2002 @10:43AM (#2982000) Homepage
    No where in her write up does she note that it
    was the original management of Ars Digita who
    went out and raised the VC money. They chose
    the firms they sold part of their company to,
    they chose to put those people on their board.
    They chose to have them as their business partners.

    Check references? Do due diligence? What did that
    turn up? I'd like to see that in the story.

    If you go into business with someone and don't
    set expectations ahead of time, in writing, and
    check that those agreements will be honored -
    well then, that's just a bit naive.
    • From your post:
      No where in her write up does she note that it was the original management of Ars Digita who went out and raised the VC money.

      From the article:
      Around this time, we started looking in earnest for venture capital in order to accelerate growth and to allow ourselves the luxury of taking developers off of paying client projects so they could work full-time on our core product, the ArsDigita Community System (ACS).

      Sounds to me like she said right there that they were the ones that went out and got VC money. Perhaps they were naive in their relationships with the VCs, but this article seemed to me like it was saying "beware, this is what VCs can do to your company" rather than "these evil people came in and took over and ruined our business and its not our fault at all".
  • King Of The Hill (Score:2, Insightful)

    by ONOIML8 (23262)
    Here again we see someone who wasn't satisified with a profitable and stable company but just had to be king of the hill. She admits that they went looking for capital to "accellerate growth".

    What the hell is up with that?

    It's ego and penis envy, whatever you want to call it.

    I fail to understand why they needed to "grow" if they were stable and making a profit. Why does everyone seem to think they need to be bigger, badder, and better than the rest.

    Hell, as long as you're making some money, contributing something to the world, and putting food on the table for you and your family then relax and enjoy. From the way she describes it, they were in just that position before they went looking for "venture capital"

    If growth was needed, it would have funded itself thru profits.

    I think she said they had about 60 some people before looking to "grow". After they "grew" those people had to make their home elsewhere.

    She seems to assign a lot of blame to the managment people who were hired to help them grow. I would say that she and the other founders were as much or more to blame for the failure of the company simply because of thier greedy vision.

  • As someone who never even heard of Ars Digita until it was announced that they were going under, Eve Andersons's story contains a number of "red flags".

    1. Several quotes from "www.fuckedcompany.com"
    Yeah, there's a good reputable news source.

    2. I't all the VC's fault.
    If ArsDigita was as sucessful and profitable as claimed, why did they need VC's? Why? Because like all the other dot-commers who went bust, they wanted to get richer faster. All her talk about ethics and honesty is just so much hot air. Yes, VC's are evil crooks. But so are you if you get in bed with them.

    3. "By the end of March 2000, we had 110 employees, 7 offices ..."
    Why does a company whose business is done solely over the Internet need 7 offices? Typical dot-com mentality. Too many people, too many offices. Appearance is more important than good business practices. It's much more pretigious and gratifying to the ego to be CEO of a 110 person/7 office company rather than a 10 person/1 office compnay. Even if the VC's hadn't killed ArsDigital, when the economy slowed down they would have collapsed under their own bloated weight, just like all the other failed dot-coms.

    4. "Philip was quite happy to let a 'professional manager' step in and take over"
    Sure, why not. Why not let somebody else run the compnay. As long as a big fat paycheck is still rolling in, who cares. If Richard Greenspun really cared about ArsDigita as much as he claims, he never would have done this. Just another example of the greedy "I want to get paid to do nothing" attitude that kills many businesses.

    In conclusion, it's quite obvious that the founders of AD screwed up and are now trying to pin the blame on someone else. They're like a guy who blows his entire paycheck on lottery tickets and when he doesn't win anything, wants to blame the people running the lottery. The truth is, they gambled and lost. They got in bed with crooks and agreed to play their crooked game. They turned over control of the company to someone else because they thought it would make them richer, faster while doing less work.
    • Hi there, I've just read your post and take issue both with the content and your tone. I checked out your past history to see whether you were trolling, but it appears not. If you were, excuse me.

      1. Several quotes from "www.fuckedcompany.com"
      Yeah, there's a good reputable news source.


      However, since Eve worked at ArsDigita, she would be well placed to confirm whether they were true or false.

      2. I't all the VC's fault.
      If ArsDigita was as sucessful and profitable as claimed, why did they need VC's? Why? Because like all the other dot-commers who went bust, they wanted to get richer faster. All her talk about ethics and honesty is just so much hot air. Yes, VC's are evil crooks. But so are you if you get in bed with them.


      Wanting to get rich doesn't mean you are a crook. Neither does being a VC. In this case, the VC's didn't look like they were competent and made some catastrophic decisions, but they weren't crooks. Bit it does seem you are a bit too busy with generalizations.

      3. "By the end of March 2000, we had 110 employees, 7 offices ..."
      Why does a company whose business is done solely over the Internet need 7 offices? Typical dot-com mentality. Too many people, too many offices. Appearance is more important than good business practices. It's much more pretigious and gratifying to the ego to be CEO of a 110 person/7 office company rather than a 10 person/1 office compnay. Even if the VC's hadn't killed ArsDigital, when the economy slowed down they would have collapsed under their own bloated weight, just like all the other failed dot-coms.


      There aren't many companies that do business solely over the internet. Amazon would probably be a good example of one. ArsDigita isn't a good example of one. In order to work with other companies, they would have to give presentations and provide support to companies on their sites. You seem to place more emphasis on scoring cheap points than actually being correct. If a company like ArsDigita can open an office in the other country, then they can satisfy demands in other countries. They can employ people from these countries, giving them money. (Or is that another example of the dot-com greed you seem so obsessed about?)

      4. "Philip was quite happy to let a 'professional manager' step in and take over"
      Sure, why not. Why not let somebody else run the compnay. As long as a big fat paycheck is still rolling in, who cares. If Richard Greenspun really cared about ArsDigita as much as he claims, he never would have done this. Just another example of the greedy "I want to get paid to do nothing" attitude that kills many businesses.


      'Richard' Greenspun has always been called Philip, because that was his name. The idea actually was that day-to-day administration of the company was to be given to the VC's, enabling Philip to do different sorts of work. Philip, while founding this company, probably worked harder than many of us ever have. There is no evidence for saying what you have done.

      In conclusion, it's quite obvious that the founders of AD screwed up and are now trying to pin the blame on someone else.

      It may be obvious to you, who has only just now found out about the company, but to those of us who have known about the company since just after it was started, we don't have the same blissful ignorance that you exhibit. The people who started the company have done many worthwhile things, and your rabid accusations sound exceedingly stupid when put against their measured responses.

      thenerd.
    • 1. Several quotes from "www.fuckedcompany.com"
      Yeah, there's a good reputable news source.


      Actually, it is pretty good, often it was the best way to find out what was actually happening at your own company, someone would leak it to FC or Vault. Once employees started to realize that they simply couldn't trust their managers, and managers decided that it would be easier to lie to their employees (not that I am making any sorts of allegations against a former employer, just commenting on the zeitgeist)
      • "there will be no layoffs"
      • "this deal will save the company"
      • "we will be repricing stock options"
      • etc.


      and so forth, anonymous bulletin boards suddenly became sources of fact, with real insiders dropping enough clues in to confirm that they really were employees of said company, but no more.

      Why does a company whose business is done solely over the Internet need 7 offices? Typical dot-com mentality.

      Lots of reasons. AD operated out of Cambridge MA because they wanted proximity to MIT graduates. Maybe you want to be near your customers, to better understand their market, or provide hands-on support. The Internet doesn't make location irrelevant, exactly the opposite, if you can do business anywhere, it only means you have a greater choice of precisely where that is. You could head out to where the rent is cheap, sure, but could you get all your employees (the most valuable part of the business) to relocate? What about travel to meet customers (and yes, you do need to do this, no-one does serious business without meeting face to face first)?.
  • by Kagato (116051) on Sunday February 10, 2002 @03:21PM (#2983066)
    People who sign with VC's make a deal with the devil. Sometimes they run a company to the ground (ArsDigita), other times they turn the company into money making machine (Cisco). In ALL cases the VC has an end goal of taking control of the company and either a) Pushing the founders out, or b) if the founder is a figure head valued for marketing, taking away all power.

    PBS did a great Documentary on VCs in the tech industry back in the 90's. I still remember the the VC who funded Cisco bluntly talking about how It's the VC's responcibility to push the founders out the company.

    The dot-com VC rush pretty much matches up with the silicon valley tech rush back in the early 80's. And the success rate between the two is actually pretty similar.

    I think the problem bringing in a VC is the same as brining in any new management team. If you bring in a new team you've basically saying we have to change everything. This can work well if things are truely broken. But in this case the comapny wasn't broken. What it needed was someone to stay the course and manage the expansion.

    Managing expansion is a very tricky business. Expand too far, leverage too much, you leave yourself open for failure. All of a sudden a small bump in the market looks like a tidal wave. A one point raise in interest rates could make you default you loans. Very few business manage this well, let alone greedy VC's.

    It's a gamble. So when looking at all the money waved in front of your face read "Cryptonomic" and ask yourself "Ever danced with the devil in the shaddow of the moonlight?"
  • If you want control of your company, don't take VC money. It's too bad it turned out so unfortunately for them, too bad they couldn't be content being a small company without VC funding.
  • There's one principal reason someone goes to a VC, they want their money. Usually it's to help grow the company quickly. It is misleading to suggest that you're full of noble ideas which benefit the world when you need $40 million from VC's to help fuel your ambitions for growth. Growing a company is one of the most difficult things you can do with it. Sure a garage outfit can be profitable, that's easy there are no overheads, but ArsDigita was not profitable from Day1, it lost $40million, it used to be profitable when it was small, then the founders got greedy, went to VCs and messed up their growth plan and became extremely unprofitable. For someone so greedy and apparently unqualified Eve is doing a lot of complaining about what others did to cause the problem. Where's the Mea Culpa?
  • by KFury (19522)
    I'm surprised that nobody here noted that Eve was one of the first webloggers [kuro5hin.org], and an inspiration to thousands.

    I met her at a dotcom party in '1997 and she inspired me to learn pi [fury.com] to 100 places.

    Beautiful, inelligent, geeky. Truly, Eve, you are the best of us.

    ...Either that or I am a sad, sad man.

"Just think of a computer as hardware you can program." -- Nigel de la Tierre

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