ArsDigita Founder Responds to Closing 304
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."
Re:Pinch of salt? (Score:3, Insightful)
Now she's blaming it all on the managment that kicked her out.
Is she bitter?
The short answer is "No".
The longer answer is that Greenspun's own account of Ars' downfall matches hers in a number of ways. They both felt that the venture capitalists made horrible decisions.
I can understand if she's upset that her dream for Ars will never manifest itself, but I doubt she'd stoop so low as to manufacture incidents that never happened just to make herself look good and make others look bad.
From all I've read about them and her, she seems to be a bright and honest person.
Re:Pinch of salt? (Score:5, Insightful)
so the fact that Greenspun and she have similar recollections is hardly surprising.
I didn't say she was lying
Fault? (Score:4, Insightful)
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.
Re:Interesting time line (Score:2, Insightful)
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.
The canard of growth (Score:5, Insightful)
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.
Remove the log from thine own eye... (Score:3, Insightful)
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*
Know your VC... (Score:4, Insightful)
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.
Re:Pinch of salt? (Score:4, Insightful)
Not-so-surprisingly, I've heard *many* accounts along these lines from people in various companies that were ruined by VCs. Formerly profitable endeavors saw an opportunity to expand so long as they relinquished control to MBAs, were grateful to do so (thinking the MBAs would relieve them of the chores of management, accounting, and payroll), and then found to their dismay that the new folks were complete morons interested only in padding their own bank and expense accounts. It sounds somewhat naive in hindsight, but the programmers who built the companies found the business side of it to be a tedious pain in the ass and wanted to do what they loved best, program; turning over these non-programming aspects to a 'professional' seemed logical.
Only the thing is, the 'professionals' in business are often incredibly stupid and even more greedy. My own experiences with executive management in various corporations is one of disbelief combined with wonder: disbelief that someone so stupid could hold such a position of power, and wonder over how they got that position in the first place. Clearly, the world of management *isn't* Darwinian, else all of these fools would've been weeded out of the corporate gene pool a long time ago. Instead, they run the show.
Never underestimate the potential incompetence of an MBA, especially a VC MBA. Years of experience have taught me that the most likely person to stick their fingers in the pie and screw things up are just these kinds of folks. Especially the ones (which seem to constitute the majority) who never progressed beyond the kindergarten level of maturity and are constantly whipping out their peckers to measure them against everyone else they encounter.
Max
It must be easier to sling mud while hiding (Score:5, Insightful)
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.
VCs are Lemmings (was Re:Know your VC...) (Score:2, Insightful)
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
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.
What really went wrong. (Score:5, Insightful)
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. ;-)
Re:The canard of growth (Score:3, Insightful)
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).
Re:It must be easier to sling mud while hiding (Score:2, Insightful)
Re:Grain of salt (Score:3, Insightful)
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.
Re:Not really (Score:0, Insightful)
Typical.
I wonder if there's a single Java product in existence that isn't slow as molasses AND actually does something useful.
Re:Not really (Score:2, Insightful)
Eh... VC's etc. (Score:3, Insightful)
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.
Re:Pinch of salt? (Score:1, Insightful)
The behaviour she describes for the people called "incompetent" matches the behaviour by incompetent people at my company. In fact the way she describes incompetent technical people matches my CTO and the way she describes incompetent non-technical people matches the higher management echelons at my company. This goes down to many of the individual points made, e.g., when describing the ex-Oracle guy (I forget his name).
It just rings too true to be made up, that's all.
On another note, I'd also like to agree on your point about MBAs. It reminds me of the famous quote "The desire to be a politician should immediately disqualify you from becoming one" (paraphrased). Same with MBAs. People who want to manage shouldn't be allowed to without SIGNIFICANT experience (and competence) in doing the jobs they are managing. The
Just my 2 (euro)cents
Re:Grain of salt (Score:1, Insightful)
A little bit of the VC perspective (Score:2, Insightful)
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.
Eve needs to take some of the responsibility (Score:4, Insightful)
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.
Re:simple, practical reasons (Score:3, Insightful)
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.
Re:Grain of salt (Score:3, Insightful)
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.
King Of The Hill (Score:2, Insightful)
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.
Re:Sounds like Sour Grapes to me (Score:2, Insightful)
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.
Re:simple, practical reasons (Score:2, Insightful)
You base this on? (Score:2, Insightful)
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.
Re:It must be easier to sling mud while hiding (Score:1, Insightful)
Mostly because her comments are whiny.
She had a job, the company went bust. In *her* account she had nothing to do with it.
Pretty typical so far, right?
But here's where things are interesting:
SHE PUTS UP A WEB SITE TO GIVE HER *SIDE* OF IT.
Its pretty obvious in her world, the universe revolves around her.
Re:It must be easier to sling mud while hiding (Score:1, Insightful)
Until then learn to deal with a democratic society.
Normally I post logged in, AC here because it seemed appropriate.
Re:King Of The Hill (Score:1, Insightful)
However, during the go-go pre-y2k period, the worry was that the amporphous "other guys" would beat you to the pot of gold. It was akin to the Oklahoma land rush. In the case of a company that had a platform for stuff (with accompanying bragging rights), there was probably anxiety that expertise alone and hard work would not carry the day. It has long been said that progress is a road built upon the corpses of the pioneers.
Re:Eve's capacity for self-delusion continues to s (Score:1, Insightful)
At my company, we take pride in something called "work/life balance". This means that people have a life outside the job. We don't want people spending their lives in front of a cathode ray tube or sleeping under their desks. A company that expects overtime is a company that will destroy its employees.
Re:Know your VC... (Score:3, Insightful)
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.