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ArsDigita Founder Responds to Closing
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."
I guess I'll just have to get my MCSE now.
You can't legislate goodness. Let each to his own destiny, by will of his freely made choices.
She was sacked last October.
Now she's blaming it all on the managment that kicked her out.
Is she bitter? Or is she correct?
---
Oregon
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 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.
vc's get ahold of a company, and everything goes to hell.... they hada good buisiness model, once...
All hail the ACS!!!!!
Ars Digita is a fine example of the entrepreneurial powerhouse which can be established through the hard work and determination of a family of low-wage antelopes working in combination with a mutant goose--bless you all.
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.
In the Philip Eve love affair, who is the subbie and who is the domme? I want to know, dammit!
The middle mind speaks!
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.
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?
Philip Greenspun's story (not surprisingly) agrees with Eve's, but provides a very different point of view.
godamn viet cong ruin everything
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.
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.
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.
6
For general info read first: OpenACS FAQ
http://openacs.org/faq/one?scope=public&faq_id=
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.
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?
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.
I love Mondays. On a Monday, anything is possible.
where can i see this chick naked?
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*
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.
When in doubt, have a man come through a door with a gun in his hand.
To ask this is to illustrate extreme ignorance of the history of aD and its founders (the profitable, visionary ones, of which she was named). It's not wrong to be ignorant, it's just impolite to cast apersions on someone while in a state of utter ignorance.
-- @rjamestaylor on Ello
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 want a new quote. One that won't spill. One that don't cost too much. Or come in a pill.
It's hard to imagine ArsDigita -- basically some support for a community database/website -- taking over the world
.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.
This is like saying "Its hard to imagine an auction 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 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.
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. ;-)
She didn't run the company, things got fucked.
While this isn't quite a causal relationship, it KIND of dents your argument.
For those of us who read Greenspun's account of the lawsuit 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.
:P
:P)
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
(there's a german word that would apply here, but I couldn't spell it for the life of me
autopr0n is like, down and stuff.
... that I hated that stupid book he wrote with his dog on the cover?
Dirk
She means to say "in late March 2000". ArsDigita had the VC money in 2000. Allen Shaheen was running the show by July 2000.
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.
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.
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
it's interesting to note the numerous "I'm an Anonymous Coward so let's bash the author of the article" comments.
If these people have something to complain about so publicly, the least they could do is be forthcoming about it.
Geesh, you'd think they were the VC peeps that were being complained about in the first place.
You aren't, are you?
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
Well, she's unemployed now...
http://philip.greenspun.com/writing/reading.html
Yes, some large companies like Apple and Enron can end up crashed and burned... but some giants keep chugging along (IBM and especially Microsoft).
"Time flies like an arrow. Fruit flies like oranges."
The common form for the second sentence is "Fruit flies like a banana", which is a lot better. Why did you change it?
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.
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.
You're right. I was very sleepy when I made the new sig and got the quote wrong.
When in doubt, have a man come through a door with a gun in his hand.
What a babe
Double woohoo!
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.
When in doubt, have a man come through a door with a gun in his hand.
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!
_____ "If liberty means anything at all, it means the right to tell people what they do not want to hear." -- Orwell
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.
- Back off man. I am a scientist
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...
Eve isn't a bad looking chick, but lets face it, her writing has all the look of her being really high-maintenance.
Plus, if she's such a brain, how come she's unemployed? Its my experience that top-notch computer people are never unemployed unless they've got some real personality problems.
It's all quite sad, really, it's clear that Eve still longs for the days when she sat in front of a humming CRT, with her dog at her feet, solving problems and pounding code all night. Unfortunately, I've seen this a number of times in recent years. It's really quite disturbing. i.e.Talented geeks being pulled into management positions because the company has grown, and no one else knows enough about the underlying process/code/whatever to manage it's production and implementation efficiently. It's a bad reason to fix what isn't broken.
The result being an inexperienced business manager, and one less expert, fully devoted, programmer--loose loose. Never mind the fact that the poor programmer often feels more stressed, less fulfilled and removed from their art.
This transformation of individual character isn't unlike what appears to have happened at ArsDigita, and many companies. The core of the company is cast aside once it's realized that there's real money to be made. Then the ambition fuels greed, perspective gets lost, and what made the organization special seems to dissipate, leaving unmotivated, unfulfilled people behind in a plain vanilla, soulless environment.
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!
Hmm, based on this evidence, would you pay her to build you a website?
From the article: "...giving away free software and training. The revenue came from services and support."
So they were giving away this "monstrosity" and then made money from supporting it. Wow, what
a business model...
If the road to hell is paved with good intentions, where does the road paved with evil intentions lead to?
While some of what she says is true, this paper looks more like Eve trying to rationalize (in her own mind) her firing and eventual failure of ArsDigita. The Us vs. Them, "my shit don't stink" tone rings hollow to anyone over the age of 15.
For a more balanced "goodbye" to ArsDigita, look here.
There's any number of reasons why people could be posting as AC. Maybe they don't feel like jepordizing their jobs just to make a comment on this relatively worthless (in comparison to keeping a job) site. This isn't a macho contest of who's brave enough to reveal their user names. All you need to see are the comments themselves, you do not need to know who is making them. I mean, fine I can see your user name, but what does that really tell me? Do I now know who you are or something? What separates you from an AC anyway?
Mac OS X and Windows XP working side by side to fight back the night.
I am not disparaging the content of this post (#2981556) or a previous post (#2981546). I just wish to point out that both are AC, were posted within six minutes of eachother (those times being 3:01am & 3:07am), and currently are at scores 5 informative and 4 informative, respectively. Could be coincidence. Could be the same poster voicing further similiar views one after the other. Could be something else. That's what critical thought is for.
USA-Democracy is 270 million YESes and NOes a day, not one every four years.
This has become a pissing match, flogginy a dead horse, or what ever your personal cliche is.
We' gossipping ala Fucked Company, and frankly this doesn't belong here.
III.IIVIVIXIIVIVIIIVVIIIIXVIIIXIIIIIIIIVIIIIVVIII
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.
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.
the hero worship on this site is nauseating.
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.
. Quit playing Monopoly with Bill. Switch to one of many non-Microsoft products today.
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.
eve is rich enough..she doesnt *need* the 7.5 million. they couldnt have kicked the VC's out without loosing the company and a long legal battle. it was the right decision.
But, I'm wondering as I read this, what about the ArsDigita product? Is it as good as Slashdot?
Bush's education improvements were
Greed alone didn't cause the dot-com bubble and then crash -- greed <I>and dishonesty</I> did. There's nothing wrong with greed, so long as it's tempered by the will to do right. Getting rich quick doesn't harm others if it's done by moral means; this is as pervasive and wrong as the obvious but incorrect appearance that every dollar my company earns is a dollar you can't have (don't see why that isn't so? Go take a macroeconomics course).
If someone wants greater profits and pursues them by legitimate means, creating more jobs and providing more customers with a product they want enough to pay for, good for them! It's when individuals let their greed override their morals (as Eve's account indicates happened on account of the VCs at ArsDigita) that people get hurt. Being "good young american capitalists" and trying to grow wasn't (by Eve's account) the ultimate cause of their problems; losing the company's morals was. That is to say, even if ArsDigita did unknowingly invite the VCs to gain some management control, it is still those VCs who are responsible for the actions they initiated. Blaming ArsDigita for the non-reasonably-forseeable acts of a 3rd-party (who would expect someone trained in management to throw out the basis for an already-succesful company?!) is of itself unreasonable.
On a different note, jobs still aren't so hard to find -- you just need to know where to look for them. There are lots of folks who need programming staff, or at least contractors. Besides my primary, stable job I've recently found work for car dealerships who need their internal IT software reworked for new accounting rules (yes, some do custom-write such things), small businesses who need custom data-conversion software from their old accounting systems to their new ones, weather analysis contractors who want someone to suppliment their full-time programmer's work. Since I <I>do</I> have that stable job, I've recently started using these as opportunities to connect some of the more motivated computer science students at the local University with employment, and come in to help them when they have trouble. Not infrequently local computer shops will give recomendations for such people to businesses they act as regular suppliers to; if there's one where you're friendly with the owners, ask if they'll give your name out when someone asks.
Of course, I'm in a small town (my primary employer is in the Bay Area; I telecommute, but have several potential employers here if I preferred to work locally). It may work differently where you are.
</RAMBLE>
Among the first lessons any entrepreneur must learn is never give up control of your business . This is fundamental. Never give up even partial control to your lawyer or your accountant. Venture capitalists are adventures, they are the modern equivalent of those who underwrote andventures in trade during the initial exploitation of the new world. Venture capitalists look to see a ship come in; not underwrite a warm fuzzy guild of craftsman.
There appeared to be no business plan in effect here other than to be warm and open and trusting. And they got fucked then eaten. Darwinian principles score again!
heuristic algorithm seeks stochastic relationship
Disclaimer: Technically offtopic, but short.
Schadenfreude - literally "hurt-joy," or perhaps "shame-joy" i.e., the joy you get from seeing someone hurt. If I'm a little off, please forgive me, as the entirety of my education in the German language consisted of three years in High School.
woxy.com - Bam! The Future of Rock and Roll
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?
Do you people really believe this?
The Ars folks built a company that failed, and they want someone to blame. So they blame the people to whom they had an adversarial relationship from day one. Surprise surprise.
Counter that with every major tech company in the world today who could not have gotten off of the ground without VCs..you know, Intel, Apple, EBay. Gee, how could these companies have possibly succeeded if VCs were universally toxic?
Maybe the Ars folks should just admit that they sat on a bubble that burst. The market for AOL-server and Tcl was never going to be huge - they were both fringe products. They had a good run and now its over. Deal.
Because coders can do no wrong, right? (cynicism)
VC's don't just "arrive on the scene". They are there because the majority shareholders agreed to do a deal with them. Who agreed to do a deal with VC's? Phil Greenspun. Why did he do it? That's an interesting question.
Ms. Andersson says that Greenspun was happy to let a professional manager step in and take over "some of his day-to-day management duties". That's the job of an executive, such as a VP of operations. The job of a VC is to contribute a giant box of cash, and the price of using a VC is an agreement to pay back 4 or 5 or 10 boxes of cash a couple of years down the line.
Athough there's a lot of insight in Andersson's account of how VC's work, she blanks out the real accountability. Greenspun did a deal with VC's, and I believe he knew the real terms of the deal: get big fast or give up control.
As far as changing the world goes, perhaps Andersson is sincere in believing that Ars Digita's internally financed growth rate was not enough to become big enough to change the world. I disagree. Ars Digita was an open source organization, which vastly multiplies their impact on the world. They had 100 professional employees, a profitable business model, and more growth than most executives can handle. RMS, Linus Torvalds, Larry Wall, Jordan Hubbard, and the Apache core team have had enormous impact on the world with a lot less resources than that. Ars Digita did not need a large box of cash to change the world. I think both Greenspun and Andersson knows that perfectly well, but Andersson blanks it out of her account.
Why does this little dogshit company get so much airtime on this site???????
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.
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?"
You can't have women in upper management.
I remember when aD was first appearing in the /. news. It really looked like a cool place: Lots of motivated, educated, driven people who had a new concept and it looked like although they expected a lot from employees they also seemed to give employees some fun stuff in return.
/. that seem to say that VCs are bad if you actually care about your business and you don't want to see it become a cash cow and likely crater or become some monster you don't recognize.
The teaching concept and also the mass of online material available to anyone for their learning pleasure was also mind blowing.
Definately a cool idea that I think would have best matured slowly on its own without outside help.
As for outside MBAs for management, hire them so you can fire them if need be. Once you give up control both equity-wise and management-wise to someone who does not share the same ideas and dreams as you you're pretty much their pet.
As for VCs I've read numerous articles, some story postings on
I still think the ideas that Philip and Eve based much of the company on were good and sound, I'd use them in my own business - but I would hold back on growth and stay away from VC or any capital injection that would dilute my shares to less than 50.1% of voting stock. If you can't grow your business organically and keep hold of it - whats the value? Taking over the world with VCs at the helm? Slow and steady, one step at a time thats how you build something of lasting value.
A bit of a depressing story overall.
m
The use of cutsy tags got old in 1998. Also "ramble" is redundant because this is slashdot.
Please fix your posting style, thanks.
Aren't legal settlements untaxed? That lawsuit might not have been a total surprise to Greenspun. Just somthing to think about.
psychopathic
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.
I could not justify my existence if I were a turkey farmer. Would I terminate myself? Undoubtably, yes.
o integrity
o technophilia
o the capacity to work like crazy and still not take herself too seriously
o brains
o a cute smile
listed in no particular order. She is the sexiest woman alive. Oops. That's right. She has money too, I guess. I wouldn't hold that against her.
two comments!? From One person!? Say it isn't so!
Obviously there may be more sides to this story then phillip and eve's. I'm sure the VCs probably have their own version, but don't want to apear as idiots in spouting off publicly.
autopr0n is like, down and stuff.
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?
Ummm, she never ran the company. In fact, things only became F****D after she rose into management, no?
The comment from Eve about Buck failing to motivate the team to work more than 40 hours a week hits a sore spot.
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.
Since eve was in a position to make a zillion bucks, OF COURSE she wanted other people to work hard to make her money.
I may be a geek, but I understand what motives people, and its primarily money. Eve is PO'd other people didn't work hard enough to make her more money.
Poor eve. Boo hoo.
... then kill yourself and help save the planet.
Makes you wonder how we can ever determine the historical truth about anything.
Anarchists never rule
I feel most concern for the employees that poured their hearts and caring into creating the products of arsdigita assisting/caring about their community of users.
I invite members of the aD community, customers and ex-employees to have a look at jcorporate.com as an alternative (has no VC). Jcorporate offers a strong community and has products already since '99 what aD has been rewriting in Java:
- Java based application development framework called Expresso;
- open source collaborative applications, and
- content management system (much more extensive)
Expresso is based on Struts Framework - and jointly they have overwhelming market leadership in the Java application frameworks market with about ~85% marketshare. Expresso is very popular with a large community of users! >80,000 downloads; strong community of >4200 developers on its listserv; more than 17,000 registered users.
Check it out at www.jcorporate.com.
"eve is rich enough..she doesnt *need* the 7.5 million"
Riiiiight.
She ain't that rich.
And if she is, its simply proof that god doesn't exist.
I'm surprised that nobody here noted that Eve was one of the first webloggers, and an inspiration to thousands.
I met her at a dotcom party in '1997 and she inspired me to learn pi to 100 places.
Beautiful, inelligent, geeky. Truly, Eve, you are the best of us.
...Either that or I am a sad, sad man.
Kevin Fox
...you don't get to choose who the VCs will put in place. You make the deal with the devil, and you get what you get. You may be lucky and get someone who is an asset to your company, or you may get the VC's ne'er do well son in law.
This is just like when Hitler invaded Czechoslovakia. (Godwin's law)
Actually you do get to choose. You don't have to
do a deal with a VC who doesn't let you choose.
I'm guessing you never took VC money or you'd know
this.
Gasp! Then Microsoft is destroying employees by the thousands! Of course, the joke is that they're only destroying other people's employees, theirs are perfectly happy.
/. crowd, who evidently cry like little schoolgirls over "Quality Time".
Alex made a perfect good explaination in his account, which evidently gets brushed off by the
The gist is this: when you're competing against the Microsofts of the world, whose employees work 80 hrs. a week and are very intelligent (their real problem is the cult-like "group think" that takes over), it's impossible to be successful unless your employees are willing to make the same kind of sacrifices.
That's it. In a nutshell. There you have it. Period. I realize that the women in the audience won't like that explaination, but your mother sold you a pack of lies, so you should be used to it by now.
Reading Eve's history, it sounded like aD ultimately failed because of Phil Greenspun. Why did he choose to accept the $7.6 million settlement and give up majority control?
I certainly don't believe Phil thought the VC's had "learned their lesson" and would "do the right thing" after resuming control. Why was Phil the only one to profit from the settlement? (Why weren't the other defendants given a portion of the settlement?)
I don't know Phil or Eve or any of the VC's involved, but from reading the account, it sounded like Phil sold out aD.
This isn't a troll, so if you have an insight as to what happened, please clarify.
"it's impossible to be successful unless your employees are willing to make the same kind of sacrifices."
Successful for whom?
Unless you've got an equity stake in the company, then you're better off not putting in 80 hour weeks.
Oh wait...you do it to make your company successful, because its all about the team, and doing well for one another.
Except the guys (and girls) who have equity stakes do it for the money, and then lie to you about doing it for the team.
Don't be such a tool.
...unless you're talking about cats, of course. Evil little fuckers, cats. Kill 'em all, that's what I say. Stamp on their heads.
Here is some of the history that Eve either forgot or neglected to mention in her diary. This is not venting. I am writing this so people can understand that taking money from a top VC does not necessarily sink a company (there are successful public companies who took VC money) Also I think it is important to address responsibility. If you heard Philip Greenspun talk you might actually let him convince you he had nothing to do with aD's demise. Did he, absolutely. Did the VC's, absolutely. aD's fall has turned into a big finger pointing game, it's sad to see Eve follow Philip Greenspun's led and do this as well.
Back in the old days aD was doing well. They were bring in lots of money and had a good thing going. Was it sustainable and would the company have been able to remain profitable when the dotcom party crashed. Maybe, maybe not. But regardless they did have a good thing going on when companies had big IT budgets and were throwing money around and wiling to pay for aD's services.
So why did they take VC money? Greed and ego. Philip Greenspun who was the majority shareholder and always had the final say, as well as the other Founders, wanted to be famous and wanted lots of money. It's as simple as that.
So what went wrong? Ego. Instead of storing up for a cold winter they ate all their food during the summer. They didn't consider they would hit hard times. They bought $3mm Cape Houses (actually Philip bought it but aD paid the mortgage) opened world wide offices and hired like made (even though they didn't have the clients to justify this growth), had play room, ferries, and $3k monitors and entered into insane contracts (I could list much more).
What also went wrong? Ego. Philip and the new management spent so much time fighting it was amazing that anything was accomplished at all. They fought all the time. This was not in the best interest of the company or the employees. Particularly during the lawsuit no work got done. Management was so focus on the lawsuit and the company was divided between two camps (Philip Greenspun or the new management). Again not in the best interest of the company. There were grand egos at aD.
So what finally went wrong? Greed. Philip tired to "take back" the company and management filed a law suit to resolve the matter in court. Did Philip sell out? Hard to know what was in his mind. Maybe he didn't sell out. Selling out implies that he thought the company was worth anything at all. Maybe he realized that the Internet party days were over and his $194 mm valuation was a joke in the real economy. Maybe he realized that receiving $7.6 million for aD was the luckiest thing that ever happened to him. Maybe he know if he embarrassed the VC publicly enough they would settle and he could leave with the cash. I heard that he pretty much cleaned out the bank account. Whatever his motives were greed got the best of him and the employees were the ones who suffered.
So can VC money ruin a company? Yes. Can an egotistical founder who is not a team player
I'm sure you're right about many of the reasons about why ArsDigita chose Cambridge, but you didn't answer the question about the other offices. My company has other offices, but they aren't real, just sales-persons' homes. We still say we have offices in DC, NY, etc...but they aren't brick and mortar investments. Yes, you have to meet face to face, but that's what airplanes are for.
One prestigious office in one location is a very good idea, for all the reasons you point out, but there is a point of overkill. It's less expensive to fly well trained, high level sales people to a customer rather than try to put an office near what you think might be a group of likely prospects.
As far as close proximity to MIT grads-- that was certainly a reason for operating out of Cambridge, and another in a long line of miscalculations made by aD; don't believe everything you hear churned out by the Boston media engine--I've been here long enough to know that a lot of the 'value' coming from institutions like MIT or Harvard is pure hype. Besides, most grads leave the Boston area upon graduation.
If you want the best value for tech personnel you're better off recruiting out of the UC system, University of Washington at Seattle, or the University of Idaho at Moscow. The west is the best in tech.
Eve why do you make Philip Greenspun seem like he was a victim? It sounds like you need to take more responsibility for yourself you also need to place some with the former Chairman and Founder.
Who had the final say and decided to pursue the "growth strategy" in order to have an "impact" on the world? It sounds like it was Philip Greenspun. Since you say he was the Chairman and majority shareholder I'd be surprised if that was not the case. Now maybe he didn't like what his decision resulted in but it needs to be acknowledged that he made the choice to bring in the VC's. it didn't just happen.
It also sounds like instead of making a good faith attempt to work with his new partners (the VC's and management) he acted like a 12 year old and had pissing matches each day. You should ask yourself Eve if the company had no direction was it because the new management had utterly no clue or if Philip Greenspun constantly distracted them with his daily primadona routine.
Lastly how could someone who walked away with more than $7mm be a victim? It seems that you believe that if the VC's were not in the picture aD would have gone public and Philip along with all the founders could have been worth hundred of millions. That's a bit naive. aD fell apart when the economy hit hard times, IT budgets shrank, and competition arose. The downfall of aD, although maybe not as severe, would likely have occurred no matter who was in charge. In tough times aD's "consulting" practice was not sustainable. Philip just managed to get out at the last minute and take a bunch of money with him. In fact he was the only one who made out. How many others lost because of that? Think abour it.
It doesn't sound like aD had a great new management team. It also sounds like aD had a group of founders driven by their egos and dollar signs who were incapable of managing a company of more than 30 people.
The only real "victims" were the employees and clients.
"I've been here long enough to know that a lot of the 'value' coming from institutions like MIT or Harvard is pure hype"
The value of a Harvard (and to a far less extent MIT) degree is that you'll rub elbows with people who are going to be big in government.
Cambridge people aren't any smarter, they just think they are. For that reason, they're a lot of fun to mock mercilessly.
Its almost a sport in these parts...
Christian R. Conrad
mail me at iki.fi ; same user ID as here