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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."
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.
From the account ... Or might it have been because I was dating Philip Greenspun
... you can easily have 2 accounts of the same event that read very differently depending on which details are left out and which are emphasised ... just that this is unlikely to be the authoritive account.
so the fact that Greenspun and she have similar recollections is hardly surprising.
I didn't say she was lying
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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.
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.
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. ;-)
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
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!
"The way to write a contract is to assume that you and the nice man sitting across the table will drop dead tomorrow, and your heirs will hate one another's guts."
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