Why TechCrunch is Brilliant
Forget about TheStandard or Red Herring at its glory, this is perhaps the best example of tech journalism I have seen: The story and discussion of what happened at Filmloop, when it was essentially sold in a fire sale to an affiliated company of the VC for its cash.
Here is why the post shits all over the old farts at dead tree magazines who still insist on doing fawning profiles of only the most-hyped companies and ‘11 steps on how to get rich 2.0′ type articles:
- The content of the piece was a scoop (or near scoop with Valleywag also with the news).
- Arrington takes a position and spells out why he believes in the position he has taken. Because of it, others weigh in to balance his viewpoint, creating a rich, friction-filled debate.
- The story involves a series of complicated sub-plots, including that a photo widget company raised $13m and spent all but $3m in a yeartwo years, a VC who invested in May of 2006 wanted to sell the company in a firesale by November of 2006 and the crux of the story: can a VC force a sale of a company without management consent, and if so, how?
- There are over 100 comments on the post. 100 very good, well informed comments. Some from the VC firm who is in question, others from quite well known and credible figures on both the entrepreneur and investor sides, and all intelligently debating a complicated issue.
- The discussion gets down to an incredibly granular detail around preference share rights and how such a scenario could have been possible, providing actionable advice you would never get in a ‘media setting’.
The discussion is on the whole pro-entrepreneur but to me, coming from the perspective of an entrepreneur, I have no sympathy for either ComVentures/Garage or Filmloop. How could they possibly spend $10m in a year two years developing a photo widget and how could the investors happily sign off on that cost structure after they had invested (presumably the costs were in the business plan and the planned revenue to offset them never arose)?
How the events transpired were interesting and lessons are to be learned but the fact that the company failed shouldn’t be a surprise to anyone.
Either way, bravo Arrington. Keep up the good work.
UPDATE: Mike Arrington himself rightly points out in the comments that it was two years rather than one in which they burned $10m.
Hey, thanks very much. Just one thing to note - the company raised it’s first round at the beginning of 2005, so it was spent over a two year period. That may or may not change your analysis.