I said this in the other thread and I know it sounds cliché, but we're not planning to "go away" or get acquired or something. We've always positioned this company as a long-term play, and made that very clear when hiring, raising money, etc. It's just not possible to go after something big if you plan to "flip" the company quickly.
> but we're not planning to "go away" or get acquired or something
If you've taken VC money, haven't you already gave up that choice? Despite pretenses, the VCs are going to want: a) IPO or b) acquisition.
Since you assert b) is not your plan, do you really think you can become a $100m/year company (IPO) by charging for something that Google/MS/everyone else provides for free?
Perhaps I am too pessimistic (or realistic?) about VC goals/control.
To address the VC issue the poster and subposters are talking about:
> If you've taken VC money, haven't you already gave up that choice
> if your current VCs aren't able to change your mind, and they get angry as a result,
> Or exercise their Board powers and fire the CEO when push comes to shove.
> if your current VCs aren't able to change your mind, and they get angry as a result, just their absence alone from future funding rounds
Basically, you don't know what you're talking about. Look at the VCs involved, and try to make a case for how this could work!
Fuel Capital is a $20m fund. SVAngel doesn't take board seats. Data Collective does take board seats in A rounds, but its super unlikely they have one here. Crunchfund is a small seed fund.
All of these guys are microVCs/super angels, with <=$200m funds each. They don't take board seats in seed rounds, and I would wager a significant sum that they have basically no way to affect what Inbox wants to do. If the investors get a monthly email outlining the company's performance, they would consider themselves lucky.
To elaborate on this point: if your current VCs aren't able to change your mind, and they get angry as a result, just their absence alone from future funding rounds will make it nearly impossible to get other investors interested. So they basically have you by a chain.
That's what the parent poster is getting at. In SV, most founding teams retain control after a seed financing, and many continue to retain control after a Series A.
I think you're actually wrong about VC goals. Yes VCs look for acquisitions, but acquisitions only really move the needle when they're really big (>$100m). Anyone acquiring for those amounts aren't going to shut the product down.
It's pretty easy to name any number of >$100M acquisitions that have been shut down. Regardless, that's only a goal of VCs: there's no shortage of VC-funded companies that have been sold for far less than $100M when they couldn't raise the next round at a palatable price.
No startup company can make a defensible claim that their product will be around for the long haul.
Not sure where the B2B constraint came from. That's a little more challenging, because B2B companies are more likely to have revenue and enterprise sales channels, etc., worth preserving, and it's not particularly relevant to your thesis (that products from VC-backed companies are less likely to get shut down).
Still, here's a few that came to mind where the product has been shut down or changed sufficiently to be the equivalent for many customers:
dMARC
FeedBurner
AuthenTEC
Face.com
TellMe
Wildfire
I'm sure I could come up with a few more if I thought about it a little longer. I'm pretty sure these are all >= 100M.
Vendor reliability is a problem at all levels. If you don't have a multi-year maintenance contract, all the more so.
I don't think the point is only about the product going away. If Inbox is acquired then it's no longer 'the email company' but the whatever-the-acquirer-wants company (which may well be advertising).
They're building a platform. They can make money by charging developers a percent of revenue made from apps built on the platform. No need to charge users for email directly.
Yeah, but very few companies start with plans to be "flipped". The reality is that the failure rate of startups is very high, the exit options are few, and privacy policies generally aren't worth the digital bits they're stored on. While you may have the best of intentions (and I genuinely believe you do) it's still not enough to let me give you access to all of my e-mail. I already do this with Google; shifting my e-mail to a new service is not practical so I would simply have two companies with access to all my e-mail instead of one. I'm also suspicious what you get out of the deal: you know how it goes, if you're not paying for the product, then you are the product... At least with Google, I know and understand their intentions.
I wish you the best of luck, because this is a hard space to play in.
In that case, you should probably make a big fancy statement to that effect. It would be popular, people are very concerned about the issue of services being acquired and binned these days, it's such an obvious pattern.
If you are not legally/politically able to make such a statement, then these casual assurances are worthless, and ultimately misleading.
Your two paragraphs are logically irreconcilable. Obviously, they cannot legally or politically make a statement like "we will never get acquired." You tell them not to make that statement if they can't. But then you also tell them they should make the statement?
People need to chill. This looks like an awesome product and platform, and it doesn't seem like it will require any data lock in (you can always move your emails from place to place, and it looks like they won't necessarily even require you to store emails on their servers. Worst comes to worst, if they shut down, I imagine they would provide migration utilities.
These guys are clearly pretty smart. If someone is going to build this product, they seem like a good choice.
The strongest statement you can make to this effect is to preferentially take _my_ money over VC money. Words on this particular subject have been reduced to having no value with most people.
I wonder if it's possible to make that promise a legally binding contract. Of course all startups say that they won't "go away", but most of them will even if they say they won't.
While I can't think of a legal way to guarantee "not going away", you can legally guarantee a very strict privacy policy, good for 10 years counting from when the account was created. Future changes in privacy policy would not be able to cancel the 10 years promise, so any acquirer would be prevented from pushing ads. The acquirer could still kill the produce though.
You simply set aside money in an endowment fund (or other funding apparatus) and create a legal entity charged with the task of using the money in the fund to continue operations in the event the main company shuts down. Just add a clause in the legal framework of the organization which provides for the startup and handover operations, put individuals on a "board" of some sort who will begin drawing a salary when the organization is kicked into action, etc. It's not exactly rocket science.
The fact that so many companies who "plan to be around forever" haven't bothered to even think about these sorts of things indicates to me how fundamentally unseriously they take their own business.
I am confused. The fund is set up by the company itself right? So if things get so bad that the company has to shut down, BUT they have a fund big enough to keep running the company, why must they shut themselves down to tap into it? Why can't the original company simply use that money to keep operations running?
Because that's the only way to prove continuation of operations. Also notice the difference between continuing to provide services and continuing running the company as normal (which typically would involve lots os expenditures beyond the basics necessary to keep services running).
As a fellow receiver of venture funding, I think you need to have more explanation than that if you want to be convincing.
You took investment money. If you're a typical startup, you plan to take more. Investors are in this for returns. VCs are in it for returns in the timeframe of their particular funds.
That you're not planning to get acquired makes it sound like you have no plan. What you really need is a plan to stay independent and sustainable forever. Which means having some sort of plan to pay off your investors. And if that isn't being acquired, then I presume that means an IPO within 10 years. That is an unlikely outcome for any startup, and personally I'd say it's especially unlikely for an infrastructure company.
As an aside, I definitely think it's possible to go after something big while planning to flip the company. However, in that case it's important to talk as if you won't be flipping the company.
