Venture capital

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Aral Balkan, Ello, goodbye:

When you take venture capital, it is not a matter of if you’re going to sell your users, you already have. It’s called an exit plan. And no investor will give you venture capital without one. In the myopic and upside-down world of venture capital, exits precede the building of the actual thing itself. It would be a comedy if the repercussions of this toxic system were not so tragic.

Is it possible to honor your users while also taking money to build and grow a business? Is it possible to grow a business with VC while honoring yourself and your vision for the business? I think so, but it depends on the character of the founders and the investors.

My limited experience with VC was at Bulbstorm (my former employer). Bart, the CEO, took several rounds of funding. He had an exit plan, but he never sold-out our customers. Hey, we even got acquired! And we didn’t compromise our values. That’s something to be proud of.

I doubt this is the norm, but maybe that’s not because VC is inherently bad. The more likely reason that tech startups sell out their users is the founder’s weak character and a poor choice of investors. It’s a tough proposition when your dreams are on the line and you can’t keep the lights on.

Bart is a stand-up guy—he has great character and an iron constitution. He pulled it off. But he’s clearly the exception, which is why Aral’s point is so salient.