Lane Becker: Yeah. So what happened to us post 2008 is that we were basically told by our board, “Okay, it’s great that you guys are having fun with this little consumer toy but it’s time to bring the adults in.” is is kind of classic Silicon Valley behavior prior to the Zuckerberg-Sandberg-Andreessen-Horowitz era, where their one-two punch of Sheryl Sandberg coming in underneath Mark Zuckerberg instead of on top of him, which is what they would’ve done in years previous and what they would’ve done, frankly, if Zuckerberg hadn’t had Peter Thiel advising him on how to structure his board... It’s true, he was 20. He would’ve gotten screwed if he hadn’t locked into some good advisors; Andreessen Horowitz opening up and saying, “We believe in founders. We think founders need to stay in charge of their businesses. We think a good VC teaches a founder how to become an investor.” at is all absolutely, 100% true and came a couple of years too late for us. So in late 2008, they’re basically like, “You need to raise money and prove to us that you can raise money in this totally fucked up environment or we’re going to lose all faith in you. And oh, by the way, also we’ve lost all faith in you and we think you need to get an adult in here.” Those are sort of the messages...
Evan Nisselson: It doesn’t sound like it was an option. It was a way of phrasing.
Lane Becker: Right. The thing is, if I could go back and do it again...
Evan Nisselson: What would you do differently?
Lane Becker: I would just tell them to fuck the hell o . Seriously. And you know what? I think that’s kind of what they wanted me to tell them. I actually ended up having a conversation with Rob Hayes years later about Travis Kalanick, who, let’s be honest, is like clearly the most successful asshole billionaire in the industry, right? Really plays it to the hilt. is is long before Uber is in any other city besides San Francisco. Rob Hayes, to his credit, was one of their seed investors at First Round, so nice work Rob. He told me the story about Travis Kalanick that really stuck with me, and this is after I had left Get Satisfaction, so it was probably in 2010.
Evan Nisselson: You left and you were still on the board or you weren’t?
Lane Becker: I left. I got pushed off the board first with the series A round and then or got pushed o the board in the series B round. Rob tells me the story about how there’s a board meeting he needed to reschedule because he had a conflict so he has his assistant call Travis. Travis probably didn’t even have an assistant at that time. Call Travis and say that Rob needs to reschedule the meeting and Travis says, “Fuck you. We’re not rescheduling that meeting. I’m putting my time and energy into this. He needs to put his time and energy into this, too.” Rob was like, “I have so much admiration for Travis for doing that.” And I realized, “Oh, that’s how we fucked up. Rob’s a bottom.” Clearly, that’s what he wanted. He wanted me to dominate him because that’s what venture investors want from you. Now my attitude towards this sort of thing is to go to a BDSM metaphor. or, who was always the sort of more politic of the three of us, Thor’s take on it is that your investors are always testing you. And that was the test. In that sense, we failed that test because in that moment, we weren’t forceful or aggressive enough. We weren’t doing the things that they needed us to do to see that we were passionate or committed. And I actually think, as fucked up as that is, it’s also totally, totally true.
Evan Nisselson: I actually...
Lane Becker: I usually don’t swear this much.
Evan Nisselson: The subject is relevant for swearing. I’m sure I could loft some out there as well, depending on the question you’re asking me.
Lane Becker: Apologies if you have delicate ears.
Evan Nisselson: No, the kid left earlier so he’s no longer here. That was Serge’s kid that I invited and gave a little name tag, if anybody didn’t know. What is he, three weeks? A month old, a month and a half? So that brings up the point. Let’s finish the story of the situation and go back to talking about investors and the crux of how you got screwed. All of a sudden it sells—the company. And you’d been out.
Lane Becker: I’d been out for awhile.
Evan Nisselson: You probably had limited knowledge of what was going on.
Lane Becker: Limited.
Evan Nisselson: You’re still the shareholder.
Lane Becker: Limited and as we’d argued, deliberately incorrect knowledge of what was going on.
Evan Nisselson: And you were out for how long?
Lane Becker: I left in 2010. Thor left in 2011 and I believe Amy left in 2012 or 2013.
Evan Nisselson: So over the last two to five years...
Lane Becker: Left.
Evan Nisselson: Right, and still had equity. Not a lot.
Lane Becker: Still had equity. Sort of ever decreasing.
Evan Nisselson: Decreasing, recapping, and other things.
Lane Becker: By the end, probably the three of us collectively owned between 7% and 10% of the company, depending on the day.
Evan Nisselson: Then all of a sudden news hits. Get Satisfaction is sold.
Lane Becker: Right.
Evan Nisselson: Tell me the story just before that, because I think there was some behind-the-scenes to that. How did you find out and then how did it evolve to all of a sudden having an extensive discussion with entrepreneurs around the world on Twitter?
Lane Becker: is is where the story gets kind of gross and ugly.
Evan Nisselson: And that’s why I asked.
Lane Becker: Yes.
Evan Nisselson: I’m sorry. at’s why we’re here.
Lane Becker: I don’t mind. What the hell. We’re here. We found out because we had maintained, even a er leaving the organization, we had actually maintained pretty close ties with a number of employees, which is what I would recommend to everybody even if and especially if you end up getting shoved out of your own organization. Employees on the ground usually know what the hell is going on. In this case, we actually found out from an ex-employee who had also done the same thing, who had maintained tight relationships. And apparently, the employees at Get Satisfaction had been explicitly informed not to tell any of the founders that the sale was happening because the current management, I won’t be more specific than that, had decided that we were a liability in this situation and they weren’t going to tell us that the sale was closing until—it’s unclear to us—either exactly the day it was closing or perhaps the day a er it had closed. So they had just cut us out of the loop entirely.
But this ex-employee had caught wind of it and he had no reason not to tell us so he just called us up and he was like, “Hey FYI, your company’s selling.” That is just the shittiest way to find out that your company is selling. At the time, though, we assumed, Okay well, we’re probably getting washed out, right? Because why wouldn’t they be telling us if they were going to get us even a little bit of capital? Now, up until this point, our understanding has been that revenues had sort of leveled o . We knew that they were struggling. We understood that they’d done a convertible note with really onerous preferences towards the end in an attempt to keep things going. But again, they were like happy, happy, rosy, rosy in their conversations with us.
What I understand now is that it was 3x... A convertible note with a 3x liquidation preference was there primarily to ensure that only the people that participated in that note were going to see anything from it, because they had done a successful job of hiding how badly, frankly, they had managed the business, how o -a-cli the revenues appeared to have gone. So they were all kind of scrambling to make sure that they were going to get their money or they were going to be able to get something out of it. at’s what that last year actually was—not an attempt to get the company back on its feet, but an attempt to basically steer it in a direction that was going to guarantee the maximum outcome for the people that still had some insight into what was happening: the people sitting on the board.
So we find this out. or emails very politely their CEO and CFO and says, “Hey, you mentioned awhile back that you were thinking about maybe acquisition or fundraising. How’s that going? Can we maybe talk to you about it?
Come in and talk to you about it?” One of them, the CEO or the CFO, writes back and says, “Yeah. We’re really busy this week. Why don’t you come in next Wednesday?” or was like, “So, funny story. We actually know what’s happening and we think you should bring us in much sooner.” And all of a sudden they’re like, “Oh yeah, you should come in on Friday.” So we go in on Friday and we know that we’re going to get washed out. There’s no way they would’ve been screwing with us as much as they were if we weren’t going to get washed out. But we go in basically with an argument like, “We think, ideally, you should at least recognize that the common stock is getting completely washed out in this instance. We still think you should give something to the common. Even if you’re not going to give something to the common, even if it’s just like pennies on the dollar of the sale in recognition of all the people who have put so much time and effort into this....” is, by the way, is not uncommon behavior even in the situation where common gets washed out. Frequently, in order to maintain relationships or in recognition of the work that’s been done or to just not look like an asshole, the preferred stock will actually throw something to common anyway. That’s actually something that does happen. Not in this instance. We were like, “Okay, even if you’re not going to give it to common, at least recognize that we are the founders of this fucking business and we put a ton of time and energy and capital into it and we would like to see some small token thing just in recognition of that. And hell, even if you’re not going to do it because you’re nice people, you should do it because why the hell else would we support this sale? What is the point of us supporting this sale?” And the CEO’s like, “Oh, but it’s your baby. Don’t you want to see your baby make it out into the universe?”
Evan Nisselson: It’s his argument that if you don’t support it, it goes out of business?
Lane Becker: No. His argument was “suck it up,” basically. He basically says, “Okay, I’ll go back to the board.” Oh, so the other thing we learned in this meeting on Friday, besides the fact that we’re getting washed out, is that the sale’s closing on Tuesday. And we were like, “Wait a minute, you told us you didn’t want to talk to us until Wednesday?” Like, what? Jerk!
Evan Nisselson: You probably used a stronger word than that. You don’t have to use it here.
Lane Becker: No. There was this really funny part. The worst part about this meeting is that I go in, or goes in, Amy goes in, and we know the whole point of this meeting is for him to deliver us this shit news that we’ve been washed out. But before he gets to that, the first 20 minutes of the meeting is spent with him grilling us on which employee told. “Which employee told you? Which employee told you?”
Evan Nisselson: So that situation was horrible. Let’s jump to...
Lane Becker: He says, “We’re going to ask the board.” e board basically comes back and says, “No. We’re not going to give you anything. We’re not giving common anything but we do expect you to support the sale.” And it was in that moment that I realized this happens. It’s so frequent. I end up going out on the morning of the sale... It’s Tuesday morning and this congratulations note hits my phone and wakes me up at 6:00 in the morning because this news has gone up on the wire that Get Satisfaction is sold. So all of my friends start doing the thing that you would totally expect them to do because they’re your friends, which is they start sending congratulatory notes. I was just not in the mood for it so I wrote this thing on Twitter, which I have to say I did not expect to get the kind of pick-up that it did. I was basically just like, “Hey everybody, I appreciate the sentiment but don’t congratulate me on the sale because the founders got totally washed out and we got nothing.”
Evan Nisselson: As you are a very genuine and sincere person. at’s what the message was, but to everybody else, that’s unusual in Silicon Valley.
Lane Becker: I know.
Evan Nisselson: Unfortunately—or in most of the ecosystem.
Lane Becker: No, I know that’s accurate actually because one of the very, I don’t know if “amusing” is the right word, but one of the really fascinating outcomes of this is that I got a lot of private messages from a lot of successful entrepreneurs who all said something along the lines of, “Wish I could pretend I didn’t know what you were talking about.” It just made me realize in that moment: this is absurdly common.
Evan Nisselson: I was on the plane and I saw the thread, which had many, many comments—I don’t know if you have any numbers, I mean dozens, hundreds... It just started going and going and going and going.
Lane Becker: Yeah, it was great for my follower count.
Evan Nisselson: Anyhow, it started and I felt so bad. I know what it’s like. A friend was going through this and I actually belabored for like 20 minutes on the plane: Do I post publicly? What can I say? What would be appropriate? What would be right? What would be helpful? And then I just sent you an email and that’s where we started a back and forth thread. A lot of people voiced that they thanked you for sharing that.
Lane Becker: Yeah. It made me feel great, actually.
Evan Nisselson: But now that it’s out, and you look back... So talking about the investors. First question actually, most importantly: You mentioned earlier there’s a lot of negative results. There’s only a small percentage of successes. Our audience is all trying to build businesses or build technology. Are you going to do another one?
Lane Becker: Oh, yeah. I would totally do it again.
Evan Nisselson: Perfect, I was assuming that was your response because there’s only one answer for a true entrepreneur. But now, looking back at that, what would you do differently next time?
Lane Becker: We covered the one point, right, which is that I would have had a lot more independence and this is something I think comes with age.
Evan Nisselson: Independence?
Lane Becker: From the board. I would’ve set things up better so that I would’ve been able to maintain control because I understand how to do that now. And then I would’ve actually maintained control because it’s not just about the percentage ownership or how much money has been invested. It’s also about the more subtle social ways in which investors can create pressure on you. I mean, at the time that we gave up the CEO role of Get Satisfaction, technically we still owned more than 50% of the company. We didn’t have to do that. It was far more the intimidation factor of it that made us do it than anything else. I just feel much more prepared for that sort of thing these days.
Evan Nisselson: I had a similar situation where, unfortunately, we almost had a large financing and it blew up in the 12th hour. And all of a sudden there was a transition where the top investors and the new CEO said, “It’s best if you don’t come into the office after you transition to chairman. It’s best for everybody.” And actually, it was a very difficult period because I wanted to do what everybody thought was best for the company and at the time I was not sure that was the right decision. Learning hindsight is 20/20, but now I realize the decision of not going into the office after that transition situation was a disaster and wrong on many levels. How else can we learn if it’s not from our own challenges? Is it advisors? How do we know which one’s the right advisor? Is it just that we have to go through this crap and become better at the other side and hopefully it’s not disastrous?
Lane Becker: Well, I definitely think learning from other people’s experience is better than learning from your own experience.
Evan Nisselson: That’s a fucking rhetorical question. And see, I cursed. I knew it would come up when I started talking about this. How would you answer that differently?
Lane Becker: If I were doing this again today, I would definitely have a much stronger support network. There just weren’t as many of you in 2008, 2009 honestly. I would definitely build a much stronger support network. Or I would have come up through a much stronger support network, like say an accelerator-type structure that gave me access to other people who I could talk to and work with. I think that is huge. e other thing I would do differently today is I wouldn’t panic as much as I did then.
Evan Nisselson: I panicked all the time.
Lane Becker: Yeah. And now, I’m like, “Well, it’s just a company.”
Evan Nisselson: One of the things I try to do now after successes and failures... I am a mentor to about five accelerators and try to help others avoid the mistakes that I did. You can never dictate. I think it is best to share stories which can share perspective for others to make their own conclusions. at’s the same thing I do as an investor. You’ve met some investors now who you would definitely work with in the future and you probably have signals that say, “Oh no, not that one.” Tell us a little bit of how you would choose those signals. I know we’ve got a couple of minutes left and need to wrap up, but this is a fantastic discussion to help others avoid the mistakes that we might’ve made.
Lane Becker: I just think your investors are essentially your boss. For all the blah in this industry about how you get to be your own boss, that’s really not true. You have people that you report to, right? And your investors are those people, and so like any situation where you’re going to have a boss, the question is: Do you like and trust this person? At the end of the day, that’s really what it comes down to. Are you able to communicate with them in a way that feels meaningful? Have they done things, have they said things that are indicative to you in some way, shape, or form that you can trust them? Do they talk about things as if they were experienced? Do they have an experience that you can relate to, because that’s one of the fastest ways that you can form a trust relationship with somebody? I think that’s the reason why Josh and probably you were successful with a lot of the companies that you invest in is because that resonates with them. I just look for that human connection in this situation and some sign that they’re not just some autonomic bottom feeder and just trying to sort of take what they can and then run o , which unfortunately, the business world has quite a few of.