Frequently Acquisitions Deliver NO Money To Founders, Early Employees And Investors

Lane Becker and Evan Nisselson - LDV Vision Summit Fireside Chat ©Robert Wright

Lane Becker and Evan Nisselson - LDV Vision Summit Fireside Chat ©Robert Wright

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This article is an excerpt from our LDV Vision Summit & LDV Vision Book

LDV Vision Summit 2015 Fireside Chat with:
Lane Becker, Director of Products & Startups, Code For America
Evan Nisselson, LDV Capital


Evan Nisselson: This is Lane Becker. He is fantastic.

Lane Becker: That’s a great opening. Hey, everybody.

Evan Nisselson: You are a phenomenal serial entrepreneur. Love parties but only when there’s certain goals, which we’ll talk about. We talked the other day. Actually, I think I was flying 30,000 feet in the air and you were somewhere else. I saw a Twitter stream and I responded and then we started talking via email. We haven’t talked in awhile. This discussion is about the life of an entrepreneur, the roller coaster life of an entrepreneur. Thee good, the bad, and the ugly.

Lane Becker: Mostly about the ugly.

Evan Nisselson: Is it?

Lane Becker: I think we’re mostly focusing on the ugly today.

Evan Nisselson: We can focus on the ugly, but also in that ugly, there’s a discussion about what’s ugly and how we can do better. It’s a two-way street here. For the audience to know, we’ve both been entrepreneurs for about the same amount of time—18 years.

Lane Becker: Yeah, around that. Since...

Evan Nisselson: 1996, like I said?

Lane Becker: Yeah, 1996, 1997.

Evan Nisselson: I went to the other side of the table after my last company which had an unfortunate disaster, for which I blame myself. The company got to about $3 million in revenue. It was a SaaS platform and we were trying to raise money or sell in June of 2008 with an investment banker. I was chairman at the time and we had about a dozen companies interested in June. In September of 2008 the economy crashed, the potential leads all closed their doors and said that they were no longer interested when the market crashed. Diablo Management was hired to liquidate the company by the majority shareholders. That was actually their name, “Diablo.” Several companies were in discussion with them to acquire the company, including myself. I tried to negotiate with the devil, honestly, to buy back the company to keep it alive but it was not possible during that economic crisis.

Lane Becker: That’s truth in advertising right there.

Evan Nisselson: It was really amazing.

Lane Becker: They know what they’re doing.

Evan Nisselson: The bizarre part, and then enough about me—we’re going to get to you and then back and forth... Actually, Andy, who was our CTO, who’s in the audience, was at the last board meeting. Our typical board meeting was about seven people—normally investors, myself, and a couple executives. And this last board meeting was about 25 people, including lawyers and others on the phone. It was announced about 12 hours prior to the board meeting that Diablo was invited to come to the meeting by the majority investors. And all of a sudden it was a discussion of liquidating the company—of what to do, what not to do, and how to manage liability. Let’s transition to you. So you’ve done a bunch of companies. How many?

Lane Becker: Three. I mean, if you want to go back to the stuff I did in college, four or five, but I’d say three in that kind of classic, Internet startup space. One was a design consultancy. One was an analytics tool, an early analytics tool in the mid-2000s that we sold to Google, and then my most recent company, Get Satisfaction, which I think will be the subject of this discussion.

Evan Nisselson: It will be the majority of the subject, absolutely. Talk about Get Satisfaction. When you were starting it... Or before you start, what was your goal? Why did you want to start that one?

Lane Becker: Oh, it’s a good question. Well, it was 2007, which was a lifetime ago at this point in Internet years. It’s funny. While getting ready for this conversation, I was thinking back to all the stuff that didn’t exist in 2007 when we were starting Get Satisfaction—like Facebook as a platform that anyone used that wasn’t a college kid or Twitter or SAS. Even the concept of SAS. I remember when we were originally pitching Get Satisfaction to First Round Capital, actually Rob Hayes from First Round Capital, who was our first investor early on in his investing career. I remember that I had a slide where I was showing the buying page from Basecamp and I was like, “I think we want to sell like these Basecamp guys do, where there’s three pricing tiers and there’s this one in the middle and we just think that’s a really great way. We’ve never seen anybody sell like that before. I think it would be a really great way to buy online.” I remember Rob, who is a wildly successful investor, going like, “Yeah. at will never work.”

Evan Nisselson: And your response was?

Lane Becker: He is a much better investor now. We actually listened. I would say my entire experience at Get Satisfaction... I also want to take responsibility for the mistakes that we made. I could talk about the mistakes that we made all day.

Evan Nisselson: We’ll talk about some of those, too.

Lane Becker: When it comes to our investors, I would say that the mistake that we made was that we listened a little too o en.

Evan Nisselson: How do you choose when to listen? I had similar challenges as well. We all do. It’s life.

Lane Becker: I don’t know. Thor, Amy, and I came up with something... or and Amy are a married couple, the Mullers, and we came up with what we called “The Muller-Becker Rule of Investor Advice,” which is that you should always assume that the approximate percentage of advice that your investors give you that is correct is equivalent to the percentage of your company that they own. Good luck figuring out which percent that is. I don’t think there’s a great rule.

Evan Nisselson: There’s not, that’s why I asked—because you’re smarter than I am.

Lane Becker: I talk to a lot of people about how to manage boards since the experience of Get Satisfaction—and particularly the experience of not managing our board particularly well at Get Satisfaction—and I think it really comes down to just really knowing what it is that you believe in or what you care about and making sure that is represented and then weighing all the advice that you get relative to that. These are people who are spending part of their time looking at what you’re doing. You’re spending all of your time looking at what you’re doing. You’re the one with deep knowledge and deep experience in that area. It’s valuable, but you always have to gauge it against

What is the core of what it is that I’m doing? and How do I apply it against that and decide? I realize that’s really abstract. It’s also almost impossible to do, especially relative to your investors who definitely have a sort of power or authority position over you.

Evan Nisselson: I think that makes a lot sense but I just realized, we should probably take a second and back up. What was Get Satisfaction in the beginning? The goal of it, the funding that came in, and the recent outcome, which is what sparked our discussion when I was flying in the air and saw a Twitter stream discussion that I thought was very valuable.

Lane Becker: Get Satisfaction was a customer service community platform. We came up with the idea in 2006, 2007, looking at online forums and seeing all the conversation that was happening about people who had products and sharing and having ideas and sharing problems and getting solutions from other customers. So the original idea for Get Satisfaction was a consumer site that was basically customer service without companies. How do we create a space where customers can share ideas, answer questions? at sort of thing. It did pretty well initially and early on, but very quickly, one of the things that we had done is we’d created a mechanism for employees to... is is our little accidental growth hacking thing, what would now I guess be called growth hacking. We had created a way for employees to self identify so they could come and they could say “Oh, I’m an employee of Yahoo, I’m an employee of Apple” or whatever. ere were no Apple employees that showed up, at least officially. There were plenty that showed up unofficially.

Evan Nisselson: Maybe they’re here unofficially, too.

Lane Becker: We would give them a badge and they would start answering questions alongside the customers. It was actually very effective. Again, this is prior to Twitter and Facebook becoming customer service platforms. at was still just a twinkle in someone else’s eye. I think we were very directionally accurate in that sense about what the product needed to be, but kind of basing it on old technology forums instead of thinking about where it needed to go. But the thing that did happen that was so interesting is that once the employees started finding out about us... We’d done a really good job on SEO on the pages. Mid-2000s, SEO is still kind of a thing, and it turned out that all of these marketing and customer service types in all of these different companies had actually set up Google alerts for the name of their company and we had made sure that the name of their company was very prominent in the page. Basically, what we had developed is that as soon as someone came in and asked the question about, say, a Samsung product, it was like having a direct line into all of marketing and customer service people in Samsung because they’d all set up these Google alerts and it was SEO’d so it would show up relatively high. We developed this really fantastic way to get access to all these people and so suddenly we had all of these employees from all of these companies, some fairly high up, who are self identifying and answering questions around these products. at was the point at which we started having a conversation with Rob and some of the other folks on our board about, Maybe we should start to turn it in this direction. Maybe we should go back to that original idea we had about selling this as a product, as opposed to the place that we had initially pushed it based on our investor feedback, which was towards more of a consumer environment.

Evan Nisselson: At that stage, you were making how much revenue?

Lane Becker: Oh yeah. We were making no revenue. is is Digg-era days of trying to get big fast with a consumer platform. So much of this ends up being subject to the sort of vagaries of the moment. Do you know what I mean? What’s the hot thing? What’s the direction that everybody else seems to be going? Where can we pattern match today? We were kind of flip-flopping around a little bit based on that. Personally, I think if we just stuck with our initial idea of following the Basecamp model and getting into the SAS approach earlier, we actually probably would’ve been in much better shape in 2008 when everything tanked. It’s funny, listening to your story and my story...


Evan Nisselson: Well, not really funny.

Lane Becker: Well, I’m going to go with funny because I have no choice but to laugh at this point. My childhood dream was to be a cautionary tale for others. Here we are up on stage. In 2008, the economy tanks and there are these macro conditions that have fuck to do with anything that any of you in the room are doing. We can blame 2008 entirely on a bunch of guys wearing ill-fitting suits sitting about a mile and a half that way. at way? at way? I’m lost, orientation-wise. Again, what they were doing was terrible. It had nothing at all to do with what I was doing or with what you were doing, but those macro conditions totally influenced our ability to succeed. In your case, it was your ability to sell. In our case, it was our ability to raise a series A, which had been going quite well up until that point. Suddenly, the money’s not there. So I’m scrambling. I end up asking some of our better-o friends... I mean, I did all sorts of things to keep the company going through this period, like asking people for money.

Evan Nisselson: Tell us a couple of those things that you did.

Lane Becker: Actually, one of the things that I did which was fantastic advice that I got from one of the guys who would later become our investor, Josh Felser from Freestyle... Josh is amazing. I would totally recommend taking money from him and that’s a very short list of people that I have for that.

Evan Nisselson: You’re an advisor to them.

Lane Becker: Yeah. I was for their first fund.

Evan Nisselson: They’re also an investor in one of our companies, Camio, and the CEO, Carter, is in the audience. Here he is, right in the back.

Lane Becker:  That’s right. Everybody likes Josh. Josh has this thing that he says, which I think every investor should say but very few do. He says, “We will always have an agenda, but we promise to share it with you.” So when he feels like his interests are going to diverge from your interests, he will point out how that is happening and why he is lobbying for something separate from you, which is terri c because there are always times that your investors are going to diverge in their interest from you. Always, in every company.

Evan Nisselson: Is that solely a personality trait or is that because he’s a serial entrepreneur?

Lane Becker: I think it’s a personality trait but I also think it is both.

Evan Nisselson: Both.

Lane Becker: Yeah, I’ve watched them win all sorts of investment opportunities based entirely on the fact that he’s able to empathize with the people that he is talking to far more than somebody who’s never actually run a business in their life. He suggested that we have a dinner party and that I invite all my high net worth friends to come to the dinner party and basically just tell them, “Hey, I’m pitching you an investment and dinner will be terrific, but if you’re not interested in investing, we’ll have other dinner parties. Don’t bother to show up.” He was like, “80% of the people won’t show up and then 20% of them will and the 20% that show up are all going to invest.” Which was completely, 100% accurate. at is exactly what happened.

Evan Nisselson: Wow. that’s great.

Lane Becker: It was. This is like December of 2008.

Evan Nisselson: Did you believe him or was that like, I’ll give it a try. I don’t think it’s going to happen? At that stage, it was kind of like I’ll do anything to try and raise capital to keep the company alive?

Lane Becker: I was already in that I’ll do everything to raise capital to keep the company alive place. I was very much there. In fact, this story has a very sad ending in which we sold Get Satisfaction to a company called Sprinklr, probably like six to eight weeks ago. And every early investor, every employee, all of the founders got completely washed out, so none of us see a dime from the sale. e only people who make anything o of the sale are, interestingly, all the people who are still sitting on the board: later investors, the current CEO, and the former CEO. It’s funny how that works. Actually, the mechanism by which that works is one of the things I want to talk about. We should get to that. One of the things I have observed through the experience of being more public about this than most people are when their company sells (but not really) is how much opacity there is. We have so much transparency and we talk about our world as so transparent and open, and it certainly is relative to the way investing worked in the ‘90s, for example, but I want to be transparent and open about things. Like in the beginning, there’s still this surprising shroud of secrecy and uncertainty around how things end when they don’t end well, which is most of the time, or at least they don’t end fantastically. It turns out there are things you need to know about that part, too—including, for example, the way we got screwed, which is one of the many ways you can get screwed in a sale where not everybody’s going to see something from it.

Evan Nisselson: We’ll talk about that in a second. Let’s lead up to it. You evolved your role with the company from what to what and when?

Lane Becker: Well, I was always co-founder and chief product officer. I didn’t actually take the CEO title but or and I used to joke... he was the CEO of the company. We used to joke that he was the peace-time CEO and I was the war-time CEO. He was really good when things were going well. I was really good when you needed somebody to get kind of pissed off at board meetings. I sort of ran that piece of it and the fundraising piece and everything that happened post 2008. or was still very much the CEO of the company.

Evan Nisselson: A couple of years ago, you switched again. Correct?   

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.

Evan Nisselson: I think that’s great advice. We could talk for a long time, but I want to end on this: Is there anything else that from your experience you’ve learned that you would give as concrete advice to anybody in the audience who is either building or wants to build a company?

Lane Becker: I think you’re better o when you think about venture capital as a game or taking venture capital as a game. I recognize that it has all sorts of real-world inputs for a lot of people. Actually, starting companies is one of the ways that they aspired to class-jump, which is very hard to do in this country. We have a surprisingly static class system and Silicon Valley is still very aspirationally one of the ways that you can do that. So you’re thinking about your future, you’re thinking about the people that care about you— there’s all sorts of reasons. I recognize the gravity of it. At the same time, you are going to be better o if you can treat it as if it wasn’t the most important thing in the world. You know what I mean? Entrepreneurs are always at a disadvantage in negotiating situations with investors because the person who wins a negotiation is always the person who has less of an emotional investment. Always. You can go into any negotiation and if you have more of an emotional investment, you will lose. That’s just kind of the deal. You have to figure out how to manage that and to me, managing that means pulling yourself away from it as much as possible, looking at the situation dispassionately and understanding that if it’s a game, there are rules. It is a system. It’s kind of a weird game because some of the rules aren’t necessarily as apparent to you as others. If you can, treat it as a game—understanding the system and the system dynamics, understanding the person and their motivations and intentions, and understanding how they’re going to align or not align with yours. On the one hand, I want to say, “Get to know that person as a person and trust them,” and on the other hand, I want to say,

“Step back from the situation and recognize that it’s not just about the two of you as individuals.” It’s actually about the system that you’re participating in and the expectations that you have and that your LPs have and your returns on capital and the margin macro economic situation.

Evan Nisselson: So it sounds like you have to do both and there’s a fine line between getting to really know them and taking a detached perspective. I think that’s fantastic advice. It’s probably everything in life. But in this situation, investors, co-founders—it’s very critical to have that view without blinders on.

Lane Becker: Yes. I don’t think it’s surprising that so many of the startup founding teams that manage to build these sort of wildly successful companies, they’re on their second or their third or even their fourth company before it kind of hits. e Twitter team is a great example of this. It is the act of working with these people over time, learning their strengths and their weaknesses, figuring out how you can trust them, figuring out where you can lean on them, that makes you quite successful. I have no doubt that that’s true over repeat investments as well.

Evan Nisselson: Right. is had been fantastic. Thank you very much for sharing the ups and the downs with transparency. You’re going to be here for the rest of today?

Lane Becker: Yeah, I’ll be around.

Evan Nisselson: Others, if you have questions, we don’t have any more time right now but Lane is here. He’s fantastic. Thank you for sharing and enjoy the rest of the Summit.

Lane Becker: Thanks for having me.

Evan Nisselson: Thank you, Lane.

Lane Becker: Thanks, everybody.

Evan Nisselson: A round of applause, guys.

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This article is an excerpt from our LDV Vision Summit & LDV Vision Book