Omnidrive’s CEO and sometime TechCrunch blogger, Nik Cubrilovic, takes a pot shot at threaded video app, Seesmic – via Seesmic. Have a listen, its really an attempt to drive up embedded video comments on TechCrunch via Seesmic. Why pander to them – leave your comments right here on metarand.
Earlier in the month I wrote a post about the Omnidrive situation in which an angel investor in the company, Clay Cook very publicly denounced the company’s founder Nik Cubrilovic. I’ve since spoken with Nik and heard his side of the story and also delved more deeply. There are definitely two sides to every story and this case is no exception.
As a brief aside, there is an interesting bacskstory at play. In addition to being a founder of Omnidrive, Nik was at the time writing for TechCrunch. This made him a magnet for people wanting to be “in” with the Atherton Web 2.0 camp, as personified by TechCrunch HQ – Michael Arrington’s place in the Silicon Valley suburb.
Sometime after Clay had invested in Omnidrive he moved with his family from Perth to Atherton. They quickly became a part of the scene, Clay bought himself a Hummer and they began to hit the Valley circuit of launches, parties and conferences. He made a follow on investment into Omnidrive, but soon after this things seemed to go pear-shaped.
He was unable to secure a visa to remain in the US and ended up back in Perth a few months later. During this time there was a breakdown of communication between Nik and Clay. In addition Nik fell completely off the TechCrunch radar. He stopped writing for them and Michael Arrington has not mentioned Omnidrive or Nik since then. Michael recently lauded Duncan Riley when he left the TechCrunch stable, and he pointed out that all his former staffers remain TechCrunch friends – Nik’s name was not included on this list.
It would seem that personal and business frustrations reached a boiling point and Clay made his public denouncement. At the time he was still a shareholder of the company.
This gives rise to certain legal and ethical obligations. While the strict black letter set of rights and obligations are crystallized in a company’s Shareholder Agreement, it can be argued that even if that document is silent on the matter there are two duties that emanate from the angel investor relationship.
The first is a synchronous duty of disclosure or communication. As an executive of a company, the CEO has a duty to maintain a regular channel of communication with shareholders. In my view this goes beyond providing regular reporting on the status of the business. Angel investing is largely personal and the communication should match that relationship. This duty also rests on the investor and it is not prudent to close that channel.
The second duty is a duty of care that the investor has, as a shareholder in the business, to not harm the company through their actions. Where that investor has a public channel of communication open to them, this duty suggests that channel should not be used to air grievances between the company, its executives and the investor.
As I said initially, I’m not taking sides in the Omnidrive situation, but looked at as a case study, it is clear that we can derive a key rule for angel investing: Communicate First, Broadcast Last.
This rule is directed at both the investors and investees in an angel transaction – both parties should communicate as much as possible and try not to broadcast their grievances.
Let’s now turn to a more recent case study that again illustrates this rule: Seesmic.
In February Seesmic’s CEO, Loic Le Meur, (seen here outside TechCrunch HQ) announced the company had raised a $6 million investment. The funding came from Atomico, Niklas Zennstrom and Janus Friis’s private investment vehicle, as well as from a line-up of angel investors that included Steve Case, Ron Conway, Reid Hoffman, Michael Parekh and a few others including two people who have been involved with Omnidrive – Jeff Clavier and Michael Arrington.
I spoke with Loic recently and in our conversation we discussed how he was building Seesmic and also explored the nature of the relationship he had formulated with his investors. From this conversation I had the distinct feeling that he got this rule: Communicate First, Broadcast Last.
Loic told me that he is “building Seesmic a lot in the open”. He found his investors through networking around: “if Reid Hoffman invests then you have two more entrepreneurs who want to invest.”
And similarly he made it clear that he talks to his fourteen investors on a daily basis. “There is not a single day when I don’t talk to one of them.”
So it came as a big surprise when I read Michael Arrington’s TechCrunch post: Don’t Screw Your Partners Over A Marketing Promotion. Michael is a minority shareholder in Seesmic and yet here he was very publicly taking Seesmic to task over a lack of communication.
Again, I don’t want to take sides – I also have Seesmic’s video enabled in the comments on this blog, but it seems that the first part of the rule was not followed by either Loic or Michael – communicate first. Loic should have let all those parties who have the Seesmic plugin know that there was going to be a series of outages, but he should have told his investors about this as a priority.
At the same time, Michael would have been better off taking Loic to task privately and working collectively to ensure that the public issues management aspect was handled more appropriately. He clearly did not adhere to the second part of the rule: Broadcast Last.
In closing, I call on all parties involved in building early stage ventures to communicate more, no matter how busy you may get and when emotions run high try to exercise restraint, especially when you feel compelled to hit the broadcast button.