

Bootup Labs' Danny Robinson: "I made mistakes. I was wrong. Lessons Learned." - scg
http://blog.bootuplabs.com/2010/04/21/i-made-mistakes-i-was-wrong-lessons-learned/

======
dmix
Bootup Lab's reputation has still been badly damaged.

An entrepreneur's commitment and sacrifice to their business is very serious
and they took a very nonchalant approach to handling this situation until the
PR blew up.

Of course Danny is sorry now. I'm sure Bootup will continue to do fine with
finding new startups since entrepreneurs in need of cash are always in high
supply.

But competent entrepreneurs look for competent investors and the real test now
is if Bootup labs is capable of getting/being either of those.

~~~
gojomo
Obviously there were screw-ups. But it's possible a major factor was someone
else fell through on their investment commitment to Bootup Labs. They hinted
at that, though quite rightly Bootup hasn't specifically named who fell
through on them. They've taken the hit themselves. Depending on what the
inside story is, some might respect them for that.

When trying to make something new happen, you almost have to express
preemptive confidence, and gloss over some of the caveats applying to outlier
possibilities. You say, "We have the investors all lined up", not "We have the
investors all lined up, as long as the people I believe are solidly reliable
remain reliable". 99 times out of 100, avoiding such pedantic qualifications
helps the joint effort. Sometimes it blows up. Here it blew up, and then slow
communication made it worse, but such mistakes happen among the ever-hopeful.

~~~
alexro
And the first thing they said was : "you must be grateful for all we did to
you". Screw them

~~~
gojomo
Jamie Martin: "I just wanted to add that I have no hard feelings for Bootup
Labs, for Danny, Boris, or anybody we met, I don’t think it’s anything
intentional they did. But there are lessons to be learned from what happened
from our situation."

Funny and sad that the commenter lynch mob has a lot more righteous anger --
_"Screw them"_ \-- than the people actually involved.

~~~
jacquesm
I think he's highly professional in his stance, if I were him and I were angry
I wouldn't let it show publicly either.

The rest of us don't have anything to lose here, having an investor bail out
that far in to a deal is as good as being shot down, there is no way they
could have survived it. Also, your sample size is just one individual out of
all the founders that got axed, so not 'people', but person.

How the rest of them feel is any body's guess.

We, collectively can put a fair amount of pressure on boot-out labs, more than
Jamie could at this point in time, he hasn't got the money to sue them (I'm
fairly sure he'd have a case), but even if he had the money to sue them it
won't look good on your future resume if you go and sue a former investor.

The right way to handle this would have been to reverse the deal and to
compensate all those wronged by it, there are plenty of ways that could have
been done.

~~~
gojomo
We know how at least one of the other booted founders feels, and he suggests
he understood there was always a risk the money wouldn't come through:

[http://techcrunch.com/2010/04/15/the-curious-case-of-
vancouv...](http://techcrunch.com/2010/04/15/the-curious-case-of-vancouver-
incubator-bootup-labs/#comment-1029706)

The 'deal' _was_ reversed in that no equity was requested even though _some_
material assistance was provided. If hypothetically a startup was willing and
able to continue in Vancouver even without the foreseen investment, the whole
episode could have still been net-positive. If the startup was derailed by the
detour to Vancouver (as appears to be the Status.ly situation), the whole
episode appears net-negative.

If there's not enough cash to make the full investment, and already ~$10K or
more has been spent on the companies released from the program, what's the
additional 'compensation' amount that would be fair? Airfare back home? Some
hypothetical opportunity cost that was forgone based on their hopes in
Vancouver?

Jamie might have a legal case but if there's one email where BL reports, and
Jamie acknowledges, that the funding is still pending and conditional on other
uncertain factors, that case could be shot.

~~~
jacquesm
I think the blog posting (the mea culpa) was carefully crafted to avoid taking
a stance that could cost them money, but I think it is crystal clear that if
the situation had been outlined beforehand (that the money was not on hand)
that they would have never made the move.

That's called pre-contractual information, which is supposed to be given
freely so the other party realizes the risk. They did nothing to warn them the
money was not available at all, and might never become available.

In a court case that would probably have 'legs', even if getting to a judgment
would probably cost more than it's worth, and they seem to bank on that not
happening. But there are more ways to skin a cat and the internet is a great
place to put such things to right.

The way out is to compensate them for the expenses they made that they would
not have made if they would have been properly informed beforehand, so that
includes the funds to re-locate back to where ever they came from and a sum of
several thousand dollars to get started again.

Figure another 5 to 10 grand per founder and you should call it quits and
consider the matter settled as good as possible given the circumstances.

If they don't have the cash they could do an iou redeemable a year from now,
or when they take on their next round of funding.

You break it, you own it, and a real 'sorry' includes compensation.

We agree about the one email, if that exists it's a different story, but then
I think that mea culpa would never have been written, clearly there is a party
at fault here, by their own admission.

------
jacquesm
This is just damage control, nothing else.

Bootuplabs have egg all over their faces and pretty much deserve to be ignored
by any serious startup.

An apology doesn't go far enough, if half of what I read about this is true
they should send those guys some money to cover the costs they made to move to
Vancouver. The thing they're probably really sorry about is that it got as
much play as it did, I don't think they expected a not-so-spectacular startup
to get that kind of PR on being axed, more so than they probably would have
gotten during a launch.

------
chegra84
Danny, Words whisper, Actions scream. In order to combat this situation, offer
the cut teams tangible help. And, don't let it be something like:" If I could
help in anyway!" Jesus Christ man, you already know how you could help; these
guys need money. Use your connects to link them with some angel investors/ VC.

After, this am sure everyone would forgive and applaud you. And the publicity
and the goodwill gained goes a long way. It is just too easy to say am sorry.

~~~
dannyrobinson
You're right! I will continue to work with everyone involved. Another
accelerator was interested in possibly taking Status.ly in for their summer
program, and I let Jamie know.

~~~
chegra84
Your equivocal words aren't going to help-"Possibly". And, they don't need the
money couple months from now; they need it now.

~~~
cperciva
I think at this point Danny has learned his lesson about not promising more
than he can deliver. If he was contacted by another accelerator which said
that they _might_ be interested in taking Status.ly, he's exactly right to say
"possibly".

~~~
chegra84
My point was to get something more solid.

------
cperciva
As Danny says, Bootup Labs has a long road ahead of them to regain the
community's trust. I'm willing to give them that chance.

At this point, I certainly couldn't recommend that a startup from outside of
Vancouver move here to work with Bootup Labs, but for a startup in Vancouver
-- treading carefully and making sure that money is in the bank and that legal
agreements don't say anything evil -- I think Bootup Labs might still be an
option.

And if Bootup Labs has a few years of success stories, well, that might just
redeem them.

~~~
jacquesm
Being associated with Bootup labs as a venture they've invested in may
actually be a negative for a while.

A second round investor may think twice before entering into a partnership
where bootup labs is already present.

~~~
cperciva
As long as Bootup Labs is a silent investor (and AFAIK they don't take board
seats), why would future investors care?

~~~
jacquesm
The investment world is pretty small, especially in Canada.

Getting an investment from a company that is second rate immediately qualifies
a startup as second rate, as though you've tried the more serious outfits and
finally had to resort to 'plan b'.

Just like having kpcb (I know they're not Canadian, and not exactly angel
investors, just to illustrate the point) on board is an automatic stamp of
approval, the reverse also holds true. If I were on board of one of their
other investments I'd definitely be concerned about the effect for follow up
rounds. It's not just your company that matters, but also the company you
keep.

~~~
cperciva
_Getting an investment from a company that is second rate immediately
qualifies a startup as second rate [...]_

Interesting -- so really it's just a signaling exercise. That makes sense,
given how poor investors are at directly measuring quality.

Thanks for the explanation! One of the things I appreciate most about HN is
the willingness of experienced people to provide this sort of insight to us
newbies. :-)

~~~
jacquesm
I detect a note of cynicism there.

Some investors are _much_ better than others at judging the quality of the
companies they are looking at, but plenty of them are looking at being the
'second' firm to invest after a 'name' is on board, since that dramatically
increases the chances of success of that company. Of course every VC dreams of
discovering that unknown nugget, but sadly there are plenty that are not able
to separate the wheat from the chaff on their own power, so they look to
others as a source of guidance. That's also why you'll see a slew of 'copycat'
companies getting investment if a company in a certain league grows big. For
instance, when Youtube exploded on to the scene there was a flurry of similar
offerings backed by a very wide range of VCs, all of them trying to get a
slice of the pie after the concept was proven. Some of those would have turned
down youtube if it had been offered to them only a few months earlier.

Take Y combinator as an example. If a startup with a crappy product is
invested in by Y combinator versus some unknown angel investing in a fantastic
product then when shopping for a second round simply having Y combinator on
board will open lots of doors and will probably lead to a quick second round
at a fair valuation even if the product was bad and a quick and violent ending
for the start up that was funded by an unknown. Having a great product and a
great team is unfortunately not enough to always secure funding, having a
partner with name recognition on board significantly increases your chances.
Even if in that scenario Y combinator would not be 'working the network' on
your behalf.

Having your wealthy great uncle as an investor will not do much in this
respect.

This is sad but really true. Ideally every company should be investigated and
judged on its merits, but the number of deals presented to some groups leads
to weird shortcuts like this. And it would be even sadder if that meant they
miss out on great opportunities, the fact is though that it even works. It is
a self fulfilling prophesy, some 'name' is already in, company gets round 2,
maybe scores big in the longer term vs company does not get round 2 and dies.

Looking back the VC that didn't go with the company that died will feel they
made the right decision.

~~~
cperciva
_you'll see a slew of 'copycat' companies getting investment if a company in a
certain league grows big_

This is why I'm a cynic -- you don't even need a company to get big, you just
need the field to be "hot". Back in 2000 I was cold-called by two VCs wanting
to invest in my work on distributed computing (I had recently announced the
computation of the quadrillionth bit of Pi).

They were interested for no reason beyond the fact that everybody else was
interested in the field. I told them that there was no workable business model
and that I wouldn't take their money under such conditions -- so they went and
gave their money to someone who was willing to ignore reality in order to
justify taking the money.

About $100M went into that field in 2000, and none of it came back out. Such a
horrible waste.

~~~
jacquesm
It happens _all_ the time.

Ideally venture capital (and especially angels) is a force that helps creative
people realize their dreams in return for a realistic premium associated with
the risks.

They should help with guidance and their expertise to maximize the chances of
those dreams becoming a reality, and should use their portfolio to balance the
risks between existing money making (and thus now lower risk) ventures and
newer high risk early stage ventures.

In practice venture capital all too often distorts the market, creates
unrealistic expectations (both for founders, the public and partners alike)
and is 'penny wise and pound foolish' when it comes to evaluating new ideas.

Our host is - unfortunately - in this respect, imo not that much different
than the rest, even if they do get the mentoring and assistance factor (far)
better than most, there is not a single investment in the current batch that I
would call worthy of the 'V' in VC, they're pretty safe bets, if they fail
they'll fail quickly and if they're going to take off they won't fly too far.
The scope of most of those projects is simply far too limited.

It's all about the batting averages, and that's essentially what these small
funds are all trying to do, to show a good track record of managing their
portfolio in the hopes of landing one that hits it out of the park, more
likely than not due to a pivot.

By increasing the dealflow they're playing 'scratch lottery' instead of a
strategy game in the casino, statistically speaking if you keep at this long
enough sooner or later you recoup your losses with a healthy profit margin and
you can continue to play until you score big.

The one nightmare I have is being unfunded, healthy and growing and suddenly
getting a copycat me-too project with VC backing and a bunch of inexperienced
cowboys in the same space.

That can really ruin your day, and possibly much more than that.

Back in 1997 or so, the real beginning of the .com bubble there was this great
cartoon in a newspaper here, it pictured a train with tons of guys in suits,
pockets bulging with money trying to get on board. The train was clearly
labeled 'Internet', and a reporter was asking one of the guys the question
where they were going. The answer: "No idea, but we really don't want to miss
this train".

~~~
cperciva
_The one nightmare I have is being unfunded, healthy and growing and suddenly
getting a copycat me-too project with VC backing and a bunch of inexperienced
cowboys in the same space._

I had that nightmare too, until I realized something: Online backup is hard to
do right. If you don't know what you're doing, you fail spectacularly.

I don't worry about the inexperienced cowboys any more. They'll fail sooner or
later.

~~~
jacquesm
And that's indeed exactly what happened at some point in my past, only not
with online backup.

The investors in the competitor were actually very gracious about it and did a
lot to make up for the damage they caused me, which they really were not
obliged to do. Interesting how that played out, we still exchange Christmas
cards 12 years later.

Focus on the hard stuff, let the cowboys fail and just keep plodding away and
you'll be successful somehow. But they can destroy your market for you by
giving the whole field a bad name and they can mess up the timing to the point
that you miss out on something substantially bigger.

------
rdl
I don't think proceeding without "money in the bank" is THAT unusual for
startups. There is a certain minimum buffer, but once an investor signs up,
and paperwork/etc. is executed, most people would go ahead with signing leases
for buildings, hiring, etc. with even only a few months more of cash on hand.

Maybe you don't want your incubator/investor to behave like a startup, though.

------
Mr_Donut
I think it's pretty easy to take shots from the sidelines. It's fairly obvious
that the vast majority of you guys know very little about the start-up
environment in Vancouver. We need guys like Danny and Bootup to take some
risks in order to develop our ecosystem.

In this case, an error resulted. They didn't want that to happen, but it
happened. Crucifying these guys after the fact helps no one.

If there's value in Status.ly, either someone else will step in and fund it or
someone will buy it.

Entrepreneurial risk takes many forms.

As for the "slick PR messaging", you guys obviously don't know Danny.

~~~
pwntrepreneur
Bootup needs to act like a grown up.

1\. Don't intake companies until financing is in the bank. 2\. Have agreements
for all intake companies before they start. A term sheet is not binding, and
frankly, should only be used to reflect the business points in the agreement.
Don't rely on it. 3\. Recognize that they are dealing with unsophisticated
entrepreneurs. Don't try to bullshit them with big words like "capital call."
Help them help themselves. 4\. Get more people on the board that understand
investing. The principals are nice guys, but they are not bankable in the
investing world. They need two more people like Boris Wertz on the board, not
hide behind some bullshit advisory board. 5\. The principals should take
finance lessons.

------
necrecious
Anyone got a good round up of what happened? The post provided links to parts
of the previous conversation but I'd rather read a good article summing
everything up.

~~~
cookiecaper
Here's the summary as I understand it.

Bootup Labs accepted 7 startups into its program this January. The proprietors
of these startups agreed and finalized the paperwork and moved up to Vancouver
to participate. They were told shortly after arrival that there may be some
hiccups with the funding but not to worry and they'd get it all straightened
out.

In the meantime, Bootup Labs paid the living expenses for at least some of the
startups but the capital never materialized. In March, Bootup Labs had secured
new investors, but the investment wasn't enough to keep all seven startups
alive. They cut four of the seven loose just like that, with no money to help
make their way back to their places of origin, no capital invested, and
nothing more than a "Thanks for trying, sorry about this."

Status.ly proprietor Jamie Something wrote a post about it and the thing kind
of blew up.

Again, that's the story as I understand it. All corrections are welcome.

~~~
mos1
_nothing more than a "Thanks for trying, sorry about this."_

Actually, they got a request that they be grateful that they received some
minor expenses, and some whinging that BUL paid _some_ money but didn't
receive a finished product.

"Sorry about this" would've been nigh infinitely better, as it would've shown
some understanding of the value proposition as viewed by the entrepreneur.

------
prog
Looks like statusly is for sale. <http://statuslyforsale.tumblr.com/>

The post that talks about this: [http://livejamie.com/post/522093261/booted-
out-of-bootup-lab...](http://livejamie.com/post/522093261/booted-out-of-
bootup-labs)

------
keeptrying
This kind of thing really makes me sick. At the very least we should see an
offer of monetary help for the startups that were dropped. Ie he should help
out the people he financially hurt even though they dont matter to him
anymore. That action would win him points and get him on the way to regaining
his credibility.

------
twidlit
He failed but he didn't fail fast. :) but the important thing is he learned a
lesson and wrote about it.

~~~
gizmo
Ehm, what!? The important thing isn't that he "learned a lesson". His actions
had real consequences, and an apology (sincere as it may be) does not absolve
him. Not in the least.

It's doubtful he's really changed, because he apparently needed advise from
many people to figure out that his actions were far from honorable. For all we
know he's simply in damage-control mode. Especially to sum it up as "Made a
mistake. Lesson learned." (post title) strikes me as especially glib. An
apology is now in his best interest, so of course he's going to apologize.
It's not as if he has a choice.

That said, I do believe he feels bad about the situation, and I think the
apology is sincere. But I also think that his original actions were scummy,
and that his instinctive reaction (cover up / hope it blows over / attacking
victim on internet) shows his character. And people don't really change
overnight, so he's still that kind of guy.

So the important lesson, if there is one, is to stay away from bootuplabs.

------
ghurlman
Too little, too late.

~~~
lrm242
Its never too late to stand up and admit your mistakes.

~~~
ghurlman
True, though the impact is somewhat tempered when only done to save your own
skin.

~~~
Josh2010
Too True, and the apology was professionally written/reviewed by a PR expert
with crisis management experience. Anyone wanting to start a business here is
so naive they can't discern fact from fiction. Given the young age and limited
experience of most of the entrepreneurs this is like fishing in a barrel. Be
smart, act on facts, not fiction.

------
olliesaunders
Whoa, I would not like to be this guy right now.

------
ananthrk
Though it does not help Jamie now, it indeed _sounds_ a honest apology
(especially #3). Glad to see that Jason.

------
libretard
"Never ascribe to malice that which is adequately explained by incompetence" -
Napoleon Bonaparte.

------
starkfist
Would this scenario have broken laws in the US?

------
Josh2010
Why is this guy any more trustworthy today after issuing an artfully written
apology, that was clealry crafted by a PR professional skilled in crisis
management communications?

Don't forget, "actions speak louder than words." Startups do yourself a big
favour and steer clear of this underfunded, unprofessional slow motion train
wreck.

~~~
stretchwithme
I love it when the shady and duplicitous finally realize they can no longer
hide the facts and then apologize as a last resort.

~~~
pavs
I think this is a tricky situation. Lets say for the sake of argument that
they honestly handled the situation _unbelievably_ wrong as opposed to being
deliberately shady. They realized, right before the blog post, they needed to
communicate better with everyone.

How differently should they have handled it other than what they wrote in the
blog post?

I should acknowledge that my knowledge about the situation is only as deep as
this blog post and the post they replied to. No knowledge about their past
reputation.

~~~
jacquesm
For starters they could offer to compensate those wrongfully booted out
because of _their_ failure for costs incurred.

That would go a long way to showing they really care about them, instead of
just about their own reputation.

I see this as a salvaging operation, probably at the instigation of the new
investor they've found, a way to use the fact that they are in the spotlight
to do a cheap 'mea culpa' while getting as much mileage out of it for their
own shop. There is no such thing as 'bad publicity', especially not if you can
spin it to your advantage by showing what an upstanding guy you are by
apologizing in public. But words are cheap.

Maybe I'm too cynical here, but really if they did anything over and beyond
simply saying stuff I'd be a lot more convinced this is heartfelt.

~~~
stretchwithme
I think sometimes people put on a show that they have resources that they do
not have and think playing fast and loose with other people's careers is
alright as it is only business.

This is irresponsible. And once discovered, we'd do well to not deal with such
people.

I would not be overly strict about that, though. It would be ok, for example,
to have them make license plates for you.

------
Josh2010
Human nature makes us want to forgive and forget. Donlt get sucked into this.
Keep a lear head and select your incubator and mentors based on facts, not
emotions.

Bootup sucked young entrepreneurs into their "cool clubhouse" mystique, when
there was no substance or cash. The total funds raised by BUL in 2 years is
insufficient for even one decent startup - how are they going to fund 11 or 12
companies in any viable way? Don't get sucked into the hype, stay clear of
this bullsh*t.

