

Protect Kids, Get F*cked - sabraham
http://medium.com/what-i-learned-building/6972e9e7c15b

======
erik_landerholm
I can add a bit more color to this story as I was intimately involved in it.

I worked at the company that was bought by HP in Oregon and then later in
Texas. It was called RLX technologies and created the first blade server.
After it was purchased by HP I stayed on for a few months before moving on to
a startup in Oregon. It seemed like a great idea as they moved me back to
Oregon.

My best friend, who got me on at RLX after my first startup (NEI: high speed
telecom startup) had crashed and burned, had taken a position at this startup
in Oregon (we both were from there and had met after graduating from Oregon
State). It seemed like a way to continue the work we had started at RLX and
would get me back to Oregon. So win-win.

Long story short: the startup had issues and he moved on to found IMSafer. I
would of liked to but needed to stay on for another 6 months, so I wouldn't
have to pay back half of my moving expenses.

Once I finally moved on to IMSafer the company was still small with only 6 of
us. It was a great time and we built something truly exciting and helpful. We
had a wonderful time at the Techcrunch 40…, but that's a story for another
time. :) I believe Paul knows this story too, as it was one of the big reasons
we got into Ycombinator!

I will skip to the end as Jason supplied much of the interesting info and the
color to that debacle. But, I will add, just as you don't count your chickens
before they hatch you never, never invite your new 'partner' (board member,
investors…whatever) to a board meeting until the money is in the bank.

Once the assets were sold only 2 of us stayed on with the new company that
bought us. It was a trying time, but my best friend did get to move back to
Oregon and it was just us, keeping a rather complicated site up and running
while working on creating the 'new' product that was to make all the money.

While, at IMSafer we had realized that there could be big money in using this
software in a more enterprise fashion. We realized that many virtual worlds
for kids were popping up and they had use for software like this. He, I and
another one of our friends from our old RLX days set out to create a real-time
piece to the software that was much better at moderating less dangerous
content like curse words, etc. It would quickly mark words they found
objectionable and pass the text on to the more complicated software outside
their enterprise to look for the truly dangerous things.

From the point that IMSafer crumbled to when he and I decided to leave or got
fired…depends on who you are asking, we had grown the business to a million
dollar run rate in 8-9 months. But, we had been bought by a startup and we had
very different opinions on how to run it with the purchasing company…and we
lost!

About that time we left/got fired we decided to do something new. Both of us
had vary different experiences buying a new car and decided we wanted to fix
that. After getting in a small fight with our former employees we got them to
relinquish all rights to CarWoo! and proceeded to build it. At the time it
seemed a bit crazy to fight for something that wasn't much more than a landing
page and a bunch of crazy ideas, but in hind sight…seems like genius….I have
decided to tell it as a stroke of genius!

After we got into Ycombinator we told Paul about this story and at the time he
said it was the worst 'pulled funding' story he'd ever heard. It's possible
he's heard worse since, but somehow I doubt it.

5 of the 6 of us were married at the time and 4 of us had children. As we were
in the tussle over CarWoo!, which was almost nothing at the time my wife had
our second child.

Tommy and I got our call that Ycombinator had accepted us while sitting in
benchmark's parking lot in the spring of 2009. We had come full circle i guess
you could say.

We moved down to Palo Alto, left our wife and kids behind for the time being
and the rest is history.

~~~
wyclif
Quite a story, one of the best and most revealing ones I've ever read here,
and I've been here since the beginning. Thanks for sharing, and letting us see
"behind the curtain" a little.

~~~
erik_landerholm
Thanks. It's pretty cathartic to talk about it. I haven't thought much about
it in a long time. I skipped a lot of the details around CarWoo! too...at some
point we will get around to posting that.

------
BrandonWatson
When Jason sent this to me as a preview, I did not think it would end up on
HN. Interesting.

I want to respond to a few of the comments, as I was the main protagonist in
getting this idea off the ground, CEO of the company, and the business/product
guy surrounded by the talented engineers who made this happen.

The decision to invite the board member on to the call the day before the
money was in the bank was my call. My biggest mistake of my career. I have
learned from it, but it was my call and I blew it. Nothing about the situation
gave us any reason to believe that we would have a problem. By the way, if
anyone wants a front door key to a tier 1 VC firm, I am sure one of us still
has theirs.

On the topic of the business model. Let's first talk about the derivation of
the idea. Having spent my career in tech and Wall St, I have seen the
migration of high IQ talent into spaces where the marginal utility of IQ was
trending to 0. We wanted to find an opportunity where we could be smart and do
new things, and that would, theory lead to money. The base thesis here was
that no one had made money in the kid protection space for a while. IQ follows
money. Viola. We were right - there had been no innovation in this space in a
long time, and everyone was focused on keeping porn off computers. We decided
to try and focus on keeping bad guys from getting to the kids.

We can all have an intellectual discussion about whether this was an overblown
social issue or not. I don't feel like rehashing that here. What we did know
is that we had a novel approach to solving this language problem, and we built
an engine. We did not solve it with Bayesian analysis or ML. We went a
different route, and the engine was very effective.

Our premise was that we could sell the software to parents. We did all the
things many of you would do. Built an MVP (before there was a phrase for it),
talked to customers, etc. It turns out that the axiom from real estate is true
here. People lie. What parents said they would pay for, and how they reacted
when using the software were totally different. Many of them expected the
software to come with a computer, or be paid for by someone else. They told us
they would pay for it, but in reality they expected it to come from an AV
provider. That never would have surfaced in talking to customers ahead of
time.

We then pursued a deal with McAfee. I don't know if at this point in time I
can talk about that deal or not, but suffice it to say, that wasn't the golden
ticket.

After spending time refining the business model to get parents to pay, we (as
many companies do) fell backward into our business model. It started with a
fortuitous call from a large company making a massively multiplayer game for
kids. It turns out many of these companies who cater to kids have rooms full
of moderators for in game chat. People are very expensive. Some tech found out
about our software, installed it, and found it very difficult to beat. They
were intrigued enough that they asked us if they could install it inside their
server farm. When we took the call, every answer from us was "yes of course"
but in reality we had no idea. Credit to Tommy and Erik for figuring out in
short order how to make the demo a reality. The first company figured they
could reduce their people count from 600 to 60 with our software being the
first pass filter.

Once we figured this market opp out, we started reaching out to other
companies. Long story short, we were looking at deals of $250K per year for
our software. Bad timing being what it is, this was all happening around the
time of the financing closing. So while Benchmark (wow, that's the first time
I have said that name out loud in connection with this story in public since
2003) was moving forward on what they thought was a consumer software deal
with massive growth potential, it looked like we had a business opportunity in
enterprise-y software for community moderation for companies catering to
minors.

When Benchmark pulled out (worst kick in the stomach feeling of my life having
to pass that news on to the team) we scrambled. The deals from these game
companies were coming along but we weren't going to have enough runway to get
them closed. The eventual buyers of the company were building similar
software, and they had heard our name enough in their calls with their
potential customers when being told why they were not being moved forward in
the deal that they wanted to buy us. It was a little bit of good luck and
timing in an otherwise crap sandwich state of play.

To sum up: 1) We knew who we thought our customers were: parents 2) We were
wrong about how they would act: parents didn't want to pay for this type of
service, despite what they told us 3) We were wrong about the virality of the
service: despite saying otherwise, parents wouldn't tell friends they were
running this software because of what they perceived as potential social
stigma 4) You can sometimes fall backward into your business model 5)
Benchmark did us wrong, but that's life. Move on and do great things. Jason,
Erik, Tommy and David are some of the most talented people with whom I have
ever worked, and I rate IMSafer as the time of my life. We had a lot of fun,
and built some amazing stuff (patent filing in case you are interested:
<http://www.google.com/patents/US20090089417>) 6) Survivorship bias is a
bitch, and there are many stories of smart guys not getting over the hurdle
which never get told. We weren't idiots, or morons, or whatever. Sometimes
things don't make it. The real question is what did you learn and how to you
do something constructive with what you learned.

I am happy to answer any additional questions.

~~~
onebot
Thanks for the candidness and honesty. It is really refreshing to hear the
details--mistakes and all!

------
stuffynoses
_We received email after email from parents thanking us for saving their
children’s lives, literally._

Yes, please tell me more about all these children whose lives your service
saved. Just like _To Catch A Predator's_ ridiculous premise (that digusting,
fat 50 year-old men who live in their parents' basement are hooking up with
hot teenagers), yours reeks of trumping up a problem that only exists on the
extreme fringe. Literally.

 _one of the partners installed our software. He tested it, he used it, it
worked. He got it. He called us and said he wanted to invest as soon as
possible._

Who is this investor? I want to know because anyone who would vote money on an
anecdotal experience like this is an idiot.

Your story is interesting, but only when it sticks to the parts about you
rushing into an investment without due consideration or self-protection.

If you wanted funding, you should've asked Congress for it. They love to
exaggerate child sex exploitation as much as your service did.

~~~
morphle
Indeed, tell us more about these children's lives you saved. I've done
extensive research on these occurrences when my first startup internet
provider first encountered these claims in the nineties. We never found any
evidence whatsoever. We did find an overwhelmingly large number of people
ready to go on a witch hunt or lynch these so called perpetrators, but that's
been going on for thousands of years now.

Has anyone claiming child pornography online ever actually found something?
Again, please show us, they would be my first datapoints ever in our assisting
of the police in investigating these.

The business model of the OP is itself predatory on the fears and underbelly
feelings of uninformed parents. Better to explain to those parents how to
raise children so that they are cautious about anything they encouter online.

~~~
steevdave
I used to work for a content filtering company. Yes child porn exists, and
it's one of your worst days when these sites start popping up in what you're
reviewing, no, we can't send the links to others to "prove" it exists. I no
longer work there and I'm glad I don't have days like that anymore.

------
tptacek
What a shitty situation. But why, oh why, would you sell your house and move
from Houston to California before the check cleared? We started Matasano when
my kids were pre-K and a a full-day every-day handful, and I had to spend a
couple months away from my family while we worked out the move (mine from Ann
Arbor to Chicago). I know I'm not the only founder to deal with that
situation. Was there some additional circumstance involved here, some other
pitfall people should be on the lookout for?

~~~
RuggeroAltair
I know directly of one case in which one of the terms of the acquisition was
that in case of the founder's death within the retention plan, his family
wouldn't get the remaining part of the money (which would be given at the end
of the retention plan only if he was still alive). This founder, rightly so,
thought that it was an awful concept, since his kids needed to be protected
exactly in the case of his death. The purchaser said they would have not
changed the contract since that was a standard clause and that it was
unconceivable to consider changing it. The startup called everything off the
day before the deal (even after it was announced), because of this.

The clause that was impossible to make disappear suddenly disappeared
overnight.

P.S. Congrats for Matasano, I am a fan of your company.

~~~
danielweber
_was a standard clause and that it was unconceivable to consider changing it_

 _The clause that was impossible to make disappear suddenly disappeared
overnight_

Oh, if I had a nickel.

Younger readers (and older ones, too) should be aware that this is one of the
easiest lies to slip from someone's lips: "oh, that's standard, we can't get
rid of it."

You need someone experienced on your team -- even if not working for you, a
friend you can call -- to find out just how "standard" these things are.

 _EDIT_ : even terms that really and honestly are "standard" can be changed

------
erik_landerholm
I think I need to clarify what IMSafer did. A lot of arm chair QBs here
talking about how's it's evil or that abuse of children in a sexual way just
doesn't happen...that could not be further from the truth.

No offense (well we know where this is going), but anyone saying this has no
f*$%ing idea what they are talking about.

What we found in those years with IMSafer and later with the company that
purchased our assets was mindblowing in a terrible way.

In the US we weren't allowed to really do anything with the data we found even
in the most awful cases. When the patriot act was in affect there were
opportunities to turn some of the data over to the gov agencies that deal with
exploited children, but it was unclear.

In the UK they were allowed to more freely use what they found to put
pedophiles behind bars...which they did on more then one occasion.

In some cases it appeared that children had installed the software as a
desperate cry for help against their abusive family members.

In one particular egregious case the offender was involved in group chats
where he would try to normalize the behavior to his child by having other sick
individuals tell her it was OK. Then, they would setup times for her to be
online with them while terrible acts were perpetrated on her.

No one is acting as if this was common. But, it did happen. And we weren't
selling the chat, running ads against it or in anyway trying to monetize the
'fear' or grief of our users.

A lot of people here do not have kids and don't understand how hard it is for
parent's to talk their kids about all sorts of issues around sex and drugs and
rebellion etc.

In many cases IMSafer was their last hope and it was very helpful to a lot of
people.

We never started it because we wanted to spy on kids or know people's gossip.
We did it because we realized that parents were ill equipped to deal with the
new online world.

Porn was a not a concern. To us that was your child viewing something. What we
were concerned with was someone coming into your child's world and talking to
them without your permission. If the child was having an issue with their
parent's these kind of people would pick at that and try to show the child
they were on their side to win trust.

Places where parent's thought their kids should be safe just weren't and still
are not.

Also, some kids are susceptible to these kind of attacks by predators. In some
cases parent's had kids who had been sexually assaulted in real life already
and they were very afraid, because of their child's mental makeup now, that
they would make easier targets.

We had adults buying plane tickets for kids and working out details to get
them to fly across the country to meet under the guise of some camp the kid
was going to, etc.

It's real whether you want to deal with it or not. We did our best to balance
online privacy while helping people.

I feel like we did a phenomenal job and we didn't sell fear. It was never part
of our marketing or selling.

~~~
BrandonWatson
To pile on a little bit to what Erik shared here. There were several use cases
that we could not have imagined when we set out on our path.

First, there was a case where a high school girl was equipment manager of her
school football team. She was gang raped by some of the players. She was
talking about that in chat with her friend, talking about committing suicide,
and talking about how she couldn't tell her parents. She was afraid of what
they would do to her. To her! Our engine caught much of this, and flagged it
for the parents. It worked out in the end. We found out about this after the
fact when the parents contacted us to let us know how our software probably
saved her life.

Then there was the situation where there was a father who was a community fire
chief. His child installed the software on his father's computer because his
father was abusing him, and was spending time in really really bad chat rooms.
The kid was hoping we were monitoring the alerts. The child eventually reached
out to us asking why we hadn't sent the police. It was heart breaking.

Lastly, there was a kid who was buying drugs from a contact online. Is this a
sexual predator? No. But a predator nonetheless. Our software flagged it.

There are bad people out there. Some of them are the Chris Hanson predator
types. They aren't all sexual predators, but they are still looking to gain
access to children without parental permission.

Children and young people react with "this software violates my rights!" As a
child, under the age of 18, in the US, has no rights. A parent is supposed to
parent. They have no right to privacy.

The software was not meant to record chats. It worked as a sort of a sliding
window, and only when there was a flagged issue would a parent get a
notification. That notification would include some of the chat around the
offending line to give context, but nothing more.

With regard to access to kids - parents can look into a living room and ask
"who is that?" Well it's Johnny. He lives down the street. The parents can
talk to Johnny's parents. When a child is in an MMO and has a "friend" list a
mile long, parents can't really ask "who is Fragg3rKill3r225?" Worse, their
kid may not really know who that person is either.

At the core, IMSafer was about helping parents manage the relationships their
kids were building online. As a parent, it is your job to know who has access
to your kids, and how they are influencing them. Most parental control
software is billed as keeping porn of the computers. IMSafer was about keeping
the bad guys out of the kids lives.

~~~
Zak
_Children and young people react with "this software violates my rights!" As a
child, under the age of 18, in the US, has no rights. A parent is supposed to
parent. They have no right to privacy._

It's absolutely false that children in the US have no rights or that parents
can legally violate any of their rights arbitrarily. It's closer to the truth
that children don't have a legal right to privacy from their parents in their
parents' home using their parents' computer and internet connection.

This attitude is problematic though. Instead of encouraging a more open dialog
between parents and their kids, parents using spyware creates an adversarial
relationship. Under those circumstances, the kids will find ways around it,
which you describe elsewhere as "unfortunate". I have no doubt there were
situations where your software resulted in very good outcomes, but I'm
inclined to suspect that in most cases where parents installed it, there was
something broken in the parent/child relationship. Unfortunately "No mutual
trust with your teenager? Our robot babysitter will let you know if she's
talking about suicide online." probably isn't the world's best advertising
slogan.

------
sabraham
This sounds like the story Jessica Livingston mentioned at Startup School 2012
<<http://news.ycombinator.com/item?id=4699862> >, if I remember correctly --
business in Texas got a term sheet, moved to California, investors pulled out
when their user acquisition metric changed. Anyone have more color on this?

~~~
pg
Yes, this is the same story.

------
jpatokal
Let me just quote one bit of that:

 _Our service was free as we were working out the business model. We actually
had a genius business model but hadn’t implemented it yet. We wanted more
users so we spent money on marketing._

Maybe the real problem wasn't the insurance?

~~~
tptacek
No, the real problem wasn't insurance; it was that a firm-seeming commitment
to fund the company fell through at the worst possible moment.

A lawsuit wouldn't have fixed anything for them; it'd have taken years to
resolve.

~~~
coryl
The real problem was they had no business model; spending money to get users
when you don't even know what your return is? That's ludicrous. That's a core
business issue from day one.

~~~
damian2000
twitter, google & facebook might disagree

~~~
jonathanjaeger
Twitter/Facebook grew virally, not through paid marketing to acquire users.

------
Zak
_Age? Sex? Location? That’s how predators started their hunt._

It's also how teenagers started conversations with each other in chat rooms a
decade ago. It may still be, but I haven't been a teenager in a while. I
imagine predators open with the same question, but actually using it as a
filter would produce an unacceptable amount of noise.

This is a useful story about some of the mistakes one can make dealing with
VCs, but it sounds like the product itself was a little questionable.

~~~
mnicole
In reading the article and thinking back to being a kid who'd create free-
trial Juno accounts and dig through drawers to find the Post-It notes that my
parents' AOL accounts' passwords were on just to spend hours talking to
strangers on the internet because it was exciting, I have to agree with the
notion that this software rubs me the wrong way.

This is an issue of parenting; you can't just turn on an app and expect it to
do your job for you. Kids won't be dumb if you treat them with respect and
show them what can happen if they don't keep their eyes peeled.

Like the ridiculousness of the Dateline conversations, it was always very
obvious when someone was creeping on me and it only took one click to block
them. Allowing my already-fearful and ignorant parents to read random snippets
of messages I was sending and receiving - particularly because a lot of our
ASL?? comments were jokes to begin with - is a violation of my privacy and
trust. Growing up in an environment like that would have completely shifted
not only the way I use the internet today (especially if they'd gone ahead
with their plans to implement it in social sites for kids), but would have
affected my relationship with my parents in ways that would have left me
hesitant to be myself at all.

Worse, when my cousins reached those ages at around the time this company was
starting, social mediums had progressed and their problem wasn't talking to
people online; it was posting very promiscuous photos and embarrassing YouTube
videos showing the inside and outside of their homes and not putting any
privacy barriers up. Those are much bigger concerns to me than knowing how to
deal with stranger danger in text communications.

~~~
BrandonWatson
You are absolutely correct about the photos. Explicit photos were going both
ways on chats. We were working on a solution to that, and had licensed some
pretty cool tech from a small firm in DC.

re: the notion that _you_ would have known about a creep online, that's
awesome. It's great that you were so self aware. Not every child can say the
same. A favorite quote of mine applies here. No matter how you cut the math,
and no matter how much you don't like the answer, 50% of the population is
below average intelligence.

All of the content on our site explicitly suggested to parents that they
should talk to their children _before_ installing our software. Talk about why
they were installing it, and show them how it works. Every kid hated it. Of
course they did. I would have. Unfortunately, kids have plenty of time to
think about ways to circumvent protections their parents put in place. Parents
have jobs, multiple kids, schedules to maintain, etc, and in general were
outgunned on the technology front. They are all screaming for help, or
suffering in silence, throwing up their hands because they cannot solve the
problems for themselves.

When we started IMSafer, we were all in our late 20s or very early 30s. We
were all hacker types. We also had young kids. One of our advisors was a
police officer (personal friend) who spent a ton of time with us talking about
the realities of the bad people out there. It's not Chris Hanson crazy, but
there are really, really bad people out there. More often than not, related to
the harmed minor.

~~~
Zak
I don't think it's really unfortunate that kids can circumvent technical
measures. It's unfortunate that parents want a robot babysitter.

The primary danger comes from breaking the barrier between online and in-
person. The best solution seems to me to be parents being understanding and
supportive. Want to meet someone you talk to online in person? OK, fine. The
parents come along and meet in a public place. If, instead the rule is "no
meeting people from the internet ever", teenagers will do it anyway in a much
less safe manner.

------
mratzloff
I'm confused. Did they protect kids? I don't remember if he said that or not.

Anyway, a few comments:

\- They paid for free users with no business model in place

\- They failed to complete requirements of their _previous_ investment deals

\- Handshakes don't matter, term sheets don't matter; nothing matters until
the check clears

~~~
rexreed
Startups should print out those last three bullets, frame it, and put it on
the wall. It would save a lot of heartache.

------
alphakappa
It's a good lesson on how not to make poor business decisions, but the number
of times the writer repeated the 'protect kids' phrase turned this into a
really tough read. This wasn't a noble mission thwarted by evil VCs - simply a
cautionary tale of how not to make startup decisions.

------
rdl
They (Benchmark, a top-tier VC) broke a term sheet? That is...not awesome.

------
GuiA
The title is a bit disingenuous, but the story is worth reading. Thanks for
taking the time to write and share, Jason.

~~~
klawed
It's charitable to say that the title is a bit disingenuous. I agree that the
story (as well as the ongoing discussion) is very much worth reading. The
unnecessarily provocative title is only slightly distracting.

------
homosaur
While you made a lot of mistakes here, it's also pretty frustrating that
there's a good deal of VCs who are basically only looking for the next
Twitter. Why would anyone think viral growth would be realistic for this
product? How does one acquire that much capital while knowing so little about
business?

~~~
brazzy
A good deal? From what I've heard, _every_ single VC in Silicon Valley shares
this unhealthy obsession over "the next Twitter" (Just read pg's definition of
"startup").

And as long as Twitter, Google and Facebook keep paying 8 figure (or 10
figure) sums to acquire "startups" without a business model, VCs don't _need_
to know anything about real business.

~~~
homosaur
Well, I was trying to be nice so the ones that read the forum can convince
themselves they are in the good group.

------
russell
The real lesson is that the money isnt there until the check clears. Selling
your house and moving on a promise is risky. Even trying to raise money is a
huge drain.

------
rdl
It looks like failure to get D&O insurance prevented them from suing a top-
tier VC for breaking a term sheet, but it's unclear how wise it is to sue a VC
over something like that, anyway.

BTW, if anyone needs commercial insurance for their (California based)
business, I've had pretty good experience with <http://www.alliedbrokers.com/>
Allied Brokers in Palo Alto, so far. Prof liability, D&O, etc. are all things
which are probably worthwhile after a >$1mm seed, depending on how litigious
your sector is (b2b, particularly).

------
mtaubman
Somehow I feel that a more accurate title would have been, "Fail to meet
agreed terms, screw yourself".

------
aaron695
Lol totally evil product based on making people lives awful through fake fear.

But I guess that's many successful products, make people feel bad or their
lives are missing 'something' and give them the solution for the $

Myself and friends have often talked about it. Be unethical but make money.
Individual vs Herd mentality. And in the first world is it really that evil to
fool the people who fall for it? I find it hard personally but maybe that's a
weakness I should train to get over, not sure. I do give a % of my wage to 3rd
world charity so would I still be up positive ethics wise.

Interesting article to see into that world anyway, something to think about.

------
appleflaxen
A bit off of the main point, but

> Age? Sex? Location? That’s how predators started their hunt.

And how non-predators start their hunt (the same way that predators in the
1800s started their letters with "Dear Timmy").

It's a completely nonspecific starter question for anyone who is chatting with
a stranger, and I wish the author were more careful with this.

------
jlangr
I suspect people who really want to "protect kids" find a way to do it that
doesn't involve greed, lawyers, stupidity, and liberally cursing. Maybe there
wouldn't be as much need to protect kids were there fewer people who talked
about "getting f*cked" or screwed when talking about kids. Jerk.

~~~
tptacek
As a parent of two middle schoolers, I am a lot less worried about adults
using adult language to talk about business than I am about the people who
can't tell the difference between that and actual threats to my children.

~~~
jlangr
Whatever. Just another guy who thinks he's owed something because he did
something that he thinks everyone should be gushing over.

~~~
tptacek
Yeah. Stupid guy talking about his stupid life experiences. He should grow up.

------
yarou
I really enjoyed reading this article. More articles like this need to be on
HN, rather than the run of the mill startup success stories. It's refreshing
and visceral to hear how a startup can fail, being so close to success.

------
Tichy
"For almost two years they had been personally liable for what me and my
friends were up to."

I don't understand this part. Shouldn't the investors have seen the insurance
through themselves? It seems mad to rely on other people for that kind of
thing. Sure it would have been nice for the startuppers to organize it, but
really, it's a no-brainer that for such things you have to organize it
yourself (because the people tasked with it have no real stake in it).

------
DanBC
Perhaps there's a niche for software that alerts the children and not the
parents when they're triggering certain flags.

"Do you really know this person AFK?"

"How would you feel if this photograph was sent to all of your teachers, and
everyone you know in school?"

And before people mention MS Office's Clippy - yes, it was was awful, but part
of the reason for that was kludged implementation.

(<http://robotzeitgeist.com/tag/bayesian-inference-engine>)

This new implementation could have a "spy on your children" feature, but allow
that to be turned off for the parents that find such things troublesome,
allowing the warnings to go direct to the children.

------
michaelochurch
_We went back to other investment firms that we had also received term sheets
from prior to committing to Benchmark, but after Benchmark pulled out, the
news spread and we had the scarlet letter, or maybe the scarlet zero._

This is why VC-istan is dead. (Not actually dead, but "Microsoft is dead"
dead.)

------
paupino_masano
I know how you feel exactly. I had a business in the same position except in
the payment industry: we were processing roughly $1m a day until one day we
had a frightening call from the bank. Two weeks later we were in liquidation
and I was facing bankruptcy. Like you are saying (in an essence): the rug was
being pulled from under you.

Thank you for sharing your story - by sharing, it it helps the whole startup
community :)

------
hawleyal
Sensational headline. TL;DR startups fail sometimes.

------
rexreed
Talk about counting your chickens before they hatch ... and not just about the
part where they moved or added a board member before the money hit the bank
account, but even the little "celebration" in Vegas. How is raising money a
reason to celebrate in Vegas... especially when it hasn't even hit the bank
yet?

While I feel bad for the founders here and the VC behavior is deplorable, a
little cautiousness and common sense would have really saved the day here.
"Let's not move until the money is in the bank, ok? Hey board member -- just
step back for a few minutes until the wire clears. Once it does, we're all
yours."

... All that being said ..... BIG KUDOS to the team for getting the investors
their money back:

"We sold the assets for what our original investors had put in to the company,
about $1.5 million, so we were able to give them their money back."

That's great -- I know very few entrepreneurs who have gotten well past the
point of raising capital who can claim to have returned investor money.

So, while you might have gotten the Big Screw by VCs, in part due to their
shadyness and in part due to your own over-enthusiasm and lack of diligence, I
think you saved the day for your investors. They may not invest with you
again, but they can't say they lost money with you either.

------
jiggy2011
Doesn't sound like they had any idea how to make money off this thing. Since
for whatever reason they decided they didn't want to charge any money for the
service.

What could they have done to make money from children's internet chat logs
that would not be in some way shady?

------
jere
As an old teacher of mine used to often say, "Check's in the mail. Love you in
the morning."

------
JonSkeptic
The primary lesson here is as common sense as it is timeless: "You don't have
the money till you have cash in hand." Only a fool would sell a house and move
hundreds of miles on little more than promise.

------
jessaustin
Wow that really sucks. In hindsight, could you have hit up your current
investors for the bridge round _before_ shopping around the Valley, or would
that have put VCs off too?

~~~
BrandonWatson
As one of my favorite private equity friends likes to say, "a bridge to
nowhere is a dock."

We were offered some additional capital but it wasn't enough and our
conviction was smashed. Until you've been in this sort of situation, you can't
know how you will feel or react. Experience is a great teacher.

------
pimentel
How does that directors and officers insurance (D&O) work? What is the problem
with not having it?

------
caniszczyk
He got lucky that he was able to bounce back.

~~~
BrandonWatson
Jason didn't get lucky. He's incredibly talented. We, as a team, failed. It
happens. I would go to war with any of my co-founders again, no doubt.

------
thoughtcriminal
The title is misleading, immature and in poor taste. If HN moderators had a
clue, they would edit it.

~~~
andyjohnson0
If you had the power to edit it yourself,what would you change it to? And why?

~~~
thoughtcriminal
"Misadventures in Kiddie World"

Anything is better than what's up there now.

