
Mattermark (YC S12) to shut down after selling to FullContact - minimaxir
https://techcrunch.com/2017/12/21/mattermark-to-shut-down-after-selling-to-full-contact/
======
BigMan555
The CEO of Mattermark spent a lot of time and energy in the early days of the
company establishing a public presence as a brash, highly opinionated thought
leader in the “how to run a start-up” intellectual space, which makes the
failure of the company a little ironic and is almost certainly contributing to
the Schadenfreud I’ve read on Twitter.

Take, for instance, this post, in which she seemingly boasts of the company’s
massive burn rate: [https://medium.com/@DanielleMorrill/is-my-startup-burn-
rate-...](https://medium.com/@DanielleMorrill/is-my-startup-burn-rate-
normal-882b2bd20f02)

Or this post, in which she shames a number of “Zombie Unicorns” (including
WeWork): [http://www.businessinsider.com/mattermark-names-troubled-
uni...](http://www.businessinsider.com/mattermark-names-troubled-
unicorns-2015-10)

Why be so publicly hostile and truculent?

Also, it appears that the CEO lacked focus: according to her Twitter profile,
she’s a VC and a very prolific angel investor. I’d be upset as an employee of
the company receiving $0 for my common stock that the CEO was effectively
hedging her Mattermark bet with a number of side gigs. The CEO’s job is to be
singularly focused on the success of the company.

~~~
minimaxir
Notably, there's been complaints that the TechCrunch article is _too negative_
([https://twitter.com/sm/status/944087102982995969](https://twitter.com/sm/status/944087102982995969)),
which has the inverse problem.

~~~
jpeg_hero
Yeah, unreal. Hey @sm give me $17m and I’ll give you $1m back and we’ll gauge
your positivity/negativity.

This is the stuff that gives SV a bad reputation- the sense of entitlement.
That of course we deserve “others people’s money” to do with what we please
and should be praised for it.

This is real money @sm !!

------
eps
You can't make this up:

    
    
        Dear Mattermark Common Shareholders,
    
        I’m reaching out to share some great news: Mattermark
        is being acquired by FullContact!
    
        ... lorem ipsum ...
    
        Common stockholders will not be receiving anything in
        this deal (cash or stock).
    

It's a letter to common stockholders saying they get zilch and calling this a
great news. I sure hope it's just a quirky inner joke of some kind, because
otherwise it reads like a spit in the face of aforementioned stockholders.

~~~
jacquesm
Your 'lorem ipsum' actually wipes out another gem:

"We are happy to have found an exit for our shareholders"

But not _all_ shareholders.

------
gk1
I signed up for a trial of Mattermark a month ago. Within several minutes I
learned that:

1\. Their database is terribly outdated. A company that was funded by X _two
years ago_ did not show up in a search for companies funded by X.

2\. Their "show contact info" feature wasn't working. That's not an easter-egg
feature; that's the feature they're selling!

After several frustrating minutes I thought, "People pay for this?!" Evidently
not.

To be clear, I don't wish this on anyone. I have friends who've had to sell
their company for peanuts, and I had a pleasant chat with the Mattermark CEO
just recently, but what do you expect when you enter a crowded market with a
product that isn't delivering on its basic promise?

~~~
minimaxir
It’s worth nothing that employees have been leaving Mattermark gradually over
the past year, which could explain an out-of-date database/features if there
isn’t anyone to update it.

~~~
confiscate
Yes, exactly. I see a lot of these comments on HN made by folks from-the-
outside-looking-in.

"I tried out this product. It had this bug I noticed that affected me a lot.
By extension, this entire company will fail."

That's like saying, I went to a restaurant. I noticed the silverware is a bit
dirty, thus the shop will close down.

Usually the commenter is someone who works in a specialized day job. Like an
engineer :) Or silverware washer at a restaurant. Someone who sees and handles
a narrow part of the picture.

There are many possible reasons why Mattermark closed down. I am sad to see
it. But it is probably not due to a specific feature or bug. There are
probably reasons beyond the description in the article that led to the
disappointing outcome. I hope Techcrunch will be able to find the reasons
behind this so other startups can learn and avoid future tragedies :(

~~~
gk1
No, this is more like a pizza place that can't make good pizza. Oh and there
are reports that they weren't able to sell their pizza:

> We’re told that it was hard to convince people to pay for the business intel
> in a competitive landscape that includes Crunchbase, PitchBook and CB
> Insights.

~~~
confiscate
Yes, so the problem is not that the pizza quality is not good enough in some
way. It's way bigger than that.

It's that it's hard to convince people to even buy pizza. That's a much
bigger-picture issue than saying "pizza not fresh, so they will close down".

Put another way, making the pizza fresher, is not going to substantially
improve the situation. Fixing the issues you saw (e.g. update the database to
be super fresh, fix the contact feature so it is 100% working) will not get
Mattermark out of it's current situation (unfortunately)

------
hai2ashwin
Danielle (if you read this), I was rooting for you to succeed (as a fellow
entrepreneur in the same space). I hope you would write soon on what worked
and what didn't.

Data business is hard for a few reasons:

1\. Data is a commodity until it is not. People's contact information is a
'done to death' problem but not solved yet (and probably not solvable
completely)

2\. Data is capital intensive

3\. Data businesses (and the modern ones at that) are more annuity businesses
and less like SaaS. Monthly recurring patterns take time to emerge and you
need investors that understand this dynamic. They will if you prove that your
core hypothesis works and customers are buying more (if not following a strict
monthly pattern).

4\. You need to have enough money and execution speed to prove your
hypothesis. Unlike software where customer development and execution
discipline can help you launch a good product, in the data business you need
to stitch partnerships early on with data sources. That's not easy.

You tried. Again, I'd love to read your reflections on what you could've done
differently.

~~~
confiscate
+1 I too was also rooting for you, Danielle, since the early days when you
started Referly before pivoting to Mattermark. Back then there was not a lot
of YC companies, and even fewer female YC founders to root for.

+1 to a reflections blog post! Hope you succeed in the future--the best is yet
to come.

~~~
droopybuns
+1. You had an impact.

------
bjterry
That sucks. I used to work in investment banking where we used a tool called
Capital IQ for our research, despite the fact that our focus was on venture-
backed startups and Capital IQ's coverage of startup companies was really
crappy. When I left banking one of my top 2 or 3 ideas was to start a company
that would essentially be Capital IQ for startups. The idea being that I would
sell the overall platform to VC firms and investment banks, gain access to
their data, and use it to build predictive models of non-venture-backed
startups based on publicly-available information. I didn't end up pursuing
that idea, but I was aware of Mattermark and thought that it was a service
that should exist, would be a no-brainer for people targeting that market. To
be honest, I think they did a lot better of a job of it than I would have.

Back in April when I was looking for jobs I did get the chance to interview at
Mattermark, though. Kevin Morrill and the rest of the engineers that I met all
seemed very friendly and bright (they ultimately rejected me, which is good
because [1] I would have accepted their offer, and [2] I ended up joining
Flexport, which I love). Even at the time I got the impression that they may
have a tough road ahead, but I'm sorry to see that things turned out this way.

------
kayhi
I started getting worried when their pricing was no longer public and their
blog posts didn’t make it on here any more. Enjoyed their insights on
fundraising and the progress of their company. I imagine it’s harder to be
open when things are not going as expected.

~~~
mooreds
> I imagine it’s harder to be open when things are not going as expected.

For a number of reasons, I believe this.

* You don't get the rush of external validation

* You are heads down trying to make things better at the company and blog posts don't help (enough)

* It's hard enough to share bad newest with employees and investors, who wants to share it with the world

* You may fear scaring off customers ("I was going to mattermark but then they seemed like they were going out of business so I used competing project")

------
nickfrost
Brutal result after years of work - "a less than $500,000 cash consideration
from FullContact, which will be used to facilitate shutdown."

~~~
gnicholas
It wasn’t an all-cash deal:

> _The deal additionally included a stock transaction_

~~~
mooreds
Yes, 500k of stock (at present value). So $1M.

Tough outcome.

~~~
gnicholas
Sounds like you've got inside info. In situations like these does that go 100%
to investors, or do founders/early employees take even a small piece?

~~~
jpeg_hero
The “inside info” of actually reading the article. Hahah.

~~~
gnicholas
Ah, I see the article has been updated. The details on the stock side of the
transaction were not in there when I read the article yesterday.

------
unclebucknasty
I just read through their website and I can see why it was tough.

There's something especially difficult about a business like this. It doesn't
feel like a finished product on offer, but more of a raw material for making
of it what you will.

Because when you look at their home page as a potential end customer, there
isn't much in the way of real benefits on display. In fact, the main
"features" are:

- _Automatically enrich leads in Salesforce_

- _Customize your experience with API_

- _Export Mattermark data to spreadsheets_

- _Right Data. Right Format. Right now._

3 of those 4 are purely meta-features around accessing the data (which is
presumably the core feature), but there's virtually nothing about why you'd
want to or how to make it easily actionable. They're saying "here's a bunch of
data and a bunch of ways to access it. Go make it do something for you."

That's a tough sell because it doesn't answer an immediate need wherein you
simply sign up and a problem is solved. Even if you are able to connect the
dots WRT how you _might_ make use of the data, you're now left with the task
of building something on top of it.

I'm not sure how many customers can do that. Seems the only way to make it
work is to pull in very tight partnerships to build finished apps in specific
verticals, through which you license the data/API.

------
xrd
Anyone reading this thread that said "disgusting!" reveals to everyone else
that you've never raised money. It is brutal and you have to be 100% prepared
to tell your investors you lost everything. Even if you are one of the few who
doesn't actually lose everything, you'll have multiple moments in your
entrepreneurial path where you go over that conversation in your head, like an
anti-Oscar speech, as you face the death of your company (and more
importantly, your identity as one of the brilliant).

------
skipd
Yes, we should respect founders who try and fail but the amount of praise for
a company with such little value doesn’t make sense. This praise for the
failing founder would make a lot more sense if the company was chartering new
and interesting ground.

------
highace
Great news everyone!

Ps. Not you.

------
godzillabrennus
Sorry to hear it didn’t pan out well for Danielle. I was rooting for them to
try and find a business model that worked for them.

------
noomerikal
I don't understand why they pivoted to this contacts thing. I thought they had
a solid idea previously. I guess CB Insights came along and took the ball the
last 20 yards.

~~~
reeteshv
I agree! I receive newsletters from both the services and I prefer reading the
CB Insights for its casual style and lots of graphics.

------
paulbjensen
Looks like FullContact got data/systems/source code, a customer list and 6
employees for $1m. Bargain!

~~~
confiscate
yes. Would have cost Full Contact way more to do it themselves from scratch
(collect all the company data, get the customer list, the source code, and
recruit 6 trained engineers who are ramped up on the source code)

------
motdiem
I wasn't using their product (found the data wasn't that great), but I really
like their daily newsletter - I hope it'll find a new home.

------
einarvollset
Hoping they will honor my year subscription somehow...

~~~
toomuchtodo
Depending on when you charged it, you should probably contact your credit card
company to charge it back if they’re unable to provide the service going
forward.

~~~
einarvollset
Ohh. News you can use. Thank you!

------
cocktailpeanuts
> "I’m reaching out to share some great news"

This is disgusting. Remember that this letter is:

1\. for common shareholders who will get absolutely nothing out of this deal.

2\. yet it's asking them to sign so that they can go ahead with the deal.

3\. And to top it off, "I'm reaching out to share some great news"? Are you
kidding me?

To be clear, I support all entrepreneurs regardless of what ridiculous
business model they're trying to pull off. I even think Magic Leap should be
given a benefit of the doubt and they may be able to pull it off.

Also I think it's great that silicon valley celebrates failure. Without this
type of environment it's hard for founders to shoot for the stars.

That said, people have taken this too far, and it's become ridiculous. It's no
longer about it being ok to fail, but it's about "I failed, so what? I'm the
genius and I totally deserve it and you just paid to tag along."

I totally despise bullshit like this. If you lost, just say you lost. And say
sorry. Don't bullshit people about how "it's a great news that I'm asking you
to sign this letter so that other people--not you--will get the money you
actually deserve".

~~~
colbyh
This was an internal email to investors. You have no idea what convos she's
had with them previously about the situation but you're very quick to assume
she's some self-important Jobsian figure.

Be human, chill on the assumptions. Startups are hard and you don't have all
the data so Danielle deserves the benefit of the doubt, not some vaguely
related ranting about responses to failure.

~~~
cocktailpeanuts
I normally never criticize founders when startups go down because I have been
there too and understand how hard it is for the founders first hand.

But please enlighten me. What kind of conversations could have possibly
happened before this letter that could justify saying something like "You
invested money (or time) and we've just lost all of it. You will be getting
$0. But I need you to sign this so that other people CAN get some money. Oh by
the way, it's a great news!"

Most common stock holders are probably former employees (whereas preferred
stock holders are VCs). At this point I'm sure they didn't expect much out of
this anyway, but they were once people who truly believed in the vision. If I
were one of those people I wouldn't be happy to hear this fake facade about
how this is a "great news". Phrases like this you should only use it for PR
you send to Techcrunch, saying you had an incredible journey. But not to
former employees who made a lot of sacrifices. To those people you be honest.

~~~
crdb
> But please enlighten me. What kind of conversations could have possibly
> happened before this letter that could justify saying something like "You
> invested money (or time) and we've just lost all of it. You will be getting
> $0. But I need you to sign this so that other people CAN get some money. Oh
> by the way, it's a great news!"

This reminds me of when my father's employer went out in the wake of the 1999
bubble popping. A couple of years later, the CEO sent him a very nice email
saying "hey, mind signing over your stock please" and he was about to do it. I
thought it was fishy that the ex-CEO want something worthless back, so I
called my uncle who invests in SMEs on the side of his job and he agreed that
we should ask for something back in return.

So we asked, and got, a few thousand for his stock, without a whisper of
complaint from the ex-CEO (guess we asked for too little).

~~~
unclebucknasty
I'm reasonably certain that any of the common stockholders here can decline to
sign and prevent the deal from going through.

No what they can leverage from doing that is a different story--blood from a
turnip and all that. But, there's nothing that says they must take the deal as
offered.

~~~
jacquesm
Drag along clauses exist but typically require that the stock gets paid for,
if you're going to play tricks with multiple stock classes you can find
yourself in awkward positions when you wish to screw the 'lower classes'.

~~~
unclebucknasty
Right. So, we may be able to infer that a drag-along doesn't exist or that the
majority doesn't want to activate it, given that they are trying to offer zero
to common, whereas a drag-along would _typically_ require that all holders are
treated evenly.

Also, the claim that the amount paid would go towards company wind-down makes
you think that plan would be negated through a drag-along, as some of the cash
would "leak" to common holders.

In fact, it's actually curious that they are the acquiring the company in
earnest vs. just acquiring its assets. Not sure why they would acquire the
liabilities to the tune of $500K just to shut-down. Just pay for the assets
and let the company use the funds to shut itself down. But, who knows? Maybe
there's something (like paying customers) that they are finding difficult to
transfer as an asset for some reason.

~~~
jacquesm
All agreed. So, if you're holding common stock sit tight and don't sign
anything, a better offer is likely just around the corner.

