If advertising is truly the Internet’s original sin, then the serpent is the venture capitalist who first surmised, “Sure, but what if you offered your service for free and made it ad-supported?” adding before or after any objection “Because isn’t your real value in the data?”
“The question” became so pervasive and well anticipated in venture capital meetings that many entrepreneurs eventually chose to skip the foreplay around whole swaths of their value proposition to ensure they could be first to explain that their company’s real value was, indeed, data. Cut them off at the pass. Leave them nowhere to go. Something like, “Hi, nice to meet you, Mr. Venture Capitalist. My name is—DATA! DATA! OUR REAL VALUE IS DATA!”
The question doesn’t seem that bad on the face of it. With so many companies giving away their goods for free already, what else can a company fall back on except data? Being cast out of the garden is called “The Fall” after all. But what of those startups who aren’t interested in just slinging pixels to marketers?
I say, pity those young startups who face the serpent’s question in the middle of a VC pitch. Pity Adam and Eve’s—I mean, the co-founders’—argument over whether to take a bite of that apple. And if you end up on the wrong side of that debate, be warned. You might find yourself fired. Like I was.
Once I joined a biotech startup.
I knew a couple of the (literally) genius founders socially, and they were enamored of building a consumer Internet business for their (legitimately) genius product. Think being able to test Adam and Eve’s DNA for bad apples. There had already been some first movers in the industry who had navigated (or skirted) regulatory waters to bypass physicians and the healthcare industry, and this now seemed like the tradewind route to high venture valuations. The CEO and other founders thought I could help them through this direct-to-consumer channel given my extensive experience.
My extensive experience was being fresh off of my first consumer Internet startup failure where not only did we offer our service for free, we also paid folks to use it. And it still didn’t grow very fast. So with a broken spirit and a sincere lack of interest in making the same mistake twice, I argued vehemently against my own relevance to their biotech business. They should pursue a clinical go-to-market strategy, one that targeted doctors and consumers in a high-priced, elective market segment—IVF—and use that experience as the basis for negotiating with insurers. Collect underpants. Get underpants subsidized by insurance. Profit. The CEO agreed.
At this point, you might argue that I should have gone on my merry way to more frivolous Internetty endeavors, but really, I had as much experience building a successful clinical marketing channel as I had building a successful consumer Internet startup, which is to say, zero to none. Plus my argument had lent me the type of credibility that Santa had in Miracle on 34th Street when he told people to go shop at Gimbels. Search engine marketing? Pshaw. I could do that, but what you really want are some sexy, high-priced sales reps.
Convinced of a personal pivot, I became an employee, learning all manner of regulatory initials. Only in Silicon Valley.
Unfortunately, I quickly learned that #NotAllFounders were on board with my proposed go-to-market strategy. Some were really attached to selling the service over the Internet, thinking this was some sine qua non of the business. And I didn’t do myself any favors trying to bring them around by starting most of my arguments with a very mature: “Are you f***ing kidding me?!” (To be fair, I begin a lot of work conversations this way.)
In return, I got a lot of: “Why should we trust someone with no experience in healthcare?” (Conceded!) And also: “It’s exactly because you don’t think it can work on the web that it’s an amazing, contrarian idea.” (Conceited!) Unconvinced by my cogency or my imprimatur, the team was divided going into venture capital fundraising, the very time you shouldn’t break ranks.
Fundraising has no middle ground; it’s either a virtuous cycle or a vicious one. Tensions understandably run high. Spreadsheets like the one we imagined for FertilizeMe are real and include feedback just as ludicrous. Because VCs will say anything in order not to say: “I just don’t like you.” or “I just don’t like your company.” In weaker or divided organizations, executives or Board members will latch onto feedback that supports their causes, despite the fact that the feedback is often meaningless. It’s the equivalent of being workshopped by the crazy old man in your Continuing Studies screenwriting class.
We were weeks into meetings and recriminations when the team at a prominent VC firm dropped the question, “Data’s the real asset here. Let’s just take this to the logical extreme. Have you thought about making this product free and subsidizing it with advertising?”
Remember we were a biotech company, one which could justify a $1,000+ reimbursement from insurance companies for a service that almost everyone needs at some point in their lives. You know, so it’s already free to patients, but you get paid for it.
Are you f***ing kidding me?!
I’m sure at that moment my face looked somewhat like Orwell’s in this strip as he fell to the floor. I waited for someone more senior at the firm to knock down this suggestion, but instead there was legitimate discussion. There were rumblings and murmurs about Big. Contrarian. Ideas.
And then a blur.
Over the next couple of weeks, I remember some more arguments. I remember playing way too much Scrabulous on Facebook and painting a lot of robots. I remember some regulatory initials. But what I remember most of all was being pushed out of the company, so they could, of course, focus on their consumer Internet business.
Just to be clear: “The question” got me fired from a job I shouldn’t have had, because the business was changing strategy to the one they wanted me to join for in the first place.
Not sure if that’s irony or what, but it’s something. And then whatever that is, double it, because six months after being let go, the company ended up going back to the clinical/IVF route I suggested and succeeded mightily.
Perhaps they looked outside the Garden, marveled at the emerald green of the grass outside, and then took a big whiff. The grass was greener, but for the rest of us shilling and shoveling ad-supported cow poop.
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We have a big, complicated strip coming up next, so we’re going to take a few extra days. See you next week!
– Ben