Demand stock isn’t all that employees will get, though. They’ll of course get cash for the bargain element of any vested options, plus their unvested options will probably roll into Demand stock like you said.

I wholeheartedly agree with you that overfinancing an opportunity can, by virtue of changing the definition of success, impede the very success that the financing is intended to enable. I just know that Pluck isn’t a good poster child for that thesis.

“My thesis was that Pluck was using a Web 1.0 funding style to build a Web 2.0 business”

What do you qualify as Web 1.0 funding model ? I understand the distinction between Web 1.0 & Web 2.0 business models but what is the distinction between the a Web 1.0 funding style and / or Web 2.0 funding style.

Not sure if I missed a post on this topic in the past or if there is a link, article or book you can think of that explains the difference.

Thanks
PB

Mayfield and Austin Ventures had complete control and as a result management didn’t really have a choice. The deal is likely the best hope the company has to get to the next level. Many of the employees are getting pre-IPO stock in Demand and I suspect there is a lot of hope the new company will be able to do well.

You are right that I am biased. Venture capital is perfect for certain deals. Pluck’s problem was that it had too much money. The money, in this case, WAS the problem. Had Pluck been able to morph more freely I suspect Dave and his team would have hit a home run. Ben had a neat idea with Consumating, but it was just that. I don’t think Consumating would have been the next match.com with venture capital, I think it would have been a failure. Ben; however, decided to sell instead of raise money. I think he made the right decision for his idea and for his lifestyle.

I am involved (as an investor) in two venture backed deals and I am excited about their prospects. Without capital these two businesses would never make it. The venture capital partners in these deals are invaluable.

Even if the company HAD consumed that much money, they would still do at least OK, because of a phenomenon known as the “carveout” which is typically employed when the management team is underwater. It’s hard to sell a company with a management team that doesn’ t want to sell or isn’t cooperating.

You’re a bright guy, but you’ve got obvious biases that lead you to the wrong conclusions on topics like this.