Atlanta, startups, Technology

Is the Twitpay acquisition good for Atlanta?

Twitpay was founded about 15 months ago at Atlanta Startup Weekend 2, and was recently acquired for $100k (and an additional $1 million committed to move Twitpay forward as a non-profit fundraising tool).  The acquisition was widely hailed with congratulations to the founders and touted as a success story and evidence of the strength of a “payment cluster” of startups in Atlanta.  Now I think very highly of Twitpay’s founders, know they had some great buzz, great advisors, and that everyone congratulating them was genuine in recognizing this as the payoff for hard work by everyone involved.

All of the positives aside, it appears to me that the facts are that several talented Atlanta/Southeast regional entrepreneurs worked full-time for over a year on a disruptive technology that was developing good partnerships and good press and got bought out for small change.  Lance Weatherby put it well, “There are three types of successful exits for startup founders.  You get a new car, you get a new house, or you get a new life.”  It looks like the Twitpay deal sits in “new car” territory, with “new job” thrown in since I imagine they’ll get to draw a salary as they work with investors including Acculynk CEO Ashish Bahl to refocus the technology.  I’m not privy to any details, but I maintain some hope that the Twitpay team has enough of a stake in the new entity to push up into “new house” or “new life” territory.

There are a number of issues with the whole deal that I think put a bit of a damper on Atlanta’s startup ecosystem:

  • What Cluster? – There is indeed a solid bench of payment processing technology companies in Atlanta, but it’s hard to see much benefits from this in Twitpay’s story.  With the acquirers in the payments space, the best I can say is that participating in this cluster may have meant the difference between “new car” and “no car”.  It’s small wonder entrepreneurs often ignore our local clusters.  Many local entrepreneurs who are fully dedicated to their startup just end up in “new 2nd mortgage” territory.
  • The Series A acquisition – Atlanta is not “The Valley”, and this deal rubs that fact in.  A “success story” version of this situation would have seen the $1 million invested in Twitpay and used to give the company strategic investors and a couple more iterations to “get it right”.  Buying startups after their initial model is “busted” and funding their additional experiments after the fact is not an appealing outcome for entrepreneurs.
  • The compensation sucks – If our version of a success story is that a founding team of entrepreneurs goes without salary for a year and a “good” outcome is that they get to split $100k 3 ways, and THEN get to draw a real salary as an employee, we have a real problem.  New Georgia Tech CS grads can make twice that much, fresh out of school, guaranteed.  This sends a message to talented potential technical co-founders to just go get a J.O.B.
  • Few Lasting Benefits – these guys have “new car” money.  They’re not going to be the next partners in Shotput Ventures, they’re not going to be a part of the next big angel deal or have large amounts of time on their hands to re-invest into other startups and entrepreneurs.  Furthermore, they’re now employees, which means they’re not spending much time starting their NEXT company.  They do have some domain knowledge and credibility to bring into their next startup.  Who knows?  They may even co-found something awesome that does benefit from Atlanta’s strength in payment processing.

Let me be very clear that I may have a number of facts wrong about compensation, deal terms, etc.  I’m a total outsider to this deal so I know little more than the publicly stated facts (the rest are educated guesses), but that also means that the way the deal looks to me may very well be the way it appears to other outsiders in the Atlanta startup ecosystem.  I also have the utmost respect for everyone involved in this situation.  The Twitpay team rocks.  I am sure their acquirers have great intentions and solid potential to do great things with Twitpay.

If I’ve got something wrong, let me know.

An ongoing message and lesson I take with me is that Atlanta is for bootstrappers unless you are fundable on reputation and track record alone, or you are one heck of a fundraiser.  Don’t quit your day job.  Let customers fund your growth.

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Atlanta, Java, Technology

The Next Episode

Back in March, I reached a decision to leave WeTheCitizens and spend some time in a contract role with Premiere. At the time, I expected that a contract gig would let me spend less after-hours time thinking about the day job, and more time on side projects and other interests. It turns out that even as a contractor, I cared about what I was working on. I consider that a good thing, we built up a good team, cranked out some pretty cool software, met some awesome people – I truly enjoyed my time at Premiere. The challenge for me on contract, was balancing life with billing more hours. In some ways, having a dollar amount directly attached to each hour of your time helps you better value your time. In other ways, it’s easy to imagine how working just a few more hours that week can earn you a shiny new gadget.

In spite of that, I was able to hatch FeatureFrame during my off-hours. It did occupy much of my creativity, and the process of building a product prototype, a pitch for Startup Riot, filing a provisional patent, designing a logo and business cards, and creating an actual business entity has been exciting, challenging, and in a twisted sense, fun. Many thanks to my Twitter posse, who often functioned as my co-founder, providing feedback and helping with decisions where I needed more than just my opinion. No I do not have stock options for any of you. Some interesting FeatureFrame news may yet be around the corner. It is still an interest and a passion of mine, and it will live on, but it’s not quite ready to be my main job.

The other thing I suspected when I left WeTheCitizens was that there were some interesting opportunities out there that weren’t crossing my inbox either because they were being filled by recruiters we’d used at WeTheCitizens, or because people generally seem to have the (often correct) impression that an executive in a startup isn’t really looking for another opportunity, at least until the startup’s been bought/folded and the earn-out is done. Being on contract actually did seem to send a clear signal, “Hey, I won’t be doing this new gig for too long, and I’ll need something interesting to do after that.”

A few moderately interesting things came and went, but one opportunity stood out, and I’m now a few weeks into my new role with Good Egg Studios. For all the times we jabbed at one of my Premiere colleagues for his work on Barbie.com, I never thought I would be working to build a virtual world for kids.  But here I am working on Elf Island.  A glance at the site and the blog should begin to make it obvious why.  This is an amazingly talented team, with the right marketing, the right funding, and the right product at the right time. The creativity and talent of the creative team is off the charts, and has combined with some talented technical resources to build a virtual world that a generation ahead of what kids are currently using.  The $2 billion valuation of Webkinz and Disney’s $700 million acquisition of Club Penguin are both examples of companies who have made this space extremely profitable.  The “secret” of Elf Island and our “play games, do good” mantra (which allows users to directly help non-profit causes) are going to be very sticky features that I think kids and adults will enjoy (even before launch, we’ve already had eager & hopeful users build us a fan site).  Our office space in west Atlanta is a win both for commute and for awesomeness – I need to take some photos, or come by and visit some time.

So that’s the news.  We are hiring a Java developer, a Flex developer, and a technical project manager (dev mgr?), so if you are somebody or know somebody who would enjoy such a role, do let me know.

Atlanta, Sports

Tornado Night at the Georgia Dome

I went to the Georgia Dome tonight for the SEC basketball tournament.  I caught up with a good friend who’s on UK’s faculty to watch both games, but the weather had different plans.

The Mississippi State vs. Alabama game went to overtime.  The Kentucky fans (a majority of the attendees) seemed quite excited for overtime even though they weren’t even playing, so I thought little of it when I heard what I thought was the UK fans loudly stomping their feet.  Until it became evident that it wasn’t them… it was too loud.

Looking beyond the UK fans, I could actually see the fabric of the roof of the Dome shaking in the wind.  I’ve been in the dome before for storms, and the fabric has never moved.  One of the advertising banners near the roof tore, pieces insulation started visibly blowing through the air of the dome, the scoreboard and partitions hanging from the ceiling were swaying widely, and the stomping noise got louder.  At this point, we decided that being underneath the steel and fabric roof was a bad idea, and were among the first wave of people to head for the concourse.

This was the edgiest part of the evening.  The aisles began filling up, people were becoming impatient with the slow walk up to the concourse, and the train-like sound of a tornado grew louder.  Here, there was a major possibility of a Cloverfield moment – like some monster was about to peel back the roof of the dome, screech, and create mass hysteria.  But simpler than that, if the power had flickered or gone out, if a larger tear had opened in the roof, I think chaos would have erupted.  It was a nervous and tense moment that could have taken a very bad turn.  After this, the stories began to circulate and we looked at visible damage.  One person almost got hit with a bolt that fell from the ceiling.  One security guard saw a rotating storm, another saw a woman who was outside slammed into the building by the wind.  There was an obvious hole in the roof of the Dome.

After lots of waiting, they somehow managed to finish out the Mississippi State  game, and they decided to wait to start the second game.  Overall, their crisis plan needed a LOT of work.  Via my phone, I learned there were ongoing tornado and severe weather warnings, but they left people in their seats rather than requiring them to move to the more sheltered concourses.  They provided very infrequent updates.  They kept telling everyone to stay around, and then suddenly announced that the Dome would close in 15 minutes.  They also postponed the second game just when all of the storm threats were subsiding.

The walk back to my car proved to me that a tornado was almost certainly the culprit.  The damage was extreme, but localized to very narrow areas.  We saw pieces of insulation surrounding the outside of the dome, and what appeared to be random structural pieces of the dome.  Insulation was blown so fast that it severed halves of shrubs.  Metal barricades were bent as they blew over.  Branches and plywood were sheared.

The most convincing evidence was on the Northside Drive side of the Dome.  Just below the roof of the dome were 2 sections where the exterior paneling was ripped off.  The insulation was gone, and torn banners were visible.  There were effectively 2 huge breaches directly to the interior of the dome, which explained why is was so drafty after the initial hit, and why they were reluctant to resume games if more bad weather was coming.  Large metal monument signs had been wrestled to the ground, twisted and wrested from their foundations.  Power poles and trees were toppled like twigs.

The Georgia World Congress Center may have sustained some of the worst damage.  LOTS of windows on the west side of the building were shattered.  Water pipes were broken and spewing water, and fire sprinklers appeared to be running as well.  News reports showed that this caused flooding in the building, and I’m sure this will require major repairs.

My car was frighteningly close to the path of destruction, but appears to be fine.
What a night!  I’m exhausted, and glad to be safe through this experience, which will also be another intriguing memory with a great friend.

Atlanta, Technology

Skribit Reloaded

Andrew Hyde notes that Skribit is now publicly available.  We had been in private beta as we stabilized the product and environment, and are now open to anyone with a blog who’s interested in collecting reader feedback on what they should blog about.  We also added some nice features along the way, and cleaned up some gaps on the Skribit site.

One key focus for this release was closing the feedback loop.  We notify bloggers when they get new suggestions, give them weekly activity summaries, and notify suggestors when a blogger writes about their suggestion.  Simple, but critical in keeping the conversation going.

Startup South is showcasing the Skribit widget as it now renders correctly when the width is narrowed.  Narrow-sidebar-bloggers rejoice!

Lastly, my contribution (with gratitude to acts_as_commentable) – you can now comment on a suggestion.  Because the meaning of a suggestion isn’t always clear.

Major cred goes out to Calvin (the feature machine), Paul, Jason, Lance, Alan, Josh, and anyone else I’m missing who made this latest release possible.  These guys make burning free time on a second startup a pleasure.

P.S. – You may note that I don’t have Skribit on this blog.  It’s not that I don’t want to use it (I REALLY do), it’s that hosted WordPress blogs such as this can’t handle iFrame widgets.  Boo.