As I recall, the university was run out of the non-profit ArsDigita Foundation, but the foundation got it's money from the for-profit ArsDigita company. All the VCs had to do was cut off funding, and the university dies.
I still listen to the recordings from their university every so often; they did a good thing.
They brought it on themselves. A well-conceived and well-run company which fell prey to greed and was destroyed by it.
The VCs would never have destroyed anything if the original vision had remained in place and expansion proceeded apace with what the market would bear (obviating VC funding).
That's your impression? I don't think it was greed that motivated him.
ArsDigita grew at market pace without VC money. Unfortunately, during the dot-bubble, so many companies were going public that individual options holders were barking at Phil, demanding an exit. Greed you might condemn, but daily annoyance at your place of work? They wouldn't have been any easy acquisition, they were basically too large. They were also after all a consulting company. An exit meant going public.
They took VC money because underwriters refused to them public, despite their massive profits! Underwriters didn't want to manually verify the company: they were already operating at capacity. They wanted to scan for some large VC firm and sign of.
Greenspun didn't understand the danger. Once he did, he acted on it, and made a public warning in hopes that people would see it coming.
Were you at work during the dotcom boom? You don't sound like someone with firsthand knowledge of the bubble environment.
In a bubble, your attempts to swim against the tide are thwarted at every turn. The herd is moving toward the big cash IPO. Everyone talks about nothing but stocks (and, my god, is it annoying). Unless you want to work by yourself, ignore your colleagues, and get paid in cash, you're going to find yourself making bubble-type decisions, because you live in a bubble universe. Your salary is counted in bubble units, your colleagues harbor bubble expectations, your investors value your company in bubble terms, and your expenses come with bubble price tags.
This is what makes bubbles bubbles: the smartest people you know start acting like complete suckers. It's the professional gambler's dream.
Here's Greenspun himself, from the excellent Founders at Work:
"...the original sales pitch I made to employees was, 'Come work here. You'll make $150k, maybe $200k a year if you do a great job and you make your customer really happy. We can just do that forever, making the customers happy, not spending too much. We'll pocket the profits, and have fun offices, a beach and ski house that everybody can go enjoy... we'll collaboratively have this great lifestyle.'
"...But they felt like they were dumb because every day they were reading the newspaper about people who had worked for 6 months at some company and now they were worth $20 million because of an IPO. They'd ask me, 'Why aren't we doing an IPO?' And I'd say, 'Because we have profits.' "
That was just the programmers. Greenspun claims that recruiting managers was even harder: in the bubble, why would anyone with half a brain want to work for a company that was never going to IPO?
The sad thing is, I signed up to work at aD based on sales pitch A, and by the time I actually arrived they had taken the VC money and were in the throes of Bubblemania B. I think I would have had a lot more fun at the old aD.
> Were you at work during the dotcom boom? You don't sound like someone with firsthand knowledge of the bubble environment.
Just FYI -- I was working in San Francisco during the craziest days of the bubble, at a company that WAS profitable, IPO'ed, then got bought by GE and merged into another which began bleeding money. I looked at aD, along with some other places, and saw that aD had headed downhill, so I moved back east, launching another company and eventually ending up at Google.
I remember being rather disheartened by what happened at aD. Not surprised, given my experiences with corporate drones, but nonetheless disheartened that a company with a good premise, a plan to make the world a better place, and solid profits from operations had been destroyed by VC politics.
I avoided the extremes by consulting for dotcoms. It sounds like you tried to do the same indirectly by working at aD (sorry that didn't work out).
I have a lot of respect for what Greenspun was doing back then ( particularly things like arsDigita university, photo.net and Scorecard - http://www.scorecard.org ). Even his Tcl AOLserver abomination had its good points :-)
I never understood why he needed to take VC money. With his business he could have grown it and sold it or eventually gone public on his own.
