Mission NOT Accomplished : So Stop CELEBRATING Financings



I start with the premise that running a startup is hard. My favorite business book on running a start up is Ben Horowitz’s “The Hard Thing About Hard Things”, which is 282 pages of it’s really effing hard. As a result of it being hard, it’s a roller coaster ride. The highs, when things are working, are mind-blowingly great. The lows are brutal. So appropriately celebrating wins should be a ritual at every company. But the level of celebration should be in line with the level of accomplishment.

When a financing is completed, what is the true accomplishment? Somebody (an investor, or series of investors) has been convinced to invest in the company, to believe in the dream. Now that’s a win on multiple levels. A financing is outside validation of all the work to date. A financing gives the company additional resources to try and accomplish the real goal, building a successful company that provides great service to its customers and that rewards its employees and shareholders.

But a financing is just one step in accomplishing the real goal. Hiring each great employee is also a step forward to accomplish the real goal. Yet how much is each hire celebrated? Each sale of the product is a step forward. Each business partnership….

My problem is not the fact that there is a celebration post of financings; rather it’s the level of celebration, the level of accomplishment felt. The photo above of Lending Club employees celebrating their IPO is a textbook example of too much celebrating, being too proud of what was really accomplished.

I appreciate that the company had slogged for more then seven years to achieve the IPO. But an IPO is not an exit (for most employees or investors), rather it’s an entry in to another phase of the company’s life. A phase rife with new challenges. In Lending Club’s case, to date, they’ve struggled to meet the challenges.

When the picture was taken (December 11, 2014), the company had just IPO’d at $15 a share, and it was probably trading around $23 (it closed the first day at $23.43). Lending Club was trading at over $29 a week later. On June 11, 2015, when the six-month lockup ended, thus employees and investors were first able to begin selling shares; the shares were trading at $17. On June 29, 2015, Lending Club broke it’s IPO price for the first time, closing at $14.54. On July 8, 2016, Lending Club shares closed at $4.32. Lending Club CEO Renaud Laplanche, third from the left in the photo above, was ousted on May 9, 2016. I have no doubt that the two guys enthusiastically high-fiving in the back of the photo are embarrassed whenever they see the photo. Because, in hindsight, they were celebrating far TOO much. In hindsight, they’re celebrating the fact that 19 months later, shareholders who were buying at that moment, would be down more than 80 percent. I’ll bet, in part, they were celebrating the accomplishment of having built a great company. It turns out they hadn’t (yet).

Interestingly, in a great TED talk, idealab’s Bill Gross did an analysis of the key factors of startup success. Bill’s analysis found that of the 5 success factors he measured, “Funding” was the least important across the 200 (successful and unsuccessful) startups he analyzed.

So celebrate your financings, just do it at a level appropriate with the level of accomplishment.



Reprinted by permission.

Image credit: CC by Jeremy Vohwinkle

About the author: Lou Kerner

Lou Kerner is the Founder and Managing Partner of The Social Internet Fund, which invests in the primary and secondary shares of rapidly growing privately held social, mobile, cloud, security, and big data companies. The Fund’s investments include, FireEye (FEYE:NASDAQ), Livefyre, LiveRamp (acquired by Axciom), Meetup, Optimal (acquired by Brand Networks) , Palantir, Scrib’d, and Yashi (acquired by NexStar).


Lou is also a Managing Partner of The Israel Syndicate on AngelList, which invests in shares of tech companies founded by Israelis, regardless of where they’re located. Lou’s Israeli investments include Viewbix, IT Central Station, and Segmanta.

Lou was previously Wall Street’s first private company analyst at Wedbush Securities, where he was the Managing Director of the Private Shares Group. At Wedbush, Lou started the first private shares trading desk on Wall Street. From 2003-2006 Lou was President of Bolt.com, a leading social network which grew to over 20 million uniques. From 2000-2002 Lou was the CEO of The .tv Corporation, an idealab company which licensed the top level domain (.tv) from the tiny island nation of Tuvalu. .tv was acquired by Verisign (Nasdaq:VRSN).

Prior to .tv, Lou had a distinguished career as an equity analyst following media companies for Goldman Sachs and Merrill Lynch. Lou began his career at Bain & Company, where he sat outside of Mitt Romney’s office.

Lou is regularly quoted in social media stories in the WSJ, NY Times and other business publications, in addition to his recurring appearances on CNBC and Bloomberg Television.

Lou has a B.A. from U.C.L.A. and an MBA from The Stanford Graduate School of Business.

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