Cooling your heels while patiently waiting for the venture capitalists to swoop down and take your small, but profitable, company public?
Don’t hold your breath, and take the time to read Eve Anderson’s first-hand account of the fall of ArsDigita while you still have a chance.
ArsDigita was a small, admittedly weird, web development company most widely known for its ArsDigita Community System (ACS), an open-source web community development platform. ArsDigita didn’t use the most fashionable development tools and took the approach of putting people—its employees and customers—ahead of profits. Nonetheless, ArsDigita was profitable from the start. Until the venture capitalists came.
Basing its collective behavior on honesty, openness, and respect, ArsDigita should have been one of the small business success stories. And it was. Until the venture capitalists came. In less than a year, according to Anderson’s account, venture capitalists took a thriving concern and drove it into the ground with incompetent, but “professional” management that set out to marginalize the founding principals and their principles. The epitome of this “professional” management came when the venture capitalists used company money to fund a law suit against the founding principals in order to wrest control of the company.
Fascinating account and a clear warning signal to those waiting for salvation by venture capital.
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