I’ve already commented on JobLoft’s deal getting away so I will now focus on only a few key and important points in the JobLoft’s blog entry. And I quote from JobLoft’s blog directly here,
- “What we need to address first is that what was shown on TV was just a glimpse of what happened in that boardroom on a wonderful Halloween morning. Of course, it was edited for TV, and producers have a magical way making things look and feel a certain way for television.”
- [K: Are there any reasons for CBC to deliberately twist the JobLoft story to favour the Dragons? Seems to me it is good TV either way already. As far as I know, Stu has a background in Fifth Estate and Tracie has a background in Venture. In my humble opinion, there are just too much journalistic integrity in them to really distort the story one way or another. I wander if JobLoft has a full audio and video recording of what happened that Halloween morning to support their views? If they don't have the tapes, has a request been made to CBC to help clarify the events that morning? Full video of the meeting may be required for analysis to be fair to all parties involved.]
- “We are fortunate to have him [Dr. James Norrie] as a mentor and we are willing to stand up for the best interests of the company.”
- [K: Did JobLoft truly want the deal to go through? Why were nothing done or said by the founders to stop Dr. Norrie's personal insults of the Dragons? Why create such a negative environment right at the beginning of things?]
- ‘For the record, Chris Nguyen, CEO of JobLoft says, “I learned a lot about business when I was at Ryerson…but nothing prepared me for the harsh lessons about what can happen when things go so wrong, so fast. [K: emphasis mine] The coolest thing about it though, is that in retrospect I wouldn’t change a thing about what happened and learning is always a good thing. As we complete the search for appropriate investment partners in the coming weeks, I think the shareholders have realized that we are better off with this outcome than the alternative of a fractious board fighting about the right strategy for our company. I would never take an investment offer again without making sure everyone was aligned on the company strategy. No regrets, no hard feelings and my partners and I, and even our company advisors, all wish the Dragons well and hope they can say the same about us…”’
- [K: Learning is of course a good thing. But I was deeply disappointed to read that, "... in retrospect I wouldn’t change a thing about what happened ...". Chris didn't have the basic graciousness to apologize for the personal insults by Dr. Norrie ( who is a director of the company) against the Dragons and Jim.
- K: Did the JobLoft founders support Dr. Norrie's view of the deal being under-valued? The problem was that Dr. Norrie's attack was partly predicated on $200,000 being too little money. And given Dr. Norrie's view of the fairness of the amount, supporting Dr. Norrie's view fully has the same tone and appearance of backing out of a deal simply because of the agreed upon amount of money weren't "good enough".
- K: May be JobLoft can get more investment dollars elsewhere. May be money really trumps "a deal is a deal" and integrity in our world where Donald Trump was treated as model businessman and source of wisdom. I just hope there is more than just money in life. I may be wrong. (smile)]
Here is a philosophy that I call “front page story test” which I learned from Warren Buffett after reading Roger Lowenstein’s Buffett: The Making of An American Capitalist about ten years ago. I will quote Warren here, [K: emphasis mine]
“I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, be read by their spouses, children, and friends … If they follow this test, they will not fear my other message to them: Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.“
Now, the JobLoft founders and Dr. Norrie have put themselves in the center of attention on national TV. I am deeply sadden that based on limited clips that I’ve seen and the above Jobloft blog entry, I truly wonder if the four JobLoft entrepreneurs and Dr. Norrie have unwisely traded off part of their reputation for a potential better deal for JobLoft (i.e. more money and other benefits). Is it worthwhile? Your comments are much welcomed here.
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Thursday, 23 November, 2006 at 8:26 AM
[...] By the way, I have another blog entry commenting on the JobLoft’s official blog account of the event that morning. [...]
Thursday, 23 November, 2006 at 12:40 PM
Regardless of anything else, I think that CBC definitely had a bias towards telling the story in a way to cast the Dragons in a positive light. The whole premise of the show is that the Dragons are near infallible. Getting a deal with them is the best possible thing that could happen to a petitioning entrepreneur, and if the Dragons don’t bite then obviously there is something inherently wrong with what was offered.
I don’t really know any details of JobLoft, but a $200,000 deal for 50% of the company means that the company’s valuation is $400,000. JobLoft has been around for some time, they have an existing system and several founders and apparently employees. That is an extremely low valuation.
Would the Dragons have turned it into something huge? Quite possibly. But if not, oh well, they were each only out $40,000 which is a completely acceptable risk for people with millions and billions of dollars. The stake the founders had was significantly higher in relative terms.
Ultimately I can’t agree with your implicit assertion that we as the audience were shown enough to actually be able to determine what the best course of action might have been, though without any actual knowledge of the situation, certainly the best bet is on the 5 extremely successful Dragons before any of the entrepreneurs.
**********************
Hi Rob,
I respect your view but I find it difficult to believe that CBC deliberately distort either the JobLoft entrepreneurs or the Dragons. Presenting it fairly even-handedly will still get a great audience number.
I think the beauty of the show is that the Dragons are humans and fallible too. It shows, admittedly in an artificial set-up, how some investors think and will invest. In fact, they might adopt a much safer approach to deals than normally when they have much more access to information and background researches, etc.
“Getting a deal with them is the best possible thing that could happen to a petitioning entrepreneur …”
Well, not necessarily, it really depends on the quality of the deal and the entrepreneurs themselves. As witness in the UK Dragons’ Den series, I am sure there are Dragons’ deals that the entrepreneurs didn’t bite and they ended up better elsewhere, it is quite possible.
$400,000 may be a low valuation but that is one of the strongest defensive mechanism the Dragons had in the Den. It is the Warren Buffett safety margin in investing idea.
True, $40,000 may be a small investment compare to the wealth of the Dragons but that doesn’t make it a good reason to invest in bad business. The deal have to be “good” for them in terms of risk/rewards, fit for their knowledge, etc. first.
Would l like to see more? Of course yes. Is there really a thing call “enough”? I am not sure. For me, I would love to take some time-off to be at the “eight days” (?) season two actual taping and I would love every minute of it. But not many people can do that or will enjoy or endure the really boring pitches. And, after all, CBC is in the TV business, so to get high ratings, it is their job to pull out the good bites and have enough information for us viewers at home to follow what is going on.
Thanks for your feedback.
Kempton
Thursday, 23 November, 2006 at 6:34 PM
Frankly I think that Professor exerted unreasonable influence over the students, and should have stepped aside.
I would have given up 50% of the company to have Laurence and Jim on board.
The cash was less important than there knowledge and expereince. getting three of them at the first meeting was an indication of their true comitement.
Jobloft will fold if they do not take control of their destiny and try to continue being students. Laurence or Jim could replicate it tomorrow for less than $100k.
—————-
Hi Andrew,
I agree with you that the Professor should indeed step aside. But how many people with “rock-star” power (I define as one grade lower than “absolute power”, which corrupts absolutely) is willing to step aside voluntarily? Especially if Dr. Norrie still probably thinks he did the absolute right thing by “helping” the student to get out of a “bad” deal?
I would have given up 50% too. Of course, I go with the original deal of having all five Dragons on board. (smile) Given the way they will likely be working together.
You are absolutely right that the case is “less important than there knowledge and experience”. You can’t pay them with the money they are investing in exchange of the time they will spend. Granted, they are busy people but they three were there at the “here is the cheque and welcome aboard” meeting.
You are right that the Dragons can probably hire the right people and replicate a workable site and compete with JobLoft. As do some other enterprising people. It is the sites with jobs that will get people using them. The JobLoft entrepreneurs have just made their own path to success so much less clear and so much more challenge.
And worst, the reputation lost by the JobLoft entrepreneurs and Dr. Norrie were incalculable. Just a sad situation.
Kempton
Friday, 24 November, 2006 at 7:23 AM
The one lesson that the JobLoft team, and the esteemed Professor Norie, have yet to learn is to respect both their friends and their enemies. Hurling insults, personal ones to boot, and not apologize at the first possible opportunity is a sure way to begin your descent.
Businesses come and go. Your reputation stays with you for life.
——————–
Hi Mark,
You are absolutely right. “Businesses come and go. Your reputation stays with you for life.” Again, it is sad for me to see the young JobLoft entrepreneurs starting their career in the wrong foot. And I am not sure if they know they need the fastest response to things right now (e.g. being interviewed by the media) as oppose to the “wait out the storm” approach.
Kempton
Monday, 1 October, 2007 at 11:34 AM
It might look like a bad move, but give it time: You Jobloft guys should be THANKING the professor for basically killing what was really a BAD DEAL.
You not only got more than a couple hundred thousand dollars in free publicity from your appearance on “The Dragons Den”, you also proved you had a commodity that people wanted.
The $200,000 for %50 was a horrible deal. You could easily get that money for under %10 of the company or even less
The fact that you were going to have “All five Dragons” onboard meant that each Dragon was only going to invest a fifth of their time into this venture.
Translation: It would of been a pain in the ass dealing with these five and for the percentages you were giving up the company for: NOT WORTH IT.
I saw the website jobloft.com you’re onto something amazing where you will find the venture capital and a more even keeled (cooler headed) investor.
Your professor was just looking out for your best of interests and he made a GOOD CALL.
Monday, 1 October, 2007 at 12:06 PM
Thanks for your feedback.
The deal being good or bad is one thing. The way the deal was broken off was a different matter that could have been handled much more professionally.
It should be fun to watch the season 2 of Dragons’ Den tonight.
- Kempton