July 10th, 2007 by Bill
In the conventional, “textbook” way of doing things, early-stage companies secure initial funding from “friends and family members” or angel investors, then through crisp and timely execution of a well-articulated business plan graduate to a stage of development, and level of sophistication where they are able to attract investment from venture capital firms. The company typically would be formed as a “C” corporation, would recruit a CFO or VP Finance to generate all the projections/spreadsheets and implement all the operational controls that VC’s expect, engage legal counsel to pull together the standard set of documents for a Series A funding round with the standard set of preferences, etc., etc. The company is then set on a standard three to five year trajectory towards either an initial public offering, or as a candidate for acquisition by a large, publicly traded technology or web services company. All bog standard, all terribly predictable and all terribly…uninteresting. But oh! so tempting to head down that well-trodden path as the lowest-friction, least risky way to bring a new idea to fruition.
But, what happens when the core idea of the company itself – how it should be structured, how it should behave in society, what it’s financial and human/social objectives are – is largely at odds with these conventions? Should the founders, board members and staff opt to head down the well-trodden “conventional” path and hope to preserve at least some of the core values and objectives of the company? Or take a chance in pioneering a new way of building a company; one that combines a resolutely for-profit technology business with a deep commitment to social issues?
Exbiblio was founded by Martin King with the notion that a company is no different than the people that inhabit it, give it life and purpose. Thus, the company has the same responsibilities and obligations that people have – towards their neighbors near and far, and towards the planet we all inhabit. It is also increasingly apparent that for-profit business is the most powerful, and the only truly sustainable catalyst for social change (good or bad).
This has been the foundational philosophy of Exbiblio from its inception three years ago as a Dutch company with a US-based development team. Operating under the far more strict personal data privacy regime in Europe was seen as a critical component of Exbiblio’s business strategy: after all, the information secured through the “capture” by users of their reading material is highly personal, and we need to ensure that this data is subject to the most rigorous regime of privacy. A European domicile best achieves that important objective. It is also felt that the merits of a US brand are diminished in a truly global economy.
During the past six months there has been more than the usual amount of early-stage company trials and tribulations at Exbiblio, all of which is openly chronicled in our blog. We produced our initial business plan, and embarked on the time-consuming task of raising our first outside capital. After much internal debate, we decided to re-incarnate the company as a US “C” Corp (see “conventional company standard procedure above!), on the assumption that investors from Peoria, Wenatchee San Jose and Tukwila would feel more comfortable with a familiar US corporate entity. The response from 25 or so individual investors was highly encouraging, with commitments topping $3 million received. As we approached closing of this fundraising, however, Martin – as the founder, and sole investor in Exbiblio to date – decided not to proceed with the round, and the related change in the company’s domicile. The result was the departure of several highly talented and experienced members of our senior management team, and a re-tuning of our gameplan to move forward sans outside investors for the time being.
So, dear reader, you might assume that this blog entry is Exbiblio’s epitaph, given all the ups and downs, twists, turns and reversals that have been revealed over the past year. But you would be sorely mistaken. Martin and other investors have committed additional funding to carry the company into the middle of 2008, and a smaller, core team of engineers is dedicated to bringing Exbiblio’s technology to the market, albeit with some delay, and on a more modest, targeted scale. The parallel development of Exbiblio’s .com and .org activities remains deeply embedded in our culture, and we continue to see this as a core strategic asset of the company.
Watch this space for updates on our progress towards first beta release later this year.
The road less traveled is, indeed, a bumpy one, but the view along the way is grand, the experience is exhilarating, and the destination is worth the trouble!