The @DimDim exit plan for you freeloaders

Warning: this is a bitchy post.

SalesForce.com acquired DimDim (online collaboration software) for $31M. First of all, congrats for that. We always love to hear when someone in this business gets rewarded for good work they've done. If you work for DimDim, now would be the time to stop reading, because that's pretty much the last good word you will hear from me during this post.

I was introduced to DimDim a couple of years ago, when I was invited to an online presentation that used their tool. The person who invited me was naturally a founder of a startup (it's what we do). I was happy and a bit surprised to see that someone offered a free option to run quick presentations, limited by features and number of participants, but good enough for most bootstrap joints to use when they needed to show-off their stuff. I installed it on my machine, of course, and gave it a shot too.
Since then I didn't actually use it much, since I didn't find it good enough for my own needs, but I have told many people and startups about it. In our lean & mean startup world, every penny counts, so instead of spending $50/month on other services, DimDim really did seem like a good, free, sane option for the occasional broke presenter.
Not sure how many free users DimDim had, but I believe that the "freeloaders" took their role in making the DimDim platform a very popular online sharing tool. Don't you?

Enter the ungrateful part of this evening. I read @TechCrunch as much as the next guy, but I got introduced to the fact that salesforce.com acquired DimDim through the following email I got from DimDim:

Dear Customer:

Dimdim has been acquired by salesforce.com. Your free Dimdim account will remain active until March 15, 2011. After that date, you will no longer be able to access your free Dimdim account.

Please see the Frequently Asked Questions (FAQ) for additional information.

We appreciate your understanding, and we thank you!


The Dimdim Team
Pursuant to the Dimdim Terms of Use (the “Agreement”) governing the use of Dimdim Inc.’s (“Dimdim”) Site and Services (as defined under the Agreement) by you (“You”), Dimdim is hereby exercising its right to terminate Your Dimdim Account and the Agreement in its entirety. Dimdim will continue to provide Services to you until March 15, 2011. Following March 15, 2011, neither You nor Dimdim shall have any further rights or obligations of any kind under the Agreement, including the right to access the Site, or receive or use any Services. Dimdim thanks you for your business, and wishes you success in the future.

Dimdim, 900 Chelmsford St. Lowell, MA 01851
This email was intended for: | Remove

(Report Abuse) - Only if you feel this email was repeatedly sent to you without your permission.

Now let me tell you my take, or what I actually read between the lines:

Dear FreeLoader and Ex-Customer,

We just got acquired for $31M. We're rich. Richer than you will ever be. If anyone tells you that "freemium" models can't bring happiness, just send them a picture of us, fishing.
We did it all by ourselves, and we are extremely happy to tell all of you so-called "customers", who made us so wildly popular by using our free service, that you can go F yourself. We do not think you had any contribution to making us popular, and we don't think you are even remotely related to the fact that we are now filthy rich. As such, while the negotiation with salesforce.com was going on, we didn't think it was appropriate to demand, as part of our severance packages and all that, that our free service remains free, at least until people forget that the salesforce.com online sharing tool was once DimDim. In fact, you should be grateful that we're letting you keep the service for another two months. We award you with a valuable lesson - there is no free lunch in this world. We really wish we could see your face as you read this announcement, but we're a bit drunk from the champagne and generally have better things to do.

P.S. Aren't you glad our lawyers made sure we can terminate your account at will ? Oh, don't bother to get up, here's the relevant paragraph from our TOS, which you never bothered to read when you signed up to our free service.

Jokes aside for a minute, I would have done it differently. I don't believe in "exit strategies" per se, and I believe that you should always think about how to make a successful and sustainable product that people need, and hence will want to pay for. An exit is something that happens when another company realizes that you've done such a fantastic job, that they want you and your product as part of their offering. DimDim was big on the "freemium" model, and it's a big part of what made them successful. Dropping the free, and leaving the "mium" before the body of their acquired organization is cold leaves a bad taste in my mouth. DimDim is officially worth $31M - are you telling me that the "free" part has no part in this ? How much money is salesforce.com saving by cancelling the free service? Time will tell if this was the right business decision, but I, for one, think that this was the wrong moral decision.

"So long and thanks for that big fish that just ate us".

Impressions from TechAviv (or, "Just Do It")

When I was young, I had a foul mouth. Then I grew out of it and became a foul-mouth blog writer. Apologies for all the profanity in advance.

Yesterday was my first time ever in a TechAviv event. I've been a registered founder for about two years now. I always wanted to go to one of those gatherings, but somehow, while I've RSVPed many times, I never managed make it. There's always some important fire-fighting going on. Last night involved too many important people from the industry that I claim my company (zx900) is part of. It also had Mike Eisenberg on stage spelling out his Humus Manifesto, and to me that would have been like watching the movie based on a book that I liked. Going there got priority (and my wife OKed).
I have to admit, I’ve never had much chance to hang out in the Israeli startup/angel/VC scene, and so what I heard there caught me off-guard. The place kind of turned into a battle field with the founders on one side and the VCs in the other (and @Roi Carthy in the middle).
I decided to write a few things and offer a my perspective. I’ll most likely give reference to it in a comment on TechAviv’s board, and I’d be happy to hear your thoughts.

1. VCs invest in ventures that they think can make THEM (the VCs) a significant return on their investment. Statistics shows that only 1-2 out of every 10 startups makes it (i.e. doesn’t close shop). If they didn’t invest in your venture, there’s at least an 80% chance they were right. Probably more. No offense - it’s just statistics. Give them a break. You don't spend your savings on investments you don't believe in, right?

2. VC money is private. It’s not your tax dollars (shekels, whatever). They don’t owe you anything. They’re not the chief scientist. Just back the f*ck off. I was so lost in that discussion on Wednesday, along with some folks on stage (seemed like). I found myself sympathizing with the VC partners, which is funny, because I actually think most founders should stay away from VC money for as long as they can.

3. People have been burnt by taking an investment from the chief scientist. Remember that. Mike Eisenberg is not making things up. Don’t be caught off guard a year into the process. Having to close shop in a year from now because you've raised money in the wrong place wouldn't be more pleasant than not getting funded at all right this minute. Make sure you know what you're getting into.

4. Even more people got burnt by taking VC money. Go read the TheFunded (but don’t believe everything you read). Getting an investment from a VC would put you in a spin - make sure you’re ready for that spin, as it will not be what you had planned on when you first thought of starting your venture. Be prepared, you’re not winning the lottery here, you’re acquiring partners who have a different agenda than your own. The fact that you both want a successful exit does not mean you see things eye-to-eye.
A VC pays a million dollar for 25% in your company, let’s say. You paid nothing, and you own a larger share. Do you think both of you translate the word “success” the same way?
Again, know what you’re getting into. VC is definitely a great way to go, but it’s not a one-size-fits-all.

5. If you’re a founder, this is important, so listen up.
In today’s world, you don’t have to have seed money to get started with many ventures ($10K is not seed money, guys).
There is an alternative. You WILL need to put YOUR money where your mouth is, you’ll need to work like a mule for many months, but if your idea is as good as your pitch says that it is, refusing to do these two things means that you’re full of of it. Look yourself in the mirror. Are you willing to risk something here, or do you just want to roll the risk over to some rich guy who you think will sustain less damage if things go south?
If you’ve already done all that, and still can’t get funded, perhaps you’re one of the 80%? Think outside of the box. Maybe that box is your whole venture.... You’re an entrepreneur, you’ll think of some other great idea if you put your mind to it. Don’t get caught up in your own idea. Think, launch, and if it doesn’t work out, think again, and launch something else. Repeat till you retire. Doctor's orders for sick people who need to constantly create new things.

6. And this is just to try and show that I’m not talking out of my *ss.

zx900 participated in launching a few different ventures this year (radiorec.fm, sprophet, jobsfor10, SearchGmailBySize to name a few). We cover the "actual work" part - we build the product. I’d tell you how much money was spent in building each, but I’m afraid I might lose your attention while you’d be rolling on the floor laughing. Statistics shows that none of these ventures will be successful, but we’ll keep going till we find one or two. We like it. We like entrepreneurs who put their heart where their mouth is. We partner with them, and we hack their product out the door. The discussion on Wednesday defined us as “hackers”. I disagree with the definition - I think that we simply prioritize correctly, but we’re here, and we'll do it for anyone with his/her head in the right place. Give us a call (no more sales pitch, I swear. Stay with me).
THERE IS a different way to do things. Any web venture, any mobile venture, any SaaS venture, any social venture, and 80% of any software venture can be launched in a bootstrap. It’s going to almost kill you both financially and personally to go there without raising money first, that’s true. But if you believe in your idea as much as you claim that you do, then go do it. You’ll launch, you’ll put that balloon up in the air, see what happens, get some traction, get wiser. And then you can decide if you even want to raise money, and if so how much, and who from. A wise copywriter once said “Just do it” (no idea how it relates to shoes)
Scott Tobin said on stage “we have $750M. Come see us”. I believe him. He’ll want to see you. But you need to bring something to show them, and PowerPoint is Microsoft’s product, not yours.

Get to work !