Trouble in the House of Rothenberg(backchannel.com)
backchannel.com
Trouble in the House of Rothenberg
https://backchannel.com/mike-rothenbergs-vc-firm-was-young-splashy-and-loaded-with-cash-now-it-s-all-come-crashing-down-e76fa076c7c5#.7227ltm2f
14 comments
This is a great list of all the things you shouldn't do. It's all ego and no substance.
Just absurdly irresponsible with other people's money...
> Many investors say they did not know — nor was it disclosed in annual reports — that he was founding and funding his own business with their dollars, despite the fact that the investment was roughly 50 times the size of the seed investments the firm normally makes.
> Many investors say they did not know — nor was it disclosed in annual reports — that he was founding and funding his own business with their dollars, despite the fact that the investment was roughly 50 times the size of the seed investments the firm normally makes.
>He set out to bolster his new firm with spectacular events: BBQs with tutu-ed ponies or luau dancers, puppy parties, luxury boxes at Warriors and Giants games, a sponsored race car, and an all-day founder-and-investor soiree that involved renting out the Giants stadium every year.
was the luau party held at Alcatraz?
was the luau party held at Alcatraz?
Boost VC, the other accelerator focusing on VR, is scrappy, focused, and cares only about the startups it's funded. Quite a contrast.
edit: This Rothenberg article sounds pretty damning, but also reads like a hit piece -- which makes me wonder what the other side of the story might be. I don't know anything about Rothenberg personally.
edit: This Rothenberg article sounds pretty damning, but also reads like a hit piece -- which makes me wonder what the other side of the story might be. I don't know anything about Rothenberg personally.
Is it correct that, from my reading, the authors did not speak to Mike Rothenberg before publishing this piece? If so I'm forced to categorize this more as gossip and speculation than as balanced investigative journalism.
It's clear that there are problems. But I'd rather see problems identified and corrected than aired as dirty laundry.
It's clear that there are problems. But I'd rather see problems identified and corrected than aired as dirty laundry.
Read all the way to the end.
> At 6:30 on a recent Wednesday night, Rothenberg offered to give one of Backchannel’s reporters, Lauren Smiley, a tour of his Folsom Street office. I rang the doorbell, but there was no answer. An inbox check yielded an email just then from Rothenberg’s crisis communications flack: “Mike just called me and is slammed with some deadlines. He’d love to show you the office but overcommitted himself.” Soon after, an executive assistant I recognized from LinkedIn answered the door, and asked if I had an appointment. She showed me upstairs to the lobby. Rothenberg came out briefly in office casual to politely say he was on a call with an investor, and retreated to his corner office...
Waiting for Rothenberg to get off the phone, the assistant handed me a HTC Vive VR headset, and cued a video by Wevr, one of the fund’s portfolio companies. Fitting it over my head, I found myself undersea in an underwater cage... I took the headset off, and was back in a nearly abandoned Rothenberg office, where I told the assistant I’d show myself out. Rothenberg remained behind his office door, talking away.
> At 6:30 on a recent Wednesday night, Rothenberg offered to give one of Backchannel’s reporters, Lauren Smiley, a tour of his Folsom Street office. I rang the doorbell, but there was no answer. An inbox check yielded an email just then from Rothenberg’s crisis communications flack: “Mike just called me and is slammed with some deadlines. He’d love to show you the office but overcommitted himself.” Soon after, an executive assistant I recognized from LinkedIn answered the door, and asked if I had an appointment. She showed me upstairs to the lobby. Rothenberg came out briefly in office casual to politely say he was on a call with an investor, and retreated to his corner office...
Waiting for Rothenberg to get off the phone, the assistant handed me a HTC Vive VR headset, and cued a video by Wevr, one of the fund’s portfolio companies. Fitting it over my head, I found myself undersea in an underwater cage... I took the headset off, and was back in a nearly abandoned Rothenberg office, where I told the assistant I’d show myself out. Rothenberg remained behind his office door, talking away.
I read the whole piece. Not buying it.
1) When did the authors reach out for comment
2) What was the response
The authors craftily imply that they reached out, but did they?
>At 6:30 on a recent Wednesday night, Rothenberg offered to give one of Backchannel’s reporters, Lauren Smiley, a tour of his Folsom Street office.
Did they just ask for a tour of the office? Was this last Wednesday? Did they reach out for comment subsequently?
Furthermore, I can't Imagine that Mike is not actually completely swamped . . . Asking to reschedule is not refusing to comment.
1) When did the authors reach out for comment
2) What was the response
The authors craftily imply that they reached out, but did they?
>At 6:30 on a recent Wednesday night, Rothenberg offered to give one of Backchannel’s reporters, Lauren Smiley, a tour of his Folsom Street office.
Did they just ask for a tour of the office? Was this last Wednesday? Did they reach out for comment subsequently?
Furthermore, I can't Imagine that Mike is not actually completely swamped . . . Asking to reschedule is not refusing to comment.
Yeah there's no bubble in tech.
Downvote me all you want. Something nasty is coming in tech startupland.
I didn't downvote you, but I suspect the reason you were downvoted is because your comment isn't insightful and doesn't add to or create any discussion. It's a kneejerk, oft-repeated one-liner.
My comment isn't much better from a discussion standpoint. Just helping clear up what may be confusion.
My comment isn't much better from a discussion standpoint. Just helping clear up what may be confusion.
So what. 95% of the poseurs doing "angel" investing are in it for the scene, the cachet, the parties, the "networking", the name-dropping etc etc. Rothenberg gave people what they wanted....a very exclusive club with ridiculous membership fees and all of the very visible attributes that let the "LPs" signal to their peers that they were "Valley players".
That sounds like the descriptions of the IPO purchasers (being the cash out providers for insiders) just before the last dotcom crash. They didn't know what it was but they wanted to be invested in tech.. anything they couldn't understand was going to have an absurd ROI, putting them in the rich crowd.
Like the nature of the dot com crash, if it ends like a pyramid scheme, that reflects worse on the state of finance and analysis of our industry than on the last "suckers" in another tulip season.
Like the nature of the dot com crash, if it ends like a pyramid scheme, that reflects worse on the state of finance and analysis of our industry than on the last "suckers" in another tulip season.
It allows you to raise money, get deal flow and network with what looks like almost no effort.
It also allows you to get way in over your head.
I mean, this could describe maybe 10% of hedge funds that get started. Charismatic young leader, raises money, has a good year or two and then success gets to their head.
They take their eye off of work and start believing their own hype, they throw lavish parties, and fly in private jets.
Then the CFO quits, investor questions aren't answered in a convincing manner. Requested documentation is harder to find that Trump's tax return.
If you wanted to look for fraud in a fund, you could probably get to 80-90% success rate just by looking for
1) CFO or general counsel resignations.
2) CEO's who go from spending 16 hours a day working to 3 days a week working.
3) A pronounced decrease in fund transparency in the form of financials and reporting.
This is why countries have accredited investor rules. Fraud, even if it doesn't start out that way, too often creeps in when people who have initial success find that sustained success is much, much, much harder to keep up.