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1) the senior partners were not all aligned, with one whose name figures in previous comments lording it over others;
2) portfolio companies that were profitable and poised for further growth and success were scrambling for survival following the intervention of certain partner(s) (see previous comments)
3) feedback from management and entrepreneurs about the partners was uniformly negative, scathing about a co-founder who had a talent for snatching defeat from the jaws of victory. His name? See previous comments :-)
I saw some people dancing with joy the last week. They all have experience interacting with Orsak and rejoice in his downfall. Schadenfreude. The only thing sad about this is the damage he caused-and how quickly!-to entrepreneurs and their dreams, and to his own partner's worldview.
Perhaps if they'd asked for $800m or $1bn they'd have already closed on it!
Too bad James, Colin, Tim, and David didn't get the success they deserved. The Merc's comment about noting partners yelling at each other several years ago and the grapevine are quite aligned. One partner was more interested in being acknowledged as a co-founder and being ranked by Forbes as someone with the "Midas Touch" than actually helping Worldview succeed. Worse, his was the Touch of Death.
A key takeaway from this is that the outcome--success or failure--is very influenced by our choice of partners. One bad apple is enough....
#2 are VCs that are not nice and successful. Count their abrasiveness as the price of success.
#3 are VCs that are nice and unsuccessful. Working with them may not lead to success but it won't be abusive.
#4 are VCs that are not nice and unsuccessful. The worst of the lot. Guaranteed failure and guaranteed abuse. Are you a masochist to want that?
For Worldview the comments so far indicate Wei and some other partners were spread over categories 1-3 while Orsak monopolized #4. Gives me the shivers to think of companies that await his kiss of death and abuse.
I agree with your catagorization. Given that firms like Vantage Point dominate almost single-handedly the #4 catagory, why do their investors continue to give them BILLIONS? BTW, I know about their qualification from personal, direct experience.
I don't have any experience with Worldview, but it looks like the end was well-deserved.
http://hosting.mansellgroup.net/enablemail/ThomsonNewLetter/HostedWires/NewsLetters/july28-06.htm
I have a hard time understanding why anyone would take as fact some of the anonymous assertions above. In Silicon Valley, everyone has an agenda, people are out to take other people (at least their perceived enemies or competitors) down, and to boost themselves or their allies. So regarding the commment above about Crescendo, we talked with Crescendo's David Spreng yesterday, and he said it couldn't be further from the truth. His firm is doing well, he said.
Don't me wrong. Comments are valuable, and generally contibute to the debate. Just be aware of the agendas!
LPs� due diligence started with a recent investment Cemaphore, an old investment Cosine, and several others. In 2000-2004 we heard of portfolio companies poised for success with impressive revenues and margins. 2005-2006, in a vastly improved tech economy we saw those same companies and new investments struggling for survival. We confirmed Mike Orsak�s active involvement in these �turnabouts� and simply lost confidence in him and a partnership that included him. The absence of a firm hand at the wheel contributed to an unmanaged Mike and the departure of other GPs, and this also disturbed us.
Some of the prior investments can still be led to profit. They may require further watering to achieve a successful exit for shareholders benefit. To invest further in existing portfolio companies LPs need to see leadership now on long-pending items (e.g., eliminate Mike Orsak�s involvement in the firm) and adapting to new circumstances (rekindle the fire that made those investments successful at one point and likely to succeed ahead, repair/rebuild and win back the trust of the entrepreneurs, employees and LPs).
Can James Wei, Susumu Tanaka, and the various partners make those decisions?
What I find more compelling though, is the obvious misrepresentation of the facts in both the PE article and Matt Marshall's followup. Worldview, if you follow James Wei's comments in a follow up story this week, is by no means shutting its doors. What has happened, and while this is not a good sign, it definitely is not an absolute death knell, is they failed to raise the requisite amount for the fund, and decided to shelve that fund for the foreseeable future. To characterize this as Worldview shutting their doors is irresponsible and sensationalist journalism.
Does this mean their might be changes at Worldview prior to going back to market - one can surmise that may be the case. However, Wei indicated they still have $200mm to invest - based on how VCs are compensated via management fees, that appears to be plenty to keep Worldview up and running for a few years.
Good VCs are motivated by carried interest, not management fees. Carry is zero owing to reasons captured in the articles and comments. What does it say about a VC sticking around for management fees in the face of the poor performance and no carry? Read up on clawbacks, performance guarantees, penalties.
We know Mirapoint well and invested in it with confidence through Worldview since 1998. Events there played no small role leading to our losing confidence in the partnership. The gap between the new management team�s results and promises is always widening, their credibility with us is low and decreasing, and their need for financing explains their support of the partner on their board. We aren�t surprised by these self-serving agendas.
Barring significant changes including personnel LPs will not ante up for additional investments and management fees. With those changes better returns are possible and with better returns Worldview V becomes probable in a few years.
Bashing people's reputation is a big NO NO. What is being perceived is arrogance is not a crime. What is a crime is when someone is being unethical.
In this case, people slandering a person's good reputation is a crime.
My personal dealings with Orsak has been very solid and he's a very ethical man in a world where many people are not.
After several months of trying to raise a fund Worldview pulled it. General partners, principals and other employees left the firm over the last two years. Mike Orsak's role in the firm changed last winter. His own statements and admissions to the press confirm he doesn't support the firm's growth and success and did not cooperate in raising a new fund. Worldview III and IV are very much underwater and not likely to see air. Media professionals witnessed partners yelling and screaming at one another.
What does this say? Big changes needed for investors in current funds to invest remaining funds, pay management fees, and support partner paychecks and lifestyles.
Some commended Worldview partners they worked with. Credit where credit due. Why are a few getting worked up, accusing the media of false reporting to show support for someone who was central to the current mess? support him without accusing the world of bias and slander.
Thanks, finally, for providing some specifics (only one positive exit since March 2000). At least now we can take this to other side and ask them about it.
Mike and I extracted maximum value from troubled situations and shared some with management that cooperated compliantly. This process always made Mike a hero to management and consultants (and they sing his song) and for a while his partners and LPs. Employees and other investors in those companies were left by the wayside.
The tech collapse created a few of those difficult situations. Most however were created or worsened by Mike's involvement. We parted ways over the diving catches, strikeouts, and differences in opinion over the ethics and morality of our actions.
Worldview's LPs finally woke up. Their decision to not invest is unambiguous about Worldview and Mike.
I don't know if others here understand that of 34 companies invested from Worldview IV, 19 are alive but most living dead. 5 died. 10 were acquired but here's the kicker, only 3 for (little) more than the total money that went in.
Explains why investors said more than "Ouch!"
James Wei: NVidia, Broadcom and several other hits. Colin Savage and Tim Weingarten: FineGround, IntruVert, and others that sold for more than they raised.Not great but ok.
Mike Orsak: Fifteen+ years experience as a venture investor. Name one company he invested in that has lived ten years. Seven years? Five? The answer is: None. Name one success. None. Consider now the busts: Snowball, MetaTools (which became MetaCreations and now Viewpoint), Cosine,numerous others including acquisitions sold for less than money in. With his Midas Touch entrepreneurs don't need competitors and investors tech recessions to kill them. Ergo Worldview's predicament.
Last year Orsak said he was taking on a reduced role (see PE Weekly and VentureAlert). It disturbs he is still on the website as a GP and on board of companies placing them at risk.
Credit the journalists and their professionalism for picking up on this.