I took a pause before I hit publish on this article, mainly because I am an alumni of two failed startups and also because it took real courage for Katherine Krugg to publish why she felt Everest failed.
Failure hurts.
It genuinely is horrible, and the recent Medium article by the Everest team should be applauded for it’s candour.
However; reading the Everest Spring Report of 2012 was horrific. The business venture was always going to be a car crash. In this post I will outline why.
We can dissect the 51 page document the Everest team issued to investors line by line to show why it should have raised massive due diligence concerns and why those investors that did pass should be pleased.
I have read it cover to cover and a have a litany of notes on almost every single page; some incredulous, many serious and a few comical.
Name dropping like a mofo to gain credibility
It is extremely important to the author of the report that they cram in all of the lessons they have cribbed from seminal business classics like Get This Done and The Innovators Dilemma or from knowledge repositories like Quora.
When asked a serious question about growth, strategy or priorities the Everest team immediately wax lyrical about Silicon Valley in an effort to misdirect the investor attention.
The following apps and their strategies are mentioned repeatedly. Often followed by “When Path did this it blew our minds” and “It worked for Twitter so it will work for us.”
- Twitter (61 times)
- Facebook (9)
- Foursquare (3)
- Instagram (3)
- Quora (2)
- Path (4)
The report is sprinkled liberally with 10+ other applications (Chill, Lift etc) accompanied by indications to the reader that Everest will, in time, also join the ranks of these titans of Silicon Valley.
In itself such a practice would not be too disruptive but it is paired with mentioning as many business visionaries as possible. The Everest Report, unashamedly, states that they are copying or recruiting their version of;
- Steve Jobs
- Gina Bianchini
- Peter Farell
- Michael Wolfe
- Tristan Walker
- Omid Korestani
- Jack Dorsey
- Lee Clow
- Om Malik
- Robert Scoble
I could easily double the size of this list but you can see the pattern emerging;
We know these people. We have read their books. We met them at a brunch once. They were successful therefore Everest will be successful.
Get your money in quick; we are turning people away!
There is very few pages which exist in the report that do not sell the success of an entrepreneur, CEO or company that is not Everest. Every page is peppered liberally.
Should anyone be reading this thinking context is everything or the classic correlation does not equal causation then let me round off the keyword analysis with a few indicator sentences which should have resulted in a red flag on the play.
A variation of the sentence
“Our friends in Hollywood / the valley / the investment world”
appears a staggering 19 times.
Those are the actual words.
19 times in a 50 page report the audience is teased with a secret cabal of business contacts just waiting with poised Mont Blanc pens ready to issue signatures to million-pound sponsorship deals.
The appendix even threatens that investors will be shut out like the
“Investor who shall remain nameless”
that was not forthcoming with his wire transfer and was denied by Everest. He would have to
“engage in the terms of the next round.”
Words that should NEVER appear in a report about your company
I have taken some of the most incredulous statements and ran a quick search to see just how often the sentiment was expressed in the Everest report.
Probably (7)
For example (13)
Down the road (2)
At some point (4)
What if…[you reader imagined this!] (3)
Hope (5)
In a month/week/year…or so (6)
The entire document is peppered with rhetorical statements imagining a world where Everest is the nexus of all adventure, athletic and health sponsorship.
Fitbit, Jawbone, Nike, North Face, Patagonia, Lance Armstrong, Bear Grylls and ordinary people (3 mentions) will bow before the integrated world of Everest dream delivery.
From branded T shirts, posters and swag to wearable devices. From adventure apparel with barcodes to the app itself through to packaged experiences; the team of 6 was going to deliver it all right after they hired the right Om Malik, Richard Branson, Tristan Walker etc.
The report reads like the enthusiastic stream of consciousness from a college student on amphetamine.
Business ideas are literally vomited onto every page book-ended with rhetorical statements and our friends are poised to fund it all.
If this report was distilled down to some actual learning followed by a serious of concrete actions or experiments then it would have been less than 5 pages.
The author would have done well to study the Berkshire-Hathaway letters by Warren Buffet or the concise communications of Michael Burry to the investors in Scion Capital.
Or even the Culture book by Zappos.
The Real Indicators which betray Everest
As I have grown older and worked in product, project and enterprise level deliveries I have grown to value two things.
- A visionary salesperson who can sell a dream
- Data to support that dream
This report is critically lacking in the latter.
Here is a list of words that do not appear, contrasted with terms that do appear.
Finance (0)
Figures (0)
Revenue (1)
MVP (1)
Rock Climb! (7)
Lean (0)
Delivery (0)
Budget (14) Thank you now we are getting somewhere…wait, what? The 14 times that budget is mentioned it refers to other established companies budgets (Nike etc) and how much they will pay Everest!
Opportunity (13) Get your money in quick!
Marketing (32)
Market (6) However, not one mention of market is accompanied by figures apart from the bold statement that people are bored of video games. I wonder who is spending the $30 Billion+ then…
Value (17) but not a single value statement or data point or even a unique value proposition.
However most telling in this report is that the word ‘Customer’ appears twice.
Twice.
The word Advisor appears 19 times.
I mentioned at the start of this article I have also felt the pain of failure; my first company was a competitor to Tough Mudder crossed with the Hunger Games and lack of capital killed it. The absence of runway and a poor business partner resulted in heartbreaking failure.
I am not blaming my partner, he would have made an excellent Operations Director but a European accelerator offered £15K in seed as long as I fired him. Their unvarnished words to him during our interview were; what exactly are you the Operations Director of?
I refused their request and 3 months later the company was dead. A lesson that has stayed with me to this day. Friends are not necessarily the best co-founders.
For the second attempt I was one of three co-founders of a mobile payments app (PandaPay) which attempted to launch alongside the other 500+ loyalty/mobile payments apps. Every investor passed including the one who wanted to sit on the board for 0.25% as an advisor. The product was floundering with no revenue and no customers and simply being kept afloat by injections from the team. It was in the end, if we are being honest, a hobby.
After I quit the team (along with one other co-founder) I received a message from some of the senior OpenTable personnel saying they liked the marketing and pitch but they had been trying to solve bill-splitting for over a year with phenomenal resources. A job offer was floated but the dream of split-bills was dead to be honest.
It’s not a painful enough problem.
PandaPay still exists in that transient layer between funded and persevering. Good luck to my old partner; I hope he gets it working.
So, I have genuinely tried to temper my critique of Everest but it is still maddening.
In the UK we have a chronic shortage of capital.
It is by far the most scarce resource; often locked in the personal wealth of old money made in blue chip or traditional industries like finance, insurance, law and property. Investors are reluctant to part with even <50K seed money without strong business plans, credit worthiness, masses of data and even then it is a coin flip.
Most will snort at the idea of an incubator or accelerator unless you are developing in the fintech space.
Which is precisely why this document really bugs me; here is a team with access to the best market, a great product idea, the best advisors and the kind of capital injection UK entrepreneurs could only dream of and they blew it all on shit like deciding which ticket-tracking software to use, rock climbing, ensuring the office was separate from the rest of the ecosystem (at double the cost) and playing football during the Scrum updates.
Who was actually working on the Product Roadmap and prioritising the features? Who was working on customer validation? Where are the user flows? Where are the screencasts? Where are the market projections? Where is the single unifying vision?
Where is any indication that the founders were attempting to build a legitimate business or lifestyle brand and not just have a play in the entrepreneur sandbox funded by investors.
“We are pretty organised; we even paid our taxes on time.”
Next to that sentence I simply wrote
WTF. Well done, pat on the back for you on not getting disqualified as a company owner and…being a grown up.
The Everest Spring Report reads like an homage to the Silicon Valley elite; not so much if you build it they will come, more like if you read the 4 Hour Week and know Peter Thiel then they will come.
Except they didn’t.
