Blog Disses Valley Star Sarah Lacy, Ridicules Slide

Henry Blodget | January 21, 2008 7:51 AM

Aging, LA-based digital news blog PaidContent lashes out at star Valley BusinessWeek columnist, Yahoo TechTicker anchor, and author Sarah Lacy--calling her a "doting, in-awe" poseur who's just pretending to be an insider.

Why the swipe? A few theories jump to mind. The boyscout .org just says it is offended by Sarah's explanation for Valley start-up Slide's $500 million valuation.

We haven't seen the Slide numbers the folks at Fidelity and T. Rowe Price considered when taking a chicken-feed $50 million flyer on this future IPO, but we just can't get that hot and bothered by a $500 million valuation. Slide's growth is compelling, and if it delivers, it will be valued in the billions.

In any event, having worked with Sarah, we are pleased to report...she really is an insider!

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maria gibson (URL) said:

Sep. 27, 6:31 AM

i figured i'd do it here since henry was kind enough to defend me. while bloggers and journalists can frequently disagree with things i write, rafat has always viciously personally attacked me. i have no idea why. i asked him about it at Web 2.0 in 2006 and he sheepishly admitted he'd crossed a line and apologized. acer travelmate 2300 battery
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Henry Blodget said:

Jan. 23, 2:24 PM

Thanks, Steve. So Series B has higher liquidation pref than Series A, etc? If so, my mistake. I thought they had same.

Steve said:

Jan. 22, 5:44 PM

Henry, unless Mayfield and gang are WICKED smart and touch and T.Rowe and gang are WICKED stupid and weak, the always always always rule of thumb (when it comes to sequential preferred share sales) is: last money in, first money out. At the least. Often there's more.

So yes, it would be huge boiling news in venture capital at least if a later stage investor was in any any way subordinated to an earlier stage investor.

Sarah Lacy said:

Jan. 22, 2:11 PM

i was going to stay out of this, but a few people have asked me to weigh in. i figured i'd do it here since henry was kind enough to defend me. while bloggers and journalists can frequently disagree with things i write, rafat has always viciously personally attacked me. i have no idea why. i asked him about it at Web 2.0 in 2006 and he sheepishly admitted he'd crossed a line and apologized. i didn't accept it because i felt it wasn't genuine. no surprise, now he does it again.

first off, as a reporter, i'm not sure when i claimed to be an insider? at any rate, i find it more than ironic a blog not even based in the valley is calling ME a poseur, when i've lived here and reported here for eight years. it's hard to get upset about something when it's an absurd allegation and clearly fueled by some bizarre vendetta.

oh, and let me issue this spoiler alert: Rafat thinks my book sucks too. never mind he hasn't read it and it doesn't come out until may.

John C. Smith said:

Jan. 21, 9:38 PM

It's a little pony of Rafat to send Staci over to slap Henry back. (Same difference if Staci came over to comment on her own volition. Any beef here should be Rafat's.)

This is a pretty irrelevant and inconsequential debate. However it's hard not to weigh in against PC's holier-than-thou "anti-hype" pose.

First of all I consider PC to be a generally good and useful site. (As I think SAI is.)

And I think it's fair to say that Rafat has a (usually, but not always healthy) skepticism about early-stage new media companies; and that Lacy can be, in at least a couple of fairly clear instances, credulous when it comes to same.

However Rafat (and PC in general) certainly has its weaknesses. Namely that the site principals will believe anything any EVP or higher exec from big media (LA or NYC based) tells them, and are particularly and uncritically fawning in person and in interview settings. (Unless said MSM exec has to cancel their speaking gig at some PC conference last minute, or is guilty of some other monumental slight.)

Hard to say which is a more problematic flaw. Given the way innovation is transferred through an industry, it's probably more healthy and productive to give the benefit of the doubt to the insurgent rather than the incumbent.

Either way -- glass houses...stones.

Henry Blodget said:

Jan. 21, 5:21 PM

I wasn't suggesting they didn't buy preferred--almost all private rounds like this are preferred. My point was that Mayfield, et al, have almost certainly have preferred, too. The liquidation preference is ahead of the common, but I doubt it's ahead of the existing preferred. Is that what you're suggesting?

Henry Blodget said:

Jan. 21, 4:38 PM

Sorry for the confusion! I didn't realize "24/7 international news organizations" were in the business of insulting competitors who scoop them.

Peter Kafka said:

Jan. 21, 4:20 PM

Paidcontent's Staci Kramer responds (apologies for the MT problems, Staci):

Snide can be fun but facts would be good too .. yes, our company, ContentNext Media, is headquartered in Santa Monica but we are a 24/7 international news organization with four sites -- not one -- and full-time staff in New York, other U.S. locations, the UK and India, an event business and more.

Also, while Rafat did comment about your Techticker colleague, the bulk of the post you describe as "ridiculing" was actually just quotes from BW. You raise some questions about the reasons for such a post. It all boils down to this: we're anti-hype. Always have been.

Staci D. Kramer
Executive Editor
ContentNext Media (paidContent.org, mocoNews.net, ContentSutra, paidContent:UK)

Steve said:

Jan. 21, 4:18 PM

Henry, no liquidation preference? You must be joking. Are you saying Fidelity and T.Rowe bought common shares? NFW. They bought preferred shares. And why are they called "preferred shares"? Because at the dire most minimal least, they get a liquidation preference. Still an insane and silly valuation and funding, but not THAT insane.

Caprityme said:

Jan. 21, 4:02 PM

Wow, Henry! Who knew the bar for attaining Silicon Valley "insider" status was that low.

Henry Blodget said:

Jan. 21, 12:31 PM

No idea about specific terms, but I doubt Mayfield et al would have allowed liquidation preference. I suspect Slide and existing investors view this as cheap insurance money (these firms almost certainly less aggressive on price than VCs and other financial buyers would have been).

The fact that Fido and T.Rowe bought suggests that the company does plan to go public (they're crossover buyers, not private-market investors). I suspect existing investors just thought "hey, economy going into tank + lots of competition, might as well capitalize on current mo."

consider this said:

Jan. 21, 12:11 PM

Henry - was there a liquidation preference (e.g., investors get money out first on any sale)? What other "interesting" terms were there?

Without this information, a "500m" valuation is meaningless. And with 70 or so employees, 50m dollars isn't going to fund (major) acquisitions, it's going to fund operations thru the (presumably imminent) recession -- perhaps one of the reasons it was rushed?

Of course if they get a 2b liquidity event, then everything is moot :)

Worst case is slide just sold a put against their company, at the expense (dilution) of current employee/shareholders (who probably have no idea what just happened, and are all "rah rah 500m valuation").

Blog Disses Valley Star Sarah Lacy, Ridicules Slide

Henry Blodget | January 21, 2008 7:51 AM

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