Derek Powazek has a distressing post about what, sadly, is a fairly common small-business story: Powazek and his wife, Heather Champ, started a cool little photography magazine built around contributions from a community of users. Both of them have a little experience in the online community-building area, and their magazine, JPG, was a smart experiment in combining the talents of online contributors to produce an offline (i.e., paper) magazine. (I’ve known them both for several years and have high respect for their work.)
A little startup company formed around JPG, Powazek formed a partnership with a friend who’d helped build the site’s software, and they took some investment from a tech-publishing mogul. I think you know where this is heading: there was a falling out, and Powazek and Champ have now left the company and the magazine. (There’s a Metafilter discussion.)
As Powazek tells it (and Champ confirms), the dispute was chiefly over their friend’s desire to expunge the record of the first six issues of the magazine’s history. On the face of it that’s a dumb idea. Presumably the partner who now runs the company will step forward and tell his side of the story, but it will take a lot of telling to make that look like anything other than a petty or stupid move: At best it places some wrongheaded notion of market-positioning above honesty, and at worst it’s an effort to revise the company’s story for financial/ownership reasons. A publishing company’s archive is its history. With Salon, we’ve kept our earliest issues live on the Web in all their crude glory; a lot of faces have come and gone since then, some acrimoniously, but we’ve never taken down a whole issue or removed an executive’s bio.
No matter how you cut it, this sort of fight sets a company on a lousy course: users suspect foul play, and often they’re right. The emotions are like those in a messy divorce. The people involved feel it’s difficult to tell the whole story; sometimes (as is the case with Powazek) they still have a stake in the company they’ve left, and are torn — they want their baby to prosper but they’re angry at no longer having custody.
Powazek draws the right lessons from his experience (roles and responsibilities — like, “Who’s the CEO?” — really matter; “communication between partners is mandatory”). But the larger lesson, I think, is that, no matter how idealistic you are when you start a company, the moment you take on investors, everything changes. You may still be an idealist, but the people around you are thinking about maximizing return. No matter what they say, you’d better assume that — or you’re likely to be disappointed, or even cheated.
LATE UPDATE: In the last couple days Paul Cloutier (Powazek’s business partner) and Jason deFillippo (the company’s CTO) have both posted about this story from the other side, and, no surprise, there are multiple perspectives here, and it’s nearly impossible for an outsider to get a clear fix. (Derek has more too.) It’s sad to see all this bad blood flow.
[tags]startups, publishing, online community, derek powazek, heather champ, jpg magazine[/tags]
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Your last couple of sentences distill the essence of business, any business. Unless you’re a nonprofit, and sadly, not even in most cases, return on investment is the primary if not the sole consideration. Working with other people’s money means they now have a say, and it can mean they have more of a say than you do.
A corrollary to this is that the ideals of an individual can only map to the organization as far as their financial stake allows. If it’s you and your close friends, the company can be anything you like. A publicly traded company, on the other hand, must return value to shareholders. All other considerations are secondary at best.
I’m *really* interested in hearing the other side of the story.
How did he not see the bad PR potential?
This meme is all over flickr today:
There’s a good overview of the other side of the story here.
Thanks. I’ve added some links above.