14 min
David Siegel – Start-ups Should Start with Selling My Worst Investment Ever Podcast
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- Investing
David Siegel is the world’s first web designer and is the author of five books on the web and business. He has started 23 companies, including Studio Verso, one of the world's first digital agencies, which was sold to KPMG. His most recent book, which is highly rated on Amazon, is called Pull, which describes the shift from powerful companies to powerful consumers. In 2016, David was a candidate for the post of dean at Stanford Graduate School of Business. In July 2017, he led a team of volunteers to the successful ICO of The Pillar Project (tagged “the easiest cryptocurrency mobile wallet to use”), which raised more than US$20 million. He’s also the CEO of 20|30, a venture studio based in London.
“From a forensic point of view, the reason most start-ups fail is failure to make the sale. So people don’t understand this; they think it’s some kind of product-market fit or engineering or the product wasn’t good enough, or it was management, or there wasn’t enough money. In fact, all those things are second or later causes; the number one cause of failure is failure to make the sale.”
– David Siegel, who has done around 23 start-ups in his career
Worst investment ever
Number 1 The first one was a US$100 million mistake. He had an ICO, and ether (cryptocurrency) was valued at around $170, or his ICO had a $21 million valuation at the time (that’s how much money he had raised). By the end of that year, he had $150 million worth of ether. In the time after the ICO, he became more conscious of money management. He knew he was at the right time to cash out, but it turned out that turning ether into cash would be difficult. He was trying to sell ether and get to dollars in any way he could, but the banks were refusing to take his ether because it was difficult to do the anti-money-laundering (AML) and KYC due-diligence compliance.
After trouble also with currency exchanges, which were saying he had to exchange back into ether again, and months of trying to find banks to accept his money (he wanted to put around $50 million into a bank account right away), he could not, because AML laws were standing in his way. While this was going on, ether was going down in value as was bitcoin. At the end of it all, ether had dropped back down to $350. David hoped it would climb again but it went down to $73. So the value of his company fell from $150 million down to $5 million.
The company is still alive and “still has the lights on”, but it has slimmed considerably. As David said: “It’s austerity time here”, but he believes his team is going to make it work in the long run.
Numbers 2 and 3 David discussed two other business investments he was involved in – a brick factory in Cambodia, and a new kind of wholesale mortgage company, the latter which failed due to the lack of “regulatory capital”.
Some lessons
Astute money a href=...
David Siegel is the world’s first web designer and is the author of five books on the web and business. He has started 23 companies, including Studio Verso, one of the world's first digital agencies, which was sold to KPMG. His most recent book, which is highly rated on Amazon, is called Pull, which describes the shift from powerful companies to powerful consumers. In 2016, David was a candidate for the post of dean at Stanford Graduate School of Business. In July 2017, he led a team of volunteers to the successful ICO of The Pillar Project (tagged “the easiest cryptocurrency mobile wallet to use”), which raised more than US$20 million. He’s also the CEO of 20|30, a venture studio based in London.
“From a forensic point of view, the reason most start-ups fail is failure to make the sale. So people don’t understand this; they think it’s some kind of product-market fit or engineering or the product wasn’t good enough, or it was management, or there wasn’t enough money. In fact, all those things are second or later causes; the number one cause of failure is failure to make the sale.”
– David Siegel, who has done around 23 start-ups in his career
Worst investment ever
Number 1 The first one was a US$100 million mistake. He had an ICO, and ether (cryptocurrency) was valued at around $170, or his ICO had a $21 million valuation at the time (that’s how much money he had raised). By the end of that year, he had $150 million worth of ether. In the time after the ICO, he became more conscious of money management. He knew he was at the right time to cash out, but it turned out that turning ether into cash would be difficult. He was trying to sell ether and get to dollars in any way he could, but the banks were refusing to take his ether because it was difficult to do the anti-money-laundering (AML) and KYC due-diligence compliance.
After trouble also with currency exchanges, which were saying he had to exchange back into ether again, and months of trying to find banks to accept his money (he wanted to put around $50 million into a bank account right away), he could not, because AML laws were standing in his way. While this was going on, ether was going down in value as was bitcoin. At the end of it all, ether had dropped back down to $350. David hoped it would climb again but it went down to $73. So the value of his company fell from $150 million down to $5 million.
The company is still alive and “still has the lights on”, but it has slimmed considerably. As David said: “It’s austerity time here”, but he believes his team is going to make it work in the long run.
Numbers 2 and 3 David discussed two other business investments he was involved in – a brick factory in Cambodia, and a new kind of wholesale mortgage company, the latter which failed due to the lack of “regulatory capital”.
Some lessons
Astute money a href=...
14 min