How one company got outside money -- and still kept control

以下係一篇有關於一個我很喜歡的網頁的成功故事
原來今天已經賣了盤了
共勉之……

Owned and Operated

How one company got outside money -- and still kept control.

http://online.wsj.com/article_email/SB120533633272930493-lMyQjAxMTIxMDE1NTMxMzU2Wj.html 

MARCH 17, 2008.
By MANEET AHUJA

The founders of Vault Inc. have made a career out of giving advice. They got their start writing guidebooks for students about colleges and internships, and later branched off into helping job seekers.

But entrepreneurs can also learn a lesson from these partners -- about handling investors.

As their business grew and changed, the Vault team sought out venture capital a number of times. But they made sure they didn't lose control of the company along the way. They were careful to seek out like-minded investors who didn't want them to change their business plan. The founders also structured the venture deals so that they ended up with the majority of board seats. And when they got the chance, they bought back some investors' stakes -- leaving the founders in near-complete control of the company.

These lessons are critical for small companies. Often, up-and-coming firms are so hungry for capital that they sell too much of the farm too fast. And then they discover that the new owners of the company have very different priorities -- and have no qualms about imposing them.

"Some less-reputable VC firms have been known to put pressure on start-ups to grow faster, expand into what they believe to be more marketable business lines and in some cases seek control when things do not work out," says Jason Mendelson, managing director of early-stage venture firm Foundry Group LLC.
Vault got its start in 1996. The founders, Mark Oldman and brothers Samer and Hussam Hamadeh, had written a number of best-selling guidebooks for students, such as "America's Top Internships" and "The Princeton Review Business School Companion." Now they wanted to target a new market. Using employee surveys, they would compile insider profiles of companies that job hunters could use for research.

"There was no real way to get inside scoops on industries and employers unless you knew someone in the field -- we wanted everyone to have that edge going into the interview," says the 39-year-old Mr. Oldman, senior vice president for enterprise licensing. Producing the guides, he adds, was a way to "avoid the rat race by writing about it."

The partners raised $200,000 from friends and family and set up shop in a New York apartment. But less than two years later, they realized they needed to change their plan of attack. The Internet was coming into its own, and they decided they needed to exploit the new medium. So, they started hunting for venture capital to build up their fledgling Web site and hire staff.

The experience wasn't encouraging. Some potential investors simply didn't believe in the idea; others wanted significant changes before they handed over capital. For instance, some wanted Vault to focus on providing company information for the business-to-business market -- a big buzzword at the time -- instead of consumers. Still others thought the partners should sell space for job postings instead of offering insider information.

The partners decided to hold out, using revenue from their existing products to keep them afloat. "Luckily, we were never in a desperate position that required us to accept money at any price and on any terms," says Hussam Hamadeh, 37, senior vice president for e-commerce.

He adds, "As with any start-up, we had many VCs and angels who rejected our business plan. You simply have to keep executing on a model, bringing in clients and revenues and generating growth, and eventually, some financing sources will believe in you."

When those sources eventually showed up, some of them weren't ordinary venture firms: They were divisions of large corporations. These investors typically take a different approach than conventional venture firms, says Mr. Hamadeh. They usually aren't as interested in quickly building up firms and selling them off, and they don't demand onerous amounts of control. Instead, he says, they treat the investments more like partnerships, looking for ways that their different businesses can work together.

For instance, Mr. Hamadeh says one of the venture deals was with Hollinger Capital, an arm of media company Hollinger International Inc. As part of the investment, he says, the company provided Vault with ad space in some of its newspapers and online properties. (Hollinger managers at the time of the deal couldn't be reached for comment. The company's current leadership couldn't confirm Mr. Hamadeh's account and declined to comment.)

"There was more patience, more collaboration, and sharing of ideas both ways," Mr. Hamadeh says. "We were not being as dictated to as [with] a standard financial VC. We were not replaced or threatened with replacement as executives."

Moreover, by not allowing any single investor to own a majority stake, Vault's founders ended up with an unusual amount of control over the company. Through two rounds of financing in 1999 and 2000 -- which brought in a total of $20 million -- the Vault team insisted on deals that gave them the majority of board seats.

"We met many VCs who refused to accept our requirement that we keep control, but we refused to take the next step with those VCs," says Samer Hamadeh, 38, chief operating officer.

This arrangement helped the founders make quick decisions and implement new ideas virtually immediately. When some of their marketing spending wasn't generating returns, for instance, they were able to cut it rapidly -- instead of debating the idea with outside investors.

They were also able to ditch those investors -- and take even firmer control of the company -- when they had the opportunity. Following the tech bust in 2001, one of Vault's shareholders approached the company about buying out his position on the cheap so that he could claim a tax loss for the year. The trio jumped at the offer. They even found other shareholders who were happy to take the tax loss rather than wait for the industry to bounce back.

Finally, last September, the partners decided it was time to give up control. Over the past few years, Vault had started partnering with companies to supply official inside information for the site, and began to offer career services such as message boards and résumé reviews. The company had also broadened the site's focus to include information for students.

But the founders wanted to take the company global, and expand its services even further. So, they sold a majority stake to a media-focused private-equity firm, Veronis Suhler Stevenson. Eric Sorenson, former president of MSNBC, came on board as chief executive officer, and Eric Ober, former president of CBS, headed up a new effort: providing insider recruiting videos about companies and schools across America.

"We needed the next level of capital funding to transition into a global brand, and VSS shared our vision," says Samer Hamadeh. "Together we're creating Vault 2.0."

—Ms. Ahuja is a producer at CNBC. She can be reached at reports@wsj.com.