Later, Cramer tells me that Matheson's reaction is typical, and he's worried about whether Nimbit will be able to get investors onboard if he doesn't step in as CEO. "If I go to the VCs and say I'm in love with this company enough to take it over, they'll want to put in $5 million to $12 million," he says. "But if I don't take over, they'll question my commitment. I can try convincing them that I'm committed as executive chairman, but they'll just wonder what I'll do if a great CEO opportunity comes along in six months. And I can't take the reins temporarily from Patrick, get the funding, then give the reins back to him. It will look to the VCs like I want out."
He's interested in being CEO, he says. But he doesn't think Faucher is ready to have what Cramer refers to as the Conversation. He reminds me he has a rule against butting heads with founders. The one time he did it, at a company called Software Emancipation Technology, everyone ended up miserable. The big question, then, is whether Faucher will be ready to relinquish the top title before time runs out.
April 13, 2007
Naked Fish, Framingham, Mass.
Cramer is here at this restaurant to give me an update. Three VC firms are looking into a Nimbit deal: Atlas, North Bridge Venture Partners, and Commonwealth Capital Ventures. A few others are interested. But he wants only two to chip in, so each can get a big enough piece of the company to feel invested. Meanwhile, he has managed to set the clock back a bit by taking in another $200,000 from the angels, raising total funding so far to $1.4 million. "That gives us to the end of June," he says.
And something else: He and Faucher had the Conversation two nights ago. If Nimbit gets venture capital funding, Cramer will become CEO.
He couldn't wait any longer, he says. "Every one of the VCs has asked me if I'd take the CEO role if necessary." The message to him was clear: A deal wasn't likely without him as CEO. Meanwhile, he had been stuck in limbo, not really in charge of the company but forced by his commitment to Nimbit to turn down the CEO offers that were coming his way.
The talk was difficult. "Patrick still has to get his arms around it," he says. "Until now, it's been about how I can help him be CEO, not about taking it from him." Cramer wants Faucher to start focusing on forging partnerships with other music sites and to be one of the company's spokesmen. Faucher is mulling it over.
In spite of the tension, Cramer says he feels relieved to have the decision out of the way. But he's also worried that he may have made a mistake in waiting so long to take over. "I could have executed on funding much better if I had taken over as CEO earlier," he says. "We needed to be driving the discussion with VCs, but they've been driving it. That could be hard to fix."
May 9, 2007
Starbucks, Waland, Mass.
Cramer has some good news. North Bridge and Commonwealth seem inclined to partner and go ahead with a deal. They've scheduled a joint due diligence meeting for two weeks from now. If all goes well, the meeting should lead to a term sheet.
But Cramer seems a bit anxious and subdued. He'd prefer to be fielding at least a few more potential deals, but half a dozen other firms have passed. Cramer is suddenly talking like a man who could use a time machine. "If I had gone in in the beginning to the VCs and said this was my deal, all their concerns would have been addressed," he says. "All my CEO friends said I should take over right away." He pauses. "But if I had forced things that way, it would have undermined the relationship. Or maybe I hesitated because I had doubts about Nimbit. I don't know. You can always look back and ask yourself what you could have done differently."
But Cramer intends to ace the North Bridge-Commonwealth meeting. To that end, he has tweaked Nimbit's business model. To differentiate the company from the growing ranks of sites aimed at independent musicians, he has decided to target band managers. Where other websites focus on linking musicians to their fans, Nimbit will focus on linking band managers to these other sites--and to back-end services like mining fan databases and tracking revenue. And forget viral marketing designed to pull in hordes of musicians who might contribute a few hundred dollars each of annual revenue. Instead, Nimbit will target higher-end individual customers who will bring in $3,500 a year each in revenue. "We've got a better story to tell," he says. But he's quick to add that the changes don't represent a major strategic shift. "Those kill companies," he says. "A company has to stick to its original vision until that vision proves fundamentally flawed. And at that point, the company has a very big problem."
May 22, 2007
Charles River Ventures, Waltham, Mass.
Another day, another pitch to VCs. Today, Cramer is telling Nimbit's story to partners at Charles River Ventures. He runs the new VC pitch from start to finish, presenting Nimbit as "a next-generation business platform for the music industry employing a software-as-service model, and an SMB play representing an opportunity in excess of $1 billion through the network effect of leveraging captured data." So much for poetry.
At the end, a CRV partner compliments Cramer on having presented "a solid investment case." But the partner will quickly drop Cramer a note saying CRV is passing.
May 23, 2007
Commonwealth Capital Ventures, Waltham, Mass.
It's 7 p.m., and the large conference room is packed, especially at the end offering an expansive sushi and Chinese-food buffet. Several partners from North Bridge and Commonwealth are here, as are a handful of music industry insiders to offer their feedback. These include Ron Nordin, a former venture capitalist and software executive who has been financially backing some prominent Boston bands, and Nimbit adviser Don Rose, both of whom have the groomed, slick look of aging rock stars. Also brought in by the VCs is Jon Erik Borgen, a 30-year-old singer-songwriter who manages himself and earns $22,000 a year--the sort of customer Nimbit hopes to capture, if at the lower end of the range.
