Fidget.com Overcomes VC Funding Disaster

Last June email newsletter publishing company Fidget.com thought
they'd won. Despite the fact that VCs were getting more nervous
about the market by the minute, Fidget.com got a commitment for a
total investment of $3 million. Co-Founder Sharon Gillenwater
who'd started the company working from her kitchen nine months
before, found herself swept up by the typical post-funding rat-
race. She hired 12 staff members, rented office space, and spent
cash on marketing campaigns to ramp up opt-in subscribers more
quickly. Meanwhile the stock market continued weakening, and
despite having their strongest ad sales month ever, mid-way
through November Fidget.com lost their funding.

Gillenwater found herself alone in the midst of the Holiday
season, struggling to keep newsletter issues going out in order
to meet advertising commitments. During that "tortuous" month
and a half, she seriously considered shutting the company down.
She says, "I was ready to just hang it up and say forget it, I
was so traumatized."

However, she couldn't forget the reasons she'd co-founded Fidget
in the first place -- not to get rich fast but to serve a need.
A former freelance writer, Gillenwater felt most of her
competitors paid lip service to great content, but didn't really
provide it, and ultimately didn't really care about their
relationship with readers beyond monetizing it. She says, "We
focus on excellent content. Not a bunch of links. Not an excuse
to run ads. For our writers, the real joy is to email their
readers."

So January first 2001, she made her decision. Fidget.com would
continue, but with a different strategy, "We're not going to try
to grab eyeballs by spending a lot of money. The conventional
wisdom last year was that you have to get big and crush your
competitors. Now what we're seeing is profitable businesses are
more valuable."

By the end of February 2001, Fidget.com made its way back to the
place it had been in June 2000 just before receiving VC funding:
break-even with profitability right around the corner.
Gillenwater says, "The business is finally on solid footing
again. It makes me wish I'd never even sought funding."