Saturday, June 16, 2007

Bessemer Bamboozled?

Valleywag is delighting in a string of negative press accounts this week about Lifelock, a company we funded late last year. The online gossip column goes so far as to say that Bessemer and our co-investor Kleiner Perkins Caufied & Byers were shamefully bamboozled by the company's founder Robert Maynard.

Normally I don't respond to vicious personal attacks--after all there are so many, Who Has Time For This? But to the extent that anyone questions Lifelock's integrity and consumer utility, I feel obliged to weigh in as an insider with some answers...

Is Lifelock founder Robert Maynard a bad guy?

Robert suffers from bipolar disease, a serious mental health disorder that invariably leads to impaired thinking and erratic behavior when untreated. Sufferers of bipolar disease commonly have manic episodes that end with dire financial and legal consequences. Anyone experienced in bipolar (as I became years ago, when someone close to me was diagnosed) understands the negative behavior for what it is--a treatable medical symptom. It is no more a character flaw than President Roosevelt's polio.

With a diagnosis and proper treatment, Robert has built his third company responsibly. Self-aware, he recruited a professional team and an independent board of directors from which he disqualified himself. To protect the company, Robert retained no control through ownership, board participation, or office. During my time as an investor in Lifelock, Robert has impressed me as a brilliant, creative thinker whom other Bessemer entrepreneurs continue to call upon for advice. Robert is kind and thoughtful, and after 15 years as a VC, I haven't seen a founder more loved and respected by his company's employees. (A former U.S. Marine who champions liberal causes, Robert reminds me of another great entrepreneur, Dan Farmer.) Though it would be more profitable to distance myself from such a controversial figure, nonetheless I am proud to call Robert my friend.

Was Bessemer bamboozled?

Yes, many times. But not by Lifelock.

During our investigation of the company, the CEO was up front in every way, including disclosure of Robert Maynard's past, his bankruptcies, his medical condition, and the FTC order against his participation in the credit repair industry (where Lifelock doesn't play). I understood the baggage Robert Maynard has been carrying with him--he isn't the first entrepreneur treated for bipolar disease whose startup I have backed, and he may not be the last.

Furthermore, we feel anything but bamboozled. The Company's financial performance has more than doubled the revenue and cash flow forecasted in Lifelock's business plan. Customer churn is way below any subscription service I have seen, and persists at less than half the rate Lifelock had projected.

Was I embarrassed, as Valleywag insists?

Yes, many times. But not by Lifelock.

It's actually funny (and a little flaterring, really) to see Valleywag go after me so personally in their column, but I'm surprised they couldn't dig up any better dirt on me (really, they just missed the whole atheist angle). Yes, it's true that I'm a director of the "troubled Flock", and it's true that Flock is behind schedule releasing the best browser software in the world (which you'll all get your hands on later this year). It's not true that I'm leading a round in TechCrunch (but I'd like to, Michael, if I can).

Can consumers trust Lifelock?

As a veteran investor of Verisign, Postini, Counterpane, Cyota and several other security service providers, I know what a challenge it is to overcome the suspicions raised by sensational journalism, and the allegations of competitors who covet success. Lifelock embraces every practice we can to operate transparently and in the best interest of the customer--including ISO 27001 certification of our call center and data infrastructure--and surely we still have many lessons yet to learn. But even when we do, we will always have to endure conspiracy theories.

So rather than fight the storm of bad press, Robert Maynard simply resigned from the company this past Monday. It's a shame to lose the vision and day-to-day involvement of a great founder, but I share Robert's hope that his past will no longer be a lightning rod for Lifelock's detractors.

I subscribed my own family to Lifelock long before I invested. From 1995 to 2005, there were over 8 reported breaches of personal credential data for every American adult, and so it's reasonable to fear ID theft. As I've explained, nothing protects me better than Lifelock's rigorous maintenance of fraud alerts for my credit profiles.

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  1. Anonymous11:53 AM

    It's stunning to me (and worrisome) how these yellow e-rags like ValleyWag post garbage galore, complete with unwarranted assumptions, and receive such wide dissemination and (apparent) influence.

    Every ValleyWag (or similar source) story I have read about a business event I have been a part of, has been so erroneous that I assume the same must be true about those stories whose events I am not familiar with.

  2. That's the problem with mental illness as a medical condition, though: it crosses over to affect cognition. Anything becomes permissibly forgivable at the one extreme. Even Szasz (Myth of Mental Illness fame and darling of the Scientologists) argued that the responsibility for behavior still rests with the afflicted by excusing themselves or making certain to take their medications.

    So did the risks really outweigh the upside? Hardly, there should have been other ways to compensate him for early involvement and push him out of the picture.

  3. That is the problem with these whistle blower style publications. When there nothing to report, that start making up garbage and try to ruin honest people like David here.

    What business is it of theirs what company Bessemer determines as worthy of investment?

    None. They just make money on gosip and rumors and when "news is slow" they make up junk.

    Glad to see you handle this so well David. Don't let these fools slow you down one bit.