Zaarly finally announces funding
Peer-to-peer commerce play raises $14 million from Kleiner and adds Whitman to board.
When I first talked with Zaarly CEO Bo Fishback (see ), he told me he had $1 million in "announced" funding, wink wink. "There's more?" I asked? Yes, he said, he had millions of dollars "waiting at the door" for his peer-to-peer commerce startup. But he was keeping it a secret. Even from his employees.
Fishback is a big personality. He's a passionate, aggressive guy. This could have been just bluster. Certainly I've heard this kind of BS from entrepreneurs before, sometimes just weeks before they start missing payroll.
Today Fishback announced that Zaarly has closed $14.1 million in a series A round, led by Kleiner Perkins and Sands Capital. Also, Meg Whitman, CEO of HP and formerly eBay, will join the board.
It's likely that Fishback was playing investors off each other when he and I talked, trying to get the best deal or people to attach to his company. It's also possible the only thing outside his door was a line of creditors.
But in Fishback's case, I tend to believe. His work with the Kauffman Foundation (helping startups get off the ground) does not mesh with a man who fibs about material information. Fishback himself is eminently fundable. And his reasoning for not disclosing the state of his company's finances makes sense. He told me he wanted to keep the people working on Zaarly hungry, maybe a little afraid, and definitely focused on building a great and innovative product. Not on counting their stock options.
Many other CEOs I know would have said to their employees, "The money will come, don't worry about it. Trust me."
Zaarly is a big bet. Fishback is trying to build a platform for ad-hoc, consumer-to-consumer business. It's the kind of idea that you have to be big and aggressive to go after, and for which you need developers and other employees who are a little crazy and Messianic themselves. So while it's a big gamble to withhold information about the state of your business--even if it's good news--from your employees, I think in Zaarly's case, given the types of people he needs on his team, it works.
Zaarly is not the only platform of its type being built. There's TaskRabbit, , and other consumer-to-consumer business plays. The whole concept of consumer commerce and consumer resource leveling is getting increasing traction from investors and entrepreneurs (see also AirBNB, , , etc). The field is expanding; I've got more pitch interviews in this space scheduled, and will report on them as they happen. It's going to take some showmanship, and a lot of muscle and paranoia, to win in this field.