How Not To Finance Your Company: TalkPoint CEO Nick Balletta (Part 2)

Sramana: What was your strategy to grow since you were undercapitalized and were not finding an abundance of investors?

 Nick Balletta: A former colleague of mine at MFS Communications named Doug Hickey was the CEO of a Global Center which had a similar business model but they were on the west coast. Global Center was hosting Yahoo and Netscape. They were better capitalized as they had raised some money from SoftBank. We decided to merge the companies together and then have our IPO. During the public offering process we were acquired by Frontier Communications.

Sramana: Was your entire company angel financed?

 Nick Balletta: I raised a million dollars from friends, family and angels.

Sramana: Were you able to use equipment financing?

Nick Balletta: Yes, we were able to do credit card financing and some personal guarantees. We did not take salaries for six  months. We did everything that you do in a true start-up environment.

Sramana: How did the exit work for you when you sold to Frontier?

 Nick Balletta: Pretty well. Frontier was later acquired by Global Crossing.  The Global Crossing story did not end well. In the early 2000’s the big telecoms such as Enron and Global Crossings were reset and everyone equitized their debt and we know how that turned out. However, the folks who invested money and sold their stock after we were acquired by Frontier did well. Those than held on through Global Crossing did not.

Sramana: What did you do after you sold to Frontier in 1999?

 Nick Balletta: I was in between things. There was a venture established in the mid-1990s called CNBC Dow Jones Desktop Video. It was a joint venture between Microsoft, NBC, and Dow Jones in the mid-1990s. They were way ahead of their times. They wanted to take core television content and distribute it over the Internet using NetShow. NetShow was the predecessor to Windows Media Player.

They had a pay-per-view site developed and they wanted to sell content online. That is something that we don’t think about today, but back then there was only dial-in. It was a difficult environment. I had limited exposure to that venture when I was with MFS and I knew they were struggling because they were ahead of their time. For political reasons there was no way they could shut it down. I approached Tom Rodgers and suggested that we take the business off of their balance sheet and put it into a dot-com environment and get it funded.

We were able to take the assets of CNBC Dow Jones Desktop Video and we dumped them into a startup called NextVenue. NextVenue is actually the predecessor to TalkPoint, the company I have today. We did an asset transaction and let Microsoft, NBC and Dow Jones carry a minority interest in the business. I did a series of financing for that business, first a $10 million round of financing followed by a $30 million round of financing.

We went into expansion mode and distributed CNBC content as well as road show presentations for IPOs. We got a no-action letter from the SEC and went to the big banks and started taking management presentations from the leadership of these companies and then we put them online to allow institutional investors to watch the road show pitch. Going into 1999 and 2000 we caught the IPO wave.

When the capital markets started to dry up, so did our IPO business. We diversified into research content and other content with investment banks. We branched outside of financial markets and got into pharmaceuticals and publishing. We filed for IPO in 2000 and we really saw the market start to dry up. That is when we were approached by Akamai, iBeamBroadcasting, and another company and we ended up consummating a deal with iBeamBroadcasting. We did a merger with them and I became president of enterprise services.

This segment is part 2 in the series : How Not To Finance Your Company: TalkPoint CEO Nick Balletta
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