How Not To Finance Your Company: TalkPoint CEO Nick Balletta (Part 3)

Sramana: What was the story behind iBeam? Why were they so interested in acquiring your company?

Nick Balletta: iBeam Broadcasting was involved with media entertainment. They had a similar concept as Akamai with an edge cache network except instead of using terrestrial distribution they used satellite distribution. When they write the book on Silicon Valley high fliers, you will see iBeam in there. They had great marketers and good sizzle. Unfortunately, they had no business model. All of their dollars were generated from advertising, and when the market started to dry up after 2001 they struggled.

Once the capital markets started drying up we met with the folks from Williams Communications in Oklahoma and did a pipe transaction with them. We raised a bunch of money from the Williams companies, and we then merged the business into Williams right after December of 2001. The markets were really tough by that point. We claimed the merger as a victory because so many companies were closing shop at that point.

We had some very large customers and from the enterprise level I was going after AIG, New York Life, and comparable companies. I had to go out and tell them that our business was going to be OK when they could clearly see that financially iBeam was in trouble. When we merged into Williams it gave us stability. Unbeknownst to me, Williams was also having its own troubles and three months after we landed in Williams, they filed for bankruptcy and went through their own rebalancing. That happened just 90 days after we got into Williams.

That restructure was different. The new ownership that came in went through the process of jettisoning small businesses that Williams had acquired and started selling them. One of them was my original company, NextVenue. The business was growing modestly and was reasonably profitable. They told me I could find a home for it and I was given 30 days to get a transaction done as they were going to shut it down. I contacted a buddy of mine who was an investor and was at Bank One Equity Partners. Bank One owned a public shell company, so we were able to pull the company out and dump it into that shell.

Sramana: Essentially the company you are running today was started a long time ago and has gone through various corporate structures, but the ultimate genesis was the CNBC Dow Jones Desktop Video as NextVenue. What was the actual business of NextVenue?

 Nick Balletta: We provided broadcast Web services. We took corporate communications and distributed their content over the Internet via streaming technologies. We did that in terms of voice audio and video. Granted, we have expanded features and functionality but our core has remained the same. That is what we do today.

Sramana: What was the competitive landscape in 1999? Whom did you feel were your direct competitors?

 Nick Balletta: There was a company called NetRoadshow. They were one of our primary direct competitors.

Sramana: So at that time you were focusing on the NetRoadshow use case as a primary business strategy?

Nick Balletta: Absolutely, and we did that for the first year. Our investors were folks like Goldman Sachs. We were in the right area. It helped to have our investors as clients.

Sramana: How did you get to these investors?

Nick Balletta: One of my partners was a retired Goldman Sachs partner. That is when they were still a partnership. He was the senior statesman of our enterprise. He gave us street credibility. This was a time when Goldman was investing in start-ups with little pockets of money.

Sramana: How much money did you raise from the financial players?

 Nick Balletta: The first round of financing was $10 million.

This segment is part 3 in the series : How Not To Finance Your Company: TalkPoint CEO Nick Balletta
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