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Root Markets: From Tragedy Spring Triumph

One thing I noticed recently is that Root Markets generated a host of entrepreneurial activity. Root Markets was a failed start-up in the 2006-ish time frame. I think the conventional wisdom is that successful start-ups witness a host of people spun out that then start companies. Root is an instance of failure begetting a host of start-ups and that seems interesting.

Root alum include:

  • Joshua Reich – founded BankSimple
  • Greg Yardley – founded Pinch Media (merged with Flurry)
  • Rob Leathern – founded

That is a lot of value for a company that didn’t really get too far. What was so unique about Root that enabled this entrepreneurial activity?

Here is my theory: One of the great things about a successful exit is that the founders become rich angels and everyone that didn’t get rich thinks that this adventure was easy. The result is a virtuous cycle of new entrepreneurial activity.

So Root had a few things that ended differently for them then your average start-up that doesn’t work out:

  • I don’t think people at Root came to the conclusion that the idea was a bad one. I think most of them felt that investors screwed up the company.
  • Several people came out of Root as prominent angel investors. Even though Root did not make them rich, Seth Goldstein and Jerry Neumann both were already wealthy and the credibility that people established at Root let to the opportunity to raise financing for their ideas.

I know Root people stumble across my blog all the time, tell me what have I missed here.

Does anyone know other companies outside Silicon Valley that saw such a prosperous cycle of innovation spring from the ashes of dead companies?

4 Responses to “Root Markets: From Tragedy Spring Triumph”

  1. Jerry Says:

    Back in the day we had a word for these: afterburners. A lot of companies with innovative ideas attract some of the best people, and then those people get scattered all over when either the company fails, when it’s acquired or when it becomes big and beauracratic.

    Root isn’t special in that regard, it’s only special because we hired people so good that the hit rate on becoming successful entrepreneurs/start-up execs is startling (and that’s because Seth has an uncanny ability to find amazing people and sell them on far-out ideas.) You actually missed a few: Viva Chu started Handipoints (acquired by Google), Atul Patel has founded several businesses and is currently CEO of OneScreen, Stu Libby is a co-founder of Solve Media, etc. And then there’s people who are execs at other great firms: Dan Kashman, Matt Prohaska and others.

    But in the late ’90s there were ex-Prodigy folk all over the place. In the early ’00s there were DoubleClick people all over the place, in the mid ’00s there were Tacoda people, then Right Media people, and now you see a ton of Google people looking to start something. And that’s just a sample from my limited perspective.

    This is one of the great reasons to join a startup that has big ambitions: you have an instant network of people who want to do something ambitious.

  2. Brent Says:

    But all the examples you just gave were people that came out of big successes. I think that is the cliche. What is amazing about Root is that it was not acquired and it did not get big, yet the level of success of people that got spun out is amazing. Probably one of the most “successful” “failures” outside of the valley.

  3. Jerry Says:

    I guess my point was that people don’t leave *while* you’re being successful.

  4. Brent Says:

    Fair enough. I love that last sentence: This is one of the great reasons to join a startup that has big ambitions: you have an instant network of people who want to do something ambitious.