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 XA.net
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?