“They tried to bury us, they didn’t know we were seeds.”
Fifteen years ago, in May 2006, I stepped into a courtroom and took on a Goliath, namely News Corp./IGN/AskMen. Today IGN is part of J2/Ziff Davis and not part of News Corp./FOX.
Long story short: IGN bought AskMen in 2005, I did the right thing and shifted my duties to streamline operations. By year’s end, there wasn’t much for me to do. I inquired about job openings in London and New York City, but was rebuffed. I was told “so long as you don’t go work for AskMen competitor Maxim or IGN competitor Gamespot (a CNET property), we don’t care what you do.” I told them I wanted to launch a “video startup,” they assured me “great, maybe we will invest.” With that in mind, I reluctantly became a full-time entrepreneur by focusing on WatchMojo.
From my estimates, they had been planning their onslaught since February. In March they sent me a letter warning me of impending doom and by April, they had gathered most of their ammo. In May the crossed the t’s and dotted the i’s and served me injunction papers, seeking to shut me down until a trial could determine my final fate.
After getting over the initial shock, I spoke to countless lawyers who seemed to agree: I was not violating my non-competition agreement. Such agreements would be hard to enforce, hence the injunction.
To secure an Provisional Injunction, a claimant needs to demonstrate that:
– the defendant’s actions create irreparable, unmeasurable harm
– the balance of inconvenience is in their favor: they lose more by me staying operational than I would lose if I shut down until a trial (which made no sense, me continuing to tinker to find platform/format fit would cause them no harm, whereas shutting down would have proven fatal to us)
– there is a serious matter to determine which was not frivolous.
There’s a fourth test in the case of an Interlocutory injunction,
– the matter was urgent.
Tale of the tape
At the time I had poured $100,000 of my savings into WatchMojo. I realized I could not possibly fight this alone, I would need someone to help me manage through the procedural matters involved in a trial. In an ideal world, I would craft the substantive strategy but defer to a lawyer on the procedural stuff.
The problem? That would lead me right into their trap with an expensive fight. A second problem was lack of time. Due to a few procedural snafu’s on their end and my Mr. Bean-inspired laymen lawyer schtick, we bought some time until the ensuing Monday. I could have always ask for a delay, but again, this would have played right into their hand, and besides, I wanted a swift end to the hostilities. If they were going to crush me, why delay the pain and suffering.
The Right to Represent Myself
I was being sued personally but WatchMojo was a corporation being sued as well. In Canada, an individual can represent himself but a company must be represented by a member of the bar. It’s common sense: shareholders would lose it if some random person inadvertently torpedoed the firm.
Their lawyers were quick to point out that I was in default because I did not have a lawyer. Technically, the Judge could have found me in default and handed them a victory, but, some Judges don’t want to do that because – while I did not know it then – injunctions are actually hard to obtain and shutting down a small company and smaller entrepreneur in favor of the mighty News Corp., Fox Interactive, IGN and Askmen combo was probably not something a Montreal Judge wanted to do, I figured. But there was no sympathy to be offered:
“Obviously you want to compete in the big leagues, and to compete in the big leagues, you need counsel young man.”
The Friday before the trial, luck led me to locate an injunction pro. My wife and I visited her and discussed the matter, and that weekend I mentally prepped myself for the showdown. The Monday was somewhat anti-climatic: the claimants spoke for roughly 40 minutes, I then spoke for 90 minutes and left my emotions outside the chamber, stuck to the script and dissected each one of their paragraphs (i.e. “Claimants state that ‘WatchMojo may pose a risk,’ pose a risk, My lady? Posing a risk is not the same as irreparable harm,” and so on. That kind of thing). In David vs Goliath, David ultimately used Goliath’s weapons against him; same concept here (the image featured is taken from here, btw).
I was hoping for a verdict then and there, but the judge simply said she was impressed and asked if I was a lawyer. I was not, I told her. I won the injunction, they continued their march towards the merits stage for a bit more until the tide turned. We settled. I won by not losing, living to see another day. My prize was continuing to bleed money for another 6 years!
A small moral victory: web video was nascent. Few companies had the vision to tackle the form and even less had the stomach to underwrite it. More and more companies came to us to license our videos.
AskMen never once featured one of our videos on their website, but IGN.com, MySpace and News Corp. joint venture Hulu all did. It was a symbolic victory. At its peak while I was there, AskMen reached some 8 million uniques and generated $3M in revenues. WatchMojo would go on to reach 150 million viewers per month, becoming synonymous with pop culture top 10 lists for the generation that grew up on YouTube.
Bygones: Forgive but Never Forget
I’ve learned not to wait for apologies, they simply don’t come. Nonetheless, I choose to forgive but never forget because there are lessons in our experiences. Back then when I reminisced on the matter, I went in all the details: names and all. Honestly, to quote a wise man, I deleted those mental files a long time ago. Sure, it was hurtful: here were some former partners, colleagues, teammates, brothers (or so I thought) who were now lining up writing excessive affidavits (seven!) trashing me.
Years later, I was discussing some other, random matter with Complex’s CEO Rich Antoniello (who’s grown into a friend) and he said “Ash, you have to stop thinking other people share your principles.” That hit me like a ton of bricks. Indeed, all of my life, I would prop people up, project them as their best version, assume they were principled people… only to be usually disheartened when they would reveal their pettiness, envy, jealousy and betrayal. And yes, much of that stems from my Nature and Nurture.
I always kept it in, no matter how tough I had it, I knew I had it better than most, so I didn’t want to sound like I was seeking compassion let alone pity. My super power was staying “good” and resisting “evil” in the face of other people’s misery and treachery.
Everything Happens for a Reason
Indeed, that perpetual snubbing and disrespect is what eventually led me to go into entrepreneurship, ironically.
The lawsuit was also a bit of a hidden blessing. Last week I was catching up with a fellow entrepreneur who like me started a video business in the mid 2000s. Unlike me, he managed to convince VCs to invest in his firm. I pitched 100 VCs, a couple made me offers, but by and large, they all passed. In the end, the VCs he took money from ended up pushing him out, diluting him, and killing his company.
I’m beyond happy to see entrepreneurs be flush with financing options. The landscape was unrecognizable then. By not having VCs on board, yes I had a very challenging first six years (2006-11) but once we broke even, it all made sense.
I could treat stakeholders the right way, protect my team (we never had a layoff over financial results) and build a community and brand the right way. There’s no way any of that would have been possible had we raised VC. Right before the lawsuit, Lycos founder/former CEO Bob Davis’ Highland Capital was sniffing around, considering an investment in WatchMojo. Highland had poured $17M in AskMen’s competitor TheMan, while AskMen parlayed a meagre $500K investment into a successful exit. When I was served the papers, I told Highland – who then ghosted me (natch).
Treating People The Way You Want to be Treated
As money poured into my competitors’ coffers, to some extent that served as their undoing. This is a table from an investor deck of mine, it doesn’t even include companies like Demand Media which had raised hundreds of thousands of dollars. By the time we settled with News Corp. in 2007, Lehman crashed and the financial markets tightened.
Overfunding led to convoluted cap tables and boardroom drama. A desire to scale quickly meant taking “nine women and expecting them to give birth in a month.”
We took a more measured, balanced approach and played the long game. I was always bullish on YouTube from day 1… but we didn’t rush onto YouTube prematurely, focusing on broader distribution as we waited for the online ad ecosystem to develop. But once it became clear that Google’s platform had gone from pariah to the belle of the ball, we viewed it as our favored trading partner. The rest, as they say, is history.
By 2011, I had gone through $250K of savings, borrowed another $500K to avoid layoffs, and racked up $900K in aggregate losses. But once the company broke-even, we had by then created a large back-catalog and built up distribution so we experienced a high degree of operating leverage.
When in 2006 I would sit on my couch and pray for a solution… I knew there was none. I had to go through the very painful experience to get through to the other side. I tried to seek answers to explain the injustice. There were none, at the time.
Fifteen years later, it’s clear that had we not been sued, WatchMojo would not be the success it is today.
Everything happens for a reason, but you have to stand for your principles, remain persistent but most of all, stay patient.
Were there any experiences you endured that didn’t make sense then, but with the passage of time made all the sense in the world?