The account as dictated, preserved verbatim. Everything elsewhere on this site that derives from it is a distillation — and where the two differ, this governs.
Dictated by Jonathan Paul Hare in working sessions with Claude (Anthropic) and transcribed in-session. Lightly cleaned for typographic errors and false starts; wording, sequence and emphasis preserved. Not an audio transcript. Where the distilled page differs from the source, the source governs.
They were separate rounds. I passed on the $15m SG round at $150m valuation. Oak Hill offered $5m convertible note at a $15m valuation, which would have substantially diluted the common shareholders. To block this I loaned the company $1.5m myself in a senior convertible note — using a margin loan from DB Alex Brown since my Evolve stock was still locked up. My convertible note was senior to Oak Hill's existing $5m convertible note from the previous year.
I also raised another $1.5m or so from a dozen or so angel investors, employees, and friends — I offered them all a personal guarantee on their notes to save time, as our burn rate was close to $1m/month, and I just needed to buy time to find another lead investor.
We were in the midst of doing a major customer and strategic deal with BP, sponsored by Lord John Browne — one where BP would make a lead $10m investment in a crowdsourcing model to develop solutions on our Consilient platform.
Once I locked that financing down, avoiding the need for Oak Hill's financing (which I regarded as opportunistic and predatory), they used a 'silver bullet' they had requested when they originally invested, giving them the ability to replace me as CEO (with me remaining as Executive Chairman) at any time for any reason, or no reason. The explicit understanding was that they would use that to bring in a seasoned and high-profile operating executive once Consilient was ramping, but it was their discretion.
After I closed my bridge financing, my co-founder Eric Freed (who was the actual founder of InfoCanvas, and made me co-founder with 50-50 ownership when I returned from sabbatical) mentioned he was going down to Oak Hill Venture Partners — which he had never done before; I handled the financing, and he didn't know my Stanford and Nobel mentors — and I thought nothing of it. A few days later, Ray Conley (the junior partner at Oak Hill) and Dave Brown (another operating partner) let me know that they were exercising the silver bullet, and that Ray Conley was stepping in as CEO.
Ray Conley was younger than I was, and had (as I put it at the time) never even operated a popsicle stand before — he was a newbie venture capitalist, not a CEO or an entrepreneur. But I had signed the deal. There was nothing I could do.
Corrections applied downstream are recorded here rather than made silently. The source above is unaltered.
Recorded as Hare's account. Two points of care. First, the silver bullet was a negotiated contractual right that Oak Hill had requested at the time of its original investment and that Hare agreed to; exercising it was not a breach. Second, the account places Eric Freed's visit to Oak Hill days before the exercise, and states that Hare thought nothing of it at the time. The record does not establish any connection between the two events, and none is asserted here. The characterisations of the Oak Hill note as opportunistic and of Ray Conley's experience are Hare's opinions, recorded as such. This account also corrects an earlier figure: the Société Générale round was $15m at a $150m valuation.
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