Sam Sethi steps away from Blognation

In a post on Blognation blog, Sam Sethi has announced that he is to step down from Blognation and that the company will be put up for auction. Quite what value could be put on what is an easily replicated business remains to be seen, but for the time being at least it looks like the end of the road for the company which launched in July.

Sethi blames himself for the failure, citing his problems in finding a venture backer.

Here are some extracts …

For the last 6 months Arrington has threatened to publish, private and confidential emails that were sent to him, knowing it would create fear uncertainty and doubt (FUD) around blognation within the angel/VC community, whether the content was factual or not! The merest whif of litigation whether true or not caused our the potential investors to run for the hills back in July. [Editor: the note is reference to a long running public dialogue between Sethi and Michael Arrington at Techcrunch.com].

Sadly someone in blognation sent Arrington an internal email which he decided to publish along with the previously damaging part of the now four month old email thread between Lee Wilkins and I. This spooked the new VC and further delayed the funding process. Knowing that Arrington would love nothing better than to hear news of editors leaving blognation, I chose not to tell the editors the funding was once again delayed. That was wrong and I should have been honest with the team.

Due to some of the vitriolic internal emails and skype chats around the time of the delayed funding, which have now been publically air’d by others, I decided to exclude 3 editors from the team chatroom because of their ill feeling. The 10 remaining editors were then informed about the state of funding and chose to stay actively blogging knowing that the VC in question was working through the process if somewhat delayed but certainly before Christmas.

Finally last week we had got the funding termsheet on the table, some 3-4 months later than planned but we were ready to sign on 10th December yet Arrington chose to publish a stolen confidential term sheet which scuppered the deal for blognation and ALL of the remaining editors at the 23rd hour.

Arrington knew very well what effect publishing the termsheet would have on any potential deal and thus the future of blognation.

Right now Arrington is the only person who knows who stole and gave him the confidential termsheet. Arrington is the only person who knows why he chose to publish it knowing that it would cause maximum embarrassment to the VC and potentially force them to withdraw the offer.

Well the matter has now been reported to Scotland Yard’s Internet Crime Unit : Case Number: LC986409807 and the IC3. What happens next I am not sure but the IP address of the person accessing my account will be located and that person will face both criminal charges and eventually substantial damages. As for Techcrunch other parties may still choose to start legal proceedings for damages, I cannot say anymore.

More importantly, where does that leave blognation? Following a number of discussions, yesterday and today, a revised termsheet proved to be unworkable. I have announced internally that I am stepping down from blognation and that the company will be put up for auction, like edgeio, to ensure that the idea and vision can go forward and that ALL the (cr)editors are rewarded for their loyalty and hardwork. (note: unlike edgeio none of the editors were employees)

I am pleased to say that there are already a number of potential buyers who have come forward. I am now seeking advise on how best to manage this auction process.

Personally I blame myself for not finding a VC quicker to close the deal and for not trusting the team when things were hard. My focus is now on closing blognation ltd, selling the platform and brand asset in auction and using the proceeds to pay the creditors much like edgeio and supporting the transition to a new owner before I say a final goodbye to the blogosphere.