5 min· investing
The first write-off
We invested in 2014 and wrote it off in 2015. A decade on, this is what I now think caused it, including the part that was our fault and not the founders'.
Reelmonk was a video-on-demand platform for Malayalam film, with a mechanism to stop the piracy that was eating regional Indian content. We invested in 2014 and wrote it off in 2015, and the company wound down.
It is still on my portfolio page, struck through, one of four now. A track record with the failures removed isn't a track record.
I have told a tidy version of this story before, the kind you give in an interview, where the causes are neat and none of them are yours. This is the longer version, with a decade of distance and more of the blame where it belongs.
The original sin: I was the customer
I was a user. I wanted this product to exist. I had the problem it solved, I understood the frustration it addressed, and I came to the company through the idea rather than through the business.
Investors are usually told that being the customer is an edge. In my experience it is at least as often a blindfold. I was not evaluating a company. I was agreeing with a premise I already held. The question I cared about, does this need to exist, I had answered before the first meeting, so everything I would normally look at hard, I looked at softly.
Almost every specific mistake below follows from that one.
The team was set up wrong from the start
The founder was technically very strong. He was genuinely good at the engineering, and that was never the problem.
What he did not have was experience building a business, or any route into the market he was selling to. Those are two different gaps, and the second one matters more than people think. A founder does not need a decade in the film industry before starting a film company, but he does need to be able to name his customers, get to them, talk to them, and keep track of what they tell him. Having no way in at all is a different category of problem from being inexperienced, and it is much harder to fix once the money is in.
When that became apparent, more co-founders were brought in to fill the gap, and that is when the real trouble started. What had been a capability problem became a people problem. The friction that followed looked like the cause of the failure, but it came from a structure that had been wrong since the beginning.
What we discounted
Reelmonk needed the film industry to change its behavior. Specifically, it needed producers to treat internet rights as a separate, negotiable asset, rather than something bundled away with satellite rights and not worth arguing over. Producers were unwilling to push on that, because the question was not live for them yet.
We understood this and thought we could work around it. We could not. You cannot force an industry to renegotiate its own conventions because your portfolio company needs it to.
What eventually changed it was COVID. Theaters shut, producers had no other route to an audience, and the value of OTT became impossible to ignore. Internet rights are now negotiated separately as a matter of course.
The thesis was right. It arrived about five years early.
The cap table, and how we caused it
Our angel group ended up holding around thirty percent of the company between us.
We didn't ask for it. It was offered, we took it, and at the time it felt like a good deal.
It was a serious mistake, and it was ours. Thirty percent to an angel group at that stage makes a company much harder to fund later. Every later investor looks at the table, sees founders diluted early, and draws the obvious conclusion about how much upside is left for the people doing the work. A founder-friendly investor should have refused it, or taken less. We didn't understand that yet.
Cap table structure is now an explicit criterion in how we look at deals. That one we learned the expensive way.
And I got involved operationally
I thought I could help with business development, so I tapped my own network to make introductions to producers and people in the film industry. It did not work.
I have been strict with myself about this since. When an investor steps in to close a capability gap in the team, two things happen. You lose the ability to see the company clearly, because you are now part of it, and the founders lose the pressure to solve the problem properly. Being useful in the short term usually costs both sides something in the long term.
The one that matters more than the rest
The one that matters most is timing. You can have the right idea, a capable team and a working product, and still fail because the market isn't there yet. It is like catching a wave: being in the right water with the right board is necessary and nowhere near sufficient. You have to be there when it forms.
Reelmonk got that wrong by being early. "Ahead of its time" is normally a self-serving diagnosis, which is why I hesitate to use it, except that in this case it can be checked. The market did arrive, and we can point at when. We just weren't there for it, because a company that is early needs runway to wait, and this one had raised too little to wait with.
That is the real shape of it, and it took me a decade to see. The capital plan and the timing were one failure, seen from two sides. Being early is only fatal if you haven't funded the wait.