(Photo: Flickr.com/LeWeb3)

Yesterday, word leaked that former Mashable editor Ben Parr is launching a seed stage VC fund targeted at celebrity investors. The cofounders of Tracks.by, a platform for music artists, are also partners in Mr. Parr's fund. The tech world, as it's wont to do, erupted into a collective scoff: A star-studded investment firm helmed by a “disgraced” journalist, who was fired for blabbing about his salary, doesn't sound like the stuff of Sand Hill Road.

Unwilling to let an opportunity for backseat quarterbacking pass them by, tech bloggers immediately swooped in to offer their analysis of Mr. Parr’s newest venture.

The Wall Street Journal chimed in with a cautionary tale for Mr. Parr, penned by a journalist-turned-VC-turned-journalist-again, who quit his ink-stained day job during the first bubble to become an investor. Just because reporters write about startups, it seems, does not make us experts on the innerworkings of a business. Writes the WSJ:

When journalists give up their penny-a-line trade and think they are financiers and business executives, you are in a bubble....We wish Mr. Parr and his team of neophytes well, but he has a lot of work to prove that writing about startups in any way prepares him for the very different life as a VC.

Venture Beat writer Jolie O'Dell--a former coworker of Mr. Parr's--took a similar tact, questioning the trio's "capacity to run a credible investment outfit." She hammered that point home by making the post's URL "O Rly?"

Kernel Mag founder Milo Yiannopoulos, who himself is no stranger to blog controversy, took a more personal approach, calling Mr. Parr a "tragic figure" who got "carried away with his own celebrity:"

Since then, Parr has cut a rather tragic figure on the international conference circuit, his lanyards showing white space where the name of an employer ought to be. A year later almost to the day of his termination, however, Parr, who in a delicious slice of faint praise was described as “relentlessly nice” by waspish Valley journo Owen Thomas, is returning to the limelight with… yup, you guessed it. A venture capital firm.

And as for the "celebrity" aspect of the fund, PandoDaily pointed out that nary a celebrity is currently to be found:

First off, it’s a celebrity fund, but its grand entrance to the scene included scant actual funds and nary a celebrity. That’s a bad start. At best the oddly named group – the first financial vehicle with a hashtag as part of its name? – is a nascent concept, with a fundraising “target in the single digit millions” to quote the friendly launch article by Forbes’ Tomio Geron. The anchor investors are not celebrities themselves, but rather the business managers of Brittney Spears, Lil Wayne, and Drake. In the world of celebrity, close doesn’t count.

To be fair, as the New Yorker noted in its profile of Scooter Braun, talking to the managers of stars does seem to be the first step towards clinching that celebrity investment. As we mentioned in our profile of Rap Genius, Troy Carter, Lady Gaga's manager and an investor in Tracks.by, has been known to stop by the offices of Andreessen Horowitz.

Lucky for Mr. Parr, celebrities may be less tied to Silicon Valley tradition. Besides, if Michael Arrington is any indication, he can always get back his day job.

In my experience it’s nearly impossible to keep all investors and advisors involved and up to date. In fact, it’s sometimes more of a burden than it is helpful. You need to spend time building your product, company, hiring, and making sure the gears are grinding, not reporting to and hand-holding all of your investors. Big syndicates are good (and a champagne problem) in that they allow you to pick and choose who you want to keep involved.  Out of our pool of 15-20 GroupMe investors, we probably only kept 3-5 completely up to speed on a regular basis. I think 3-5 really active investors is manageable, and most productive. After that, you hit diminishing returns.

Man, most of the investors, left out in the cold.

Well, not to worry: as Andy Weissman pointed out in the comments to this post, the GroupMe syndicate kept in touch through...wait for it...GroupMe. Now that is eating your own dogfood.

This man is a professional.

Holiday season is here, and that means your startup needs to have a holiday party! I was just hanging with some Midwestern, non-techie friends of mine who work in "normal" jobs, and they were all going on about how they all skip their office holiday parties. They're the cool kids after all, and, as they say "I spend enough time with those people at work. I don't want to spend my personal life with them."

But startups are crazy backwards land, and you basically live and breathe and poop and shower with your coworkers. So you're going to holiday party with them too. This isn't a recommendation from me, it's a practical fact. I mean, really. You probably go out drinking with your coworkers two to three days a week already, at minimum. So it seems safe to say you're going to have a holiday party with them, even if it's just the five of you drunkenly realizing at 2 a.m. that oh hey, this could be your holiday party and woooooooo!

It's actually kind of an interesting logic puzzle. If you and your startup cohorts go out practically every night together already, what makes a holiday party different than any other night of the year? Santa hats play a part. But really, the question should be turned on its head: "If we're going to have a holiday party, what do we do to make it special?"

And so I am here to help you. I have thrown a fair number of holiday parties in my day. Some have reached the status of legend. Some failed miserably. The have ran from 10 to 1,000 people. Here's what I've found that works.

I am speaking to lean startups here. If you've gotten your Series A and are viewing your holiday parties as PR opportunities, well, I feel sorry for you, and these rules do not apply. My strong recommendation to you is to not view your holiday party as a PR opportunity and follow these guidelines nonetheless.

First, if you're going for that giant, most-important-party-of-the-season blowout, give up. I say this for three reasons. First, it's already mid-December. It's too late. To plan the ultimate blow up, you need to start planning that shit in June, July latest. Secondly, you're a startup, and that has unfortunately been ruined for us all thanks to Razorfish back in the day with their "worst party ever" some 14 years ago.

Rumor has it they spent something like $15,000 on the party, which really isn't that much compared to blowouts of recent years: I recently went to one for a major tech company where it was said they spent $150,000 on the band alone. Fact is, your startup can't throw the most over-the-top party possible. Which leads me to my next point, nor should it. You're a startup. You're about thrift. It is unbecoming to blow too much of other people's money on a party. You can pull this whole thing off in an awesome way for like, five grand, if you plan right. You can get by and still have it be pretty rad for like, two grand.

Next, clients. If you have clients, I strongly recommend you do not invite them. Or at least most of them. If you have a cool client, you can invite that person. Clients keep everyone on edge and inhibit the camaraderie and bonding experience of the party. If you need to do something for your clients for the holiday season, send them a gift or card. (Note: if you're making cards, it takes a long time to think up something good. Start that project in, like, July as well.) Plus, they can't handle their liquor. I don't know what it is. They either stand in horror looking at the whole scene, or dive right in and lose their minds. I've had clients bleed on employees. I've caught them doing blow and unspeakable acts in dark corners. Just leave them at home.

The space is key. You are going for the most space possible for the least amount of money. If your office is big enough, do it there. If you do that, hire security, lock away your computers, hire caterers and hire a cleaning company. Trust me on this. People will puke, and even in an office of all people you know, something will get stolen. It's a depressing insight into the human condition. Lock everything up, hire security, keep anything from getting stolen and live in ignorant bliss that one of your friends is a klepto. Caterers are vital because otherwise people are pouring keg beer into gallon jugs and lining their pockets with bottles. I remember walking out of our holiday party with my best friend, and there was the homeless man on the street that lived by our office. He asked for some change, and my friend pulled a full bar bottle of Grey Goose out of his coat, looked at me sheepishly and handed it to the homeless man. Holiday cheer.

If your office isn't practical, since you work out of your home or a coworking space or something, go for the biggest, cheapest place you can find. This might mean a bar that is usually empty on a Tuesday night (you should rule out weekends for your holiday party—too expensive and people leave town). There are plenty of bars that will rope off an area if 20 people are coming. Have it at a dive bar. It will be cheaper for you, reinforce your sense of thrift to any guests who might care, and is generally more fun anyway. Plus it makes it clear you're not trying to keep up with the Joneses. It shows that what you're really doing is spending money on the most important thing: the booze.

When it comes to the booze, quantity is the order of the day here. Try and have an "open bar" in any way you can swing it. An open bar does wonders to a crowd's psychology. It's Bataille's theory of potlatch. People have some latent psychological trigger in their head when excess doesn't have to be reigned in and gloriously weird things happen. It's the startup equivalent to Vegas buffets. If you're on a budget, there are ways to limit the open bar but keep this sense of the unlimited. Tell the bar to keep the top shelf stuff off limits. Keep the duration of the open bar short (though I wouldn't recommend against going under three hours). In a pinch, you can limit to beer and wine, but it's really not as fun and the results aren't as satisfactory. Better to have the whole thing at a cheaper bar, or get a sponsor for one hard booze.

Speaking of sponsors, I recommend against them. If you desperately need the free booze, or if you are working with a booze company that really wants to sponsor your party, then okay. But otherwise, try and avoid them. It interjects an ineffable sense of commerce into what should be a pure bonding experience.

Guest list: it's totally okay to invite people beyond the employees. I generally invite beloved friends, vendors, contractors, etc. Though it might be a little awkward, I strongly encourage you to invite your investors (I am looking at you, my portfolio companies). If you've followed all of these steps, your party will be pretty manifestly thrifty so they shouldn't be too agog at the waste. If you go this route, consider an hour or two at the beginning where it is just employees, so there's a little bonding time. If you want to go employees-only I think that is totally okay too—especially if it allows the open bar to be open longer. I don't personally like the employees+spouse route, and with startups and young people it can be slightly uncomfortable as many of them are just casually dating. Plus the older or more reserved employees then have a spouse to hide behind rather than getting tanked, which is no fun.

Finally, paying for the thing: this is what you do. Get a budget from your CFO. Then tell whoever is planning the party that budget. Make sure your CFO is getting nicely sloshed at the party. Have your company card handy. When the party is running near the budget, pull out the company card, give a wink to your CFO and say "let's keep going! It's on me!" Everyone will cheer. Sort it out with the CFO in a month with then bill comes in.

What did you sign?

The recent acquisition of Gowalla by Facebook is just the latest incidence of the potential tension between investors and founders when a company is acquired primarily for the team rather than for the technology, product or business that they’ve built. People around the web will take the opportunity to observe that in situations where a company is acquired in this way, the founders typically get a package of equity to motivate them to join (and remain at) the acquiring company, while investors usually get anywherefrom zero to a small return on invested capital. Look around and you’ll find people willing to condemn the founders for unethically “selling out” their investors and you’ll find people who say the exact opposite, that such a company didn’t have saleable assets anyway, and so investors are owed nothing because the business failed.

Having been on the selling end of several of these types of acquisitions in the past few years, I can say with confidence that it’s extremely realistic to walk from these deals with both founders and investors feeling good about what happened and maintaining strong relationships. But I think some of the nuances are non-obvious, and I think it’s worth it for founders to think through the likely sequence of events that may arise before there is urgency and emotion and a deal is imminent.

Personally I think that in the specific fact pattern where a business has very little traction, cash is running out and you have exactly one acquirer willing to take on the team but unwilling to pay investors for a business in which they have no interest (which seems to be the pattern at play with Facebook/Gowalla) the ethical conundrum actually isn’t – the SV Angel perspective that there is no business and therefor no harm to investors is fairly self-apparent. But there are a whole bunch of ways to tweak the fact pattern to make the ethical question far more complex and more interesting. Two that are worth considering:

· What if the company still had ten months of runway when an acquirer comes knocking on the door looking to acquire the team? What obligation, if any, does the company have to continue to try to create a positive outcome for shareholders?

· What if there was a different buyer who was willing to buy the business or its assets for a 2-3x multiple of invested capital paid back to shareholders, but didn’t come with as sweet or as compelling a deal for the management team? What obligation, if any, does the company have to consider and execute this transaction rather than one that sets the founders up in a way they like?

And…

· Different but related (and by far the most common) – what happens when an acquisition offer is presented that is really interesting for the founders but a disappointment to investors who were hoping for a big outcome?

Each of these, taken in turn, is worth a longer discussion but they are all connected by a common question – when you take investor money, particularly venture money (whose business model is to fund plenty of companies that fail but to have a few tremendous outcomes that make up for them), do you also take on a measure of obligation to consider the best interests of your shareholders and how important is that obligation relative to others (to yourself, to your cofounders, to your employees…).

Legally, of course, there is an obligation as set out by Delaware law. That obligation comes with the founders’ seats on the Board to consider the rights and outcomes to all shareholders. But setting that aside, in a particular and challenging set of facts, how should founders think about investors and their rights?

The answer, of course, is that it depends on the circumstances. But there are a few elements of a framework that make sense to employ if you face this decision.

1. You probably told your investors that you were trying to build something world-changing when you took their money. Sure, they know this only happens in a few cases, but don’t ignore the commitment you made to try to build a big business.

2. The world of startups is small and involves repeat interactions. You can (and should) make the decision that is best for all stakeholders, not just shareholders, but understand that there are reputational consequences to dismissing the needs (or perceived needs) of your investors.

3. You can’t possibly communicate too much with the people who have bet on you. I can cite plenty of situations where people were unhappy with an outcome not because the outcome was wrong or irrational, but simply because it was presented to them by fiat and they weren’t part of the decision process.

All of which rolls up to a simple set of guidelines, if not conclusions. The decision to accept failure (or too-modest success) is always going to be challenging. If you are a high profile startup and have raised money on the back of a big dream (as Gowalla did), recognize that you have stakeholders around your company and consider not just the outcome they will achieve in a particular transaction, but the full arc of your relationship with them, from the point of investment through the discussion you may have three years from now about your next company. Professional investors (VC’s and angels both) are adults, understand the range of outcomes and (if you chose them well) will work with you to find a good situation for the founding team. As with all things in our ecosystem, mutual respect, over communication and a view toward enduring relationships will serve you extremely well.