CondoDomain Sued By Investors Because Of Focus Shift
(Disclosure: I am a big fan of Anthony Longo and his vision for CondoDomain — I am not completely impartial in writing this post. Also, I do not know the details besides what I read in the Inman article linked to at the bottom of the post.)
CondoDomain.com is being sued by 2 of it’s investors over the shift from an advertising model to a brokerage model. The investors feel that they invested in one type of company and that Anthony Longo, founder and CEO of CondoDomain has breached the criteria for investment.
And you know what, odds are Anthony has gone past the original scope of the investment. But if you know anything about start up investments you know that rarely do they follow the original business plan. And when it comes to a technology company they tend to morph even quicker.
So the expectation that CondoDomain was going to follow the exact business plan that they laid out when they accepted the investment dollars would be just plain foolish. Sure the initial goal was to go in that direction, but advertising dollars have dried up for Real Estate advertising online on a national scale. A pure advertising revenue model is not feasible so CondoDomain had to take a different path.
The investor should not be punishing Longo and his team for this, he should be commending him for working his tail off to make the company a success.
At the CondoDomain blog, Longo posted information about the lawsuit as well as commentary about the lawsuit and alleged correspondence with the investors.
“Its unfortunate for our startup company, or anyone for that matter, especially in these uncertain times surrounding real estate and the worldwide economy, to be challenged legally on zero basis, especially with limited funds to fight an individual in court with such deep pockets,” Longo posted at the blog site.
John C. Ottenberg, a lawyer representing Ahearn and Lopez, said that the legal action “is not about trying to keep competitors out of the real estate brokerage business.”
He added, “What this case is about is two investors who invested in a business to collect advertising revenues from essentially an online publication, and that’s what they put their money in and that’s the business they wanted to be in.” via Inman News.
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Comment by Tony Sena on 23 January 2009:
Would they have been happy if they kept their business model geared towards advertising and eventually had to file bankruptcy because no one in the real estate industry is spending money on advertising right now? At least now they are trying to move to a model that might generate revenues to secure their investor’s dollars.
Comment by Robert Unusual Loans on 24 January 2009:
Catch 22. In this market someone is going to lose and not be happy. At least they tried to do something.