Tony Hsieh actually wasn’t NSFWCORP’s first investor. After I’d told him why my dream company would be – a massively unprofitable comedy news magazine – he offered to invest, but only if I agreed to found it in Vegas. I turned him down, mainly because I had only just quit TechCrunch and had no intention of diving into anything new.
Here’s how he got me to change my mind:
“What if you produced a pilot issue of the magazine and I gave you a hundred thousand dollars just for the rights to reprint the articles in my Downtown print magazine.”
“Just gave me a hundred thousand dollars, for no equity? Just for the reprint rights to articles that don’t exist, in a geographic region consisting of a half dozen streets?”
The next day I called Mike Arrington and asked for his advice. I remember nothing at all of the call, except that it ended with Mike urging me to take the damn money and offering to become our first actual investor, via Crunchfund. My notes from the time say he offered to match Tony’s $100k. The check he eventually wrote was for $25k.
A useful piece of advice for budding entrepreneurs: Before receiving $125k in startup capital you first need to incorporate a company and open a company bank account.…