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Venture fund tries to sue entrepreneur who left negative comment on The Funded – bad idea

By August 13, 2008 6 Comments

VentureBeat reported yesterday that venture firm EDF is attempting to take legal action against an entrepreneur who left a negative comment about them on VC review site The Funded. The entrepreneur advised against dealing with EDF ‘unless you are desparate’.

This comes after an attempt by debt firm Hercules to take legal action against the site itself failed on the grounds that The Funded doesn’t have liability for comments left on the site by third parties.

As well as being likely to fail and counter-productive in the short term these attempts to control what appears on the internet show a deep misunderstanding of the medium, and a concomitant failure to grasp the realities of business in the 21st century.

For me one of the great things about the web is that it means there is nowhere for bad companies to hide (not that I know anything about the specifics of EDF or Hercules). I think this is great because it means the only option is to deliver great product and service, and maybe even do no evil in general.

Everyone’s customer base is now a community that talks. In fact if people aren’t talking about your product it probably means they are indifferent to it. If they hate it they will talk, and if they love it they will talk for sure.

This gives me hope for the future.

Clearly I’m not just talking about venture capital here – it applies to all industries. In fact it applies most to mass market consumer industries. The case is well cited but for those that don’t know the best example of this new consumer power in action is the way Dell changed it’s strategy and decided to deliver good customer service when it became clear that negative comment on the web was hurting their sales and brand – see Jeff Jarvis for more details.