I am not going to rehash Om Malik's excellent summary of "What went wrong with Joost" but I did want to dive deeper into a few points. As I have always said, raising too much money can be a curse and not a blessing. Here is an excerpt from my post in 2006
This to me can kill a company before it even gets off of the ground. Expectations are too high too early, companies will ramp up too quickly, and any misstep is seen as a failure. Secondly, companies that have too much capital usually try to do too many things and lack focus. It sounds like Joost was building a client, negotiating with media partners, and building out its own ad serving technology and had its own ad sales staff. It sure sounds like a big operation.
Another point to add is that companies founded and led by rockstar entrepreneurs are not enough to drive success. Rock star founders and CEOs will definitely open a ton of doors and drive lots of media attention, but the company still has to execute. In addition you want your rock star driving much of the execution rather than hiring a huge staff with layers of bureaucracy. Many of these famous entrepreneurs will typically have their hands in a number of different projects at once. Finally, having been successful before, you really need to assess how hungry these rock stars are for success. Hunger and passion do play a huge role in driving company DNA and creating a winner. I have had just as much success funding entrepreneurs who have had modest wins but were still seeking the big exit. Bottom line is that Joost had a ton of promise but may have been better served by raising much less money at the start and staying highly focused on the task at hand with a much leaner operation.