Entrepreneur of the Century or Company of the Century: Pondering Steve Jobs and Apple

August 29, 2011

By: Paul A. Jones

With Steve Jobs passing the reins at Apple (well, sort of: my guess is that he will be more active than the average Chairman of the Board) two main streams of analysis of the move have emerged. On the one hand, there is the not unexpected almost worshipful take on his career and his genius. On the other hand, there has been a pretty consistent message that “hey, Apple’s future is golden even without Steve.” Does anyone else think these two messages – Jobs as Second Coming and Apple as continuing master of Wall Street – are a bit, well, incongruous?

If Steve Jobs really is as brilliant as everyone seems to think (yours truly included) how can anyone seriously think that his departure from Apple will not herald a new era of diminished success for Apple? I mean, Tim Cook seems like a good manager – even very good – but is he a genius on the level of Jobs? If not, either Jobs being a genius wasn’t a material factor in Apple’s rising to the top spot in the business world, or, well, maybe he isn’t a genius. But he clearly he is a genius.

Genius to genius hand-offs are in the real world are pretty rare, and it seems to me especially so when you talk about genius in terms of softer skills like design, vision and negotiating prowess – the kind of skills Jobs is justly heralded for; and the kind of things that are pretty much universally acknowledged as the foundation of Apple’s success. I can’t recall ever having read an article lauding Apple’s manufacturing prowess, or its financial engineering, though doubtless at least a few such articles have been written. Frankly, in the business world, none come quickly to mind, andMontanato Young and Favre to Rodgers in the sports world seem more like exceptions that prove the rule than repeatable models.

Perhaps, though, there is a third alternative. In “Outliers: The Story of Success” Malcolm Gladwell posits that truly exceptional achievers in any field are the products of a combination of great skill and great luck. Anyone who knows the key twists in the emergence of Microsoft knows the peculiar mix of ability and good fortune that transformed Bill Gates from a modestly gifted programmer to one of the richest men in the world. Maybe luck is the real story at Apple, not Jobs?

I don’t think so. For one thing, while I am sure Apple got some breaks over the course of time, I can’t think of any on a par with the break that came Microsoft’s way with IBM and DOS. But even if luck was a big factor in Apple’s return from the dead under Jobs, does past good fortune make it any more likely that Apple can keep up the pace, so to speak, in the post-Jobs era? Unlikely: getting lucky, by definition, is not (with due respect to the cliché that the harder you work the luckier you get) something you can plan for.

So, it seems to me that if you can’t assume genius will follow genius, and that luck will follow luck, you can’t, I think, really believe that Apple’s success over the past decade can be repeated in the coming decade. Just as it was, in 1997, absurd to predict that a struggling Apple would over the next dozen years go from needing a handout from Microsoft to overtaking Microsoft in the hearts, minds and pocketbooks of consumers and investors alike, so, I think, it is ultimately folly to predict that Apple’s success over the past dozen years will be replicated in the next dozen. Check back in, say, 2022 and see if I am right.

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Posted by pajones1

Pondering the First Mover Advantage

August 22, 2011

By: Paul A. Jones 

The so-called “First Mover Advantage” is one of those terms that invites both passionate devotees and passionate skeptics. The “FMA” posits that an entrepreneur who gets to market first – with a novel technology or business model – has a sustainable competitive advantage over competitors that should predict ultimate victory. It is a theory that explains a lot: Yahoo!, for example (or even Lycos, if you prefer). Of course, it doesn’t explain Google quite as well.

The FMA was particularly popular in the internet bubble at the turn of the century. In those days, convincing a venture capitalist that you had a real FMA would get an entrepreneur most of the way to a term sheet with most venture capitalists. The term has been in and out of favor since; in when it seems to work, out when it doesn’t.

My own thinking is that the FMA is a pretty good analytical tool in so far as it goes. By that I mean that it is best understood as one-half of a much more instructive tool, which I will call the “First Mover with the Most Advantage” or “FMMA.”

Credit for FMMA probably goes best to Confederate Civil War General Nathan Bedford Forrest. Forrest was a spectacularly successful cavalry general who won many victories over superior forces employing a strategy that he is famously remembered for saying was based on the notion that the force that “gets there first with the most” generally wins the battle. That was almost always Forrest.

As applied to technology and business model innovation and success in today’s world, FMMA reminds entrepreneurs and investors that being first to market is by itself not the proverbially “sustainable unfair competitive advantage” that venture capitalists and business theorists are so fond of. Getting to market first is quite often an unfair competitive advantage, but by itself it is not sustainable as such. Being first to market with a new technology or business model is only a sustainable advantage if you get there with sufficient resources to capitalize on your position.

The real, but ultimately not unlimited, value of the FMMA tool can be seen in the development of the internet search engine business. Going back to the 1990s, a number of search engines that look more or less like Google in terms of technology and core business model (Google has obviously broadened the model beyond basic search, as have its competitors, and the technology has evolved) got started, including Lycos, Infoseek, Magellan and Yahoo!.  Of these, Lycos could best stake the claim to the FMA in 1994.

But as history tells us – and the FMMA tool might have predicted – Lycos did not emerge as the winner of the first internet search war, but rather Yahoo! did. Why? Because Yahoo! was the first company to get to the market first with the most in terms of resources beyond basic technology and business model innovation. Resources like superior marketing, and the most capital. Resources that allowed Yahoo! to be the first of the first generation search engines to reach a critical mass in terms of brand recognition and value.

The Yahoo! experience tells us two things about the FMMA strategy. First, the obvious one: that being first is not by itself enough. You also have to be recognized and appreciated as such, and that takes another set of resources and skills, and generally lots of them. Second, and if you keep in mind what happened to Yahoo! when Google came along, you will also see that FMMA can be a sustainable competitive advantage over time, but that as a tool it is only as durable as the management team that wields it. It is only an advantage, not a guarantee.

In terms of modern examples of FMMA at work, take a look at the ecoupon business, where Groupon can I think fairly lay claim to FMMA status. It is clearly the big dog in terms of resources (brand recognition and value, as well as capital and revenues), and if the ecoupon business model has legs, Groupon would have to be the favorite to emerge as the dominant player. But the favorite in a race still has to run the race, and run it well. Favorite status is not a sure thing (Forrest got there first with the most and still, occasionally, came up short of victory; ditto Secretariat, the greatest thoroughbred of all time, who in fact did lose a race once).

In sum, the so-called First Mover Advantage is, for starters, incomplete.  Being first is great, but the advantage goes to the entrepreneur that gets there first with the most. It is also an advantage that can be sustained – or not, depending on how well it is employed over time.

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Posted by pajones1

The Vision Rule

August 11, 2011

By: Paul A. Jones

One of the more insidious clichés of the venture capital business is the so-called “golden rule,” to wit that “he who has the gold, rules.” Alas, it’s a rule that too many less experienced entrepreneurs think is, well, golden. It’s not.

The problem with the golden rule is that it is premised on the notion that start-up success is mostly a function of access to capital. Now, when you are sitting in the proverbial garage and running out of money to keep even the lights burning, it is, I suppose, understandable to think that capital is the one indispensable mediator of success. But that is the thinking of ordinary folk. Entrepreneurs are made of sterner stuff – or at least the ones who earn the sobriquet are. Because while capital may be a necessary part of entrepreneurial success, it is not sufficient. Far from it. Ultimately, capital is like fuel in a NASCAR race: something you have to have, and you have to manage carefully – but ultimately it’s the driver (the entrepreneur) and the team/car (assembled and empowered with the entrepreneur’s vision) that wins the race (that makes the business a success). It’s as much about vision – more really – than it is about gold.

Entrepreneurs – even in places where gold is scarce, like here in Wisconsin – must remember that as necessary as investors may be to accomplishing their business objectives, they, the entrepreneurs, are equally as necessary to the investors if they, the investors, expect to accomplish their investment objectives. Because there is another rule of startup success besides the golden rule; let’s call it the “vision” rule. He who has the compelling vision, rules – because without a compelling vision no amount of gold will deliver the goods for either the entrepreneur or her investors.

Now, the vision rule can be just as insidious as the golden rule if taken out of context. Then again, if a prospective investor wants to play that kind of game, well, what’s good for the goose is good for the gander. Smart entrepreneurs, though, and smart investors, don’t live in cliché land. When a prospective investor implies that without capital an entrepreneur’s vision is worth almost nothing, a smart entrepreneur doesn’t get defensive but rather parry’s with the equally valid (and equally limited) notion that without the entrepreneur’s vision the investor’s capital isn’t going to produce the kind of returns that the investor is looking for, either. Or, to put it another way, either party – the one with the vision as well as the one with the gold – can stop the game before or during the match by taking his ball and going home.

The entrepreneur who understands the vision rule should not abuse it – any more than the investor who understands the golden rule should abuse it. But when an investor does abuse the golden rule – i.e. when an investor argues that the entrepreneur’s vision is worth next to nothing without the investors gold – the entrepreneur should remind the investor (gently if possible, but more forcefully if necessary) that without the entrepreneur’s vision their would be nothing to invest in. In practical terms, when the investor tries to shift the ground of the valuation discussion to what the vision would be worth without the investor’s gold, the entrepreneur should counter that no, the debate is really about what the valuation is when the vision and the gold come together. If the investor won’t go there, well, that is a pretty good sign that the investor thinks too highly of himself, or too little of the entrepreneur – or, perhaps more likely, both.

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Venture Capital: Preliminary Questions for Entrepreneurs

August 8, 2011

 By: Paul A. Jones

The Venture Capital industry has been a critical component of the high impact business scene in the United States for fifty years. It is hard to imagine a Silicon Valley anything like today’s without recognizing the critical role venture capital and venture capitalists have played in creating and sustaining it – “it” being an innovation engine of unmatched impact anywhere else in the world, and one that, gradually, is infiltrating other parts of the nation and globe. And yet, many entrepreneurs are deeply suspicious of the industry and its practitioners. Many entrepreneurs, including even a few who have, or at least seemed to have, benefited from working with venture capitalists, talk about the industry with terms like “vulture capital” and “vulture capitalist.” What goes on here?

As a serial venture-backed entrepreneur, venture capitalist and counsel to dozens of entrepreneurs and venture capitalists over a twenty-five year career in Silicon Valley, North Carolina and Wisconsin, my own take is that while there are surely bad actors in the venture capital community – as there are in any community, including the entrepreneurial community – most entrepreneurial animus for venture capitalists is based on misconceptions about the role and modus operandi of venture capital in the innovation process. My own experience suggests that many (not all, but many) of the venture capital horror stories told by entrepreneurs involve deals that never should have been made at all: deals made by entrepreneurs who saw the capital but not the strings attached to it when they made their venture capital bargain. In the interest of trying to stop some of those foredoomed venture capital deals that shouldn’t get done from getting done in the future, here are a few things entrepreneurs should think long and hard about before even considering looking for venture capital dollars for their deal.

  1. Venture capital is expensive. In fact, venture capital is the most expensive form of financing out there, at least on the right side of the law. While an early stage venture capital investor may be seeking a “modest” 3x or 4x cash on cash return on their portfolio, the implications of that kind of portfolio return mean that they are looking for at least a 10x return on any given investment in that portfolio. It takes a couple of such “home runs” to make up for the singles, doubles and strike outs that make up most of the typical venture capital portfolio, so every deal done has to have home run potential. The implication of this, for entrepreneurs, is that the success bar is extremely high: that venture investors will hold them accountable for anything less than stellar results. If you are not ready to be judged by those kinds of standards, don’t enter the arena.
  2. Venture capitalists are first and foremost accountable to their own investors, not themselves (and of course not their portfolio entrepreneurs). They have legally binding fiduciary obligations to put the interests of their own investors ahead of their own interests and the interests of their portfolio companies and entrepreneurs. Even the most entrepreneur-friendly venture capitalist, when push comes to shove, will look out for the interests of their own investors ahead of the interests of their portfolio entrepreneurs. And they should: that is their job.
  3. Venture capitalists generally have egos on a par with entrepreneurs, which is to say that, pace entrepreneurs, they may be wrong a fair amount, but they are almost never in doubt. If you are not comfortable working with folks who can be as stubborn and opinionated as you are, don’t expect a cozy relationship with your venture capital investors.
  4. Venture capitalists work for venture capital funds, and both venture capitalists and their funds are significantly influenced by the dynamics of their own career development path as well as their fund’s evolution – good or bad – over time. Venture capitalists come and go – your great relationship with a venture fund can be recast overnight if your venture capitalist leaves the fund. No matter how supportive and enthused your venture capitalist may be about your deal, if her venture capital fund has limited cash resources (and they all do) your ability to access those resources in a pinch is up to the fund’s management as a whole, not your particular venture professional (and, of course, at some point, there just isn’t any dry powder left for anyone).
  5. Just about every venture capitalist believes – really – that they and their fund bring more than money to the table. And many of them do. Unless you agree, stay away. Nothing can sour a venture capital relationship quite so fast as an entrepreneur who won’t listen respectively to, if not always take, advice from their venture capital investors. If you want passive investors, don’t look for venture capital funding.
  6. Pretty much all venture capitalists have big egos (see above). They all have strong and usually in some way unusual personalities (as do most serious entrepreneurs). There are quiet, supportive types (well, a few) and there are folk like Don Valentine, a widely-respected dean of the industry who has been quoted over the years (without ever denying it, to my knowledge) as follows:  “I have never fired a CEO too early in my entire career.” The point? However good the fit might otherwise be with a venture capital fund, make sure you can get along and be productive working with the particular venture capitalist who will be working your deal. And, per 4 above, hope that particular venture capitalist stays with her fund and your deal for the long haul.

I am sure there are some entrepreneurs reading this who are wondering just why, in light of the above, anyone would want to work with venture capitalists. If you are one of those, well, don’t; seek venture capital, that is. Devise a bootstrapping financing plan, or, if that isn’t practical, think of an idea where that is practical, or find another direction to go with your career. On the other hand, if you can, with your eyes really open to the above rules of the road, think of working with a venture capitalist as just another part of your challenge, something to be relished rather than feared, go for it. But if you end up road kill, well, that happens. Just about every ultimately successful entrepreneur makes big mistakes and has big failures. Just ask Steve Jobs, he of the Newton PDA and NeXT Computer.

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Posted by pajones1

International Patent Protection

August 4, 2011

By: Ivan T. Kirchev

Startups, entrepreneurs, and small companies must try to protect their intellectual property rights both in the U.S.and overseas. Although international patent prosecution can be a complex and costly process, companies should consider creating an international patent portfolio. Having such patent portfolio will certainly make the company more attractive for U.S. and foreign investors. If a company already has pending U.S. patent application(s), the company can seek protection of its inventions outside of the U.S. by filing foreign patent application(s). Generally, there are two ways to pursue foreign patent protection.

A company can file an application directly in each desired country or region (i.e. in Europe, Germany, China, etc.). Most foreign patent applications can be filed based on an U.S. application. As a general rule, these foreign applications must be filed within one year of the U.S. filing date in order to obtain the benefit of that U.S. filing date. Cost of foreign filing depends widely on the country and includes filing costs and the corresponding patent prosecution fees of foreign associates handling the prosecution.

Alternatively, a company can file an international Patent Cooperation Treaty (PCT) application within one year of the filing date of the U.S. application. The PCT application provides, in essence, a placeholder and opportunity to file one international application and have the patentability of the claims examined under international standards. Currently, the PCT includes 139 member states including most industrialized nations. The applicant will receive a report regarding the patentability of the claims in about six months after filing. Eventually, the applicant will have to choose specific countries in which it ultimately desires to obtain a patent. The PCT is a patent “filing” system, not a patent “granting” system. There is no “PCT patent.” The applicant can start the application or “national phase” process in any particular country that is a member of the PCT right after filing the PCT. Alternatively, the applicant can wait to receive an international search report and written opinion of patentability. Filing through PCT, instead of directly in the member countries, allows an applicant to delay “national phase” filing in these countries up to 30 months from the U.S. filing date (31 months in some cases). Generally, if company would like to have one or more patents in hand as soon as possible, it should start the national phase immediately after filing the PCT. Alternatively, if a company would like to defer costs and see what the patentability report indicates, waiting is a reasonable course of action.

There are many benefits to filing a PCT application. A PCT filing provides one application, in one language, filed with one Office that defers multiple foreign filings until entry into the national phase. The PCT application permits last-minute foreign filings and provides an international filing date. The applicant can make amendments to an application that will be in effect in all designated elected states. In addition, the applicant can better plan expenses for the national phase filings and thus can control its overall costs.

On the other hand, at the time of filing the PCT application, the applicant may also want to file national applications in countries not included in the PCT, which is a relatively small number of countries. Costs and fees for filing a PCT application are estimated around $3,000-$4,000.  Nationalizing the PCT application in the countries selected by the applicant adds additional costs which vary between the PCT member countries. The highest filing cost is with the European Patent Office (around $9,000), but a European application will give the applicant the opportunity to select many countries in Europe. Filing in other PCT countries may cost around $500-$700 per country (these are just filing costs). Prosecution fees and maintenance fees add extra cost to the application.  Below is a link to a list of the counties participating in the PCT.

http://www.uspto.gov/web/offices/pac/dapp/pctstate.html

Therefore, a company should determine its goals with respect to foreign patent protection and decide which of the above-identifies international filing options works best for its objectives and budget.

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Posted by itkirchev

Commercial Biopharma in Wisconsin: What Next?

August 3, 2011

By: Paul A. Jones

The University of Wisconsin – Madison, is one of the country’s leading centers of public biopharmaceutical research, and the campus has spawned dozens of spinout companies based on University research. For this, the citizens of Wisconsin should be grateful; and, even more so, hopeful. Grateful because a foundation capable of supporting future growth is in place; hopeful because given the right conditions that growth could, over the next five years, support the emergence of the Madison area as one of the nation’s top five centers of commercial life sciences investment, and indirectly the emergence of Wisconsin as an important mid-continent oasis for venture capital investors that today think of the state as flyover country.

The major progress to date is reflected in the dozens of Madison area life sciences companies, including biopharma companies, with important ties to UW-Madison research. While not large by national standards (UC-San Diego – good school, but hardly a match for Madison – has spawned a couple of hundred life sciences companies) it is a big enough number to establish that the University is technically capable of, and, as important, culturally willing to enable, the kind of private/public collaborations that are critical to realizing the “real world” potential of the University’s basic research.

So, the question is no longer can Wisconsin play in the biopharma major leagues, but can it compete for championships. Can Wisconsin, instead of being known for a handful of companies worthy of acquisition by larger, better funded national firms with roots outside the state, become a major center of large, well-funded companies acquiring promising competitors and moving their operations to Wisconsin. The answer is, in my opinion, yes – if we can take two big steps. The ultimate step is becoming tightly integrated into the major venture capital markets, particularly on the two coasts. The penultimate step is moving our biopharma university spinouts from founder/scientist-managed to professionally managed earlier in their development.

We need stronger ties to the major venture centers, particularly on the coasts, because that is where the majority of biopharma venture and other risk capital money is, in terms of quality as well as quantity. That is critical because compared to just about every other tech-driven sector, what sets biopharma company-building apart is the vastly more time and money it takes to build a profitable business. You simply can’t get a major biopharma company off the ground with a succession of six and low seven-figure investments and SBIR grants. At best you will get to the table too late with too little – and create something for larger, better funded firms to snap up. Unfortunately, multiple high seven and eight figure risk capital investments are simply beyond the capacity of Wisconsin’s limited venture capital base; even more so if you limit the field to firms with nationally recognized life sciences bona fides.

So, how do we get the major biopharma venture capitalists on the two coasts to Madison on a regular basis? Not now and then, but as a regular stop where they make regular investments?

Having spoken with some; having worked on the west coast for life sciences companies and their investors; and having seen money center biopharma investors warm to the Research Triangle life sciences market over the period from roughly 1995 to 2005, I think the answer is professional management. Biopharma and other life science spinouts from places like UC San Diego – at least those that in fact receive substantial capital from the most highly regarded life sciences venture investors – tend to share one key characteristic besides compelling science: experienced professional management. I believe that if our most compelling young biopharma and other capital and time intensive life sciences companies could match management resumes with their comparable counterparts on the coasts, our companies would, in short order, find themselves with comparable balance sheets as well.

Why is professional management so important in the biopharma space? Several reasons. Foremost among them is that building a major biopharma business not only takes more capital and time then building, for example, a software company, it is just plain more complex. The science is more complex, the regulatory environment is more complex, the market is more complex, and the business/financial models are more complex. The bottom line is that venture investors, who in almost every case put the quality of the management team ahead of other factors on their investment checklists, do so even more regularly when they evaluate biopharma and other complex capital and time intense life sciences investment proposals.

Why don’t our management teams match up well with west coast management teams? Two factors jump out. First, our founders (mostly university professors) have less experience (indirect as well as direct) than their counterparts on the coasts with the company building process. These are incredibly bright folks with incredible amounts of energy and, no offense intended, they all too often underestimate the time, energy and skill it takes to build a world-class biopharma company. As a result, they are often reluctant to transfer management of their companies to “the suits” nearly as early in the process as they should. We have to change that mentality if we want to generate sustained serious investments from serious life sciences venture capital investors.

Another reason we don’t have a deep pool of experienced company builders managing our biopharma spinouts is that it is hard to attract them here. No, I am not talking about the climate, though I am sure weather is not a net plus for us. Rather, I am talking about the career risks an experienced biopharma professional takes when they move to what is, for now, a minor league city in terms of “big time” (read “big money”) emerging biopharma companies. The kind of manager we are talking about wants to know that if the deal they are working on now doesn’t work out – or even if/when it does – they won’t have to relocate (again) to find their next opportunity.

To some extent there is not a lot we can do, locally, to change the metrics of the “what will I do next problem.” But there are a few things that would help. One is changing the dominant “I can do this myself” culture common among the area’s founders. Another is making sure that the great science we have here in Madison is more visible in the business community on the coasts. I very much doubt, for example, that the typical life sciences manager on the west coast realizes that UW-Madison is a top-3 recipient of NIH funding.

UW-Madison, and the region, has made enormous progress over the last dozen years in demonstrating both the ability and willingness to work with the private sector to commercialize the University’s extraordinary research. If we can take the next big step – recognizing the need for and successfully competing for experienced professional biopharma managers – we will, I think, rapidly find ourselves among the nation’s leading centers of biopharma venture capital investment. And, once the venture people are here, they will – probably to their surprise – find that we have lots of other great technologies ripe for venture investment as well, all around the state.

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Posted by pajones1

Startup Valuation: Sometimes Less is More. Part I.

August 2, 2011

By: Paul A. Jones

A good rule of thumb when you are selling something is to sell it to the highest bidder. Alas, if you are an entrepreneur selling a stake in your startup company, this seemingly self-evident rule is subject to a number of exceptions, large and small. In this first installment of a couple of blogs exploring startup world exceptions to the higher is better rule, we’ll be looking at one of the biggest and for some entrepreneurs most frustrating exception: what we’ll call the “Over Zealous Investor” exception.

Of the more frustrating experiences of my 25 years in and around venture capital, among the most frustrating is the otherwise interesting deal that prices itself out of the capital markets. It goes something like this. A usually less sophisticated entrepreneur with an at least fundable idea but little else finds some usually even less experienced investor willing to buy in at some outrageous price. Like, say (you can’t make this stuff up) $100 million pre-money for a somewhat generic IT idea.  The entrepreneur takes the money, uses it more or less wisely, and through hard work and determination gets the company to the “next stage” where it needs more funds – but is now worth, in the minds of more sophisticated investors, say, $2-5 million on a pre-money basis.

Or would be worth $2-5 million but for the fact that the over zealous investors already in the deal paid $100 million. With that baggage, it isn’t worth the paper the entrepreneur’s new PowerPoint presentation is printed on.

Now you might think that the losers here are the over zealous investors who overpaid, and you would be right. But so, too, is the entrepreneur, who can’t raise more money because she took too high a price early on. And so, even, are the investors who would be very interested in the deal at a $2-5 million admission price. It turns out, in practice, that the initial investment was such a good deal for the entrepreneur that … everyone ends up with nothing. Thus the Over Zealous Investor exception: an entrepreneur who lets less sophisticated investors pay a scary high price for a deal runs a very high risk that when more money is needed no one (unless the initial folks want to poney up) with any brains is going to provide it.

In this situation the “sell to the highest bidder” rule led the entrepreneur astray because it brought a bunch of people in to the company as shareholders who (i) clearly (consider the price they offered) had no business making the kind of early stage high risk investment they made, and (ii) probably are the kind of people who would make good plaintiffs if the company and some group of new, smarter investors made a success of the business – albeit one that would almost certainly not, in retrospect, justify the early investors’ $100 million valuation. To put a finer point on it, no sophisticated investor is going to come in and wash out the prior investors and – management has to remain incented – jack up the shareholdings of the founder and/or management team for the simple reason that if they do that they are inviting the wrath of the earlier investors. Such wrath often taking the form of an expensive, time and energy-wasting lawsuit of uncertain outcome. As I have heard at least one top tier investor say about a company with a Over Zealous Investor problem, “I wish we could do this deal, but life is too short, and, as you know, there are too many other fish in the ocean.”

So, if you are an entrepreneur with a good, fundable idea, the first exception to the “sell to the highest bidder” rule of thumb is “don’t sell if the price offered doesn’t pass the blush test” (which is to say, could you look a judge in the eye and say the price was reasonable without blushing). When you break the Over Zealous Investor rule you all but eliminate bringing in smart money down the road.

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Posted by pajones1

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