<?xml version="1.0" encoding="UTF-8"?>
<rss version="2.0"
	xmlns:content="http://purl.org/rss/1.0/modules/content/"
	xmlns:wfw="http://wellformedweb.org/CommentAPI/"
	xmlns:dc="http://purl.org/dc/elements/1.1/"
	xmlns:atom="http://www.w3.org/2005/Atom"
	xmlns:sy="http://purl.org/rss/1.0/modules/syndication/"
	xmlns:slash="http://purl.org/rss/1.0/modules/slash/"
	>

<channel>
	<title>The XVulture</title>
	<atom:link href="http://xvulture.com/feed/" rel="self" type="application/rss+xml" />
	<link>http://xvulture.com</link>
	<description>Insider's View of Venture Capital and Entrepreneurship</description>
	<lastBuildDate>Sun, 07 Mar 2010 01:15:25 +0000</lastBuildDate>
	<generator>http://wordpress.org/?v=2.8.4</generator>
	<language>en</language>
	<sy:updatePeriod>hourly</sy:updatePeriod>
	<sy:updateFrequency>1</sy:updateFrequency>
			<item>
		<title>How Hot is Your Deal?</title>
		<link>http://xvulture.com/2008/08/05/how-hot-is-your-deal/</link>
		<comments>http://xvulture.com/2008/08/05/how-hot-is-your-deal/#comments</comments>
		<pubDate>Tue, 05 Aug 2008 22:30:51 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Business Plans]]></category>
		<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[Venture Capital]]></category>
		<category><![CDATA[Hot Deals]]></category>
		<category><![CDATA[Investors]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/08/05/how-hot-is-your-deal/</guid>
		<description><![CDATA[Whether you need $50,000 in seed capital or $5,000,000 in bridge financing, raising the temperature of your deal is mission critical. Every entrepreneur is looking for the source, or the sorcerer that can truly connect them to the right accredited private investors-each of which is looking to put money into deals with the right ingredients.

 [...]]]></description>
			<content:encoded><![CDATA[<p>Whether you need $50,000 in seed capital or $5,000,000 in bridge financing, raising the temperature of your deal is mission critical. Every entrepreneur is looking for the source, or the sorcerer that can truly connect them to the right accredited private investors-each of which is looking to put money into deals with the right ingredients.</p>
<p align="center"><a title="Frying Pan" href="http://xvulture.com/wp-content/blogs.dir/106/files/2008/08/fryingpan.jpg"><img src="http://xvulture.com/wp-content/blogs.dir/106/files/2008/08/fryingpan.jpg" border="0" alt="Frying Pan" width="404" height="166" /></a></p>
<p align="center"><strong> What&#8217;s it take to get on the menu?</strong></p>
<p align="center"><em>Keep reading to find out&#8230;</em></p>
<p><span style="color: #993300"><strong>REALITY BITES</strong></span><br />
<strong>Why deals get chewed up &amp; spit out</strong></p>
<p>YOU&#8217;VE BEEN LIED TO-by your banker, your broker, your bean-counter-a long line of stuffed shirts who like to hear themselves croak about &#8220;getting outside of the box,&#8221; only to cram you back into one when it&#8217;s time to start raising money for your business.</p>
<p>Don&#8217;t get me wrong. These aren&#8217;t bad people and they may even be wildly successful, they just don&#8217;t get where they are by packaging and positioning early-stage opportunity. Unfortunately for you, all that well-meaning advice can cost you time and money-lots of it.</p>
<p>Alright, so you&#8217;re here because you want to raise money. If it&#8217;s the truth you seek, you&#8217;ve come to the right place. The bad news is, if you&#8217;re like most people, you will:</p>
<ol>
<li>Be underwhelmed by the message here</li>
<li>Scan the page for what you think is important</li>
<li>Miss the real point and move on</li>
</ol>
<p>If you&#8217;re still reading, good for you, because what you just read isn&#8217;t merely a profile of how most people surf the Net, IT&#8217;S HOW INVESTORS LIKE US SURF OPPORTUNITY.</p>
<p>If you&#8217;re in the market for private debt or equity capital and that doesn&#8217;t scare you, look down-that line you just crossed may well cost you your business. Sure, you may think you&#8217;ve got your act together, that you&#8217;re ready to talk to serious money players, but you&#8217;re not. I see it day in and day out, and it&#8217;s because most entrepreneurs don&#8217;t understand one thing: THE VALUE OF TIME.</p>
<p>One of the many benefits a surplus of capital affords investors is the freedom to cherry-pick opportunity and draw a distinction between entrepreneurs and misguided dreamers.  This is why we prefer deals we can understand quickly, caluculate the upside and effectively assess the risk.</p>
<p><strong><span style="color: #993300">HALF-BAKED</span></strong><br />
<strong>What are you trying to sell us?</strong></p>
<p>All but the most savvy of entrepreneurs fail to recognize the heart of their own deals and kill their fundraising efforts before they even begin.  In order to raise the right kind of money, you need to think like an investor.  Remember, you&#8217;re competing for mindshare here.  It doesn&#8217;t matter if you&#8217;re a concept stage start-up or a growth company looking to take things to the next level, every successful financing effort begins as a bid for an investor&#8217;s time, not his money.</p>
<p>Do your materials clearly, concisely and compellingly articulate the market opportunity and the mechanics of your deal? Probably not. Odds are, it&#8217;s a room-clearing testament to the reasons most early-stage deals die slow, painful deaths: Emotional founders, plodding, techno-saturated narratives, muddy corporate structures, baseless valuations, bad investment vehicles&#8230;the list goes on and on.</p>
<p>Unfortunately, most of the misguided efforts to slim them down yield nothing more than quarter-scale versions of the original 50-page abominations. BEWARE: Just because it&#8217;s short, doesn&#8217;t mean it&#8217;s sweet. The short-form pitch isn&#8217;t a short-cut-it&#8217;s an art form.</p>
<p><strong><span style="color: #993300">FEAST OR FAMINE</span></strong><br />
<strong>It&#8217;s not just what you serve, it&#8217;s how you serve it</strong></p>
<p>If you really want to get an investor&#8217;s attention, less can be more-provided you&#8217;ve got the right ingredients and know how to mix them up.  Find a quick way to whet our appetites with something that&#8217;s got the right flavor-not too spicy, not too sweet-and you&#8217;ll find us more than willing to sit down at the table with you. Who knows? If you&#8217;re the real thing, <strong>we may even pick up the check&#8230;</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/08/05/how-hot-is-your-deal/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Protected: Kluster F@#k</title>
		<link>http://xvulture.com/2008/07/16/kluster-fk/</link>
		<comments>http://xvulture.com/2008/07/16/kluster-fk/#comments</comments>
		<pubDate>Thu, 17 Jul 2008 05:05:37 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/07/16/kluster-fk/</guid>
		<description><![CDATA[There is no excerpt because this is a protected post.]]></description>
			<content:encoded><![CDATA[<form action="http://xvulture.com/wp-pass.php" method="post">
<p>This post is password protected. To view it please enter your password below:</p>
<p><label for="pwbox-30">Password:<br />
<input name="post_password" id="pwbox-30" type="password" size="20" /></label><br />
<input type="submit" name="Submit" value="Submit" /></p></form>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/07/16/kluster-fk/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Angel Notworks</title>
		<link>http://xvulture.com/2008/07/12/investor-notworks-2/</link>
		<comments>http://xvulture.com/2008/07/12/investor-notworks-2/#comments</comments>
		<pubDate>Sun, 13 Jul 2008 04:56:26 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Investment Networks]]></category>
		<category><![CDATA[Venture Capital]]></category>
		<category><![CDATA[Angel Investors]]></category>
		<category><![CDATA[Genesis Exchange]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/07/12/investor-notworks-2/</guid>
		<description><![CDATA[A successful bachelor really never throws away his “little black book,” and neither does an Xvulture. From time to time we “water the plants” to ensure a blooming rose is always in season.
The Rosebuds in our world consist of “Venture Capable” friends and trusted institutional investors &#8211; relationships cemented over the years by successfully pulling [...]]]></description>
			<content:encoded><![CDATA[<p><a title="Angel Investor" href="http://xvulture.com/wp-content/blogs.dir/106/files/2008/07/ange.jpg"><img src="http://xvulture.com/wp-content/blogs.dir/106/files/2008/07/ange.jpg" border="0" alt="Angel Investor" hspace="8" width="159" height="272" align="left" /></a>A successful bachelor really never throws away his “little black book,” and neither does an Xvulture. From time to time we “water the plants” to ensure a blooming rose is always in season.</p>
<p>The Rosebuds in our world consist of “Venture Capable” friends and trusted institutional investors &#8211; relationships cemented over the years by successfully pulling the wings off start-up flies and emerging growth companies.</p>
<p>Our network of private and corporate cohorts are often mistaken by would-be entrepreneurs for “Angels,” “VCs,” and “Investment Bankers.”  To us they are just that, but to the uniformed start-up, they might as well be an electric fence—which brings me to the point of this post:</p>
<p>INVESTMENT NETWORKS ARE BOGUS.</p>
<p><span id="more-37"></span></p>
<p>While there are a few partial exceptions (two of which I will discuss in a moment), typically these networks are nothing more than online marketing mills, engineered to fleece you with the promise of “exposure” and “connections” to “The Money&#8221; &#8211; yeah right!</p>
<p>Posting yourself up on one of these boards is akin to entering Shrek in the Miss America pageant. They&#8217;re blind dates through one way glass (guess which side you&#8217;re on). You’re in a lineup, and on the other side of the mirror are a handful of equally unqualified service providers posing as investors.</p>
<p>If you don’t believe me, go forth young Skywalker and experience the Dark Side. Here are some of the scenarios you&#8217;re likely to encounter in the Red Light District of investor networks:</p>
<p>PAY TO PLAY<br />
The serpent whispers tall tales of a discreet capital market that secretly awaits you, if only you had the treasure map and an experienced guide. Of course, for a small fee, this Slytherin will offer you safe passage to the Promise Land. Should you really trust a snake?</p>
<p>PREP &amp; REP<br />
&#8220;If only you were packaged properly with the right introductions.&#8221; This ancient sales pitch can be traced back to the first guy who ever printed up fake business cards posing as a talent scout for Playboy. Expect to pay up to $1,000 a page for a completely useless re-write of your already lackluster business plan. While experienced service provides can be worth their weight in gold , few Prep &amp; Rep outfits can actually deliver what they promise- BEWARE.</p>
<p>JOY RIDING<br />
&#8220;Let me introduce you to my network of Angels.&#8221; This low-riding business broker is an aluminum siding salesmen turned pimp. The peril here is overexposure to the wrong people. Joy Riders pick you up for the purpose of serving as this month’s doorstop. They turn over deals like overstocked inventory and pimp you out to their outdated list of closed doors. Meaningless “Letters of Interest&#8221; precede the usual and customary follow-up call for a “refundable” fee. Use your imagination here, it almost always ends badly.</p>
<p>CHERRY PICKING<br />
&#8220;You’re the one that I want—whoo hoo hoo, honey.&#8221; Cherry Picking deals may not be the same as prostitution, but in the end you’ll get paid very little to perform sordid acts and end up walking out the same door. You&#8217;re not Julia Roberts, so don’t count on being the next “Pretty Woman.” No one in “The Biz” is looking to be your savior. If you’re the unlucky 1% that gets picked up (pre-revenue), plan on getting a big shot of penicillin afterwards.</p>
<p><!--more--></p>
<p>Now don’t get me wrong here &#8211; I’m not against Investment Networks. In fact, I believe they&#8217;re the future—just not in their current format. Here’s the problem: The two models to choose from are either bulletin boards that let anyone join, and as a result, have no credibility with real investors, or; they’re structured viewing cages that require you to lift your skirt too early, exposing you prematurely to seasoned Vultures that may eat you alive. Either way, you lose the most valuable commodity I know of—time.</p>
<p>As for the two exceptions I alluded to earlier, I like <a href="http://thegobignetwork.com">Go-Big Network</a> for its intuitive GUI and “in your face” style. Wil Schroter doesn’t pull any punches and tells it like it is, and his network is a reflection of that spirit. I also like the way GoBig avoids the presumption of being an Investment Oligopoly, and remains a neutral platform for the controlled chaos we call entrepreneurship.</p>
<p><a href="http://genesisexchange.com/">Genesis Exchange</a> is the right concept for a normalized, score-based preview model- a sort of Facebook page for start-ups, where building the highest score will position you preferentially before their registered investors. I like the scoring model, which allows investors to screen out flops and midnight dreamers. The Genesis interface forces the focus company to build a consistent and uniform infrastructure for investment preview, allowing screeners to quickly summarize the core concept or dig deeper if they so choose. However, if you’re going to play this game, you’d better read some Buffet, because fundamentals count when you’re willing to reveal the results of your most recent colonoscopy.</p>
<p>So what’s the right format? Probably a mix of the two in a transparent platform with more communal exchange between buyers and sellers—a sort of Second Life for start-ups, where you can make a deal on the street with a bunch of friends, or knock on the big doors in private neighborhoods. I have some ideas, but I think I’ll keep them to myself for now <img src='http://xvulture.com/wp-includes/images/smilies/icon_wink.gif' alt=';)' class='wp-smiley' /> </p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/07/12/investor-notworks-2/feed/</wfw:commentRss>
		<slash:comments>5</slash:comments>
		</item>
		<item>
		<title>Leave Home While You Know Everything</title>
		<link>http://xvulture.com/2008/05/23/leave-home-while-you-know-everything/</link>
		<comments>http://xvulture.com/2008/05/23/leave-home-while-you-know-everything/#comments</comments>
		<pubDate>Sat, 24 May 2008 06:41:56 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[E-Myth]]></category>
		<category><![CDATA[entrepreneur]]></category>
		<category><![CDATA[Michael Gerber]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/04/23/leave-home-while-you-know-everything/</guid>
		<description><![CDATA[Mark Twain left home at eighteen years of age, having heard enough of his father&#8217;s wisdom. After returning a few years later, he couldn’t believe how much his old man had learned.
I just love bushy-tailed know-it-all&#8217;s—young entreprenerps who&#8217;ve obviously never read Michael Gerber&#8217;s &#8220;E-Myth.&#8221; Go forth young technician and conquer the world. Surely your exceptional [...]]]></description>
			<content:encoded><![CDATA[<p><img src="http://www.garykoelling.com/files/u1/Mark_Twain.jpg" alt="Mark Twain" align="left" height="161" width="215" />Mark Twain left home at eighteen years of age, having heard enough of his father&#8217;s wisdom. After returning a few years later, he couldn’t believe how much his old man had learned.</p>
<p>I just love bushy-tailed know-it-all&#8217;s—young entreprenerps who&#8217;ve obviously never read Michael Gerber&#8217;s &#8220;E-Myth.&#8221; Go forth young technician and conquer the world. Surely your exceptional skills as a salesman/broker/engineer/coder/designer/whatever, will propel you to great heights, once you catapult over your air-conditioned cubicle.</p>
<p><span id="more-5"></span></p>
<p>OK, so there&#8217;s always a bit of “The Grinch that Stole Entrepreneurial Christmas” in my tone—get used to it, it’s just my style. The truth is, I&#8217;ve heard too many sob stories from brokenhearted, pipe-beaten, biz bunglers, who&#8217;ve come crawling to us for help, with hopes that we&#8217;ll fix their broken deals.</p>
<p>Assuming you haven’t read the E-Myth, the book&#8217;s premise is this:</p>
<blockquote><p><strong>1. &#8220;A Technician is not an Entrepreneur.&#8221; </strong> He is a worker bee that’s become proficient in a particular task or trade. A Technician does not think outside the box, but is spoon fed within it. He dreams of excellence and liberation from 9-5 ham and eggerdom, where one day he’ll be a shot caller. Unfortunately, the hard lessons ahead include not knowing what shots to call, and not realizing that if you’re calling them, there’s no Technician in your place to carry them out. I call this the “how did I get here” and “what do I do now” conundrum.</p></blockquote>
<blockquote><p> <strong>2.  “Systems run the business and people run the systems.” </strong> Any modern business which relies exclusively upon experts to survive is not a business, but one or more Technicians playing business–more like a law practice. This model is doomed from the start, and will most likely result in one of two scenarios: a) Having your experts run off and compete against you (regardless of their illusion, it’s still a pain, and you lost your greatest investment in human capital), or; b) They stick around and bleed you for ransom, knowing full well that you won’t replace them or don’t believe you could. The latter leads to an eventual leverage point toward ownership stake, resentment, or both. Either way, you lose.</p></blockquote>
<blockquote><p><strong>3.  &#8220;Entrepreneurs don’t abdicate, they delegate.&#8221; </strong> You can’t replicate something that works (whether you stumbled upon it or planned it) by dumping the process on someone and hoping it continues. You must take time to fuse your entrepreneurial essences with another, becoming one before separating again. Whomever you delegate to must “see the light” (at least the light of that particular tunnel you’re leading them down). You can later decide where they exit, or whether that light at the end of their tunnel is a freight train. Either way, make it your choice, not theirs. Moreover, serial delegation inspires consistent replication, and replication is a cornerstone of growth.</p></blockquote>
<p align="justify">The net of this Saturday night satire is lesser the effect of boredom than the forewarning of misplaced stardom. Take it as you like, whoever “you” are, and thank Michael Gerber for writing a book about it.</p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/05/23/leave-home-while-you-know-everything/feed/</wfw:commentRss>
		<slash:comments>3</slash:comments>
		</item>
		<item>
		<title>Dead Deal Walking</title>
		<link>http://xvulture.com/2008/05/06/deal-deal-walking/</link>
		<comments>http://xvulture.com/2008/05/06/deal-deal-walking/#comments</comments>
		<pubDate>Wed, 07 May 2008 06:05:14 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Venture Capital]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/05/06/deal-deal-walking/</guid>
		<description><![CDATA[It pains me to mention how many times I’ve heard this phrase: &#8220;If I can only get through the door, I’ll sell this deal.&#8221; Sure you will – if the door’s made of Balsa Wood and you’re strapped with explosives. Short of that, you don’t &#8220;get through the door,&#8221; you’re invited in – and once [...]]]></description>
			<content:encoded><![CDATA[<p><img src="http://xvulture.com/wp-content/blogs.dir/106/files/2008/05/dead-deal-walking.gif" alt="Dead Deal Walking" align="left" height="199" hspace="8" width="199" />It pains me to mention how many times I’ve heard this phrase: &#8220;If I can only get through the door, I’ll sell this deal.&#8221; Sure you will – if the door’s made of Balsa Wood and you’re strapped with explosives. Short of that, you don’t &#8220;get through the door,&#8221; you’re invited in – and once you’re there (wherever there is), don’t be too discouraged if you hear chanting from the bowels of back office&#8230; “Dead Deal Walking!”</p>
<p>I know, you’re probably scratching your head right about now, wondering how this catchphrase relates to your big shot. In Vulture cackle, Deal Deal Walking is a fraternal battle-cry &#8211; a cheer of enthusiasm that assumes another &#8220;stew worthy&#8221; entreprenerp is about to be skinned, and there&#8217;ll be meat for everyone.</p>
<p><span id="more-8"></span>Alternatively, being labeled a “live deal” would imply that you actually stood a fighting chance of survival. Achieving this coveted status requires the following, at minimum:</p>
<ul>
<li>Post Revenue</li>
<li>Proprietary Technology</li>
<li>Disruptive or Revolutionary</li>
<li>Viral Growth</li>
<li>All of the Above</li>
</ul>
<blockquote></blockquote>
<p>VC’s are in the game to accumulate equity, not help you preserve yours. The concept of win/win in Venture Capital means that the VC wins at the beginning and in the end. The beginning is where we squeeze you for value, force feed deadly conversion provisions, lay claim to your board, and handcuff you with first right of refusal options, to seal your fate. In the end, well, you’re pretty much there; you just don’t know it yet.</p>
<p>Flash forward, assuming you’re still employed by the company you founded, where it appears that the bludgeoning you’ve endured is about to show favor – a liquidity event is just around the corner – just not for you. By the time your dream is ready to pop (which is rarer still), you’ve most likely sacrificed more than 95% of your stake. Your upside now boils down to being offered the prospect of restricted stock held in the belly of a medium size acquirer (yuk).</p>
<p>If this doesn’t sound like your particular brand of vodka, I don’t blame you. Raising money is tough sport, and the odds of keeping it (and your equity) is even tougher. Now don’t get me wrong, I&#8217;m not encouraging you surrender to a life of aimless mediocrity or forfeit the challenge, quite the contrary; if you believe this is your chosen path, then take the path of least resistance.</p>
<p>Avoid becoming the walking dead by recognizing your place in the finance life cycle, and what options are “truly”available to you, at each stage. The real lesson here, is that dead deals don’t walk &#8211; because they don’t have legs. Unless you&#8217;re really one of the rare, “live deal” candidates, get used to hearing &#8220;Thanks for your submission, but unfortunately your opportunity does not meet our investment criteria,&#8221; or &#8220;We very much appreciate your submission, however at this time, our fund is focused on other initiatives.&#8221;</p>
<p>Parents are supposed to guide their children through the fundamental stages of development, and as my father once told me: “there are seasons of a man’s life, don’t skip em.” The finance life cycle of your business is no different. So in the unlikely event that you&#8217;re greeted by a Vulture and invited to the Bird&#8217;s Nest, be sure to keep your ears tuned for the whispers of dead deals past.</p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/05/06/deal-deal-walking/feed/</wfw:commentRss>
		<slash:comments>1</slash:comments>
		</item>
		<item>
		<title>Keep Your Napkin In Your Lap</title>
		<link>http://xvulture.com/2008/05/01/keep-your-napkin-in-your-lap/</link>
		<comments>http://xvulture.com/2008/05/01/keep-your-napkin-in-your-lap/#comments</comments>
		<pubDate>Thu, 01 May 2008 07:34:30 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Deal Making]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/04/24/keep-your-napkin-in-your-lap/</guid>
		<description><![CDATA[If I had a sliver of ever deal that ended up in the toilet as a result of partner infighting, I&#8217;d own Berkshire. If napkins were intended to be legal instruments, people wouldn&#8217;t use them to wipe their chins, blow their nose in, or clean up spills. Napkins are fine for sketching ideas at the [...]]]></description>
			<content:encoded><![CDATA[<p><img src="http://www.buypeace.com/img/napkin.gif" align="left" height="187" hspace="8" width="180" />If I had a sliver of ever deal that ended up in the toilet as a result of partner infighting, I&#8217;d own Berkshire. If napkins were intended to be legal instruments, people wouldn&#8217;t use them to wipe their chins, blow their nose in, or clean up spills. Napkins are fine for sketching ideas at the coffee shop, but you&#8217;d better memorialize your shared inspirations with a definitive agreement, if you want to avoid future headaches. Good faith, goodwill, and good intentions are mere spittle, irresponsibly mouthed from the lips of naive deal-makers, giving little consideration to what matters most &#8211; implementation.  This &#8220;googley talk&#8221; always precedes the perfunctory palm pressings that underscore every narrowly defined deal.</p>
<p>For all the use of the word &#8220;good&#8221; in the early stage deal-making, there&#8217;s still one missing&#8230; <em>good luck </em>- because if you intend to make a deal with that napkin in your lap, you&#8217;re going to need it.</p>
<p><span id="more-6"></span></p>
<p>For those in need of a refresher, partnerships are defined as follows:</p>
<ol>
<li>A legal contract entered into, by and between two or more parties, in which each party agrees to furnish all or part of the investment, and/or labor within the business &#8211; and by which each party shares a fixed proportionate value of profit and loss.</li>
<li>A contractual relationship between individuals, groups or companies, characterized by mutual cooperation and responsibility, whereby strategic and tactical initiatives are carried out for the betterment of the whole (hopefully).</li>
</ol>
<p>So why do most entrepreneurs fail to honor this seemingly simple charter, before, during, and after the deal points are agreed upon? Because the unwitting &#8220;would-be&#8221; entrepre<em>nerps</em> can&#8217;t identify with the concept of planning the divorce while eating the wedding cake.</p>
<p>Everyone revels in romance and joy during the courtship and engagement &#8211; it&#8217;s a natural state of being &#8211; a time of dreams, fostering creativity, exuberance, and high hopes for the future. Unfortunately, like most marriages, business relationships become strained. Greed and stupidity eventually take hold. The bright blue lines that once clearly defined your magical napkin have now faded, blurred, become distorted &#8211; illegible.</p>
<p>I often counsel &#8220;newlywoulds&#8221; that the supposed negotiation between them never took place if the parties cannot recall moments of contention and or extreme discomfort. With that said, what makes a deal stick?</p>
<p><strong>Know who you&#8217;re getting into bed with and expect everyone to be a spy</strong><br />
Play it close to the vest and never share your genius with anyone you don&#8217;t have locked down. The fact that you like the sound of your own voice is not good enough &#8211; sing in the shower.  Everyone claims to be a partner and loyal comrade &#8211; to kill or be killed by your side (sure).</p>
<p><strong>Establish the ground rules</strong><br />
Oddly enough, it is often misunderstood, as to exactly who the Emperor is. Make sure to clearly delineate the roles of each player and what kind of government you intend to run. Will it be a Democracy, an Oligopoly, or a Dictatorship? Without clear distinction upfront between the parties, the last words you utter might be &#8220;Et tu, Brute?&#8221;</p>
<p><strong>Document Everything</strong><br />
Keep minutes of each brainstorming session for strategic reflection, planning, contemplation and commemoration. You&#8217;ll understand later why it was so important to remember who contributed what. Anything that has to do with roles and responsibility, management, profit and loss, expenses, encumbrances, representations, decision making, voting rights, salaries, commissions, bonuses, distributions, dilution, priority and preferred returns, loans by officers, shareholders, friends, family and fools, is all relevant.</p>
<p>These details will become the Magna Carta of your deal. Once you&#8217;re ready to actually commit to something binding, you&#8217;ll need a more definitive framework to embody all of the relevant terms and conditions &#8211; which you and your partners have hopefully ferreted out, during those endless hours of strategic dreaming.</p>
<p><strong>In Comes the Contract to Negotiate in Good Faith</strong><br />
It means what the name implies. The CNIGF is a semi-complete agreement, where two of more parties agree to be legally bound by specific provisions. However, the term &#8220;Good Faith&#8221; means that some, but not all of the relevant deal points have been agreed to, and that the parties wish to continue to work together towards that end. Essentially this document gets you closer to a deal, but still leaves a gaping hole for trouble makers to plow through. Bow with your eyes open.</p>
<p><strong>Operating and Shareholder Agreements</strong><br />
Now you&#8217;re getting somewhere, assuming you don&#8217;t drop the ball at this point. The provisions of the Operating Agreement (for limited liability companies), or Shareholder Agreement (for corporations), define in clear and concise legal terms, what&#8217;s what and who&#8217;s who. If crafted properly and negotiated well, these documents will be stand the test of time, and do their job &#8211; for better for worse, for richer for poorer, in sickness and in health, and till death do you part (rarely the case).</p>
<p>We have developed an application, currently in alpha, that might save your marriage. It called <a href="http://http://dev.napkin.browsermedia.com/session/new" title="Napkin 2.0">Napkin 2.0</a> &#8211; give it a whirl and tell me what you think. And remember, the mere consummation of a deal does not necessarily make it a good one-just one defined. The bottom line: Go with your gut, but get it in writing.</p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/05/01/keep-your-napkin-in-your-lap/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Intentional Misdirecton</title>
		<link>http://xvulture.com/2008/04/24/test/</link>
		<comments>http://xvulture.com/2008/04/24/test/#comments</comments>
		<pubDate>Fri, 25 Apr 2008 06:12:41 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Venture Capital]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/04/24/test/</guid>
		<description><![CDATA[Let me guess…you can’t sleep at night.
You’ve been up for days thinking about your new idea, or perhaps the latest rendition of it. You have it all thought out: staffing, management, equipment, space requirements, growth rate, sales and marketing, etc.
You’re certain to recruit great talent, and why not? —with an endless supply of superior malcontents [...]]]></description>
			<content:encoded><![CDATA[<p><img src="http://xvulture.com/wp-content/blogs.dir/106/files/2008/04/saddam_nun1.jpg" alt="Saddam as Nun" align="left" height="235" hspace="8" width="175" />Let me guess…you can’t sleep at night.</p>
<p>You’ve been up for days thinking about your new idea, or perhaps the latest rendition of it. You have it all thought out: staffing, management, equipment, space requirements, growth rate, sales and marketing, etc.</p>
<p>You’re certain to recruit great talent, and why not? —with an endless supply of superior malcontents within your sector &#8211; you might as well be plucking day laborers from the back of an INS truck. They’ll gladly serve as Generals in your army. You’ll be a fearless leader and command battalions of troops (lured by options of course), to join your disruptive Jihad  against oppressive corporate America. You’ll free yourself from the shackles of mediocrity and the bondage imposed upon you by the “9-5 Axis of Evil.”  All you need now is a little financial support &#8211; a brigade of friends, family and fools, peppered with a few Angel Investors, here and there. One hard pull on the bootstraps and it’s off to the Series A Round—here comes the private placement for widows, dentist’s wives and idiot’s sons.</p>
<p>Following that successful round up, who’d ever question your plans for an institutional play? Maybe 20% for $1M and some convertible debt. Venture Capital is abundant and there’s billions of it out there. Just Google the word “Ventures&#8221; and take your pick. Better yet, why not join a few preferred investor networks &#8211; bringing the red light district right into the privacy of your own home.</p>
<p>Flash forward, you’re nearing the <em>three year mark</em> (in your head). Why not position yourself for a successful merger, acquisition or IPO? (they&#8217;re quite abundant these days). Why not go OTC? Your buddy knows a guy who knows a guy, that does these “reverse mergers” into public shells. It’s not that expensive, and a great way to churn your own volume &#8211;  Next stop: Nasdaq.</p>
<p><span id="more-16"></span></p>
<p>Now, let&#8217;s for a moment presume that you&#8217;re not the typical midnight dreamer (as described above), high as a kite on your own blend of ether and idiocy, where the order of the day is to not walk you back to your cubicle, in favor of shock treatment for  your “entrepreneurial seizure&#8221; &#8211; what now&#8230;?</p>
<p>Truth:</p>
<p>The quest for entrepreneurial freedom is now more en vogue than ever before, beginning with deconstructing college students &#8211; to get off the pipe of corporate hype, and ending with late bloomers (baby boomers) and old timers &#8211; three distinct groups who are now aware that they are either unemployable or obsolete. Either way, regardless of how you arrived at your destination, the ice water is pretty frigid.</p>
<p>Someone once told me:</p>
<p>&#8220;You’ve got a better chance of getting hit by lightning in a swimming pool, than you&#8217;ll ever have getting a venture capitalist to return your phone call.&#8221;</p>
<p>- But gaining access to venture capital isn’t the meat of my message, quite the contrary &#8211; so don’t focus purely on the term “Venture Capital,” but rather on the intrinsic meaning of the words “Venture” and “Capital” independently.</p>
<p>Joining these terms suggest that someone, or a group of someone’s, somewhere, are intent on, or at least interested in, venturing a commodity called Capital, into something you believe in. It also implies that a venture gained is not capital lost, so you’d better believe &#8220;they&#8221; want a return.  That’s right, a return, and a big one at that.</p>
<p>My point here is that everyone is a venture capitalist—it’s just a question of scale and whether or not you espouse to be a professional. If you make a bad deal with a friend or family member, realizing later that you gave away too much of your company, you essentially beat yourself at a pro’s game, which makes you an amateur.</p>
<p>The only difference being, you probably sealed your fate and don’t yet know it. Join the club, you’re not alone. You’re now a proud card carrying member of the “would be” society – wearing the scarlet number 98, representing the percentage of businesses that will never gain official access to the capital markets &#8211; and not just because you botched the value of your company by bringing in Uncle Herman for 30%, but for a multitude of factors, which include, among many others, pure lack of experience mixed with intentional misdirection.</p>
<p>Yes, you heard it right…Intentional Misdirection.</p>
<p>We the people…wait, wrong charter. We the Vultures (Venture Capitalists, Angel Investors and Commercial Banks), of the United Financial Oligopoly (“UFO”), do solemnly swear to hide the truth, the whole truth, and nothing but the truth, so help us God.</p>
<p>How do I know this? &#8211; because I&#8217;m one of them, and have been now for the last fifteen years!</p>
<p>Behind the cloak of the XVulture, I’ve amassed considerable wealth, trading on the scalps of inexperienced and unsuspecting dreamers like you. My cohorts and I happily cherry picked the best of breed from almost every industry, luring bushy tailed entrepreneurs into our clutches, on the promise of capitalizing their life’s ambition.</p>
<p>What we didn’t disclose, however, was the reality of our chosen path for them – a road paved with landlines, not gold. Each and every one of them (even the ones that did deliver), would soon learn the art of Intentional Misdirection—a calculated setup born from our (self proclaimed) elitist greed, and a viewpoint that entrepreneurs are nothing more than accidents waiting for capital. Regardless of how the deals started, they always ended the same way—our way. We owned, controlled, and fired at will &#8211; leaving the founders for dead, only to pass on our secret recipe for Vulture Stew (1/5/0):</p>
<p>One year, less than a five percent stake, and zero involvement.</p>
<p>So who am I and why am I telling you this?  The second part is easier to answer—because life has a way of teaching us things in reverse. Sometimes we have to fast forward to the end in order to to make sense of our beginnings. So if you happen to be one of the rare few that ever get glimpse of who you might have been, change.</p>
<p>As to the first part of the question, I’m the XVulture for now. And because I haven’t yet evolved to the point of giving all my blood money to charity, I have partners, investors, and numerous companies that would not appreciate my new found conscience or desire to help the underdog.</p>
<p>Maybe someday.</p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/04/24/test/feed/</wfw:commentRss>
		<slash:comments>1</slash:comments>
		</item>
		<item>
		<title>Trading Places</title>
		<link>http://xvulture.com/2008/04/24/the-perfect-storm/</link>
		<comments>http://xvulture.com/2008/04/24/the-perfect-storm/#comments</comments>
		<pubDate>Thu, 24 Apr 2008 19:13:29 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/04/24/the-perfect-storm/</guid>
		<description><![CDATA[Deals are a dime a dozen, maybe a penny these days. Like a good dog, everyone thinks they have one – sure, while it’s cute and cuddly, until it grows up to bite you in the ass. Animal&#8217;s behaviors mimic their human counterparts (Dog Whisperer 101). If you’re neurotic, so are they. If you’re stressed [...]]]></description>
			<content:encoded><![CDATA[<p><img src="http://xvulture.com/wp-content/blogs.dir/106/files/2008/04/dukes.jpg" alt="The Dukes" align="right" height="235" hspace="8" width="188" />Deals are a dime a dozen, maybe a penny these days. Like a good dog, everyone thinks they have one – sure, while it’s cute and cuddly, until it grows up to bite you in the ass. Animal&#8217;s behaviors mimic their human counterparts (Dog Whisperer 101). If you’re neurotic, so are they. If you’re stressed and erratic, so are they. If you’re abusive, they’ll turn.</p>
<p>Deals, similar to dogs, often have fleas, and sometimes blood sucking ticks &#8211; differentiated generally by those who care for them. To care for a deal, you must have discipline, patience, time, understanding, and the ability to constantly adapt to external stimuli. A great leader not only balances these factors, but does so while others remain awestruck at the magnificent effortlessness of it all.</p>
<p><span id="more-7"></span></p>
<p>A great leader is not just a visionary, but a strategist and a tactician all in one. He see the target through a wide angle and zoom lens simultaneously with pinpoint accuracy. Crisis is a walk in the park for these hunters, and nerves of steel are the mark of distinction.  He is competent and confident in all aspects of the deal &#8211; numbers, cash flow, use of proceeds, funding, valuation, competition, market dynamics, paradigm sensitivity, time management and resource allocation, to name a few. He wreaks of courage and imbues a relentless dedication to fulfilling his destiny, but never through self indulgence or arrogance.</p>
<p>This immortal can:</p>
<p>“walk with kings, nor lose the common touch, and fill the unforgiving minute with sixty seconds worth of distance run.”—Rudyard Kipling</p>
<p>This is where we put our money – in people, not deals. We look for these characteristics to invest our stake, hoping to find the right tail to wag the flee-bitten dog.  It is these attributes that attract us most to &#8220;the visionary.&#8221;  We recognize that strategy and planning require fluidity to adapt to changing market conditions, where a worthy Captain with a weather eye, will safely navigate the tides of both desperation and doubt, which swell incessantly.</p>
<p>To get capital, he must become capital – human capital. He must convince us that he knows everything and nothing at the same time about his deal, and should be ready to answer ALL of our questions, perfectly &#8211; ones that we claim (and I said claim) not to understand, related to his sector and particular opportunity. We shine the brights lights in his face&#8230;</p>
<p>His Retort:</p>
<p>“I have no idea! The evolution of this concept is organic in nature, which is the reason I stand before you. I’ve invested my own money in nanotechnology and micro surgical instruments with hopes of revolutionizing medicine, but I admit I don’t understand the intricacies of the field. I bet on fundamentals along with timing, mixed with a touch of gut instinct. I didn’t expect to walk into this room convincing any of you that I can tell the future, but I expect to walk out leaving all of you wondering if I’m a part of it. Consider me a managed fund rather than a quick pick – I’ll diversify and perform over time – consistently. And when it’s time to exit, I’ll go quietly.”</p>
<p>So there you have it – our archetypical masterpiece of an investment prospect &#8211; the creme de la creme of candidates, capturing 100% of our venture dollars, representing 1% of the hopefuls. This is who you must become to dig in our pockets. There&#8217;s only one problem … I’ve never seen this character in my life, and I’ll bet no one else has either. What does that tell you about how we really make our picks? Remember Trading Places? You got it…we’re the old codgers that bet a buck on Billy Ray Valentine, and it wasn&#8217;t to see him succeed.</p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/04/24/the-perfect-storm/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Looters, Moochers and Titans</title>
		<link>http://xvulture.com/2008/01/29/looters-moochers-and-titans/</link>
		<comments>http://xvulture.com/2008/01/29/looters-moochers-and-titans/#comments</comments>
		<pubDate>Tue, 29 Jan 2008 18:08:54 +0000</pubDate>
		<dc:creator>adamstuart</dc:creator>
				<category><![CDATA[Just Because]]></category>

		<guid isPermaLink="false">http://xvulture.com/2008/05/29/looters-moochers-and-titans/</guid>
		<description><![CDATA[Ayn Rand&#8217;s, Atlas Shrugged, paints an eerily familiar state of affairs, related to man, society, and the sad but true nature of the &#8220;collective whole.&#8221;   Although written more than fifty years ago, her philosophy related to capitalism and the perils of compromising the &#8220;free-market&#8221; and &#8220;free-thinking,&#8221; clearly ring true today.
Particularly interesting (to me [...]]]></description>
			<content:encoded><![CDATA[<p><a title="Atlas Shrugged" href="http://xvulture.com/wp-content/blogs.dir/106/files/2008/06/atlas2.jpg"><img src="http://xvulture.com/wp-content/blogs.dir/106/files/2008/06/atlas2.jpg" border="0" alt="Atlas Shrugged" hspace="8" width="218" height="253" align="left" /></a>Ayn Rand&#8217;s, Atlas Shrugged, paints an eerily familiar state of affairs, related to man, society, and the sad but true nature of the &#8220;collective whole.&#8221;   Although written more than fifty years ago, her philosophy related to capitalism and the perils of compromising the &#8220;free-market&#8221; and &#8220;free-thinking,&#8221; clearly ring true today.</p>
<p>Particularly interesting (to me at least) is her labeling of two distinct parasites of society, Looters and Moochers.  As defined in Wikipedia:</p>
<p>&#8220;<em>The looters are those who confiscate others&#8217; earnings &#8220;at the point of a gun&#8221; (figuratively speaking) —often because they are government officials, and thus their demands are backed by the threat of force. Some looters are following the policies of the government, such as the officials who confiscate one state&#8217;s <span style="text-decoration: underline">seed grain</span> to feed the starving citizens of another state; others are exploiting those policies, such as the railroad regulator who illegally sells the railroad&#8217;s supplies on the side. The common factor is that both use force to take property from the people who produced or earned it, and both are ultimately destructive.</em>&#8221;</p>
<p>&#8220;<em>The moochers are those who demand others&#8217; earnings because they claim to be needy and unable to earn themselves. Even as they beg for their help, however, they curse the people who make that help possible, because they hate the talented for having the talent they don&#8217;t possess. Although the moochers seem benign at first glance, they are portrayed as more destructive than the looters-they destroy the productive through guilt and often motivate the &#8220;lawful&#8221; looting performed by governments.</em>&#8221;</p>
<p>Looters, as much I detest the breed, are par for the course &#8211; assuming you&#8217;re talking about some corrupt government official (which they all are), that at 9am, signs a bill to fleece the high achievers or &#8220;Titans,&#8221; and at 9pm, signs a check to his prostitute (which will bounce, and be paid for by those he just fleeced). Moochers however, are the Antichrist of free thinkers and Titans, where the very nature of their existence seems evil. Rand holds that <em>&#8220;evil is a parasite on the good and can only exist if the good tolerates it</em>.</p>
<p><span id="more-31"></span></p>
<p>Creatives are not Titans.</p>
<p>In order to avoid any confusion, the term &#8220;Creative,&#8221; for the purpose of this piece, is intended to personify the common &#8220;service provider&#8221; (within any sector or discipline), who unintentionally (yes, they don&#8217;t actually know it), attempt to claim the Titan&#8217;s unique inspiration as their own, or worse&#8230; actually believe they made it better.</p>
<p>The most dangerous mistake a Titan can make is buying into the idea that &#8220;their&#8221; creativity needs further creative influence. Being creative is a foundational attribute of the titans of industry &#8211; because there is a connection to the subject of their creation. Without a keen sense of distinction, it is easy to mistake the benefits of a symbiotic relationship with other great Titans for a parasitic one.  In <span style="text-decoration: underline">using</span> Creatives, it&#8217;s important to realize that you are <span style="text-decoration: underline">contracting</span> with specialists in the creative arts, as tools &#8211; not masters.  You&#8217;re the Michaelangelo, and they are the chisel &#8211; don&#8217;t confuse the two. If you do, you&#8217;ll quickly spiril down the staircase of collective mediocrity.</p>
<p>I recently exiled a moocher from one of our companies, not realizing that this parasite has been feeding so long.  I have no one to blame but myself, being that parasites cannot exist without a willing host.</p>
<p>Artists have their place, and when true to form, uniquely inspired, can be the Titans as well.  However, self-proclaimed Creatives, as parasites, are not Titans, because they lack independent thought, and instead, attach to the dreams of those who do &#8211; only to jumble the purity of another&#8217;s magnificent inspiration, and misappropriate it as their own. This cycle completes itself when the Creative regurgitates it back to the Titan/inspired thinker, claiming that the new collective inspiration is better than the initial inspired thought.  Now, remember &#8211; this can only happen if the good (selfish free-thought) tolerates the collusion of the evil (collective mediocrity searching for a purpose).</p>
<p>Creatives or Moochers (one in the same), will always be present around free-thinking Titans &#8211; remember, because &#8220;they hate the talented for having the talent they don&#8217;t possess.&#8221; Now I&#8217;m sure you must be saying to yourself&#8230;&#8221;how can someone who is creative not be creative, or be useful at some level &#8211;  and does that mean we dont need anyone else to help us grow and develop, or to be successful.&#8221;  NO, we don&#8217;t!  Labeling yourself as a Creative is akin to calling yourself a Star.  If you&#8217;re a star, someone else or a group of someone else&#8217;s will recognize your achievements as &#8220;hightend&#8221; or &#8220;extraordinary,&#8221; and will in turn be inspired by your achievement alone, rather than the delusion that they were a collective contributor.</p>
<p><span style="text-decoration: underline">We are inspired by like greatness,</span> and if that solicits the particular-exclusive talents of another, within their particular area of expertise (marketing, sales, strategy, statistics, deal-making, operations, design, leadership), than we become <span style="text-decoration: underline">free,</span> to <span style="text-decoration: underline">create</span>, <span style="text-decoration: underline">individually</span>, and along-side of one another. This method of &#8220;Titan Fraternity&#8221; does not allow for any parasitic attachments, and if you are lucky enough to join the club, never compromise your inspiration for another&#8217;s, or you&#8217;ll fast be thrown out. Remember to always check your skin frequently.</p>
]]></content:encoded>
			<wfw:commentRss>http://xvulture.com/2008/01/29/looters-moochers-and-titans/feed/</wfw:commentRss>
		<slash:comments>1</slash:comments>
		</item>
	</channel>
</rss>
