A Classic Startup Horror Story • Hacker News Board

Re: A Classic Startup Horror Story

#81

Post by bproper » Tue, Feb 28, 2012, 2:07 PM UTC

larrys wrote: post #70

tptacek wrote: post #66

Earlier quoted context omitted.

Unfortunately some of them can involve just being easy to work with. A classic bizdev trick: schedule meetings at inconvenient times or in inconvenient circumstances; if the other party accepts, they want a deal to happen. Similar logic applies to contact negotiations. Which sucks, because being fully diligent is can also set the "hard to work with" bit and kill the deal too. It's likely that the best way to handle t…

"A classic bizdev trick: schedule meetings at inconvenient times or in inconvenient circumstances; if the other party accepts, they want a deal to happen." Very true. Of course if a party makes this mistake they can easily put the fear of god in the other party by changing their pattern of response. If you tend to reply in a quick fashion and appear very eager and then all the sudden there is radio silence the other…

Whoa I would not have picked up on that, but the strange timing should have been a tip off.

Re: A Classic Startup Horror Story

#82

Post by lix2333 » Wed, Feb 29, 2012, 2:51 PM UTC

larrys wrote: post #75

nostrademons wrote: post #44

Earlier quoted context omitted.

I was out with an investment banker at a social outing, and I asked him "What's the biggest mistake startups make during the acquisition process?" He said, "Buddying up with their potential acquirer. Once you express strong interest in getting bought, you've just lost all negotiating leverage. You've got to play coy with potential acquirers until the deal is signed."

"Once you express strong interest in getting bought, you've just lost all negotiating leverage. " Sure if you maintain that strong stance. But you can always change your level of interest and the opposite party will sense that and run to fix the deal. It's a game of chicken at that point but here's the thing. The acquirer is only looking at you and has decided they want what you have. If they didn't they wouldn't be…

I work in an investment bank and I'm not sure how much power the banker has in the deal process. A lot of it is dependent on the buyer, less on the banker. Bankers get paid based on the size of the deal. We usually take 2-3% of the transaction, but if the deal is huge, you might see that number fall down to 1% or so. Usually, its the buyer that hesitates and decides not to buy it. The banker would usually try to get the firm to purchase it, so they can get paid the commission.

Re: A Classic Startup Horror Story

#83

Post by hga » Fri, Mar 02, 2012, 5:06 PM UTC

ww520 wrote: post #43

dctoedt wrote: post #21

All is not lost, and the start-up shouldn't despair, for a couple of reasons: 1. It's not unknown for acquisition deals to get put on the back burner for a while, even a year or two. That happened to my former company when it was acquired. (This history was publicly disclosed in my company's proxy filing with the SEC [1].) 2. The Company's lawyers are likely to tell them, forcefully, to be very careful about trying t…

Yes. The startup might not have the fund to enforce NDA now but wait until the Company has developed a similar product. There will be lawyers willing to do Pro Bono on collecting the damage.

Bingo. A major use of these sorts of agreements is "If you cheat us AND make a bundle 'we'll be back'".

Or at least that threat WRT employees unwise enough to have signed non-competes (Boston and D.C. areas, obviously not California) has killed several situations I've been in where a company failed and dog in the manger types, the very ones responsible for the failure, used such threats that everyone else gave up and the concept and/or technology died a hard death.

Re: A Classic Startup Horror Story

#84

Post by hga » Fri, Mar 02, 2012, 5:16 PM UTC

goatforce5 wrote: post #45

Worked for a start up that was in an extremely long period of due diligence with a big company you've heard of. The big company was giving our company money to meet payroll, so they knew our piggy bank was empty. Big company says thanks but no thanks. We all get laid off by the start up at lunch time. That afternoon our company lets it be known that they'll be filing a law suit asking for damages of a billion dollars…

Errr, where's the oops?

Sounds like the big company really didn't want to buy and that was the definitive end of the startup, but after the threat of the lawsuit either someone got paid 8 figures presumably to avoid the lawsuit or the big company reneged on the payment, at which point no one is any worse off.