Reflect, pivot and beware of Shysters
I spoke to an investor yesterday who told me that the slew of smart deals she is seeing with incredible teams is inspiring. Entrepreneurs who are reflecting on their ideas, their business models and thinking about the future. Even better is that the amount of money they want to raise including the valuations that are what they should be, aka what they should have always been.
There are other companies that find themselves with plenty of capital in the bank but a business that makes zero sense for the post-coronavirus world that we are going to live in. They are laying off a big portion of their team, locking down on how the business can evolve and then will eventually put their best foot forward with something else that hopefully shifts into the new reality, as my friend called it, PC (post coronavirus).
Then we are seeing the shysters. Beware of the shysters. It is hard not to be heads down building your business and doing anything you can to get it off the ground to the next level. That’s what entrepreneurs do.
When things go bad the lowest of the low come out everywhere. There are investors out there who will come in and want to own a big piece of your company because they know it is your only choice.
Don’t do it. Look at yourself in the mirror and have a reality check. If you just started your business and have yet to raise a dime, ask yourself does this business make as much sense now as it is did two months ago? Do I have the stamina to wade through months or longer until finding the right investor? Will people even be investing in this type of business? Can I afford to continue when I am not getting any interest except from shysters that I do not even like?
Put it this way, if you are working on a new gluten-free granola bar, you might want to put it on the back burner for quite a while.
I have seen shysters come in and trust me it is not a good look.
When things go bad the lowest of the low come out everywhere. There are investors out there who will come in and want to own a big piece of your company because they know it is your only choice.I think as with anything the devil is in the details. After all you say ‘because they know it is your only choice’. So you are then faced with ‘investors out there who will come in and want to own a big piece of your company’.Taking that strictly the way it’s stated then what is wrong with that? You made a necessary deal to stay alive. That does happen in business.The ‘investor’ (I am not an investor of course) says ‘to take a risk in this environment with your unproven and/or unprofitable or even silly idea (read that again) ‘I want a big piece of the action for the risk that I am taking’. And true in every situation the market determines what happens in a negotiation. If you had other investors interested then you wouldn’t have to give them a ‘bigger piece of the action’. And maybe you (as has happened in the past few years or longer) given them a much smaller piece than they deserved even. So the founder is the one who could be ‘the shiester’. No?Is the act of simply taking advantage of a situation (what always happens even in the best of times) automatically make someone a ‘shiester’?Yes I know that ‘we know one when we see one’. But just the same if that is the lifeline you have a choice to make. Either you accept that one offer ‘and give up a piece’ or you fold your idea.I was thinking today that this is going to happen with restaurants and most likely many in NYC. You will have restaurants ready to go under but then some investor will come in and make a deal to own a large portion of the restaurant in order that they can re-open. In the past the restaurant owner may have said ‘FU I don’t need your investment’. But now? The investor will dictate the terms. ‘You want to reopen I want X%’. You could call that a shiester or a savior.(Note I think the restaurants that take a deal like that if offered will do well since they might pickup business if things return to normal that can’t be handled as a result of so many closings. So who has the better situation I ask?).
Well, vultures are vultures. They have always existed and they prey on their next targets. Sad but it’s the reality. Of course it hurts more when you’re involved.