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To: Noel who wrote (144996)	10/12/2001 8:43:35 AM
From: Amy J	Read Replies (1) \| Respond to of 186894

Hi Noel, 100m is low RE: "system is set up it favors the founders" I have seen probably a hundred or so founders that have lost their companies, it's not advertised because many disappear from the scene. Some have pain so great, poignant agonies, some may be going through probably deep depressions. But some snap back fast and have at it again or decide to do something else. Many sacrificed a lot, particularly in their personal life. Driving a business hard, doesn't leave too much room for too much else. Financial sacrifices too, one person I met had payroll on personal credit cards, one had a mortgage refinanced so more money could be put into the startup. The founder of a competing company to ours, spent many years building his company and taking it public, based upon what is now (but not then) archaic technology, which was okay, but later they started to transition to the new technology. He got bumped off the board when investors came in. The board brought in a highly paid CEO that would make WS happy, IPO window dressing, but he was not familiar with the market or technology, which was necessary in order to very, very carefully transition. So they made some rash business moves that didn't fit, wrong moves that's costing the founder his company. The founder is a few years older than me, started it right out of school, same school I went to, and he's essentially lost all of his years of hard work since school. The CEO burned through money at a rate that did not match the transition from one communications technology to another, way ahead of its time, absolutely sure death of any comm startup that's dependent upon an industry transition. And it gets worse. The CEO cashed in his stock, but the founder didn't. The CEO left, leaving the founder with an absolute mess that's probably not recoverable since they don't have any cash left because the CEO way over spent it big times when the market wasn't ready to bear the new technology and they're now burdened with the cost of supporting legacy products and a failed transition, which stretches and divides resources too thin. What his Board should have done was spin off the old technology with B-players, moved the A-players into the new technology, rather than letting the entire company essentially sink by holding on to the old. The founder put everything he had into his company and he was essentially raped of his company. So, in that example, I don't see the system imbalanced in favor of the founder. While not true for many startups, in this particular case, his biggest business risk was actually his investors - they put in a non-technical CEO, maybe weren't technical enough themselves, and the founder quite obviously got overruled. Now he's out of pocket at the absolutely worse time to be out of pocket. But what are the origins of this imbalance? Looking at the renown dotcoms, when the amount of money raised through investors (deal size) greatly exceeded the amount of money a company could earn through profits from revenue, too many companies started focusing on the investors' needs rather than their customers' needs, because they were potentially at risk if their competitor raised huge amounts of money if it overpowered customer revenue. But this is like doing fraud to the market place because plans and products get built either under the distraction of WS or to what WS thinks they need rather than what the customers are demanding or what the revenue is supporting. I think that's partially what this bust is about too, things got built ahead of the market place. If someone charted the average deal size, average revenue rate of a startup, ratio of deal size to startup revenue, historical years, and placed an "X" in the years where a bust occurred, would a person find that a bust occurred immediately after the (deal size):(revenue) ratio exceeded a certain ratio? RE: "I am asking you because I respect your opinion" Thank you. San Jose Mercury News has a good stock chart that addresses some of the questions in your post. I'll try to locate it and post some thoughts on this. Regards, Amy J