Ed Shafts A Start-Up

‘We’ve got a rather sharp competitor in a Cambridge start-up coming up on the inside track,’ Ed confides to his diary, ‘he’s got better NFC IP than we have and he’s getting the mobile phone manufacturers interested just as the NFC market looks, at long last, that it might take off.’

‘The snag is that we can’t match his business model,’ writes Ed, ‘he’s offering potential customers a stake in his company to secure they have some control over development and the right to re-design the IP to fit their specific requirements. We don’t sell IP only a fixed chip which can’t be modified by the customer.’

‘I think I’ve identified the chink in our competitor’s armour – trust,’ adds Ed, ‘customers like his model, and they particularly his technology, but they’ll avoid him if they think they can’t trust him. Somehow I’ve got to kill that trust.’


A couple of weeks later, the diary entry reads: ‘I may have got a bite from our NFC competitor. Acting through an intermediary – a well-known buyer and seller of businesses – a stupendously attractive personal offer to the founder and director of our competitor has been made.’


‘So far the competitor doesn’t know that we’re on the other end of that offer. Of course our identity would have to be revealed if negotiations got real. If . . .’


‘”Look,” I tell the intermediaries, “I need something in writing to say that he’s interested in doing the deal, Anything to say that he’s simply willing to open negotiations. Or a record of a phone call saying the same thing would be good enough.”


‘”He won’t say or do anything until we tell him your identity”,’ replies the intermediary.’


‘”Tell him we’re another IP company like him,” I tell him.’


‘Can’t do that”.’


‘”Why not?”‘


‘”It’s a lie”.’


‘”No it’s not. We are an IP company because we sell IP. Not in the NFC area but in other areas. Heck we even have an IP division,” I tell him, “we’re paying you a very large fee for this negotiation. Do you want it or not?”‘


‘There’s a sigh. Silence. “OK, Ed I’ll try,” replies the intermediary.


A couple of days later, the diary reads: ‘Gotcha. The intermediary called today and says our competitor won’t commit even to negotiations in writing but he’s got a recording of a conversation saying he’s prepared to consider an offer. That’s all I need. Send me the recording.’


‘I call our outside PR company. “Look I want it leaked to the trade press that the owner of this company is talking to us about selling his company. But our fingerprints must be nowhere near it. Attribute it to ‘ Unnamed sources’ or ‘People familiar with the matter said’. Whatever phrase the journos use. But no way must this be traced to us.”.’


‘That’ll screw our competitor. Once it’s out that he’s prepared to compromise his business model by selling out to us, no one in the mobile phone industry will trust him again. It’s cost us nothing because the intermediary was on a no deal no fee arrangement and there never was going to be a deal,’ writes Ed, ‘roll on my $25 mill.’

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