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May 15, 2005

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With all due respect to Ed, a VC trying to pretend he has my interests at heart when discussing valuation or dilution feels an awful lot like a used car dealer pretending to be my best pal while we stroll around his lot. The reaction is the same...grab my wallet tight and don't bend over.

The notion that, in that context, the VC's interests are not adversarial to the founders' interests is simply a lie. These adverse interests can nevertheless exist in a mutually beneficial environment, but IMHO the odds of that go way down when one party is pulling a snow job.

His core point is, of course, not wrong. During the bubble years I watched a lot of companies neglect their customers and their products in order to focus all their attention on their investors...to the ultimate detriment of _all_ concerned. But between the credibility problem that his unacknowledged conflict of interest brings to the table, and the apparent call for _unilateral_ "compromise"...well, I don't think it's a message that's going to go down well.

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