11 Jul 2014
I think business is a little like Texas Holdem poker: They are both about asset utilization….. and risk vs reward.
A key in poker is that your own hand is only part of the picture.
A great poker player considers both their own hand (and position), and (with great attention) what they may learn from the other player’s betting (asset base (chip stack!) and position) ……. because that betting “tells” about the strength and strategy of your opponent …
It is similar in business and here is a real life example of a Kiwi company I have read about that did not pay enough attention to the “tells” in business:
- In 2011 this NZ technology company had the attention of a US billion dollar company, interested in licensing technology, and
- The CEO of the Kiwi company was told by the CTO of the USA company that he wanted a deal “wrapped up in 4 weeks“ as the Kiwi company “took too long last time“, and
- The CEO was quickly informed by his own CTO the technology implementation was proving very tricky to improve on, and he recommended a quicker safer deal, but
- The Kiwi company CEO and Chairman still mucked around … taking 6 months to even send a first term sheet … getting greedy along the way ….. so
- What do you think was the outcome here for the Kiwi company?
It seems there were two really significant “tells” the CEO and Chairman of this Kiwi company did not pay enough attention to:
- The CTO of the USA company made things very clear he was ready to do business, and
- Their own CTO also made things very clear he was concerned about the technology and recommended they do a safer deal quickly.