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You're taking my comment out of context. GP said they would create an unsustainable business for $10 million, which kind of implies that they knew from the begi
by pault 9y ago
You're taking my comment out of context. GP said they would create an unsustainable business for $10 million, which kind of implies that they knew from the beginning that whoever bought the business would lose their investment. Buyer beware doesn't absolve the seller in a strictly moral evaluation. I was merely responding to the GP's hypothetical, not making a comment about the VC market in general. Also, GP never said fraud was off the table. :)
- manigandham 9y agoIt doesn't imply anything. If the seller is not fraudulent then it is absolutely up to the buyer to judge the value and thus the price they pay. If they're paying $10M for a business with all the data upfront, then they are assuming they can recoup that cost. I can sell a company that has a business model that will expire in a few years because of new tech or laws or some other reason - if a buyer still buys the company from me then what's the problem? Who gets hurt since that's what you said would happen? There's nothing invalid or unethical about this strategy nor do I care if the acquiring company just executes badly and ends up wasting the money.
- pault 9y agoWe're way off topic, but we're not disagreeing here. If there was no misrepresentation involved then there's nothing unethical. I've edited my reply to specify. As to who gets hurt (assuming information asymmetry): the users who depend on the service, the buyer that loses their investment, and the employees that put a significant portion of their lives into trying to breathe life into an operation where the founder was only interested in creating the short-term appearance of value in order to flip it.