Re: Hard Lessons Learned (for the entrepreneurs out there)

From: Jeff Bone (
Date: Mon Apr 02 2001 - 23:38:59 PDT

Gordon Mohr wrote:

> * brokers are inbeciles who will make things up
> rather than saying "I don't know" or "let me
> check"; choose your broker carefully and even
> then, don't trust them.

Ah ha ha ha ha ha! YOU TELL 'EM, GOJO! :-) :-) :-)

We won't name names, though.

Here's a little vignette for your amusement:

JoeBiz: "Hey Bob, I wanna buy 100% PUT coverage, LEAPS."
BobBroker: "Son, I really don't think you wanna do that. Lemme get you some
JoeBiz: "But Bob, I want LEAPS."
BobBroker: "Let's see here, I've got some June options..."
JoeBiz: "LEAPS, Bob. LEAPS. I've been to CBOE. I know the price. LEAPS."
BobBroker: "Too damn expensive. Been in brokering for 20 years. Too expensive."
JoeBiz: "Bob, buy the LEAPS."
BobBroker: "There, I got you some nice shorties. We'll roll 'em."
JoeBiz: "You sure about that, Bob?"
BobBroker: "Never been surer of anything in my life..."

(BobBroker proceeds to twist JoeBiz's ear for about half an hour, reading him
current stock price information that JoeBiz *already* can see realtime on his
screen from Island and a million other sources.)

6 months later, the shorties expire worthless, never get rolled, the market then
abruptly rolls onto its side and JoeBiz is left with no protection.

Bottom line, and a new piece of advice I just thought of: if you ever come into a
big chunk of stock and you have any desire to manage it yourself... don't. Hand
it all over to those nice smiling Jehovah's Witness-looking portfolio theorists
that your IB (and every other banker) sends over to convert you to the religion,
hand it over post haste and comfortable in the assurance that you've just made the
best financial decision you'll ever make. Seriously.

BUT if you aren't going to do that, then at a minimum RUN --- don't walk --- to
take your Series 7 exam; then, you'll be JUST AS QUALIFIED as any broker you're
going to hook up with, and then maybe you'll be able to trust your own intuition
instead of feeling that you have to accept the "wisdom" of their extensive
experience. It's not that you're going to learn anything; a Series 7 can be
passed by just about any moron with 9th grade math equivalency. But that's just
the point: it'll totally demystify the whole thing and really show you exactly
what that guy on the other side of the phone call knows and doesn't know.

> * ...PublicCo assumes the PrivateCo option plan...

Good advice; easy to get wrong --- we nearly did. Many first-timers will try to
poison-pill their option plan, to get accelerated vesting upon change of control.
This both makes an acquisition harder to negotiate (if not perhaps impossible)
*and* has undesirable financial side-effects for option holders.

> * transfer agents are staffed by people too inept
> to be brokers; never expect to get anything
> on time, made out to the right name, or sent
> to the right address

God, how true. The best way to handle the transfer agent issue is to *show up at
their offices on the day of transfer, lockup expiry, or whatever.* Seriously.


PS - Gojo, Dan was in town from London over the weekend. Wanna buy his mondo
condo? :-/ ;-)

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