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Noticed this phrase in a column depicting the demise of on Yahoo @

“Also, said it had restructured an agreement with America Online Inc. in which AOL would get equity in the company instead of cash payments for a deal in which was to pay the Internet giant a guaranteed $89 million over four years. The restructuring would give AOL 10 percent of based on current shares outstanding, the company said.”

So, the strategy seems to be:

– Cut a deal with AOL with revenue guarantees of, say, $90M over 4 years. – Go public, partly on the strength of your deal with AOL. – Make sure senior executive sells all of their vested stock at the peak. – Develop a burn rate of $6 Million/mo. with no revenue. – Faced with watching their partner (ie. YOU) go tits up, offer AOL an equity- instead-of-cash deal to meet the revenue guarantees. – Order your BMW Z8. – Retire to Los Altos Hills / become a Venture Capitalist (same thing).


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