August 30, 2014

Icahn Investment in Netflix Could Cause Conflict

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Entrepreneurs know the importance of vision in any business, but sometimes when disparate visions collide, the resulting conflict can hurt the business overall. News last week that activist investor Carl Icahn had acquired about 10 percent of video streaming company Netflix aroused fears among analysts that conflicting visions between Icahn and company management might disrupt operations. From initial investment to the growth of a business, conflict is inevitable. Think about these issues from the beginning so that when conflicts arise, your vision for your business comes shining through.

Struggle for Power

The poison pill. Netflix management said they were open to Icahn’s “perspective” as a major shareholder last week, but this week management deployed a so-called “poison pill” strategy to dilute Icahn’s shares and prevent take-over. Small businesses don’t generally need to deal with activist investors, but if you take investment funds from friends, family or anyone else when starting your business, you will need to decide how much of a role they will play. CNBC

The Icahn effect. Icahn’s role at other companies has often been to unlock maximum value for investors by making management changes or even by selling off assets if he thinks it’s the best way extract value. But analysts worry this philosophy may come into conflict with management’s efforts. Maximizing profit is, of course, a consideration, even in the smallest company, but be sure to do what’s best for your business in the long term too. MarketWatch

Angling for Investment

The needs of the many. One possible source of funding for businesses that can help entrepreneurs maintain control is what’s called micro investment. This approach has entrepreneurs seeking smaller amounts of money from a larger number of investors. As blogger Ian Goddard explains, “$1 from 1001 people is better than $1000 from one person…and a lot easier to get!” It’s also a lot easier to keep control when everyone owns a smaller share. Expert Business Advice

Angels we have heard on high. The angel investors are back. According to the latest data from the Center for Venture Research at the University of New Hampshire, the angel investor seems to be on the rebound. Angel investment hit $9.2 billion over the first two quarters of 2012, an increase of 3.1 percent over the same period in 2011. Investments were made in a total of 27,280 entrepreneurial businesses, up 3.7 percent over the same time the previous year. Grow Smart Biz

From Start to Finish

Startup strategies. Control over your business’s direction has to do with who gives you startup finances. It’s also determined by the partners and co-founders you choose in the beginning and how well they fit in with your vision. Martin Zwilling shares some co-founder strategies and their pros and cons. When beginning your entrepreneurial journey, be sure to choose carefully who you want along for the ride. Startup Professionals Musings

Refresher course. From the time you start, to well into your business’s operation, maintaining the energy and passion you had in the beginning is imperative for keeping your business vision alive. Business blogger Ellen Rohr has five tips for recharging your business batteries when you feel you’ve run out of inspiration and energy. Here are some suggestions that will get back your enthusiasm. Bare Bones Biz

In the beginning. Though you will likely need to make compromises in your company as you move forward, as you face budget constraints, bring others into the business, and bring on investors, you’ll need to keep thinking about changes to make along the way. Keep your vision from straying too far by beginning with a clear idea of what kind of business you are building and where you are going. Then stick to your ideals as your business grows, and build the business you envision. Corporation Centre

1 Comment ▼

One Reaction

  1. Great round up here. I agree, conflict about this issue is inevitable. What do you suppose Netflix will do about this?

    Ti

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