Hair On A Deal
In a perfect world, everything about a potential investment will be confidence inducing. The team will be great and reference well. The market will be huge. The technology will be well developed. The price and terms will be attractive.
But the world is not perfect. There will always be things about a potential investment that create heartburn. A term that I have heard used over the years to describe these imperfections is “hair on a deal” as in “there is a lot of hair on that deal.”
A little hair is OK if everything else lines up. A lot of hair is not OK and can be a deal killer.
The news that WeWork has postponed their IPO plans for now is an example of when too much hair gets in the way of a deal.
There are a lot of things to like about WeWork. They have popularized a new form of work space, a new business model for it, and have they have built a global brand around shared workspaces.
I expect the company will eventually get public.
But right now there is too much hair on that deal and all the work they did over the last few weeks to clean it up was not enough, at least for now.
So the lesson for entrepreneurs is that you really need to have your house in order when you go out and raise capital. The more eyebrows you raise with investors, the worse it gets. And hair can get in the way of an otherwise financeable opportunity.