Moe were venture capitalists We turn dreams into

“Moe, we’re venture capitalists. We turn dreams into money that mostly goes to us. But you get a little. ” The Simpsons May 6, 2013

Investments By Stage (Deal count) Seed 5% Later Stage 18% Expansion 23% Early Stage 54%

Most Active VC Investors

The Power Of Referrals

The “In” Crowd

Tools of Influence Authority Likability Reciprocity

Reasons We Like Others Physical Attractiveness Similarity Cooperation Compliments

Reciprocity is a two-way street

What Can You Give?

“Diligence is the mother of good fortune” Miguel De Cervantes Saavedra

Due Diligence To perform an investigation with a standard of care

Detecting Deception

“Facial expressions of emotion, including macro-, micro-, and subtle expressions, are universal and independent of race, culture, ethnicity, nationality, gender, age, religion, or any other demographic variable. All people express emotions on their faces in exactly the same ways. Moreover, they are immediate, automatic, and unconscious reactions. ”

Who’s Faking?

“No one indicator of lying exists; if so, research would have identified it by now. ”

“It is not the mere presence or absence of behaviors, such as gaze aversion or fidgeting, that indicates lying. Rather, it is how these nonverbal cues change over time from a person’s baseline and how they combine with the individual’s words. ” “Evaluating Truthfulness and Detecting Deception” FBI Law Enforcement Bulletin, June 2011

Recommended Book

What Do You Want To Know?

How Far Will You Go?

Don’t miss the big picture

“The expressiveness of the individual appears to involve two radically different kinds of sign activity: the expression that he gives, and the expression that he gives off. The first involves verbal symbols…which he uses solely to convey the information. The second involves a wide range of action that others can treat as symptomatic of the actor. ” Erving Goffman The Presentation of Self in Everyday Life

“The individual does of course intentionally convey misinformation by means of both of these types of communication, the first involving deceit, the second feigning. Regardless of the objective [of] the individual [and] his motive… it will be in his interests to control the conduct of others. This is achieved by influencing the definition of the situation. ” Erving Goffman The Presentation of Self in Everyday Life

“Pay no attention…”

“It is probably no mere historical accident that the word person, in its first meaning (“persona”), is a mask. It is rather a recognition that everyone is always and everywhere, more or less consciously, playing a role. It is in these roles that we know each other; it is in these roles that we know ourselves. ” Robert Ezra Park, Race and Culture

“In so far as this mask represents the conception we have formed of ourselves – the role we are striving to live up to – this mask is our truer self, the self we would like to be. In the end, our conception of our role becomes second nature and an integral part of our personality. ” Robert Ezra Park, Race and Culture

“We expect, of course, some coherence among setting, appearance, and manner. To be a given kind of person, then, is not merely to possess the required attributes, but also to sustain the standards of conduct and appearance attach[ed] thereto. A status, a position, a social place is not a material thing. It is a pattern of appropriate conduct, coherent, embellished and wellarticulated. ” Erving Goffman, The Presentation of Self in Everyday Life

How Do You React? All the world’s a stage… and you’re just an actor

The Stanford Prison Experiment

An innocent beginning…

“Would an evil place that was populated with only good people dominate and corrupt them, or would humanity win out and keep them decent and caring despite such a situation? Bad news in this particular contest: Evil 1, Humanity 0” Ted Zimbardo

2 Basic Questions Can You? Market demand exists, problem is real Technology/Product/Service works Management has ability and experience Will You? Personal psychology is effective Group dynamics and role are positive Motivation and incentives exist

Entrepreneur’s Lament “If only I could stop raising money and get back to running my business”

Characters Management Jeremy Ash Mary Alexander Jacob Averbach Alex Vardi Bernard Edith Board (8 members) Daniel Pine - Angel David Farr - Franklin Steven Doron - Franklin Alan Milano - Twickenham Cynthia Ronit - Danzinger Bruce Dov - Inv. Banker

More Characters Contacts Brian Katz Rachael Best Unnamed Mc. Grath Dairy buyer Pleasant Valley Juice Hydra Pak Barker’s clients

Daniel Pine Frat brother of David Farr at Franklin Pine looked up to him Farr referred Spouts deal Two “successful” info services companies What role did he play? He sold second business in ‘ 86 Angel investor Invested in Beechwood Series C Preferred Board member “Active role” in company development

Jeremy Ash - CEO IRS investigation in ‘ 70 s Board investigation – “nothing to worry about” Sold Tomahawk ‘ 83 Milk processing business $100 million sales Founded Beechwood Vials (BVI) ‘ 91 What investment? What ownership?

Management Team Mary Alexander - CFO Hired March ‘ 93, replacing Brian Katz Jacob Averbach - Director of Technology Engineering Manager at Tomahawk Alex Vardi - Director of Technical Operations Part-time, owns bait company With Ash at Tomahawk Bernard Edith - VP Marketing, Board member Part-time, CEO Galim Marine in Ohio Former President & COO of supermarket company

Spouts

Applicators

What Is Beechwood’s Business? Manufacturing Spouts or Building Applicators

Spout Manufacturing Dependent on subcontractor = Vials $2 MM disputed inter-company charges Experiencing poor quality deliveries Incurring freight & mold repair expense

Building Applicators There is no real business plan Designs are weak Engineering outsourced Developed in field High maintenance costs Manufacturing is subcontracted Business is capital intensive $11. 5 MM product development Production cycle => WIP inventory $ A/R collection delayed until installation

What Is Beechwood’s Valuation? Case says $20 million pre-money (Page 2) Any other possibilities? Exhibits trump case narrative

Valuation Calculation

Who Owns The Company?

Who Has Power? New Series E Investors 24% Beechwood Vials 41% Twickenham 3% Danzinger 0% Rishon 2% Empire State Ventures 4% Franklin Capital 18% Individuals 8%

Why did the previous CFO, Brian Katz, leave the company? Particularly, why did he leave within 6 months of joining the firm? Katz had significant experience in the beverage industry (with Pepsi. Co) and with financial planning and general management. His decision to join and then quickly leave Beechwood Spouts begs the question of whether he discovered something during his tenure that encouraged him to leave. Based on his position as CFO and his unique access to/understanding of Beechwood’s financial realities, it is particularly important to determine what happened. Finally, while the 15 year old IRS investigation may be completely unrelated to this situation, it provides a further impetus to assess Katz’s motives for his departure. While it will be difficult to uncover his true reasons for leaving Beechwood, Barker may be able to leverage his long history with Pine to get a frank assessment of what happened. Though unlikely, if Barker has any contacts in common with Katz, he may be able to try to directly connect with Katz to get his perspective. If this is impossible, Barker could independently research what Katz did after leaving Beechwood to at least gain perspective on whether he may have actually just left simply to pursue a more attractive opportunity.

Ash’s Fall From Grace Demoted after 3 months Terminated after 6 months “Resigned” in CFO’s report to investors Accused of overcharging Up to $2 million Dispute in arbitration vs. lawsuit Retained as consultant Develop brik pak

Ode to Beechwood (By Jack Sheu) Once upon a chilly evening, after watching Jeremy preening, I did feel a restless sense of wanting to invest some more. As I drove in my sedan, whilst calculating with my hands, The EBITs of a promised land, I hearkened back to Kellogg lore. Behind the glitz of gaudy numbers, stands a breathing entrepreneur. An entrepreneur and investors. Daniel Pine he is a friend, upon whom I do much depend, He’s got financial acumen, which I, must say, I quite adore. Since David Farr loves Beechwood’s story, he’s got investors in a hurry, To come a’knocking in a flurry, knocking on dear Beechwood’s door. Because projections were appealing, lying just behind that door. But who’d be next, that was the core. $3 million stands at my disposal, thinking ‘bout this darn proposal, Wondering how much I should go for, if I were an investor. Bluestone Cap’tal raised some issues, I would ask them to continue, To describe the curious hue, of Spouts and Vials and Ash’s lores. An IRS investigation into Ash’s business lore Makes me want to learn some more.

Spouts and Vials I’d like to see, combined into one entity, Because transactions rather shady, could take place beneath the floor. I would look at prior deals, and kick the linked financial wheels, And strip away investor peels, to evaluate my exposure. Since Alexander’s CFO, I think I’d ask her for the yore. Of Spouts and Vials’ inception stories, and their transactional yore. Shedding light upon the core. Competition makes me worry, many players in a flurry, Would sink Beechwood in a hurry, making profits far from sure. Hydra-Pak seems well-positioned, to discuss the competition, And IP is also wishin’, that they could earn cash galore. Because free lunches are not easy, everyone would want some more. Which drains away that cash galore. Dan and Dave are too invested, as early stage investors bedded, Their opinions oe’erly crested, instead I’d ask the naysayers. Outside investors who said no, will tell me more about the show, About the things I’d need to know, to see through the beguiling lore. Due diligence in the contracting between Ash’s two big stores. And about future investing, what dilutions are in store. Trust in Ash is at the core.