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"Top of Mind" with Tom Ruhe, Video 29 Part II, 8/8/2013
>> One of the great things about my job is traveling the world and meeting really interesting
people. And so it is today I'm in Seattle where I am sitting down with best selling
author, entrepreneur, instructor, Gifford Pinchot, III. Where he sat down with me to
share with "Top of Mind" viewers his thoughts of entrepreneurship, building sustainable
economies and all things that help build a future worth living. I'm Thom Ruhe. And this
is "Top of Mind." >> I think like most entrepreneurs, you know,
we get smarter with every venture. >> Yeah.
>> And I know you've had multiple ventures. One in the technology space that really kind
of hit technology and internet technology in particular at a critical time. Would you
care to share with us, you know, what that was and the experience you had there?
>> Well the business was originally started out as a groupware business but we needed
security, internet security to do groupware for corporations. So we developed the internet
security. And it turned out the world didn't really want our groupware but they sure did
want our internet security. So that business was going really well when the 800 pound gorilla
in the internet security business, who was a partner of ours, came to us and said we're
going to buy your company. >> They are telling you that, they're not
asking? >> No, they are not asking.
>> Right. >> And they offered us three million bucks
for the company. And I said that's not enough. And they said well, here's what will happen
if you don't agree. We'll buy one of your competitors and give away their product for
free bundled with our product. And if we find anyone who's doing business with you we'll
refuse to do business with them and since your product is a co product of ours it will
be worthless without us. So you will be done. >> So they are sweet talking you?
>> Yeah, sweet talking. And I and I and that annoyed me. And so I went out looking for
a white knight and found one who was an algorithm company. We were in the middleware business,
secure socket layer, which is the product that we had is the 3CPO of internet communications.
It's translating everything between computers. But that fundamental encryption itself is
an algorithm. >> Okay.
>> And so the 800 pound gorilla had the dominant algorithm. And this was a competing algorithm
company. Well if given that we had 60 percent share of the toolkit market, if that algorithm
company that was the white knight didn't buy us and what we referred to at the time as
Darth Vader bought us instead, then they would never, they would never appear in the market
because the intermediate, the C3PO would refuse their algorithm and they would be dead. And
so we kept stalling Darth Vader by saying, well we'll negotiate on these terms and so
forth. But what we were really doing >> So you were giving the illusion of due
diligence? >> Yes, while we were working on the actual
deal. And we ended up selling the company for $30 million instead of $3
>> That's a slight factor higher. >> Yeah. It was good.
>> And then what ended up happening and I already know the answer, but I really want
the viewers to get a sense of this, what happened to Darth Vader?
>> Well, what happened was that the combination of our secure socket layer, which was we had
a very compact version of that, and the algorithm company that bought us, which had very compact
algorithm, became the dominant player in the personal, in the telephone and PDA business.
And so we pushed Darth Vader out of that whole wireless business. And the president who had
threatened me was fired as a result. >> Oh, Karma is a ***, isn't it?
>> Yeah. >> I love it when you hear a story like that.