Monday, August 29, 2005

2,167 REASONS A START-UP SHOULD NOT DO BUSINESS WITH THE GOVERNMENT AND WHY TAILWIND CHOSE TO DO OTHERWISE

TailWind recently struck a preliminary deal with the U.S. Navy. It is a deal we are very proud of, in that we get the privilege of delivering electronic education materials to Navy personnel in need.

TailWind has always taken a path few other start-ups take. We started the company based on a deal with Pfizer, the largest pharma company in the world. Most companies start with smaller fish.

Now, we have done what most VC investors and many business leaders have advised against--getting into business with the Navy. The reasons against are varied and too numerous to go into but the short list would be something like: pace of deal, size of deal, and not market driven. That said, we chose to pursue the deal as a away to ground our revenue stream in a market that will not behave as dynamically as the public sector.

We are building a balanced portfolio if you will. We pursue companies in the public sector and can respond to the dynamics of the market and we are balanced by the grind-it-out but longer term prospects of working with the likes of the U.S. Navy.

I suppose the last strategic approach we should take in order to completely buck all the trends and gossip in the market is to add a consumer business play to our repertoire and then sell the technology to Microsoft. Then our contrarian approach to the everyday advice of the Sand Hill economy would be complete!

Onward!