Kiss the Ring and You Will Succeedin HPN Blog
In case you have never been involved in the process of bringing an innovative product to market, here’s how it works:
First, you have to have a patent that is fairly young. Patent protection only lasts so long. If your patents get to be much over ten years old and you haven’t gotten funding, the Vulture Capitalists begin to refer to your deal as being “long in the tooth”. The longer the tooth, the lower the chances anyone will give you funding. Once patent protection expires, the technology is lost forever. No one will ever fund it.
You must be willing to assign your patents to the Vulture Capitalist. It’s your IP they are interested in, not you, not your business acumen. If you aren’t willing to give up your IP, you can forget funding.
In addition to placing your IP up for sale, you have to be willing to give up a significant portion of the equity in your company. By significant portion, think along the lines of 90%, especially if this is your first time. If you have been down the road before and you are a proven winner, there is a chance you can negotiate a better deal. No matter what, if you aren’t willing to give up significant portions of your equity, you can forget funding.
Money breathes life into a company. You get the equipment and people you need to produce your widget and bring it to market. This is a dangerous time for you as an entrepreneur, especially if developing your technology requires a lot of capital. The MBA’s and the engineers take over and it is not uncommon for the developer of the technology to be pushed aside into a ceremonial role with no responsibilities.
The final step in all of this is the IPO, the initial public offering. This is the stage where the Vulture Capitalists get out. They sell their equity position to the Street and your stock is traded on whatever board they sell to. If you haven’t already, you now lose control of your company. You have stockholders to satisfy and they are a steely eyed bunch if there ever were.
But what about your IP? Where did that go? It went to the banks. How did that happen? Well, you don’t think the Vulture Capitalists used their money to fund your little operation did you? Some, certainly, but a great deal of what they used was other people’s money. Who are those other people? The banks. And what was the price to get the bank involved? Your IP.
According to Ken Dost, the researcher whose work this series is based upon, Bank of America, while holding some 600 patents of their own, also holds some 55,000 patents belonging to other companies. JP Morgan, Citi and Goldman Sachs hold similar numbers. Why would these banks hold the rights to so many other companies’ intellectual property? It’s the price they charge for funding. The banks know that if you hold a company’s IP, you don’t need to own stocks to control what the company does. If you control the rights to the intellectual property you control the company.
Louis Brandeis, probably the most brilliant jurist this country has ever produced, wrote a series of essays for Harper’s Magazine in 1913 called “Other People’s Money and How Bankers Use It”. In 1914 it was turned into a little book which is still available. Here is the synopsis from Wikipedia:
The book attacked the use of investment funds to promote the consolidation of various industries under the control of a small number of corporations, which Brandeis alleged were working in concert to prevent competition. Brandeis harshly criticized investment bankers who controlled large amounts of money deposited in their banks by middle-class people. The heads of these banks, Brandeis pointed out, routinely sat on the boards of railroad companies and large industrial manufacturers of various products, and routinely directed the resources of their banks to promote the interests of their own companies. These companies, in turn, sought to maintain control of their industries by crushing small businesses and stamping out innovators who developed better products to compete against them.
In the fall of last year, a group of Swiss scientists, in a study called “The Network of Global Corporate Control”, demonstrated that nearly all of the world’s economic activity is dominated by a group of elite financial institutions who have interlocking directorships. Some of these financial institutions are:
- State Street
- JP Morgan Chase
- Deutsche Bank
- Bank of New York Mellon
- Goldman Sachs
- Bank of America
The more things change, the more they stay the same. In 1913, just before the fall of the US Government to the banking cabal known as The Federal Reserve, Louis Brandeis warned us about the interlocking directorship between the large banking concerns, their large industrialist partners and how together they stifle competition and innovation. In this study, it is pointed out that the same thing still goes on only now it is on a global scale.
Give me control of a nation’s currency and I care not who makes its laws.
Give me control over the intellectual property of the major industries of the world and I care not who owns them.
Give me an interlocking directorship, and I own it all.
There is a war going on. They want you to believe the blame should fall on a scapegoat – the man who bought more house than he could afford, a foreign country who defies the US, minorities who cross the border illegally and suckle up to the welfare teat. They are not your enemy. The true enemy is this interlocking directorship which controls it all.
My question is, what are you going to do about it?
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