The Data Compression News Blog

There are a lot of so-called Angel Investors in Euclid Discoveries - the number is well over one hundred if my email inbox is any judge. Very few of these individuals fit the profile of actual Angels in the true sense - they bought their shares more in a tupperware party environment than in the high-dollar, well researched context we expect from a true Angel. And I don’t say tupperware party to insult the investors. These people purchased shares from other investors who bought large blocks, perhaps with the express notion of making a profit by reselling. (Note: every privately held startup I’ve ever been a part of exercises strict controls over who you get to resell your shares to. ED apparently didn’t do this.) Most of them bought from friends and associates who they trusted - just like tupperware.

Anyway, this results in a very large community of investors that are in my opinion being subjected to a cruel form of mushroom management. They are desperate for information on their investment, and the company is not particularly forthcoming, saying little and saying it rarely. And the poor folks that bought the tupperware shares are probably not even technically shareholders - they have no rights at all.

After a few very polite requests, I set up a board for these people - they said they wanted a place to get the news on ED.

Unfortunately, as the registrations poured in, there was no news to speak of. In two months the only real activity was

• A press release from ED announcing revolutionary technology, but no product timelines, releases, etc.
• A puff piece in the home-town Boston Globe.
• A non-puff piece in the Associated Press

Meanwhile, there was absolutely nothing on the board from the members - they had zero to say, so the only posts were from me. I posted a few judgment-free links to various articles and a few judgment-filled cricitisms of ED for their bad practices.

A small cabal of people in the in-crowd took strong exception to this, and went so far as to issue gag orders to the other investors. No problem, they weren’t saying anything anyway. There were also a few remarks questioning my motivation in the whole thing, often centering on the notion that either I wanted to steal ED’s technology or I wanted to grab some shares. (I did offer to try to be a seller of calls at 1 cent on the current dollar, but I think the logistics would be tricky)

In any case, one of the key members of the cabal, Tiny Angel, started a new board for the investors at http://www.euclidinvestors.com/. In the first week or so there was not really much news there either, it was similar to my board without my editorial slant. But Tiny Angel has taken the board private, so I don’t know what’s being posted now, although I can just about guarantee there is at least one post a week saying “be patient, why would ED show anything when they have the goods? People would only steal it.”

In any case, that’s cool, anyone who wants can start a bulletin board, and Tiny Angel can keep things on message this way.

As a coda, I’ll make a few comments about Euclid Discoveries, both of which are just my opinion. I have never seen any of their technology, and they have no products, so my knowledge is limited.

• The claims they make in their press releases are most likely gross exaggerations. Should they wish to disprove it, we can arrange for nice, unbiased tests that in no way risk giving away their technology.
• Watching the company in operation, I was applying an 80/20 guesstimate - meaning there was an 80 percent chance or better that the investors would get back 20% or less of their investment. Watching the last two months, I think that is optimistic, we’re moving into 90/10 territory.
• The most ominous thing about all this is the fact that ED doesn’t talk to anyone - investors, press, public, or even potential purchasers.
• Their notion that they will make a better mousetrap and then sell it to the highest bidder is not just laughable, but may turn out to be a critical error in judgment based on the Supreme Court’s latest actions.
• ED treats their investors like dirt, which is particularly sad since there are a few “my life savings” folks in the pool.

Who knows, I could be proven wrong. But I’ve seen a lot of ducks over the years, and this one is quacking, laying eggs, and flying south for the winter.