There seems to be some confusion about defining what is and is not Kool-Aid in alt.space. The following, reprinted with permission, can be used as a Kool-Aid filter when applied to your favorite alt.space start-up:
If you see any of the following, run away —
1. The principals cannot understand why the coolness factor is not enough to get capital.
2. The principals adhere to the “build it and they will come philosophy” instead of specifically defining their market by depth and size in their business plan.
3. The principals do not carefully adhere to securities rules and fail to give at least quarterly financial reports to their investors.
4. The principals aspire to increase capitalization by orders of magnitude, as in having raised and spent $500 Thousand, they now want to raise $50 Million without a track record or a clear implementation plan.
5. The principals dismiss other disciplinary contributions – “We are great engineers and don’t need a finance person’s help (by the way, what does ‘present value’ mean?).”
6. The principals casually talk about staff expansion by orders of magnitude – “There are 2 of us, but we will hire 50 engineers and technicians the month after we raise the money and fly within 2 years.” Yet, none of the principals have ever run a group of 50 engineers and technicians.
7. The principals display a casual attitude about angel investors and shareholders in a closely held corporation – “It is my playground, don’t bother me.”
8. The principals don’t have adequate tracking and business systems in place – “We will implement them when we need them.”
9. The web site uses the present tense to describe concepts without associated hardware – “We offer cheap access to LEO.” This is akin to vaporware in the software industry.
10. The announced corporate goals expand faster than milestone achievements. For example, the first announced goal of achieving LEO is renounced in favor of the goal of rescuing the Hubble telescope without ever achieving LEO.
11. Logos and logo shirts from Lands End cost more than the rockets they have built.
12. The principals cannot convincingly demonstrate an annual ROI of at least 20 percent.
13. The organization displays obsessive secrecy about plans, markets, progress, etc.
14. A balance sheet with intellectual property dominating the asset list.
15. There is no realistic budget allocation for regulatory compliance, licensing, etc.
16. The principals appear to be more interested in talking to CNN about future dreams than in working to make those dreams happen.