WineInStyle

The question facing Robert Eberhart at the end of the WineInStyle case is a fundamental question of whether Eberhart wants to continue to be responsible for managing a business across oceans or if he wants to return to his life in Palo Alto and let the business that he built collapse. If it were my decision, I would hold out and look for another investor rather than be inadvertently responsible for the end of my business.

I can’t imagine a plausible scenario in which the new investors have positive intentions for WineInStyle. If they did, there would be no reason for the secrecy with which they are approaching the deal. Even if the investors did get certified, I don’t believe that they are committed to protecting the business. Their secrecy is a red flag to me.

One of Eberhart’s main concerns is supporting WineInStyle’s current CEO, but I don’t believe that taking the investment would be supporting Khoo because I don’t trust the new investors. It seems unlikely to me that they would work to preserve the business, so taking their money would not protect Khoo from anything. Eberhart’s only option to support his CEO is to take the risk on finding an alternative source of funding.

The only scenario in which I would take the new investors’ money is if they committed to allowing the current leadership team, including me as the co-founder, to maintain governance of the company for an extended period of time, at least five years. That is the only way I would feel confident that they were invested in the business itself, not just its assets.