JME MAXWELL

Senior consultant, AECOM

It is time to sell.

I don’t know the first thing about the desktop computer accessory market. I also don’t know a single person who owns a desktop computer and has it plugged in. Desktop PC sales have been plummeting since 2004 and shrinkage in this market will likely accelerate rather than slow down. Unless Etlansys Technologies’ innovative and unique new products turn desktop computers into tablets, ownerJeffrey McDale will be trying to grow revenues in a rapidly contracting market if he doesn’t sell.

McDale says his philosophy is “better, at a better price.” I just hear, “at a better price.” If his Asian competitors could replace Etlansys’s entire line, its market is heavily commoditized. Bankruptcy court is filled with companies that try to straddle differentiation and cost leadership at the same time. If Etlansys’s new IP is focused on better and not cheaper in a market that doesn’t value differentiation, McDale will find himself with a shrinking topline.

Even if the market wasn’t contracting, and people wanted a better mousetrap — not just a cheaper one — I believe McDale’s emotional attachment to his firm is causing him to overestimate the likely impact of his new “miracle” IP. He can’t assume that he will be launching newtechnologies into today’s marketplace.

Early in my career, a colleague started a small online travel advisory company. A year after founding, he had an investor who wanted 50% of his company for just under $1 million. Convinced that his next iteration of technology was going to drastically increase the value he offered customers and, correspondingly, the value of his company, he didn’t close the deal. One year later, Google changed its search algorithm, and even though his technology was better, he lost his web traffic and the entire value of his company.

Here’s the good news. In leaving IBM and investing in this enterprise, McDale sacrificed more than a half-million dollars in salary and earnings. Now is the time for the payoff. If he sells at the offered price, he will be making in six years what it would have taken him almost 60 years to make at IBM. If he doesn’t sell, he will need to win years of bare-knuckle boxing against multiple global competitors in a highly commoditized, contracting market, before he sees the cash he’s being offered today.