As a very early investor in OPEL, over the years I’ve watched the up’s and down’s, followed the chat rooms and like so many worried about the return on my multiple investments. As a principle of an early stage investment firm focused on technology firms I felt it important never to engage in commentary especially where my personnel funds were involved, even after retiring I’ve kept silent. POET’s lack of effective management, execution and performance, especially now at a critical point in its growth, coupled with open questions asked by shareholders have prompted my response.

As a rule, I focused on early stage VC funding with firm’s lead by strong Engineering PhD’s who developed novel approaches to solving problems impeding industry growth, (i.e. Dr. G. Taylor). More often than not the firms were spun out of universities and just as often the PhD/CEO was of Indian descent. I found several characteristics always present in this individual. Refer to the following link authored by a Wall Street Investor. https://www.quora.com/Why-are-there-a-lot-of-Indian-Fortune-500-CEOs/answer/Taruni-Adarsh-1?ch=15&oid=199887352&share=ae071b10&target_type=answer 

As well, in a university environment the PhD is not accustom to meeting product deadlines or milestones. Also, the very nature of the PhD is to over engineer a product so it does everything ever thought imaginable in the very first release, rather than “freeze” a working fully tested device, (release it to generate revenue) than enhance it with rev. level release’s as they were developed. Also, the very nature of the PhD is a fear of failure in the eyes of their peers, the industry and even their family, thus over engineering and working in a stealth mood is second nature for them. This includes not publishing press release’s until the PhD. is 1,000% sure everything works and nothing, (even the business relationships the product was developed for) will fail. From a VC, Investor or Shareholder’s point of view having a solid working product is important however starting to see an ROI, (even small knowing it will ramp) is just as important.

My second rule as an early stage VC investor was to hire a CEO with Marketing, Sales and Capital Markets experience that was also well versed in dealing with the Investment Banking community months before the very first product came to market. At the same time the PhD who I initially invested in was asked to take the CTO roll, (most often eagerly). The reasons for this change are many but to name a few which I currently see within POET are: PhD’s do not encourage press releases or wish to discuss potential customers or anything to do with potential revenue/orders. Why, because they must live with the commitments stated and are once again fearful of failure if something were to even hiccup slightly. It’s not within them to take a calculated risk since that goes against everything they learned while growing up at home and in the school of engineering. Further, I have found that with rare exception 98% of all brilliant PhD’s have trouble conversing and conveying confidence or delivering a corporate message once they leave a technical script. A CEO must convey a confidence about future goals, be upbeat about the prospects for growth, financially and otherwise and willing to discuss the return on investment, (ROI) and be somewhat of a confident upbeat salesman when conveying the corporate message. Saying, “Humm” before each statement made or answering a question indicates the CEO must think of an answer and/or is ill at ease making statements about the future which does not instill confidence, especially when speaking with Investment Banker’s, Funds or Shareholders. I’ve also experienced first-hand how top tier PR/IR firms with great ideas and market knowledge have been muzzled by CEO’s fearful of releasing anything or have gone over the content word for word changing everything to make the release as non-committal as possible.

On the topic of press releases, I have personally sat with Defense Contractors, Fortune 50 Firms, (even Intel), working with their technology and legal teams to craft mutually acceptable press release announcing a relationship or product goal. The standard statement made to a supplier, (such as POET) by these top firms, (which is in their Buyer Training Manuals) is to, “Keep our relationship secret” etc.  Timing is important I agree, but if you blindly accept their request you’re either a novice or eagerly welcome their request because it suits you! These Firms understand the importance of keeping a small valuable company such as POET supplying an important device necessary to meet their future goals financially healthy and in business. Further, these firms also understand the disclosure commitments required by the Exchanges. Lastly, the firms in POET’s product space all have splendid marketing and technical knowledge thus they know each competitor well so when a competitor makes a claim about a future product release with capabilities well beyond what they currently offer it’s foolhardy to believe that they don’t know for one minute that POET’s inside! Keeping relationships a secret until a partners product is released is I bet an internal POET decision. I’ve seen questions regarding why big money has not yet come to POET after its uplift to NASDAQ my guess it’s caused by everything stated prior. I have sat across the table from firms seeking added investment, unless I was confident about the Senior Mgt. Team seated before me, (including its BOD’s) could pull it off, I either never invested OR in some case’s if I felt strongly that the company had a cracker jack answer to a technical issue I’d invest a small amount just to keep myself temporarily in play, (which I believe is taking place with some of POET’s larger funds). Lastly, if I felt very strongly about a firms potential I’d ask for a Board Seat or at least consensus that a new CEO was required before a major investment was made.

Board makeup is important to the investment community and in many cases attracts investment. If the Board Chairman is also the CEO and seen adding like-minded technical Experts & PhD’s to board seats it smacks of “Stacking the Board” for protection. POET’s the two Board Nominees are eminently qualified in their fields and as such should remain well paid Advisors to POET. PhD Lipson is a Professor of Electrical Engineering and Professor of Applied Physics with 45 patents which certainly appeals to the CEO’s goal. Ms. Lan Ende, comes with vast experience in Procurement and Global Supply Chain Management. One should ask, do these Nominees have the “Business Acumen” POET desperately needs right now, what important Board Committees are they truly qualified to fill, more important will they diplomatically challenge the Chairman when or if needed???

If POET is truly serious about attracting funds, a retained search should be conducted for two high profile retired or semi-retired U.S. semiconductor executives with IBM, Intel, AMD or other such firms on their resumes, we might even find a true CEO who has done it before! By taking this action POET will gain much needed credibility, attract Funds and retain or expand investments from Funds already invested. At last count, three Funds have either decreased their positions or closed out their position in POET altogether.  WHY, reread this entire post……

If POET continues on its path of silence, continues product or production slippages then to prevent further cash bleed and potential shareholder dilution it may be very appropriate to explore retaining one of the Big Five M&A Firms to confidentially seek a suitable acquisition partner.           

Think twice before voting, sending a message to the BOD is just as important as sending the same message to IBK Capital which may have the largest block of shares & warrants out there.