Mindests. Culture. Investors.

Why Culture is important?

(Three Reasons Company Culture is Important for Your Business,B. Robison,2016)

    Culture is the mirror of a community or nation it is a crucial deciding factor in how different communities react, responds, and grow culture has a major role in the lives of people in society it gives a sense of being a part of a place in this world especially when everyone speaks the same language which is a direct result of how members of a community communicate, and it changes along with culture. You experience stability because of which you feel safe and secure. Most people feel the same way about culture as they do about their family. When two strangers share a culture, a connection is made instantly. States, regions, and cities are all connected by culture. There's no denying that your culture shapes your values, outlook on life, and impression of the world. Your culture even affects your feeling of humanity and interpersonal relationships. Culture serves as the cornerstone for identity, community, and understanding between people, making it vital to both individual and social well-being. Societies may harness the transformational power of culture to create a more inclusive, peaceful, and prosperous world for both the present and the future by embracing variety, protecting a cultural legacy.

Facebook overpaid WhatsApp?: Zhassulan Niyazaly

    (The pros and cons of facebook messenger and Whatapp, K. Amrita, May 9, 2016)

    When Facebook scooped up WhatsApp in 2014 for a whopping $19 billion, it made headlines as one of the biggest tech deals ever. Was it a smart buy? First, let's talk strategy. WhatsApp was a goldmine for Facebook. It opened the door to a huge worldwide user base, especially in growing markets where Facebook wanted to make its mark. By buying WhatsApp, Facebook cemented its place at the top of the social media and messaging world. Next, consider the data. WhatsApp users are super engaged, and the potential for user data was massive. That kind of information could help Facebook refine its other services, custom-tailor user experiences, and pinpoint advertising—though it's worth noting that WhatsApp has always been big on privacy, with end-to-end encryption in place. Don't forget about the competition, either. By snapping up WhatsApp, Facebook took a big competitor off the board—or at least kept it out of the hands of other big players. This savvy move helped Facebook keep its market share in social networking and messaging. Financially, though, the deal raised some eyebrows. The price tag seemed sky-high, given that WhatsApp wasn't exactly raking in the cash. But with the potential to monetize the platform down the road (like with WhatsApp Business), it could be seen as a solid long-term investment. So, was it worth it? Looking back, it seems like Facebook's WhatsApp buy was less about the dollar signs and more about a strategic power move. Sure, the price was steep, but it seems to have been a good bet for keeping Facebook at the forefront of the ever-changing digital landscape.

Problems bringing in new investors

Control and management disputes: Beniamin

(Two Businessman Pulling a Rope in Opposite Directions, 2016)

    Shareholder agreements act as guides for companies, aiming to prevent conflicts and establish a clear path forward, especially in situations involving investors.(Rodolfo.S,27 February, 2024). However, there might be some disagreements between shareholders and company management when it comes to control.

    One major challenge involves defining authority and decision-making processes. When multiple stakeholders with differing interests are involved, determining who holds ultimate control can be contentious. This issue can lead to power struggles and disputes, hindering the company's stability and strategic progress. Additionally, balancing the rights of minority shareholders with the interests of majority stakeholders poses a challenge. Achieving consensus on issues such as voting rights and dividend distribution can be difficult, potentially fueling tensions among shareholders. Furthermore, navigating the legal landscape while drafting these agreements is complex. Ensuring compliance with relevant laws and regulations is crucial, as non-compliance can render agreements invalid and expose the company to legal risks. All in all, while shareholder agreements aim to provide clarity and structure, they might be the main challenges in  balancing interests, and ensuring legal compliance for investments. 

Poor Communication: Phuripat

(Poor Communication Hurts Performance,J. Nathaniel,2016)

Poor communication may create such a huge obstacle as the most powerful weapon in the arsenal of those who want to induce new investors. The breakdown of communication channels and ambiguous messaging can lead to the creation of a suspicion and questions in the mind of investors, which, in turn, brings their trust into the venture to the edge. In the lack of a well-defined and transparent storyline about the investment proposal, investors might not be competent to comprehend the value-added or the potential yield. Furthermore, if the entrepreneur is unable to clearly express crucial facts like finances, markets, and the business model, that is an additional problem that will only increase the doubts in the investor’s mind about the likelihood of the business’ success. In addition, getting communications all wrong or incomplete could cost the team its trust and authority as investors may begin to doubt the adequacy of its managerial capabilities and credibility. Addressing these entities' communication troubles involves the using of an approach that is strategic and absolute which is then followed by clarity, transparency, and consistency in all communications with the investors so as to elicit trust in their investment chances.(FasterCapital,2016)

Cultural Clash: Mugtaba

(Higgs, 2019)

    Ensuring a cultural fit between new investors and the organization is paramount for fostering a harmonious and productive partnership. Organizational culture, comprising shared values, norms, and behavioral expectations, serves as a foundational element that shapes decision-making processes, communication styles, and overall work dynamics within a company. Research has shown that when there is alignment between the cultural orientations of investors and the company, there is a greater likelihood of mutual understanding, trust, and collaboration, which are vital for long-term success. Conversely, misalignment in cultural values or priorities can lead to friction, communication breakdowns, and conflicts that may impede progress and undermine the effectiveness of the investor-company relationship. Therefore, companies should carefully evaluate the cultural compatibility of potential investors, considering factors such as their management style, approach to risk, and long-term vision, to ensure a cohesive and mutually beneficial partnership. Moreover, fostering open dialogue and transparency regarding cultural expectations and priorities can help mitigate potential conflicts and strengthen the alignment between investors and the organization.(Investors, 2024)

Financial disagreement: Rawaa

(6 Key Ways to Manage Financial Disagreements in Marriage,Callie McGill,7 Apr, 2023)

There may be financial arguments between current owners and idea prospective investors which may cause conflicts when they want to bring in fresh investment.

Nowadays the attitudes of a current owner and the one invested in new money may not coincide. Existing shareholders might be more concerned about the company’s growth over the long term, while novel investors could be interested in short-term profitability. Such disagreements might result in fights and stall the most critical ones.

As for already owner, may be worth a great sum already in light of history and potential. But the new investors will have different take, most of them basing on what they think the company is capable of achieving in future. Such divergence of opinion regarding the value may hinder the conclusion of satisfactory investment terms.

Varian explains that where there is disagreement among investors, the additional risks would result in an increase in price, he says this because these risks are included in the premium. On the other hand, this might result in lower future returns, as other investors might demand higher returns to stay in the market taking into account this new risk.(panelXing , Keqiang ,2023)

Reference

• Panel.X, Keqiang.H (1 December 2023.) Investors' opinion disagreement and abnormal trading around pre-earnings announcements  https://www.sciencedirect.com/science/article/pii/S1057521923005513 
• Painter, S. (2020, October 30). Why Is Culture Important? Impact on People & Society. LoveToKnow. https://www.lovetoknow.com/life/lifestyle/why-is-culture-important-impact-people-society
• Higgs, B. (2019, November 21). Coping With Culture Clash. ChiefExecutive.net. https://chiefexecutive.net/when-cultures-clash-and-when-they-dont/
• Investors, in. (2024). Behavioral Finance for Private Banking, 2nd Edition. O’Reilly Online Learning. https://www.oreilly.com/library/view/behavioral-finance-for/9781119453703/c03.xhtml
• PitchBook. (2016, January 22). Facebook’s $19B acquisition of WhatsApp breaks record - PitchBook. PitchBook. https://pitchbook.com/news/articles/facebooks-19b-acquisition-of-whatsapp-breaks-record
• The Worst Ways to Communicate With Investors for Your Startup. (n.d.). FasterCapital. https://fastercapital.com/content/The-Worst-Ways-to-Communicate-With-Investors-for-Your-Startup.html
• Rodolfo.S (27 February, 2024) Control and Management Disputes.

    https://blplegal.com/shareholder-agreements-and-their-legal-relevance-how-they-affect-        the-administration-and-control-of-the-company/

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