Diversify or Not?

Hypothetical scenario - suppose you're looking to add shares of a company to your portfolio. In the following scenarios, would you invest in the company? FWIW, most "experts" agree that the company would be a good (or blue-chip) investment.

1. You work for the company, and know it's doing well and/or will do well in the future. Great employees, products, etc. You already own a few shares because of employee options. (Increased risk in investing in the company because if they do badly, you'll lose on your stock investment, and maybe you'll also lose your job)

2. You own a small business (eg manufacturing cogs) which produces items which you supply to the company (eg a big conglomerate). The company is your biggest customer at the moment, and you enjoy dealing with them; you know they far outrank their competitors (one reason why you focus on them being your primary customer), they pay you well, treat you well, etc. Since they're your biggest customer, you've done your research on them, and think that they'll do very well in the future. Would you invest in shares of this company?

 

I am not sure how working for or supplying for the company would give you an edge in knowing whether to invest in them. I dabbled in trading shares for an ASX company I worked for, but working there didn't give me any additional 'inside' knowledge, and indeed there were blackout periods where employees couldn't trade the shares so it was more of a disadvantage to work there.