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According to Lisa, the mechanics of 4e had as much to do with it as the license.
Jason's mission was to learn as much as he could about 4th Edition, play it as much as he could, and report back with his findings. From that, we would ultimately make a decision that could make or break us. The tension was agonizing. I could barely sleep at night as my mind wrestled with the options. If we made the wrong decision, it could very well mean the end of Paizo.
When Jason returned from D&D Experience, he laid out all the information that he had gleaned. From the moment that 4th Edition had been announced, we had trepidations about many of the changes we were hearing about. Jason's report confirmed our fears—4th Edition didn't look like the system we wanted to make products for. Whether a license for 4E was forthcoming or not, we were going to create our own game system based on the 3.5 SRD: The Pathfinder Roleplaying Game.