A few fun and interesting, though not necessarily “breaking”, news items from the business headlines
VW And The Price of Cheating
$15 Bil. That’s the amount of the settlement that Volkswagen agreed to with the U.S. government for “intentionally” cheating on emissions tests for its vehicles. I’m not clear how someone could “unintentionally” cheat. But apparently it is possible.
Gawker Sells For $135 Mil
After being slammed to the mat and held to a three count by Hulk Hogan via a court decision, the online gossip site was sold for $135 Mil. Hogan’s favorable court decision of $140 Mil pushed Gawker to file bankruptcy. Yes – you can buy a company out of bankruptcy.
A True Dog of A Tale
A couple of twenty something dudes. The U.S. government. A $300 Mil contract. Guns. Plenty of marijuana. It’s real life script tailor-made for the cinema. Need I say more. Sometimes the movie practically itself. Read on my friends. Read on. Oh yea, the movie is called “War Dogs”.
$72 Mil to Leave Your Job
It’s not fun to get fired. I know. I’ve been there. However, as firings go, stuffing $72 Mil dollars into a duffel bag as you exit is slightly better than simply a swift steel-toed boot to the rear. As this article shows, the Shakespearean drama/tragedy known as Viacom seems near an end with current CEO Philippe Dauman headed to the unemployment line. If you see Mr. Dauman standing along the road with a tin cup and home-made sign, please toss him a couple of dollars to buy supper.
Blake Glenn shares his looney perspectives, stories, and mis-adventures in The Looney Executive blog. He has interviewed hundreds (or at least tens) of people via The Looney Executive Podcasts and former TV show. He’s the founder of a tech group called IgniteTech, and claims to be a direct descendant of the original Looney Executive – Because there must be SOME explanation … right?
If you dare, I can be reached the old school way … blake@LooneyExecutive.com
A few fun and interesting, though not necessarily “breaking”, items from the business headlines
The Telephone Eats The Internet
Another one bites the dust!
Another Internet 1.0 pioneer has bitten the dust, at least in a sense. After years of buyout and merger rumors, Yahoo has finally been acquired by telephone company Verizon – itself a product of a series of mergers. It seems Verizon has embarked on a multi-course meal with plans to combine Yahoo with another recent meal – AOL. Here’s hoping that Verizon doesn’t get a case of severe indigestion from these two declining Internet dishes.
The Yahoo Timeline
Launched in 1994, Yahoo was a mega-hit for a few years. This timeline shows an interesting history, including the deal that made Mark Cuban rich!
Whatever Happened To The Internet Brands From the Web 1.0 Era?
Remember Altavista, Compuserve, and Netscape? A look at this list brings back so many memories. Ah, the good old days of Internet 1.0!
Palace Intrigue … Redstone vs Redstone
There’s nothing more exciting than a good ole knock-down drag-out corporate battle. This tale of palace intrigue includes so many interesting items – a 90-something year old media mogul that refuses to relinquish power at Viacom; The mogul’s daughter making moves to assert her own power over the empire; A Viacom chief executive fighting back against the mogul AND the daughter; At least one much younger former mogul girlfriend that wants her piece of the pie … Whew!
Man Claims iPhone Invention … in 1992
Will Apple have to fork over billions for infringing on an existing iPhone patent? Maybe. Maybe not. One word of advice though: If you want to secure a patent … always pay your patent fees!
P.S. I’m actively recruiting test contestants for my business game show experiment. Interested? Please contact me so I can add you to the player pool!
Blake Glenn’s Looney thoughts, perspectives, adventures, and insights on the world of business!
— By Blake Glenn
Upon my arrival in LA, as always the tall palm trees, bright sunshine, and pollutant-infused smog embraced me with open arms. But, unfortunately, for the next week I wouldn’t see much of them. My immediate destiny was to be holed up deep within the bowels of the GAO office, leading efforts to turn around our fast disintegrating hopes for the $5,000,000 tech project.
When I got to the office I hit the ground running. I immediately set up a meeting with the client staff to hear their grievances. We held the meeting in the large conference room. It was windowless, barren, cold, grey, lacking in anything approaching personality, completely soulless. It was an appropriate scene for the hellish torture I was set to endure.
All of the client stakeholders were present. Having all of them present was critical. Some of these people may have had their careers tied to this project. And even the least powerful among them still had influence and could make our team’s life miserable with their discontent and dozens of small complaints, a death by a thousand tiny cuts.
I should have put on my toxic substance defense suit because the shit began flying immediately. While I wasn’t the reason for their travails, I was now the onsite representative of the enemy. And as such, I was now the one bright red target upon which to vent their unending anger.
The grievances were many. That the new network installation wasn’t going well was an epic understatement. There were lots of bugs. That happens all the time of course. Things never go the way you expect. And like roaches in real life, you could quash a few here and there, but you could also rest assured that they would pop up somewhere else. Again. And again.
The situation was exacerbated by the engineers and technicians whose poor attitudes angered the GAO staff . The techies didn’t communicate well about problem resolutions. They didn’t respond quickly to information requests. And most damaging of all, they were simply rude to the customers, treating them like uninformed idiots that didn’t deserve the tech’s time.
My employer had made a big mistake too. They had left a hard core network engineer named Terry in charge of the onsite team. They could not have chosen a worse candidate. He was a very good network engineer, maybe even superb. But his people and management skills were non-existent. He was rude, short-tempered, and thin-skinned.
He was the Donald Trump of the geek world. But this was my employer’s fault more than Terry’s. They knew about his “personality flaws”. He should have never been the onsite team lead in the first place. But, in a moment of weakness, they acquiesced to his desire to be the man.
The other techs followed behind him because, well, he was in charge. But they weren’t happy. The customers were haranguing them relentlessly, not due to their own ineptitude but due to his. And the team recognized Terry’s inadequacies. They were ready for a change. When I arrived, the GAO villagers were so incensed with Terry that they were gathering torches and pitch-forks and descending upon the tech castle to drive him out of the building. And I think each and every one of our team members was ready to join them!
I acted quickly to take control and try to put things on the right track. Here’s what I did:
Of course none of these items were rocket science. They weren’t that innovative. They weren’t going to change the world. They were all mostly just practical common sense actions needed to turn around this failing project, especially the Game-of-Thrones technique.
The primary requirements to do my job were pretty simple:
And, while not flawless, the tactics worked. Within a week we had saved the LA project, which helped to renew confidence in my employer, which helped save the other regional GAO installations, which means we rescued about $5,000,000 in revenue for my employer. I was proud of the team coming together under my leadership to make this happen. But it was a team effort. They just needed the right leader. I didn’t have to Game-of-Thrones Terry’s man parts … unfortunately. And my boss was able to maintain his golf privileges.
The trip wasn’t all work though. One upside of that adventure was that my girlfriend-of-the-time lived in the Los Angeles area. Though we amicably went our separate ways soon after this trip, it was certainly good to see her.
Frankly though, I couldn’t understand why she brought her good male friend with her each time we met. It was good to see that she had a friend out there. Who says men and women can’t just be friends. I guess he needed her support. Going through a difficult time according to her. And he was strong. Lots of muscles. I knew she was safe. She later got married and had kids. I never met her husband. But the kids kind of looked like that guy. What a coincidence. I wonder if they’re still friends.
Want to catch up on Part I? Just click here!
In mid-June, 1995 at approximately 8:29 am EST, on a typical sunny-hazy day, a major fire broke out in downtown Los Angeles, California. The sparks from this blue-hot blaze had been smoldering at a low level for about 10 days and now threatened to burst into an inferno and engulf the U.S. GAO building. The GAO was the Government Accounting Office.
An aside … As a result of a brilliant and strategically considered rebranding effort, in 2004 the “A” was changed from Accounting to Accountability. Yay!
This was not one of the ubiquitous 100-times-a-year forest fires indigenous to Southern California. No. This one was special. It was entirely contained within the GAO building. But if not contained, it threatened to leap-frog across the U.S. and spread to Atlanta, Washington, DC and other regional offices of the GAO.
Let me set the stage for this story.
You see I was working on-site as a contractor at the U.S. GAO Washington, DC headquarters. Our mission was to maintain the information technology system at the HQ as well as several field office locations around the country. Our services included installation, help desk support, repairs, maintenance, disaster recovery, and training. In total, the contract was worth about $5,000,000.
In 1995 the contractor I worked for was in discussions with the GAO for renewal and expansion of said contract. When you’re in a contract renewal year it’s like being a professional athlete in your last contract year. You want to have a great year. Be on your best behavior. Do a great job to try to ensure another big contract to keep the money rolling in. Those titanium golf clubs don’t buy themselves you know.
Needless to say, the higher-level, and by default, mid-level managers were all in a tizzy, as would be expected. The prospect of losing country-club memberships would panic even the most fearless individual. My employer implemented a secret plan send a specialist with a particular set of skills to address the situation.
And after conducting a bit of clandestine research, putting myself and those I love in dire danger, I was able to uncover the original transcript from the top-secret 1-on-1 crisis meeting with my boss, the project manager at U.S. GAO HQ in Washington, DC. Below I’ve provided a complete un-redacted original transcript.
8:47 am EST: Boss called into office of GAO division director in Washington, DC to get an earful on a critical situation developing in Los Angeles, CA
9:17 am EST: Boss asks to meet me in large GAO conference room … alone
9:23 am EST (I had to make a bathroom stop): Boss provides overview of the critical situation in Los Angeles
Full Transcript (un-redacted):
Boss: I need you Blake.
Me: Of course. How can I help sir?
Boss: We have a major situation in LA. A raging fire has broken out at the GAO regional office there. And I’m not so sure we can contain it. It’s bad. Real bad. Our entire tech contract is in deep shit. That’s $5,000,000 ready to go poof!
Me: Hmm. I see sir. How did this happen?
Boss: The geeks. Those damned geeks. No people skills. They ran wild. Talking to the customers like they were idiots. Not fixing problems in a timely fashion. They’re utterly out of control. They’ve fucked it all up! Damnit. Damn. It!
Me: I agree. That’s a bad situation sir. And by geeks I assume you primarily mean Terry, the onsite project manager.
Boss: Yes, Terry. Blake you’re our best hope. Hell you’re our only hope at this point. You’re the sole individual that can drag us out of that quagmire. Without you I’m afraid this contract will be lost. It’s worth $5,000,000 you know. We can’t lose it. You have to save it for us. It funds my country club membership. We have to focus on the real important things in life right?
Me: What? That’s a lot of pressure sir. By myself I don’t know if I can …
Boss (interrupting): We’re depending on you Blake. I mean TOTALLY. DEPENDING. ON. YOU. We really are. I need you to fly into LA and fix this freakin’ mess.
Me: Of course sir. I’ll do my best. But …
Boss (interrupting): No buts. I mean butts are fine. I like butts a lot, just not as part of this conversation. Just make this happen. And here may be a pony in it for you if you can pull off this miracle. You like ponies don’t you?
Me: Silence. Bewilderment. Staring. Mouth open.
Boss: Well don’t you?
Me: Uh. I don’t know. I never …
Boss (interrupting): Of course you do. What a stupid question. We all like ponies.
Me: Ok sir. I can see you’re under a lot of pressure. Are you ok?
Boss: How about a pink one. I think I can make that happen. You like pink do you?
Me: Pink? What?
Boss: Pressure! You have no freakin’ idea. I picked a helluva day to stop taking my pain killers recreationally.
Me: Ok. Ok. I’ll go to LA and do my best sir.
Boss: Of course. Your best is all I can ask for. That and fixing this mess of course. And saving my golf privileges. We can’t forget what’s important here. Am I right?
Me: No. I’m not promising …
Boss (interrupting): So that’s it then. It’s settled. You’ll fly out and deal with it. I already have you booked on a flight.
Me: What? When?
Boss: Two hours . You better get moving.
Me: Two hours! Sir what the fu…
Boss (interrupting): Excellent! I knew you’d be excited and want to leave right away. You’re my main man. By the way, does my golf swing look correct? Look at this.
Me: You son of a …
Boss (interrupting): No reason to thank me! You know I’m an unsentimental fool. When you reach LA be sure to check in straight away. Now off you go. You’re the man!
And with that I raced home, quickly packed, and caught a taxi to Washington National Airport. The 8-hour trip to Los Angeles, including the layover, flew by (no pun intended … ok it really was) rather quickly. I had a little time to prep myself for the hellish, toxic environment I was about to walk into – angry clients, battered tech staff, low morale on both sides, and the prospect of losing a $5,000,000 contract.
After a good night’s sleep, the last one I’d have for several days, I stepped onto pavement directly in front ofthe downtown Los Angeles GAO office. It was 8:00 am sharp. I quickly glanced the bright yellow shape in the sky, adjusted my red power tie, took a deep breath, opened the glass door, and walked head-first into the raging inferno inside.
For the rest of the story please read part II of LA On Fire!
Blake Glenn’s Looney thoughts, perspectives, and insights on the world of business!
I’m not an expert in the “art of the turnaround”. Not by any means. But as an outside advisor, I’ve had more than my share of brushes with troubled small businesses. I’ve had about 8 brushes as a consultant. I’ve had one inside experience as a part-time employee. And on one occasion I even parachuted into a hot mess to lead a tech “project turnaround” that was instrumental in my then-employer retaining a valuable contract with the U.S. government.
All of those situations were different of course. But almost all of them shared a handful of common traits:
And the reasons that small businesses find themselves in the midst of a quagmire aboard a rapidly sinking ship are also diverse. Some common reasons include:
That last one, commodity products, is a particular killer. It’s way too common in the world of small ventures. You provide a product or service that’s totally indistinguishable from many others available to customers. So rather than try to understand any obscure minute differences between the products (if any exist at all), customers simply shop for the lowest price.
And voila. There go your profit margins!
Captain … Iceberg straight ahead!
Small ventures have it tough I tell you. They have much less room for error than the troubled mega-businesses that often make the cover of Forbes magazine and the Wall Street Journal. Mega-companies such as IBM, Sears, and GM on the other hand, can go through several management teams over a period of years and still remain standing, though perhaps in a more deteriorated state. And unlike some mega-firms, small and mid-sized businesses aren’t too big or too important to fail. So government bailouts are nowhere to be seen in times of crisis.
But while each turnaround or crisis situation is unique, there are some general tactics you can implement to get a handle on the things.
Do An Assessment
Assess your cash flow. Do projections to get a clear picture of what’s going out and what’s coming in … and the timing for outflow and inflow. If you’re in an immediate crisis do this weekly. Also start regularly monitoring your income statement and balance sheet. Understand your key ratios and monitor them diligently. Assess your debt. What is owed to whom and for how much?
Also assess your management team. Are they equipped to deal with the crisis? What changes can be made to strengthen the team? Assess your employees. Maybe one or two of them can step into key roles on the turnaround team.
Stop/Minimize the Bleeding
This means try to minimize your losses by such methods as cutting costs, reworking debt payments if possible, and incentivizing quicker customer payments. You might also delay making payments to some vendors in order to temporarily help cash flow.
… with employees, key customers, lenders, and investors if you have them. Aprise them of the situation. And let them know how you plan to deal with the crisis. Get them on board early, especially employees. Let them know that their help is critical to your survival. Employees need their jobs, though some will almost certainly have to be let go. Customers need their products, though but maybe not from you if you sell commodities. And lenders want their money back.
Create a Turnaround Team
Launch a crisis team that includes one or two employees, not just managers or executives. Keep the team small. You must move quick and with urgency. And unwieldy committees notoriously move slowly. Appoint a turnaround manager that has the final say. This may be the owner, CEO, a founder, or other executive. Sometimes an outside turnaround manager is necessary, if you can afford it, because their judgment isn’t clouded by an emotional attachment.
Develop a Turnaround Plan
Create a strategy to survive and turn the ship around. Create goals and deadlines. Assign tasks. It’s just like a project plan, because, well, it is! Execute swiftly. Be flexible as things change and may call for different tactics than you thought.
These are just a few general tips on how to approach a basic turnaround. Of course each situation is unique. But these will at least get you going in the right direction.
And if you want to read an interesting and funny story about one of my turnaround experiences take a look at my post Jimmy’s Descent Into Hell.
Take care and watch out for those icebergs!
— by Blake Glenn
This is a brand spanking new feature. I’ll occasionally post micro reviews of business, or business-related, books that I’ve read. My intent is to simply provide my brief perspective and maybe wet your appetite a bit for books you may or may not have heard of but whose topics I find interesting.
While some of these books will be recent releases, many of them will be years, or even decades, old. And they are not necessarily the latest “gotta-read-it” New York Times best selling networking conversation starters.
So with no further delay, here’s the list for my very first Looney Executive Book Review:
“Billion-Dollar Ball: A Journey Through the Big-Money Culture of College Football” – by Gilbert Gaul
As a youngster growing up I was a big-time fan of college football. My favorites started with Ohio State but also included USC and Oklahoma. As time went on my interest was still there but declined significantly because, you know, I grew up and had many other interests. In recent years however, as the ESPN era has really changed college sports, I’ve gazed on diametrically with both horror and abundant interest.
This book does a good job of looking at the various revenue sources of college football such as ticket sales, sponsorships, and TV contracts. Gilbert Gaul focuses on the operations of mega-programs such as Oregon, Texas and Alabama. He also compares the revenue and funding for the monolithic empire of big-time college football to other sports such as women’s rowing. The contrast is stark indeed. After reading the book you may have blood-red angry smoke pouring from your ears or … perhaps wondering how to get a piece of this sweet multi-billion dollar action yourself.
Straight to Hell: True Tales of Deviance, Debauchery, and Billion-Dollar Deals Hardcover – by John LeFevre
More than 20 years ago I read my first book about the insider trading scandals of the late 1980’s. That book was about former investment banker Dennis Levine. I went on to read books about Michael Milken, the leveraged buyout of RJR nabisco and many more. And since the early 90’s I’ve had a fascination for Wall Street stories from various angles. Many were good, others mediocre, and a few were just bad.
I had high hopes for “Straight To Hell”. It’s about a young dude having an adventure on Wall Street, mostly based in foreign countries. Since most of my reads were from a prior generation I thought this might be an interesting Wall Street perspective from a newer generation. And I LOOOVE the name of the book. I actually have a series of personal stories about going to hell from my own business adventures.
But with that said … this book was a disappointment. While I like to hear about debauchery and juvenile behavior from way overpaid characters, this was just too damned much prostitution, drugging, drinking, and pooping-in-pants for me. I’m no prude by any stretch. Some of that actually is fascinating. But I thought there would be more about behind-the-scenes deal machinations. That fascinates me. I like to see how deals and strategies are pieced together. But maybe you’ll love it. If you love the poop-in-pants scene please never read this blog again!
Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity in Unexpected Places – by Scott Fearon and Jesse Powell
This is another Wall Street book. But it’s from a different viewpoint. Hedge funds have become big news the last few years. And hedge fund managers, the big ones, are some of the world’s wealthiest people you’ve never ever heard of. This particular hedge fund manager, Soctt Fearon, doesn’t seem to be one of them. Not to say that he’s not well off. But, comparatively speaking, he runs a small hedge fund.
Part of his strategy is to “short” stocks. That is, he identifies companies whose stock prices he expects to decline and makes bets on them. He does this by using a fairly straight-forward formula to identify prospective investments. He tells interesting stories about how some firms fell onto rough times and why they make good “shorts”. Since distressed firms and turnarounds are another interest of mine, I wanted to read this book. And I liked it.
So that’s two thumbs up, one thumb down. But if you’re so inclined please read them all for yourself and let me know what you think.
I began recently to buy board games. You know – Monopoly, Risk, Operation, Clue, Battleship, Stratego … etc.
A few weeks ago I was in a Goodwill store looking at some other items I could sell online as a profitable hobby and saw a couple of board games that I remembered playing as a child. So I bought them. Even though they were used, for about $3 each they were a bargain … as long as they were complete with all of the pieces of course. Initially this started as a sentimental trip down memory lane as I looked for any of the games I played in my youth. Then on a whim I took to the Internet to see what these things might sell for.
It turns out that some of them can bring a decent price, depending on rarity, vintage, and demand. And that extremely rarefied air of highly valuable used board games can sell for 100’s of dollars, some even 1,000’s. So I honed my eye a bit more to move from pure sentimentality to a more business-like approach, seeking potential profit. While I don’t expect to find a boatload of those rare golden gems, maybe I can make a little money each year from a new hobby. Buy for $3 and sell for $20 to $50. Not a bad profit.
Lately I’ve found myself stalking area Goodwill stores. Employees from at least four area stores now shout my name when I enter. And I even pitched signs in the toy area staking the board games as my own claims, just like in the gold rush days! When I’m in a store I strongly encourage other potential board game miners to move on. Phrases such as “Go on … Get!” and “This here be my claim”, are usually enough to get people to move on. If not I’ll add a snarl or growl, jump up and down, and flash an open mouth showing several missing and discolored teeth. It’s just a simple prosthetic device that creates the desired effect. After a proper fitting, you just slip it around your gums and Voila! – instant 1880’s gold miner mouth!
While staking my claims I came across some interesting games that were focused on finance, business, wagering and/or strategy.
As a result, I’ve become very interested in how/if these games can help to develop strategy and business management skills. I’m also developing a live quiz game show targeted to the business market. And I want to see how these games can inform my game show development. So I plan to play each of the board games at least 3 times.
Anyone interested in a monthly (or bi-weekly) board game gathering, maybe eventually morphing into a tournament?
In the months that follow I’ll update my board game collection progress as well as the business quiz game show creation. I’ve tested the game show concept 2 times so far. It went ok each time. But completion is still a ways off, unless of course a well-heeled corporation is interested in the education and entertainment such an event could provide its employees. In that case it’s ready to go right now.
In the meantime, I’m happy to inform you that I found another board game gem – Barbie Miss Lively Livin’:
“This rare 1970 board game comes with a colorful box, a beautiful paper tiara, an intact psychedelic board, one die, 2 medium metal hoops (not sure if these are original pieces or previously used improvised entry-level ear-rings for 8-year olds), and several other playing pieces. Only one listing on eBay. All offers over $100 will be duly considered, maybe even some under.”
P.S. Delivery will be delayed until I’ve played at least 3, uh, 5 times. This play time is crucial to my research into board game strategies. Now time to get my Barbie on!
A true story taken from the (Mis-)Adventures of The Looney Executive.
If you missed The Case Of The Missing Equity – Part I, it might help to catch up on the chaos of this tale and then come back for the rest!
So all of that insanity set the stage for a chaotic, unfocused, middling, small business pursuing government contracts. Having advised a handful of distressed small businesses I’d become somewhat of a distressed biz profiler. I’d seen the story before. And the evidence was laid out in plain sight for all to see.
Since he and I shared an office I’d been talking to him on a daily basis. I knew the strategy because I was helping to develop it, or at least I tried. He changed it almost weekly. This was an act of desperation. And I understood. I’d been in the desperate zone myself. But my strongly encouraged advice of developing and executing a core strategy went unheeded.
One week the focus was on applying for government certifications. The next it’s on contract bidding for items outside of his niche. We bid on a few contracts. Won none of them. Winning government contracts is a volume game. The competition can be fierce. So in order to be successful, you need to produce lots of proposals. It was a jungle where only the strongest, and best-connected, could thrive. We also discussed a few unique ideas that we could launch. These were ideas that would bring his thinking more in line with that of a tech startup founder. But Ricky just wasn’t of the mindset to think, and act, too creatively. On top of it all, Ricky was focused on his PhD studies. So he’d spend large parts of days doing school work and not addressing the severely damaged ship careening toward a fiery crash.
And yet part of the promo (before I arrived) included such typical and overused mantras as “highest quality”, “number one company”, “most experienced” … huh?
Even with that I was a little surprised when one day, out of the blue, he broke the news of layoffs for some of his small staff, including me. My surprise was not the layoff itself, but that he didn’t give a heads up, and frankly that it didn’t happen sooner. But he offered what he thought was a carrot to keep us engaged. He offered us an equity stake but …
There was no “there” there.
There was nothing original that was being produced.
There were no long-term contracts.
There were no patents or other valuable intellectual property.
There was no A+ management team.
And there was a lack of trust too.
On more than one occasion Ricky told a staff member that paychecks were on the way when they hadn’t even been mailed yet. He was buying time. Not communicating with staff. Operating on the edge. Sometimes when the landlord came by to collect, Ricky would pretend to not be there. Why the landlord felt the need to collect in person was an interesting phenomenon in itself. Perhaps he too had been told one time too many times that the check was in the mail.
As the team gathered in a meeting to discuss this dire situation, I just asked a couple of entirely reasonable questions. I didn’t want to say outright that equity-for-work was a damned horrible idea and embarrass him. But I needed to know. When I asked the legitimate question of how much he currently valued the company, he blurted out an exorbitantly high number. When I followed up with the question of how he arrived at that number, he became a bit irritated and defensive. He said that he could create any value he wanted.
Clearly he was delusional. I didn’t see this as an outright attempt at fraud. He was desperate. He wanted to think that his hard work over the years translated into something of great value. Unfortunately, like for most of the hard-working 49er’s of the California gold rush, it didn’t.
This model he’d chosen to pursue was a dead end. He may get a few contracts here and there. But without a clear focus, a good strategy, and great leadership he was destined to pilot this ship aimlessly through the coldness of space until it eventually simply crashed.
After evaluating the situation my advice was simple:
But if he was crazy enough to keep going as a startup entrepreneur … start over with a core strategy around one or two unique ideas in a space that was not a low-profit, commoditized jungle.
Ricky did get a job for a while. But, ignoring my advice, he kept the company open for business doing the same thing. A couple of years later, after I was gone from the DC area, he told me he had moved into a new office park. Same business model though. I always wish him the best. I hope he succeeds.
But the old saying is true … sometimes you just can’t teach a stubborn old dog new tricks.
Way back in 2008 I worked briefly for a very small tech company. The founder, and sole owner, was a friend of mine. We met in college. Let’s call my friend Ricky. Over the years Ricky and I both tried our hand at entrepreneurship. His sole focus has been on trying to build a company around bidding for government contracts. He didn’t have a “Silicon Valley” mindset. He wasn’t focused on developing original, “disruptive” ideas that targeted a unique “space” and led to billion dollar IPOs – just simply bidding on government contracts. The DC/Northern Virginia/Southern Maryland region is ripe with so many entrepreneurs chasing the same elusive but potentially profitable dream.
At the time, Ricky desired someone to come in and provide a much needed dose of strategy and marketing for his fledgling, middling enterprise. So he asked me to help out. Over the years, as we discussed our entrepreneurial adventures, I never got a clear sense of his focus. And when I actually went inside the company I saw some things that surprised me. First, he wasn’t running his business full time. He was actually working for a large aerospace company part time. In understood this of course. You have to pay bills. And he had kids to support. But he was driving to Philly for his job. That was a 2-hour drive one way. Good thing it was part-time.
Secondly, he was bidding on supplying low-margin, commodity electronic items of all types to government agencies. As I found out in short time, literally anyone could do this. Being an expert in electronics was unnecessary. Just connect with a distributor, set up in your home, go to certain web sites for the solicitations, apply for a certification or two, put pen to paper (metaphorically of course) to bid for contracts, and voila! – you were a new very low-overhead competitor. The barriers to entry were pretty non-existent. So, because he leased a fair amount of office space, Ricky was already at a disadvantage.
Thirdly, a massive storm cloud had overtaken his operations. Let me explain. Shortly before I arrived, there was some major internal drama. Ricky fired one of his employees. Let’s call her Diane. Diane had set up her own operation using HIS equipment in order to compete against him for the same bids. But wait, there’s more.
Diane was also the sister of Ricky’s former long-time girlfriend (and mother of his 3 children), Tanya. Tanya also worked for Ricky. And she had convinced him to hire her sister Diane against his better judgment. Diane had been relieved of her previous job under cloudy circumstances. It appeared to be some level of financial misconduct, maybe embezzlement. This woman already had a history of corrupt-minded activities, which is why Ricky didn’t want to hire her. But he did it to appease Tanya. Tanya thought it would be a fresh start for Diane. Well as the saying goes, it’s hard to teach an old crook new tricks, unless they’re crooked tricks.
After Diane’s treachery, the nuclear fallout from this fiasco also emptied into family relationships as Diane and Tanya went on the warpath against each other, dragging their siblings and parents into the fray. Those extended family gatherings must have been so very interesting.
And there was a bit more intrigue going on that Ricky had actually created himself. On behalf of his employer, his job was to work with small businesses that provided products and services to the company. Over time he developed relationships with several vendors. One of those vendors built proprietary cables for Ricky’s employer. One day the owner decided to sell his little venture. And Ricky decided to buy it … without his employer’s knowledge. In short time his employer discovered that Ricky had acquired one of its small suppliers. So this employer was paying him, already an employee, to make cabling products for them through the guise of the company he acquired.
And how did they find this out?
Well Diane of course. She called and told them. Diane may be going down in flames but she certainly wasn’t going alone!
But Ricky’s employer couldn’t prove that he’d done this. They called his office a couple of times. But they got nowhere. Ricky was smart enough to operate the acquired company under its original name. Soon however, Ricky was relieved of his part-time gig. Unless, a company arranged an Enron-like bifurcation of subsidiaries, ferreting out the true ownership of any venture would take just a little digging.
Whew! Is your head spinning too?
Not to worry. Let’s take a breather. I’ll finish this story in Part II of “The Case Of The Missing Equity!”
By that time I hope your head-spinning, and dizziness, will have subsided.
Rust Belt Rising … An Epic Quest To Build A Vibrant Tech Startup Scene In A Traditional, Conservative, Hard-core Rust Belt Town.
I’m back. After a months-long break of not writing anything, I’m getting back in gear. It happens. Sometimes we must step back and take a break. We have to refresh. So many things were going on I felt the need to deep-freeze the writing for a while. But I enjoyed the holiday season and I hope you did too. Although it seems to come and go so much faster now that I’m in my middle years. I know time doesn’t change. It’s our perception of it that does.
Then again … maybe that’s not true at all. I’ve been watching the rebooted X-Flies series. Strange and unbelievable cases those FBI agents try to solve. And now that I think about it, I have a strange theory. Maybe time IS actually accelerating. It seems like just yesterday I was on a college campus partying and working through an engineering program in Norfolk, VA. But maaaybeee … it really was yesterday. Maybe someone – or some thing – did something to me to make time accelerate several years in just a few hours.
I think my DNA-embedded neutronic positrons have been activated diametrically, which causes an acceleration of the time-space continuum on an individual basis. This was thought to be complete conjecture by the established scientific community, nothing more than voodoo science. But it’s the only plausible explanation. And that would certainly explain a lot indeed. It’s a good thing I have Mulder and Scully on speed dial.
In any case, since I’ve last written, a lot has happened in the business world that, as usual, I have some thoughts on. And I have a few more stories to tell too.
One of those stories is my decision to pull the plug on IgniteTech. IgniteTech was a group I launched on Meetup.com in 2013. It was an experiment to see if it was possible to create a viable, energetic, grass-roots driven tech startup scene in the Dayton, OH region. You see Dayton is a hard-core rustbelt town. It’s also a hard-core military town, with one of the largest U.S. Air Force bases located in the region. And the culture of these two influences is very strongly reflected in the regional institutions and the population. When I returned here a few years ago, there was no movement to build a grass-roots driven tech startup scene.
So is it possible to create a dynamic tech startup scene in Dayton?
That was the question I wondered as I launched IgniteTech. Well the short answer (or the short-term answer) is … no. It’s not possible, at least not right now. There simply doesn’t exist a strong concentration of past, current and potential founders that have the motivation, the will, to make that happen. There’s just very little energy focused on building a great tech startup scene. On top of that, there’s not a dynamic support system (existing institutions) that helps to foster such ideas.
And though the regional institutions also lack enthusiasm for creating a dynamic tech startup scene, the situation isn’t primarily their fault. Grassroots is about people making things happen for themselves. IgniteTech was about building a grassroots movement. And the people it was meant to help simply didn’t demonstrate a motivation to build something. But there is an upside. There actually are a very small handful of people (2 or 3 that I know of) working diligently to make something happen. And if their enthusiasm can recruit a few more people committed to the tech startup scene, maybe in a few years we’ll see some significant progress.
In my last “Rustbelt Rising” post last November, I wasn’t sure if anyone else would step into the fray to continue IgniteTech and take it to the next level. No one did. After I sent the farewell notice, four or five people responded with nice words. But not a single person even inquired about how to keep it going. That, in a nutshell, is the story of the current grassroots tech startup movement in Dayton.
Suffice it to say I’ll have a lot more to post about my IgniteTech (mis-)adventure in the near future. Check out this interesting short piece on what it takes to create a tech startup scene.
Now I’m off on a new set of adventures:
And hopefully by the next post I’ll have connected with Mulder and Scully to solve my time-acceleration issues.
Wish me luck.
If you dare, he can be reached the old school way … blake@LooneyExecutive.com
P.S. I’m actively recruiting test contestants for my game show experiment. Interested? Please contact me so I can add you to the pool.