Just read Jeff Hilimire’s latest blog post, in which he recounts old offices, no business plans, and the glory of being young and starting your own gig to just do what you love. That reminded me of one of the most painful times in my business career – ok, in my life – that actually led to a great victory. There are several stories wrangled into one, but they all converged. The result was a complete business turnaround.
In 2007, we finally bit the bullet and got our first office. There were 4 of us at the time, and we all met once a week in my basement in midtown. Other than that, we worked virtually…before it was cool to work virtually. I remember a prospect asking me in a very shocked tone, “Are you talking on a cell phone?!?” This was 2007.
That first office, like Jeff described his, was not ATV. It was off the beaten path, weird, and wonderful. We got the space because part of our plan at that time was to take some of the WiFi training that we had been farming out and bring it in house. We saw how profitable it was, and we made the hard decision to actually compete against our own channel, albeit only locally in Atlanta. So our new space had a great training room that we customized to make even better.
When we made that decision, we got a HUGE early victory. A Fortune 100 company (who no longer exists) reached out to us to outsource their WiFi training for hundreds of employees all over the world. In less than 30 days, we negotiated the contract and scheduled the first training session at our sweet new digs. We were off to the races.
That deal took us from just over $1M in revenue the prior year to over $1.8M in 2008. WiFi was growing like crazy, and enterprise network engineers needed training and certification, and that’s where we played. We were not paying attention to, and had no understanding of the massive meltdown that was building up in the global marketplace.
The first business day of January, 2009, we had our regular call with our big huge customer, wherein they told us that, despite the fact that we had a multi-year training contract, everything was on hold. Later that day, the news broke that this company was splitting into two businesses. One of those businesses was later acquired by Google for $13B, and that’s the last anyone ever heard of that business.
Because we realized that we had just lost our largest customer, we had to let go several employees. That was the beginning of a very, very long year.
Our CTO had resigned on really good terms to go start his own business. He later sold that business and is now a very successful podcaster and financial Rock Star.
As the markets continued their implosion, our business declined rapidly. We had expanded into other non-related lines of business as well, including renting out our email list that we had grown from zero to 150k opt-in emails. As fun as those new businesses were, they were not our core business, and we had to cut those business lines and employees as well.
It got so bad that, in the summer of 2009, we had to deliver the news that we would not make payroll that month. At that news, my co-founder left to go to work for an up and coming WiFi equipment manufacturer. We had $250k in debt, rapidly declining sales, and we were losing and letting go employees.
After not getting paid for nearly 3 months, the remaining minority owner of the company threatened to force us into bankruptcy so he could purchase the assets of the business and push me out. That’s when I reached out to Charlie Paparelli.
I had met Charlie several times, but he really did not know me from Adam’s house cat. He took the meeting anyway. I met with Charlie, and poured it all out on the table for over an hour. I explained everything that had happened, and ended with, “I just want to get out. I want to leave my company.”
If you know Charlie, you know he is no nonsense. His response to me was all Charlie, and I will never forget it as long as I live. In fact, his response is what I think about when I am advising or mentoring someone and they need to hear a harsh truth. That’s what I needed to hear, and that’s what Charlie said. He said, “You started this thing. You broke this thing. Now get back in there and fix it!”
The Light at the End of the Tunnel
Charlie’s words hit home. I think, despite my pleas to help me get out, that I really wanted to hear what Charlie said. I needed a good kick, and that’s what he gave me.
We were now at 4 employees, down from our peak of 11 people. I brought everyone in to the office and laid it all down on the table. “It’s just us,” I said. I made a very high level 5 point plan, and explained to everyone that this is what we were going to do. It was going to be very hard, but we could do it. That 5-point plan was literally written in black sharpie on a single piece of paper and hung on the wall for all to see and remember everyday. I still have that piece of paper.
The following 2 years were so. very. hard. But they were also some of the most invigorating years of my life. The four of us knocked it out of the park. We got more done with just 4 of us than we ever did with 11 employees. We created 2 brand new certifications and published or updated 3 of our study guides. We got back to profitability, and it turned out that making payroll for 4 people was really easy compared to making payroll for eleven.
Almost exactly a year later, I saw Charlie at church, and gleefully told him that we were paying off our debt at a solid clip, and sales were up 25% year over year, and we were cash flow positive.
In the spring of 2012, we got an offer to acquire the company, but it fell through. That was a huge disappointment because we had worked really hard on the deal. Some of those “failure” emotions started to rear their ugly heads again. But then we closed the largest deal we had ever closed – or dreamed of! That one deal let us completely pay off all our remaining debt and have cash in the bank.
A month after that, we got another offer to acquire the company. This one went through. The turnaround was complete.
I could write 10 blog posts on the many, many lessons I learned between 2009 and 2012. Don’t quit. Get a mentor. Get a mentor who will tell you the very hard truth that you might not think you want to hear. Be open and honest with your team, and demand that they be honest with you. Don’t borrow money. Stick your head up and see what’s going on in the world (like a global financial crisis!). Do more with less. Don’t grow too fast. Don’t spread yourself across side businesses when you should be focused on your core. And, finally, when you’re going through hell, keep going.