The Crankification of Mr Cranky
This is a Mr Cranky Repost from July 13. I thought based on a significant increase in readership I might share the recipe that takes the raw ingredients of a starry-eyed, everything-is-beautiful, young wannabe startup entrepreneur into a realist…
It’s 2003, I’m not quite Mr Cranky… yet. I start the job in Herndon VA. The company… Ikimbo. Today there are 50 employees. I’m the new CEO. My new assignment at a company in the enviable position of having raised $28M. I’m in the catbird seat. Except I’m here because the board had fired the previous CEO. I get the corner office. For like 5 minutes until I think better of it. The former CEO’s corner office rivals the size and luxurious appointments of any successful Fortune 500 CEO.
Pictures of my predecessor with celebrities, press articles. awards. I scrap the bling, convert the office into a conference room, move into a windowless office and begin the work of figuring out how I would reduce headcount from 50 employees to 12. I settle into my closet, eschewing the false trappings of success and go about the work of extending the runway with the hope that the survivors and I can get this baby off the ground.
Here’s a company that was burning $500K per month. Every two months the company burned more cash than it had generated in revenue in the 5 years of its existence. Here is a company where the employees did what was asked of them. Unfortunately very little of what they were asked was germane to building a real company. Here was a corporation that was providing income to 50 souls, many with families. Here was an organization where management had failed those employees and most of them were going to pay for the failures of leadership.
How did I get here? I was hired by a VC. One of the VCs involved in Astracon, the last Denver-based disaster that I had just parachuted in and out of.
Story there? I was called in to replace the college professor turned entrepreneur, CEO. Our software developers were located in Australia as a University of Brisbane spinout. The rest of the business was in Denver. Flush with $70M of VC capital we were down to assets of, $6 million, 200 employees, including a company masseuse, and one huge anchor OEM client, about to kick us out. The company had generated a little over 2 million in revenue in 3 years. The Aussies, who love everyone, despise the Denverites, and the Denverites hate the Aussies.
Yet this company was the darling of the Denver and Australian press. The buzziest of the buzzy. So buzzy that I had looked into acquiring the company a 1½ earlier when I was running a division of 3Com.
So back to Denver. I walk into a palatial CEO suite. I convert that into an employee break room and choose a closet for my office. I’m going to let the folks here know that I’m focused on results and not optics.
On my second day on the job, we’re down from 200 to 199 employees. A masseuse just went on the job market. I called my executive team together, explained that not all of us in this room would be here 90 days from now and outlined our two short-term goals, 1) we need to figure out how we will keep our most important client while 2) reducing staff to 70. More innocent employee… victims of hubris and excess were about to be on the street.
What makes me Mr Cranky? I’ve seen the effects of strong personalities in weak management clothing. I have been there to clean up and inflict the personal pain caused by leaders with a faulty value system. I understand what happens to investors, employees and companies focused on the wrong priorities. I understand the difference between the fake smile, the back slap, the forked-tongued platitudes to honesty versus meaningful authentic actions.
I’ve been there, done that. I had co-founded my own company in 1992, invested $100K of my own cash, only to be fired by the VCs on my 40th birthday. My well deserved birthday present for failing to gain revenue traction. Since joining my first startup in 1979, I’ve seen winners and losers first hand and I’ve come to recognize certain patterns.
What makes me so Mr Cranky (I mean besides the fact that I’m an old fart)? I see those patterns of failure over and over today and I see them celebrated. I know how this movie ends and I mourn the coming storm. Many of us will not be on this startup bus when the wheels come off.