Necessary Endings

What Business Failure Taught Me

Kathy and I are in an ending process with a home filled with memories. We usually don’t get attached to “things,” but selling this home has been difficult. I even lost a few hours sleep over the last few weeks leading up to the sale.

I kept wondering why this process is so difficult. It is just a beach condo. In fact, we don’t even come here very often anymore. If we want to come down to the beach again, there are hundreds of rentals available. We can even rent the very same place we are about to sell. So why the sadness?

We bought the condo 27 years ago in October 1987. It served as a gathering place in the summers for me, Kathy, her sisters and all their children. We grew up together. We became a close knit family. My 25 year old niece told me, “It was a place I always felt safe.” My 32 year old nephew posted a 300 word eulogy on Facebook on growing up at the condo.

I learned that the more our lives are invested, the more difficult the ending. The memories keep coming like the slow movement of the ocean waves as they continuously roll toward the beach. Will this mourning process end?

As difficult as this ending process is, it reminds me of an even more difficult ending. In 2003 we had to wind down a business which we had started 11 years earlier. Eleven years is a long time. We started by losing money on the way to becoming profitable. Then we made a couple of bad decisions, followed by a market downturn, and the business went into a tailspin. We couldn’t get it right. It was time to end it.

At one point this business achieved over $7mm in revenue. It had 50 employees and served over 40 customers. Then it was gone. The business had a strong core ideology which was centered on the employee. We believed if we served each other well then we would serve the customer well. It was a great place to work and a great company to do business with.

I still have pictures in my office of the the company getaway cruises, Christmas parties and partner golf retreats. There were so many great men and woman who grew up together in that company. I being one of them.

They joined as twenty something singles, got married and had kids. They grew up from individual performers to project managers to partners. We were invested in each other’s lives. And then it was over and I was left with the wind down.

The process of winding down a business taught me a few lessons.

Absence of Hope

Starting is the presence of hope, and ending is the absence of hope.

Endings brings out the worst in people for this very reason. When there is no hope, we tend to fight over what is left like hungry dogs fighting for scraps of food.

We fought over the remaining cash and assets. We fought with vendors to whom we owed money. We fought with clients who owed us money who still needed work we no longer could perform. We fought. It was ugly. There seems to be no good way to end when there was no hope.

Long Friendships Lost

We used to hug. We opened every meeting with prayer. We dedicated the business to the glory of God. Now we don’t even talk to each other. This is one of my biggest regrets. What could I have done to avoid this? I could have done the right thing. Here’s what happened.

The founder of the business was out of answers. We both were stumped. Instead of going to the minority partners for their input, we decided to bring in an outside CEO. He had experience in service company turnarounds, and we thought he was our white knight.

The new CEO was a bad fit for a closely knit culture. His methods were received as harsh and authoritative. The push back was massive. He was faced with a market which went cold, an inside revolution and little operating capital.

The minority partners decided they wanted out of the partnership. The terms of a buy-out were clearly spelled out in the LLC Operating Agreement. The formula for the valuation provided a miniscule payout for their shares. Needless to say, they were unhappy. In fact, they left and never talked to us again.

The founder, who was best friends with them, reached out and his attempts at reconciliation were rejected. I never reached out to either of them. I felt justified in my actions based on our agreement.

If I had it to do over again, I would have included the minority partners in the decision to bring in the outside CEO. They should have been part of the decision. If we went forward, they should have interviewed him.

When we got to the buy-out, I should have opened it up for negotiation. I don’t know if we would have come to a materially different number. I do know it would have been a discussion instead of “take it or leave it.” Even if I had to kick in more money to make it fair in their judgment, it would have been worth it. Decade-long relationships are more important than money. I made a mistake and these men and their families stopped being a part of my life. I lost.

My former partners went on to establish themselves in new organizations. They are now leaders and partners in vibrant companies. We just don’t talk anymore.

There Is a New Beginning

From the ashes of that company was born a new business, iPartners. It was one of the very first SaaS businesses in Atlanta tech. I funded it and backed my original partner and two other key former employees, all founders.

iPartners went on an 11 year run of success. It ended in a successful exit in January 2014. We used the same core ideology, a new business model combined with 11 years of wisdom gathered from the experiences of the first business.

This week we are having a retirement lunch for our founding partner, Bob Lasher. He is one of my absolute closest friends and one of the greatest Atlanta sales professionals and tech CEOs I have had the pleasure to work with. We have been together since 1980 when he joined me as a salesman in my first startup.

No longer working with Lasher feels a lot like selling this condo. There is sadness in the process but it is a necessary ending. We will continue to be best friends but no longer business partners. After thirty five years in business together, we are moving on to the next stage in our lives.

Our family will continue to visit the beach, but we will stay at a different place. Our condo of 27 years will not continue to the next stage of our lives. The memories carry forward but not Lasher’s career or the place we once owned.

The result of endings is the hope of looking forward to many new and exciting memories. Endings are necessary for new beginnings.

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