The last day of Startup Week was least crowded and least filled with must-see presentations and panels. However there was one talk that made the whole day shine as the previous ones, one of the best (if not the best) of the whole conference, courtesy of Doug Richard of Dragon’s Den and School for Startups.
Here I’ll try to retell it while trying to preserve the awesomeness of the story which will be hard to achieve since it will be hardly possible due to absence of Doug’s great presentation style.
The biggest mistake ever
At a conference a couple years ago he was asked what was the biggest mistake he has ever made.
This question caught him off guard and he didn’t have an answer, he hadn’t thought about it thus far.
Actually he had two personality traits that prevented him to lash out an answer on the spot: he’s a very data-driven person, very precise; also he is in a very good mood or a very bad mood.
On one occasion following the conference, when he was in a particularly bad mood, he decided to quantify his main suspects for the biggest mistake and the main candidate won. A wave of depression followed.
Prior to this talk he decided it would be best, more illustrative, if he shared with us his mistake and the lessons he learned, instead of giving out a round of advice.
Zeros, commas, lots of ‘em
In the second half of the 90s his company made software for TV and movies but soon they were also making commercial graphics software for homes and businesses.
At one of the trade shows that they exhibited at, a high level executive from the fourth largest publicly traded software company at the time came up to him offering to buy the company.
After a little bit of back and forth between the suitor and his co-founder whose extreme shyness compelled him to hide behind the curtains the deal was struck.
The main factor was the figure already prepared on a piece of paper, and what a figure: it had ones, zeros, commas, a whole bunch those two really, a very nice number.
Back then that was all I knew about negotiation.
There were just two conditions
The first one was that he moves to Dallas, Texas, where the company was headquartered. (Doug hates Texas. Mainly because of the large number of Texans there.)
When his wife told her friend that they had to move from Dallas she asked her “So are you going to go or divorce him?”. Apparently from an LA perspective those were equally understandable options.
The second condition was that he and his co-founder were to be payed in stock which they had to hold on to for 100 days, a popular form of transactions in those days.
After the value of the shares fell 99% 89 days after the deal, Doug was rather annoyed to put it mildly.
Lesson: always take cash.
Not only was he now broke, he was in debt – he got a big house which came with a big mortgage.
After 3 days of sulking, as time passed Doug became angrier and angrier with each day. He realized he wanted revenge to be his guide.
He met with people who were the largest investors in the company who agreed with his sentiments that the situation was disastrous and that the management was bad but also informed him that as investors they won’t do anything.
Lesson: investors don’t do anything.
Since he was still young and in an appropriate mode which can be surmised as ‘ready, fire, aim’ he decided that he will run the company. After allying himself with all the unsatisfied stakeholders he proceeded with a hostile takeover of sorts and installed himself as the president and CEO.
Revenge be my guide
His first act (btw. his second largest mistake ever) was to gather all the company executives from all over the world in Texas and fire them all on the spot.
And the thought still puts a smile on my face.
He then bought an around-the-world ticket to visit all the 17 offices around the globe. The people there were understandably terrified at the news – their bosses had gone and never came back.
At that point he held 19 titles since he still hadn’t replaced the fired executives. This had to change, fast.
So he did what no-one would expect or suspect – he chose the new executives randomly, took the first ones to look him in the eye.
This was a problem in places like Japan where no-one looks you in the eyes. Except this Korean woman. And having a Korean woman as a executive in Japan was pretty radical, to say the least.
Doug gave one piece of instruction to his new executive team: go out, make money for me, send it to me. If they needed anything more than that they were given an additional piece of instruction they were told that he’s “busy, go sort it out on yourself.”
And now for the power of trust
What they heard instead is – “I trust you completely and I am sure that you can do it! Go go go!”, because no-one could have thought that he actually picked people randomly. When you give absolute trust to people they come up with incredible results.
In the end, 17 out of 18 executives came through, delivering growth for 17 consecutive quarters. All of them did, all but him.
In the end he sold the company:
For cash.
And that’s how the story of Doug’s biggest mistakes ends. ‘Twas a pleasure hearing it, take the chance and catch him when you see him billed at a conference.
It turns out you won’t have to wait too long since Doug is scheduled to talk at the How to Web 2011 conference. If you decide to come ping me, would love too meet as many new European (and beyond) startup folks. And make sure you follow @SEEHub for the latest updates.
