The struggles many companies are facing today reminded me of this story. Like most Americans I distinctly remember where I was on September 11, 2001. My wife and I were attending an industry trade show for our company NetQoS, where we were launching our second product. I was watching CNBC waiting for an interview with Jack Welch when news of the first plane came across the screen. When the second plane hit everyone knew that the world had changed. Later in that week as we drove back from Atlanta to our home in Austin, Texas, we discussed what this might mean for both the country and our business.
As CEO I knew that just surviving the next 12 months would be an accomplishment. At the time the company was just beginning to ramp revenue and was burning cash on a monthly basis. Unfortunately my worst fears were realized when, as we went into 2002, it became almost impossible to sell our products. One customer told me that our product was the best product he had ever seen from a new company but that if it cost a dollar he couldn’t buy it.
As 2002 continued to be challenging, I knew it was time to consider the interests of our shareholders. We had been funded by a single firm, Liberty Partners. They had invested a total of $11 million in the business, and it appeared likely to me that they would lose the entire investment if we continued. I entered the board meeting in the fall of 2002 with my mind made up. The right answer was to make a recommendation that we return the remaining funds to Liberty and shut down the company. While I believed that the company had two great products and a strong team, the economic environment was preventing us from having any success. I didn’t know what else I could do to make a difference. There is nothing tougher for a CEO than contemplating the death of their company, but I felt it was clearly the right thing to do.
I made the recommendation, saying, “If it was my money I would take it and go home.” I will never forget the words of Tom Greig, a board member and managing partner at Liberty: “If you need more money we have a checkbook.” Sometimes in business the only thing that matters is having the right partner.