Change of Control
It was a miserable, gray, slushy, midwinter day in 2001 or 2002. I had been working on a truly gruesome coding project, fixing someone else’s disaster under immense time pressure during a complex integration of two businesses. We had a hard deadline approaching and dozens of people were blocked by this project’s being incomplete. The code I’d inherited was so badly written and impenetrable that I resorted to printing a big chunk of it out on 8.5” x 11” paper, maybe 20 pages’ worth, and taping them together top-to-bottom into one long vertical sheet. Obviously there was no continuous feed printer around; this might have been a case where old technology worked better than new. After creating this 20ish foot monstrosity and laying it out on the floor, my next step was to crawl along it with various colored highlighter pens to connect the curly braces whose mates were several feet away. (To the non-nerds in the audience, don’t worry, that’s the end of the hare core geekery for this post.) It was the only way I could think of to make sense of the previous coder’s slop. My colleagues all got a good laugh at my expense; my manager shook his head in dismay as I sat on the floor coloring like a preschooler. By the time I left late that night, though, I’d solved it. The victory was short-lived—I left the office just as a massive blizzard started. It took me over two hours to get home. ‘Twas epic. The next morning heralded one of those classic post-storm Chicago winter days where the barometric pressure skyrockets and the temperature plummets. You could hear the new snow make hard, crunching noises as you walked on it, at least if you were outside and dumb enough not to have your ears covered with something thick and wooly. I didn’t bother shoveling out the alley since driving back to work would have taken half the day, instead deciding to hoof it to the train. Cross country skis or snowshoes would have helped. Also generally helpful would be a regional commuter railroad that isn’t surprised by ice in the winter—the switches in the downtown yard had frozen solid and there were guys out there with little flamethrowers (and how badly do I want one!) thawing them out. So my 20 minute trip via “the way to really fly” actually took two hours.
Sure enough, by the time I sat down and read my email that morning, some crapstain middle manager in New York had turned the whole project plan on its ear and obviated the need for the tedious, difficult task I’d completed the night before. Like so many times before I took a moment—face down with my nose on the “F” key, listening to Outlook beeping frantically because it doesn’t understand “F” three hundred times in rapid succession, in hypothermic shock from the walk from the train station—to ponder the career choices that had led me to that parlous juncture. Quickly, angrily, I made the following resolutions:
- One: I was going to start my own business, never to work for The Man again.
- Two: I was going to make enough money at said business to retire and move to Hawaii.
It was epiphanic. The fog cleared very quickly from there. Determined, I decided that having something tangible as a daily reminder of these goals would be helpful. I wanted something to look at or touch when things got grim again as they surely would. I googled around and chose a laminated map of Hawai’i as the physical representation of these goals.
When my touchstone arrived a couple of days later, I tacked it to my cubicle wall. As The Man later decided—surely with good reason—to move me around that beige, soulless office six times over the next two years, it moved with me. I ended up having to reinforce the corners with extra Scotch tape because the repeated perforations from the push pins had compromised the structural integrity so severely.
* * *
On October 18, 2004, a confluence of exceptionally fortunate circumstances enabled me to achieve Resolution One. Along with my three partners, I quit working for The Man. We four and our first two full-time employees sat down that day in a borrowed conference room at Northwestern with a Box-O-Joe, a dozen donuts, and a pad of these 3-foot Post-It notes that you can stick on a wall in lieu of a whiteboard. We sketched out how we wanted to build our platform, and, maybe more importantly, we sketched out how we wanted to build our business. We’d all been embittered by The Man and were determined not to become him. This thing we were creating would be substantially different.
In the spring of 2005 we moved into our permanent office space in Evanston. I put the dog-eared map of Hawai’i up in the computer room there since we didn’t have high cubicle walls (damn right we didn’t) and there was no wall behind my corner desk, only floor-to-ceiling windows exposing a spectacular panorama of Lake Michigan to the east and Chicago to the south. I missed seeing the rendering of my retirement destination every day, but the replacement was inarguably a giant upgrade.
Lots of things happen when you run a business, many of which you don’t anticipate. What separates the winners from the losers most times is not how well they planned, but how well they reacted to the things that shot holes in their plans. For various reasons, legal being foremost and modesty somewhere further down the line, I can’t go into detail about the trajectory of our firm over these nearly five years. I can say that our ideas were proven to work, money was made, investors were excited and participated actively. We mostly executed according to our plan and adapted well when challenged. We built an extraordinarily talented team who worked hard and built a system which I believe is unparalleled in our industry. Best, we had fun doing it.
None of this happened in a vacuum, of course. The climate for business and investment the last two years can only be described as dreadful. While the increased volatility in the equity markets was great news for our particular business model, our investors, like everyone else, saw their personal portfolios crumble before their eyes. The timing couldn’t have been worse: just as we needed a substantial influx of capital to buy more hardware and hire more engineers to take our business to the ultimate level, we found that the appetite for that type of investment had dwindled to near zero. Frankly, too, our own patience as founding partners had been stretched. We were also investors, and the board presidents we each answer to in our own homes were demanding substantially increased returns.
We came to the conclusion early this year that selling the firm was the best—maybe the only—way to grow the business in the quantum fashion we envisioned. Our organic growth was positive but the slope simply wasn’t steep enough. We needed help, the kind of help for which you have to surrender something substantial. In deals like this, that price is euphemistically described as a “change of control.” In transactions like this, the sellers don’t reap a mountain of cash and buy one-way tickets to an island paradise 4,000 miles away. Instead, they go to work for the buyer. They go to work for The Man.
* * *
The deal closed last week and I was in my new downtown office reporting for duty the next day. So far, everyone at my new firm has been great and the culture seems to fit with ours. One thing that is really helping to ease the transition back to the bigger pond is that the sector I work in comprises an unusually small, tight circle of people, and there are at least a dozen folks at the new gig whom I’ve worked with before, including my own boss. It feels familiar, sort of like returning to a 10-year college reunion. I think we’re going to do just fine since The Man is, in this case, a mensch.
I went back up to Evanston over the weekend to clean out my desk and get some personal effects from the office. We’ve got a sublessor coming in fairly soon so the space has to be cleared. As I took my last lap around, enjoying the sparkle of the sunshine off the lake’s surface, I remembered to peek into the computer room to see if there was anything there I’d forgotten. Glad I did. The tape had started to yellow and gum a little, but there on the door was my touchstone map. Aloha. I took it down, rolled it up, and now it’s in a box in the garage with a bunch of other stuff I retrieved that I haven’t figured out where to store. I’m sitting at a trading desk at the new office; there really isn’t a lot of room for personal items. In any case I’m about 100 feet from the nearest wall so the map doesn’t really make sense there. The walls in my office at home are pretty crowded, too, so it may be some time before I find a new home for it. But I am keeping it. Though I may have had to back out of Resolution One, I still have a chance at Resolution Two. My plan may be shot full of holes, but I am reacting.