I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…
The USA, early 1990s to early 2000s
During the course of my career I have been involved in many cases of companies dying, bankruptcy, and other negative corporate events. At times I was there until the bitter end; often I left before the final events occurred but could see evidence of encroaching doom. When you are first starting off as an employee with little experience these signs are harder to understand; as a veteran I can now unfortunately pick them up right away.
One of my first memories as a public accountant was the day that they fired all the administrative assistants. Not the ones for the executives – the ones that helped the new staff get orientated. These women (they were all women it was the early 1990s) ran each of the floors and it was the first time I’d seen anyone get fired en masse. This was before email I think they left us all some sort of strange voice mail or something (voice mail was big back then). It seemed very sad at the time.
In the early 1990s there was a lot of tension in the public accounting firms between audit / tax vs. the consulting side. I was a staff person and was invited to one of the partner meetings (because I played bass guitar but that is a different story) and I could see the vitriol between the two groups. When the audit partners’ asked “how could they help” the consultants the answer was to “get out of our way”. This was not the happy story that I was being fed as a staff person, for certain.
Later that accounting firm went belly up but I was long gone by then. We started up a small consulting firm and it was fantastic for a while. However, it all started to fall apart as key founding members left after a dispute with the main owners over compensation and eventually I was one of those that departed. The departure was even more difficult since many of my friends and family members were also involved with that firm. Unlike most of the other companies in this piece, however, that firm thrives until this day. So we can conclude that I was not indispensable…
At various points during my career I had a “choice” between two firms. Often I chose the wrong one. At the time I didn’t realize that right before you go public, you shave out all of your costs for a quarter or two and you accelerate all the revenue into the current period (to the extent that this is possible and legal, of course) in order to make your company look great for the IPO process. Living in a company that is doing this is very painful and I left but that was before the company became one of the first successful IPOs of the era (a completely unexpected and unprecedented outcome) and I missed out on an opportunity for those founder stock options.
As the dot.com era came to a close there was a giant shake-out in the Internet and Consulting sector. I worked with three companies in succession that eventually went bankrupt. The first of them had an IPO (in the era of voice mail plus a bit of email) and I noted that it was odd that most of the IPO funds raised went to pay out one of the primary investors (they took the cash, we retained the stock). In hindsight of course this was another ominous sign.
In the second and third bankruptcies there were other “frothy” signs in the market. When you signed up for work, you received stock options “equal to your pay”. However, this is a strange analogy, because the “value” of stock options isn’t based on the current stock price, but on expectations of future gains. As it turns out, all the stock options in this era became worthless because I received them at their peak and wasn’t able to stay long enough to recover if the losses ever turned back into gains. Which they never did, of course, because the business models of those consulting firms were irretrievably broken.
Towards the end, however, the consulting firms kept coming up with more and more dubious schemes in order to survive. They would promise profitable products and services but you needed to 1) design the service 2) market the service 3) execute on the service 4) collect money from the service… and we only had a bit of cash left. Thus mathematically what they were proposing was impossible. This quote from Dave Barry aptly sums up how our firm was approaching impending doom…
As we transitioned between bankrupt owners it was astounding how few individuals had any spare cash on hand. They had to go two weeks without a paycheck and many of them were completely out of sorts as a result. These were staffers paid six figures in many instances and they had no cash cushion. The coming post dot.com business downturn was not going to work out well for these people.
When your company goes bankrupt you have a few extra tasks to do that you hadn’t anticipated, such as going to social security to get your earnings reinstated because the company isn’t there to file for you. You also have to work with the IRS because they often don’t send the correct tax results and you need to save your pay stubs and create your own records. If you paid into the schemes where you get health care of transportation spending with pre-tax dollars, those policies also become a big mess. A friend of mine had a company credit card that went very badly for him since the firm wasn’t paying these claims either; he had $50,000 in company costs on the card that went to him personally and it was a disaster. I had to negotiate a medical claim with a hospital because although we had Blue Cross insurance the company hadn’t paid the premiums so in the end these claims were rejected. All in all these sorts of misadventures left deep scars and paranoia among anyone who had to live through them.
These posts represent my experiences but if you take away anything it would be to be prepared in case the company that you work for begins to have problems. You need a significant cash cushion on hand and I recommend networking even when all goes well because when the sh*t hits the fan everyone is out there looking for opportunities and if you are late to the party it is even harder to get back on your feet.
Cross posted at LITGM