Toxic

As I hung up the phone I realized in those seconds a storm was just over the horizon. There were two law suits in the works already, but this ones was a devastating blow. Our customer data base had been stolen and sold to a nasty, nasty competitor. Who in turn sent out email, fax and letters to all our 30,000+ customers saying that the NSC was going out of business (the business I was CEO of) and that we had sold the business to them, an that all orders would be handled by them from here out. All a complete lie, amazing gall of these brothers. The damage was done and our $500+ million business was pulled to the ground in a matter of hours. Cash flow was king and it shifted from our phones to the bad guys down south.

I knew in those moments that this was going to be something that would get nastier before we even knew if we would survive as an organization. 

The next action was I brought my trusted leadership team together in my office. These were the people that were the heart, the spirit of the company. I could have held off telling some of the nasty things underway but this was like a torpedo to the side of our ship and there was no trying to shoulder this myself.

The conversation started, “We need to trust each other now more than ever. I need your help and your passion. We have three nasty, nasty legal battles underway. One with a consultant we inherited that thinks he owns the place and is draining off millions, another is a past board member and executive that stole from the business before I showed up using falsified documents and now a bad competitor that threw a curveball at our cash flow.” I went on to share that we had a business that needed to continue to operate and try and stabilize, while changing everything to even survive. 

The deal I put before them was simple. I wanted the people I trusted to take the complete control of the day to day business. We needed to cut the work force by 50% and compact all costs by 80% or greater. I would take all the toxic stuff, the nasty legal issues and the mounting debit the latest blow created (a $30 million short fall). I went on sharing “use the visual of me getting into a biohazard suite, going into a toxic place to focus on the nasty legal issues. I do not want to pollute the team, the efforts to restart the business. I will need help from two of you – but the rest go forward and get us out of the ditch.” 

They all stepped up, forward and did an amazing job. We would meet every other day in the morning early, we would help think through any issues or opportunities they needed coaching on. Then I would go to a back office with no windows and about 45 boxes of memos, legal letters, etc. I never had the lawyers come to the center, I would meet off site. When I traveled to Fresno to file the cease and desist order or to L.A. for meetings with the legal prep work,me and one other team member went at the efforts. Even a trip to Chicago for a meeting with our top 30 suppliers that we owned over $30 million to was just me and one other team member and we carried the “bio-suites” with us (I would literally sit before a meeting and imagine myself suiting up and going into Toxic-ville. )

The 30 days I spent doing this allowed the business to try and regain some level of “normal” and we started on a new path to restarting the business. The team was amazing. My my focus on the toxic efforts allowed for a push to bring as much of the legal fronts to closure, along with finding a way to pay off the $30 million plus (David B was amazing at bring these deals to a close and getting inventory in) AND keep the business moving. 

Even with all these efforts and a team that would and could do anything they were tasked with, the business was not going to rebound. Together the leadership team and my board of directors we set a target that by a date the numbers needed to be at X million. When we were 50% off that target we moved forward with selling off the assets and shutting down the business. 

Two funny moments in the middle of all this craziness; 

1st: Late one night the head of marketing and I were hanging out just unwinding a bit, laughing a bit. Jeff said “hey I always heard there was hidden money at NSC, lets look???” So we found in the warehouse the original plans for the building and a huge ladder and we started looking in the ceilings, tapping on walls looking for hidden rooms and spaces. With no luck but I still laugh thinking of the crazy two guys looking for a buried treasure. 

2nd: Another time a friend was in town visiting and we walked through Santa Rosa to get lunch. As we went different people would wave and say “Hi Dave” or “Hey David” - this happened 5 or 6 times. My friend commented “wow Santa Rosa is a small town, amazing everyone knows everyone…” my response still makes me laugh. “No, not small. Those are all the lawyers working on all the legal fronts underway…”

Lesson from the toxic time was a simple one.

Business will always have issues and challenges. Sometimes if they are too toxic it is better to find a way to not let the toxicity seep into the rest of the business. Divide and conquer, containing the toxic efforts to as few as possible. I choose to embrace the nasty legal stuff and gave the lifeblood of the business survival to the team. I provided updates to the board (daily sometimes) but I had a laser focus, get the legal efforts drawn to a close so we could all work on the business turn around.