Day 98 - The Fractious Path of Righteousness

          My wife and I took a van load of stuff over to our son’s place today. He’s got a shed where we can store some of our outdoor stuff like the pool toys, the barbecue grill, garden tools and so forth. Also we have never seen his place, something we really need to do in order to get an idea how much space we have to work with. It turned out to be a lot less than we had imagined, and a lot more rustic. We can make it work if we have to, but it’s going to be really uncomfortable. I can’t tell you how much I hate being in this situation.

*****

Naturally there ended up being a problem with the cracker brothers as our hose and fitting supplier, although in the final analysis it had more to do with us than it had to do with them—even though Ringcomme and Bloome went out of their way to make it the brothers’ fault. The whole incident to me was a case study in just how screwed up a business relationship can get when stubborn and egotistical managers insist on doing it by the book.

I had hired a new cost accounting manager. Let’s call him Eddie Sharpe. He came with good experience and good credentials. He was high energy and very knowledgeable in cost accounting issues. He was also ambitious. He got a handle on the cost accounting routines early on, and started looking for other things in which to get involved.

I was feeling overwhelmed by the strategic sourcing project so I let him take over the accounts payable department. It was supposed to be a temporary assignment. The plan was that the cost accounting responsibilities would expand as volume grew, and at some point we would be adding an accounts payable manager position. Letting Eddie run the payables section was an interim solution, but once he got the bit in his teeth there was no stopping him.

In a very short time Eddie became almost universally reviled. All the women in finance hated him, especially the payables clerks he was now managing. Most of the men hated him as well. Everyone thought he was arrogant, abrasive, and difficult. That much was probably true, but Eddie’s genius for accounting process issues was hard to overlook. As a cost accountant he had a genuine flair for tracing and isolating the pesky and sometimes devious drivers of specific costs. As an accounts payable manager he understood the intricacies of information flow. As a manager he had no finesse whatsoever. His principal people-handling skills were the peremptory demand, followed quickly by sarcasm and derision. He was a fantastic accountant with the people skills of Freddy Krueger.

Now enter the hose and fitting brothers. I had just negotiated our new agreement with them and we had signed a memorandum of understanding. Among the things they had agreed to was a 5 percent discount on any invoice we paid within 30 days, provided we paid all their invoices within 45 days. These were fantastic terms for us. Having 45 days to pay was nice. Getting a 5 percent discount for early payment was huge. We were all as happy as we could be.

Then Eddie started reviewing their invoices and decided that they didn’t meet our standards. He didn’t say anything to me about it. He just held payment. When we went beyond our 45 day payment terms, the brothers called up to find out what the hell was going on. I had given them my personal word that we could make those terms work. I hadn’t considered Eddie’s imperiousness.

Eddie was right, of course. The invoices were a mess, and that was a problem that needed to be addressed. The problem is that the brothers would have been happy to address it if we had approached them like the partners we purported to be in the negotiations rather than talking down to them and giving them ultimatums.

I figure a guy who pulls a knife on you, even in jest, is probably not a guy who is going to respond well to an ultimatum. What Eddie told them, in so many words, was that he wasn’t going to pay them at all until they got their invoicing act together. They reacted like any red-blooded American knife-wielding, 4x4 driving, bass boat towing, cracker-ass cowboys would do. They stopped shipping us product. They shut our production lines down—all of them—in the space of 8 hours. This is the point where I got a call from Ringcomme wanting to know what the hell was going on.

That phone call from Ringcomme was the first I knew that we even had a problem. You would think that, somewhere along the road to shutting down our production lines, somewhere in the midst of escalating tensions and deteriorating relations, someone would have had the good sense to tell me what was going on. You would think that, but you would be mistaken. All along this road to ruin Eddie was convinced that he had things firmly under control, and that before it was over he would have taught the red-neck hose and fitting brothers a valuable lesson in how to conduct business with a real company. All along that same road the red-neck brothers knew that they had Eddie, and Albatross, firmly by the short hairs, and if we weren’t going to honor our word, they were going to give those short hairs a good yank to teach us some manners.

Because our lines were shut down for a time, this became a much bigger deal than it had to be. It ended up requiring the attention of executive management. The problem and the fix were removed from my control. Apparently, even though I had got favorable terms from them and still enjoyed a good rapport with the cowboys, no one thought I was capable of getting them back under control. A way out was negotiated by the guy who eventually fired me from Albatross in the last desperate reorganization in bankruptcy. He had to give up the discount and promise payment in thirty days. We had to fix their invoices for them. In other words, he got significantly worse terms than I had in the original negotiation, a nice ironic twist to the whole sordid affair.

I would like to say that I learned from this that sometimes it is best to swallow one’s pride and even to ignore what you know to be the best textbook procedure in a given situation, and look at the common ground between fractious parties to find a way forward. I can’t say that because I didn’t learn that at all. I didn’t learn it for the simple reason that I already knew it. Anyone with the slightest little bit of sense at all would have known to look for ways to help the red-neck brothers fix their invoicing. They would have been happy to do it. We would have been happy to pay our invoices early to get the lovely discount they were offering.

We all wanted the same thing, but sometimes the righteous among us would rather be correct than actually fix a problem. They’d rather have the right answer than the right result. I know religious zealots who act the same way. They’d rather be theologically correct than to reach out gently to lead another soul to salvation. Being correct is a necessary and laudable thing, but it should not get in the way of the goals of the enterprise. What I learned from this little story is that, more often than not, these righteous bastards are the guys in charge, and they just ruin everything for the rest of us.

Day 97 - Cutting Edge Negotiation

          If my wife and I are going to move in with our son, we’re going to have to downsize—a lot. We’ve got a 4 bedroom house filled to the rafters with stuff. This includes the attic and the garage where we haven’t been able to park a car for as long as I can remember. There is stuff in the garage, still packed in boxes that haven’t been unpacked since we moved from Arkansas to Alabama 9 years ago. The task is daunting. The garage sale will be the stuff of which legends are made. It’s already too late to start planning it. We are going to have to pray for and get a miracle. A job would be good too.

*****

I had an interesting exchange during the strategic sourcing negotiations with one particular vendor. It was a hose and fitting company owned by two brothers. They made all kinds of hoses for a variety of applications—hydraulic lines, fuel lines, water lines, vacuum lines, and all the associated fittings.

They had bought a building close to our plant specifically to service the Albatross account. They went beyond normal bounds to provide us what I considered to be stellar service. If we needed something in a hurry, they would fabricate it on the spot and drive it over to us in a matter of a few minutes. They made Albatross proprietary parts to our specifications as well as providing aftermarket and replacement assemblies made by other hose and fitting manufacturers. Their price structure was very competitive. They were committed to doing whatever they had to do to keep our business.

Negotiating with this company was a trip. The two brothers came along with the fellow who managed their local facility and dealt with Albatross on a daily basis. The manager wore a suit and kept a business-like and professional demeanor. The brothers wore jeans and knit shirts and cowboy boots. They were personable and relatively well focused, but they were anything but professional.

They were a couple of hard-scrabble country boys who were having a good time with their modest success. They weren’t trying to grow their company or groom it for a public offering or a sale or merger. They wanted to keep our business, but their primary concern it that regard was that they wanted to be able to buy bigger fishing boats and spend more time on the water.

What I’m suggesting is that their goals were modest and very concrete. They didn’t translate what they wanted into percentage increases in annual volume or improvements in margins or better overhead absorption. They wanted fishing boats and pick-up trucks.

They knew what they wanted and they knew what they needed to get from us and what they could afford to give up in order to get there. To my thinking this made them a lot easier to deal with than some of our other vendors who had grander schemes and better calibrated yardsticks, but no clear picture of what they hoped to gain.

The brothers were neither ignorant nor naive, although that is precisely what most of my colleagues thought. The younger brother actually pulled a knife on our materials manager during a break in the negotiations. It was meant to be a joke, although it wasn’t received very well, and no one thought it particularly funny. Other than a deranged low-life (or Bill, the last division president to fire me, or a fat chef), who brings a knife to a business negotiation? That was the consensus in our group anyway. It didn’t bother me that much, but then he hadn’t pulled the knife on me, and, in any event, I had already been desensitized to knife lore and cutlery flashing in my past working life.

In a couple of days the event, stripped of its context and amplified in its implied threat, had become company legend. Ringcomme and Boome in particular liked to hold the knife pulling incident up as a prime example of why we had to reshuffle our vendors and start doing business with professional business people rather than crackers and rodeo clowns. 

As it turned out though, in spite of their lamentable social graces, the brothers were excellent vendors. When we started talking numbers, they showed themselves to be astute and to have a large amount of quantitative data committed to memory. They were emphatic without being hardnosed. They were more than willing to horse trade, but they knew exactly how far they could go and when we got them there they dug in with all four heels.

I thought we did very well by them, and they were so far ahead of their competition across the board that they became our vendor of choice for all our hose and fitting needs in spite of the ‘knife pulling’ incident. They were so far ahead in the rankings that not even Ringcomme could undo our recommendation. And boy, he really wanted to.

Day 96 - One for All, and All for Naught

          I told our landlady today that we would be moving out by the end of January. This should give her plenty of time to find a new tenant for the house. I hated to do it, but time is growing short. It sure looks to me like nothing good is going to happen anytime soon on the job front or in the economy.

Last year I put on a seafood boil for the neighborhood for New Year’s Eve. It was a great party. Everyone brought their own beverages and desserts and appetizers. I did a huge pot of Low Country Boil that included shrimp, crab, scallops, clams, mussels, lobster, kielbasa, potatoes, corn-on-the-cob, and onions. I put out bowls of drawn butter, cocktail sauce, tartar sauce, and a chipotle rémoulade. We dumped the cooked seafood onto a central table covered with newspapers, and everyone just dug in. It was fabulous.

Everyone had a great time. I want to do it again this year—kind of a last hurrah before I have to pack up my stuff and run to safety. The neighbors have agreed to ante up on a ratable basis so I don’t have to pay for the whole thing like I did last year. I love this place.  

*****

The next big project we launched at Albatross was the strategic sourcing initiative. This was a very big deal. It came under Ringcomme’s supply chain umbrella, but it was actually initiated by the new CFO, another of Jed Boome’s cronies from the crane company days. The CFO, let’s call him Wylie Lovett, was a smooth talking, silver haired, sharp dressed man who exuded class and competence. He made everyone, including me, feel as though we were on the right track. He had grand ideas rooted in good sense that we vetted thoroughly before implementing. Everything seemed so rosy for a time.

We hired a consulting firm to shepherd us through the process. They sent a squad of high energy kids down from Chicago—all bright, focused, and confident. Management picked Albatross employees to be involved in the project. Before we finished more than a hundred of us were involved in one aspect of the project or another.

Central to the project were a handful of commodities teams. There was one for wood and fiberglass, one for hardware and fittings, one for metals and extrusions, one for rubber and plastics, and one for MRO or maintenance and supply items. Each team had eight to twelve members from all different areas within the company.

The teams were to stage a supplier conference, post a list of items they proposed to buy, solicit bids from selected suppliers for the items on their list, visit the suppliers to determine their suitability and capacity to meet our requirements, negotiate with suppliers to achieve the best overall performance in terms of quality, service, and price, and select the best overall vendors. The idea was to save in total costs, to partner with suppliers to provide the best possible products in the most agreeable time-frame to our customers at the lowest possible cost to us.

To achieve these laudable goals we put in a tremendous number of hours beyond what it took to do our usual jobs. We developed lists. We made phone calls. We studied cost structures. We mapped product movement. We developed and published specifications and drawings. We attended classes in communication and negotiating. We wrote, developed, and rehearsed presentations. We did role playing exercises. We went to endless meetings. We beat ourselves half to death for the company because the promise was—the promise that we believed with all our hearts—that we stood to save tens of millions of dollars over the next five years if we did a good job. That was tens of millions of dollars that we absolutely needed to save in order to remain competitive and profitable.

I got tapped to join the MRO team. I didn’t want to do it because, for one thing I didn’t even know what MRO meant at the time. Besides I felt I’d already been assigned more than I could hope to accomplish is a lifetime. Since starting at Albatross as controller of the boat division, I’d also assumed responsibility for all the commercial fixtures products, and then, when the shared services controller was canned and the school business controller left for greener pastures, I got their jobs added to mine as well.

I calculated that if the company paid me the salaries of all the controllers whose duties I had assumed they would have to give me an annual wage of $540 thousand. If they also gave me just a quarter of the salary they were paying Robert Lester, who was still eating up a tremendous amount of my time trying to get an understanding of the boat business, I would have been the highest paid individual in the company—knocking down nearly $630 thousand.

I’m not complaining about the money, but I did have plenty to do without getting immersed in the strategic sourcing project. I tried to get out of it. I went to the CFO and made a pretty good case I thought. Rongcomme made a better one against me. He wanted me on a team, and he had way more clout than I. I started going to the MRO meetings.     

It was a huge commitment of time and effort, but I ended up enjoying it a lot, especially when we got to the negotiation phase. There was something about sitting across the table from teams of supplier executives and hammering out deals that really tripped my trigger. The hours were incredibly long and arduous, but the satisfaction quotient for me was as high as it’s ever been in my working life.

If I could do that all day every day I’d be a happy fellow. I think I’d be pretty successful too. I mean I think I’m good at negotiating, good at overcoming objections, finding common ground, making persuasive arguments, getting to ‘yes’. I’m not a natural. It didn’t come easy to me because I’m naturally shy and reticent. I don’t like meeting and interacting with strangers, and I don’t like having to put on a performance. But with practice I can get really good at something I enjoy, and I enjoyed this…a lot. It would have been even better if, after the project was done and we had new agreements with a new slate of suppliers, it had meant anything at all to any of us.

Like so many other things I’ve been involved in at work over the years, executive management sabotaged the whole deal. In the end no matter what vendor we thought offered the best hope of helping us reach our goals, Ringcomme picked vendors based on prior relationships he had with them. The whole sourcing initiative was just a shell game. We paid the consultants $5 million and change, paid another bucket full of money on travel and staging dog and pony shows, put in an astronomical number of hours doing homework and taking meetings, negotiated our hearts out, and we could have saved all that time, money and effort by just asking Ringcomme who he wanted to do business with.

So we didn’t save any real money. We just spent it. Even the vendors who gave us price concessions did so based on volumes we never achieved. Favorable payment terms that I personally had beaten out of a goodly number of suppliers never materialized because we couldn’t even meet the extended payment schedules. We didn’t have the cash. We’d spent it on consultants and projects.

Day 41 - Sport Negotiating

          Gary called today with a question about the inventory—a simple matter that we disposed of quickly. He asked after my health and I told him about the pain, the fever, and the Cipro. He said that in his experience Cipro takes a minimum of a week and as much as two to begin to work. Once it begins, apparently, it works pretty fast, but I’d have a long wait for any relief. I don’t know if this is true or not. It seems irresponsible on the part of the doctor to prescribe a slow-acting antibiotic for a kidney infection that had the potential at least to become virulent and even life threatening, but what do I know? I’ve got a lot of nerve second guessing a board certified urologist when I can’t even hold a simple job in accounting.

          If you were paying attention during those last two sentences you will realize that self doubt has begun to take root right next to the bacteria ravaging my plumbing. I expect that in this circumstance the hydrocodone is both my best friend and my worst enemy. I’m taking them two at a time now even though the pain has abated to the point of mild discomfort when I urinate. I convince myself that they help with the fever and they help me sleep, although that last is not really true. They don’t help me sleep at all, but they do help me not to care that I am awake.

*****

          Henry was never troubled by self doubt. No feeling of inadequacy, sense of guilt, or pang of conscience ever clouded his mind that I know of. Henry kept his own counsel. By Henry’s reckoning he was the smartest sumbitch in the valley, and while he might pay for good advice that did not mean that he had to take it when it went contrary to his own wisdom. Everyone else’s intelligence was measured by the yardstick of Henry’s own notions, so that the more you agreed with him the more brilliant you became.

          Much of what Henry did seemed to me not just counterintuitive, but downright stupid. And yet he was not, despite his behavior, a stupid person. I began to believe over several years that he made stupid business decisions intentionally just to prove that he could. Just like hitting on bizarre and unattainable women—to prove that he could. He had to constantly reinforce the notion he had of himself that he was above having to listen to anyone else or do anything that anyone else would do in the same or similar circumstances. He would cheat and fudge and screw up wherever and whenever he chose, and because by doing so he gave the impression that he was crazy no one ever called him on it. There were almost never permanent consequences for him. Sure he might have to buy a truck or pay a settlement, but his life, his homestead, his business, his circle of influence remained virtually intact. I wondered sometimes if he’d made a pact with the devil.

          The lowest I’ve ever seen him was shortly after I’d gone to work for him, about a year after he’d run afoul of the IRS, and while we were in the process of moving our whole operation to Arkansas. We got caught out of trust by our floor plan lender. A floor plan is a wholesale line of credit secured by our inventory. As soon as we sold a boat we had to pay it off. Being out of trust meant we hadn’t paid off sold inventory on a timely basis. We weren’t out of trust just a little bit. We were out of trust about $6 million.

          I had walked into this situation without knowing what I was getting myself into. Henry had been pulling the wool over my eyes as the CPA in charge of his tax work and annual review in the same way he was fooling the lender. When I left the CPA firm to go to work for him, I was suddenly in the thick of the very accounting subterfuge he had been using against me. I knew that sooner or later we were going to get caught. I also knew that as soon as the lender found out we were out of trust they would shut us down and padlock the doors.

Henry had been able to hide his out of trust condition because the lender was at best lackadaisical about checking our inventory. They let us know in advance when they were coming. Henry would get on the phone to his customers, and have them bring their boats back to the dealership on some pretext, usually service work. If that didn’t work he would just tell the lender’s agents that the boats they were looking for were out on a demonstration cruise or at a show. Sooner or later the unit would make its way back to the lot, he’d call the lender, they’d come out to look at it, and everybody would be happy until the next inspection. Then the whole process would start all over again. To keep things interesting Henry kept paying units off and ordering new ones from the manufacturers to keep his float alive.

          The internal financial statements he was providing to the lender every month were a joke. The $6 million he was out of trust was being carried as customer deposits. That is he had sold the boats and collected the money, including taking a unit in trade usually, but he hadn’t recorded the sale. The money was be credited to customer deposits rather than recorded as sales revenue. I knew I had to get things honest and I had to do it in a hurry, but I also knew that if I did it all at once the whole sorry mess would come tumbling down on our heads. We were actually making significant progress toward clean books until Henry decided he needed to buy a factory and move his operations to Arkansas.

          I ran the numbers on that too. It wasn’t such a bad deal. We bought a bankrupt manufacturing operation for 10 cents on the dollar. The trouble was coming up with the cash to fuel operations until we started getting production off the line. I told Henry it would take $3.2 million to do properly. Henry raised $1.5 million and pulled the trigger on the deal. We were a million seven short, and Henry made up the difference with out of trust floor plan proceeds. Instead of us getting back into trust and being able to breathe a collective sigh of relief, he plunged us deeper into the hole.

          It all came crashing down when I published the next set of quarterly financials. I made them honest. I knew I had to. It was one thing to fudge on the monthly internal financials, but I just wasn’t about to lie on the published quarterlies. It would go against everything I stood for. I dug in my heels. Disaster was the result.

When the lender realized that Henry was actually losing money they became unbelievably skittish about the whole arrangement. They descended on us unannounced with twice the usual number of grunts to check our inventory. Naturally they couldn’t find a lot of it. Instead of letting Henry waltz them around with a lot of B.S. like they used to do they started asking really hard questions. When Henry told them a unit was at a show they wanted to get on the phone and talk to someone at the show that could go look at the unit and capture its serial numbers. It got really ugly really fast. Henry was sweating bullets. Tension crackled across the property like downed power lines. After two days of trying to salvage the unsalvageable Henry came clean and threw himself on their mercy. That’s when things began to get really interesting.

          The lender didn’t shut us down as I had thought they would. The reason they didn’t shut us down is that they wanted to keep the whole matter as quiet as possible. They had already been caught unawares by another out of trust dealer to the extent of $104 million. That number made our paltry sum seem insignificant. It had also made a big splash in the financial press and caused the lender’s stock price to take a substantial dip. They couldn’t afford any more bad press, and they couldn’t afford any more losses. If they shut us down they would get both. The fiasco would make the papers, and they’d have to liquidate our inventory at a significant discount. They’d be lucky to get out with half what we owed them.

          The far better course for the lender was to throw us into a workout. They made Henry sign everything he owned over to them. He was three days just signing papers that gave them first security rights in virtually everything of value we had except the property itself, which was of course mortgaged. Then they parked two agents in our offices to approve every deal we made. All the cash we collected went directly to them every day. We would submit payment requests to them for all our expenses including payroll. Whatever we spent had to be documented and approved by them before they would release the funds. Everything else they kept. They came with us to Arkansas. It was burdensome and unnerving. It left us scant room to operate and no way to capitalize on any opportunities that might come our way. The lender ran the business, and they ran it with an iron hand. Still we were open for business, working our way out of the mess, and Henry wasn’t in jail.

          At first Henry seemed a broken man. He lost his color. He quit combing his hair or taking any care with his appearance. His attempts at philandering were listless and half-hearted. Gradually though he came out of it. It was another instance of Henry escaping his own stupidity unscathed by more or less blind luck. Were it not for the lender’s previous troubles they probably would have locked our doors and filed charges against Henry. As it was, to all outward appearances they left him doing what he’d always done with the one exception that everything was now totally above board and honest. That part probably made Henry crazy, but he made the best of it and within a few weeks seemed his old self. I guess he had to keep his larcenous spirits up by perfecting the use of his ‘foot wedge’ on the golf course. To his credit, and to my everlasting surprise, the one thing he did not do was hold me responsible for the mess. I knew that somewhere in the dark recesses of him mind he had to be thinking that if I hadn’t insisted on being honest he would have been enjoying ‘bidness’ as usual with impunity.

          One interesting thing happened to me in the course of all the turmoil. The lender sent an auditor from Detroit to look at our books. I’d already made significant strides getting them into shape, and I went out of my way to be as forthcoming and helpful as possible when he showed up. I guess he appreciated that because we developed a kind of cautious rapport that I would not have thought possible under the circumstances. Maybe the controllers he usually dealt with were still trying to cover up their bookkeeping misdeeds. I didn’t. There wouldn’t have been any point. We were already caught out. Keeping the books honest at that point just made everything work better. The more they knew about the reality of our situation the less likely they were to have unreasonable expectations. All I know is that eventually he came to trust me, and I made sure that his trust was not misplaced.

          Now Henry had earmarked a crummy little internal office in the Arkansas facility for my use. The furnishings were awful. The desk and credenza were pressed wood by-products covered in cracked and stained Formica. My chair listed about 5 degrees to port. There were no windows. It shared an air conditioning and heating zone with the windowed offices across the hall that also housed the thermostat. The result was that my office was a good ten degrees cooler than the rest of the building in the winter and that much warmer in the summer. I hated it and so did the lender’s auditor.

          One day the auditor went to Henry and told him he needed to give me a bigger office. He told him that he wouldn’t even have a business were it not for me, and he had no business consigning me to a slum tenement of an office when there was so much prime space available right across the hall. He told him I needed more space, more comfort, and more respect, and that he wasn’t going to be happy until I was moved into quarters commensurate with my importance to the company. That little speech got me moved into Henry’s office. Henry moved down the hall and built himself another, but I inherited all his office real estate and all his furniture. I’ve never had as fine a place to work since.

          The thing was huge. It was the equivalent of three regular sized offices. The entire West wall was floor to ceiling window. The South wall was one huge custom built floor to ceiling cabinet that housed an entertainment center, a clothes closet, file drawers, and a wet bar. The custom made desk was just shy of two acres. There was a matching credenza, and respectable artwork on the walls. The carpet was plush with a hand inlaid design. There was a sofa, two barrel chairs, two end tables, a round conference table and 6 matching custom upholstered directors’ chairs. My new chair was a high backed leather executive chair with padded arms. It did not list to port or starboard. It was so comfortable that I had to eventually get rid of it and replace it with something more conducive to work. I had the Taj Mahal of Middle American office space, and I enjoyed it every day for 7 years before some dirt bag from the company we finally sold out to took it away from me. But that’s a whole other story.

          Eventually we slipped the lender’s shackles. They stayed with us for two years, collecting every dime and scrutinizing every payment. It got to be a huge pain in the ass, and it really stymied all our efforts to succeed and grow the company. The lender hardly cared what happened to us. They only wanted to get their money back, plus interest if possible. In fact they probably hoped that we would eventually fail. I’m sure they thought we had it coming to us. They just didn’t want it to happen until we had got them paid off. We were still a long way away from having done that when we found a private lender who was willing to buy out their position. Of course the new lender wanted a substantial discount, and we wanted to make sure that he got it.

This was my first indoctrination into the world of hard-nosed negotiation. I thought we could probably talk the lender into taking 75 cents on the dollar. I thought that was reasonable, and that they would be happy to get it if they could get out quickly and with cash. The longer they stayed in the workout the more likely it was that we were going to fail anyway. They kept such tight reins on us that we weren’t able to invest in improving our production efficiencies or upgrading our product offerings. We were languishing in mediocrity, and our lackluster sales were telling a story of significant risk for the lender. They would be happy to get any reasonable deal.

I figured we could offer them 66 cents and settle out at 75. Henry and his VP thought we could do way better than that. We offered them 40. I was sure they would balk, but they didn’t. They hollered. They made a lot of noise, but they kept talking. In the end we convinced them that we were going to walk away and let them have the keys. In fact Henry jumped up at one of our meetings with them and threw his keys on the table. It was his car keys, but the gesture wasn’t lost on the lender’s executives who suddenly saw their careers flash before their eyes. They couldn’t afford to take the kind of hit that our abandonment of the enterprise would give them. They were still in too deep, and the memories of their other losses too fresh. Besides, Henry’s demonstrably lunatic behavior over the two years they had been camped out in our back pockets convinced them he was just crazy enough to stick them with the whole mess. They settled for half what we owed them and ran for the exits.

We had a new lease on our future with a new and entirely more accommodating lender. The new lender was an individual. He’d built a huge agricultural operation in the East and sold out to a corporate food processor for a mountain of cash and stock. He was sitting on $150 million, and he was bored. He liked us. He owned one of our boats. He thought we deserved a chance at success. He was just as crazy as Henry but a lot nicer and there was not a larcenous bone in his body. At first he was reluctant to get involved. The risk was considerable. We’d gotten enough of a discount on the deal that his security interest in our inventory was going to be very attractive, but he was still fronting a lot of cash and anything could go wrong. The economy wasn’t that good. Sales were lagging. The VP and I went to his house, stayed with him two whole days talking into the night. We gave him our personal word that we would keep open channels of communication with him and watch his back at every turn. Finally he bought the deal, and we closed out the other lender. He was our savior, and I vowed that I would never let Henry take advantage of him. I never did either—no matter how hard the bastard tried.