About a million years ago in 1995, I left a great job at Intel Corporation and, with a partner, invested $14,000 of our savings into starting a technology-related business. We didn’t take a salary for two years, opting instead to plow all profits into staff, rent, technology, marketing, and so on. We crossed our fingers and hoped that our risk would pay off.
Five years later, the company had grown by almost 1700 percent, earning nearly $3.7 million. By then, the dot-com bubble had burst, but we were still riding high. The business continued to soar and by the next year, it grossed nearly $5 million. We were an Inc. magazine 500 Fastest-Growing-Company powerhouse. We rewarded ourselves with luxury cars, six-figure salaries, and perks galore. But it was all good because our employees loved us, our clients loved us, and our husbands loved us. It was a big old love fest.
You know where this is going, right?
In 2002, we started feeling the dot-bomb aftershocks. Most of our internet start-up clients had disappeared. Eventually, even our large Fortune 500 clients began tightening their belts. Fortunately, we had stockpiled a boatload of cash that we knew would see us through the tough times. But our revenues continued to decline and we ate through our savings. It was time to ask our employees to get lean and mean.
It was a painful day when we had to break it to our staff that we wouldn’t, after all, be taking them on that trip to Hawaii. We wouldn’t be moving into an office with a ping-pong table, sofas, a flat screen TV, and video games. In fact, we wouldn’t be giving out the raises and bonuses they were accustomed to until things started to turn around. Thus began the torrent of rancor and vitriol.
I was completely taken aback and hurt. How could these people, who we gave such great opportunities and rewards for so many years turn on us so quickly? Don’t they understand we’re trying to save the business and, in turn, them from the unemployment line?
About a year after I sold the business, I had lunch with a former employee. I mentioned to her how baffled I was by the reaction. She said that everyone resented the living heck out of the fact that they were being asked to suffer while we continued to ride around in expensive cars and take trips to Hawaii. It simply wasn’t fair. “Fair?” I said, stunned. “We took all the risk. We took very little money out of the business for ourselves until the last few years. Why shouldn’t we reap the rewards? That’s what entrepreneurship is all about.”
Here’s what she told me: “It doesn’t matter. That’s old news. What matters is that if we’re going to be a team, everyone has to take a hit.”
I didn’t get it then. I do now. Sigh. Another lesson learned the hard way.