Last year, we began working with a local group whose founder/president I had known for a few years previously. I won’t name them.
We have a real need for capital. The company is self funded, and this means we fund all purchases out of our own pocket, or from our own lines of credit. And in some cases, being a small business, from my credit card (Lesson one in how to give a spouse a coronary: put a large purchase on a personal credit card … you know, 5 or more digits before the decimal point).
Their mission was to help us construct a package to help investors understand what we had to offer, and how we were going to proceed. I’ll be honest, it was hard dealing with them (not the investors, but the company), as they didn’t “get it” and spent more of my time and effort and money arguing with me over things they shouldn’t have, rather than doing a quality job on the packet.
So several months into the project, we are down all the money we put in, and have no real work product that we can take to investors to try to raise capital. What was returned to me were, honestly, warmed over versions of bits I provided them. My expectations had been set, by them, that I would see something in nearly final form 2 months before I pulled the plug.
Needless to say I am disappointed. When viewing what they provided, I realized that they would need (if I allowed them to continue working on it) many more months of work to get this into a reasonable form. I realized that they had never really put effort into the project. From the multiple repeated spelling errors, to the company name errors, to their injection of things I had insisted not be included …
I found that I was arguing with one of the people over stuff he had learned at business school. I get the feeling that some MBAs think that what they hear at business school is a correct and accurate reflection of the real world. Which is interesting, as some of what I heard was patently ridiculous, and ill-representing any market I have participated in. I guess that real world experience isn’t relevant in that universe.
Hell, its a broad brush, and you are right, I shouldn’t paint all MBAs like this. This experience has led me to rethink how we work with service providers though, and caused me to want to see resumes/CVs of anyone I deal with. Not that resumes mean much, but I can spot someones inflated view of themselves as easily as I can spot a paucity of experience.
All this said, there comes a time in everyones life who manages a project of any sort, where you realize that the project (their effort) isn’t making progress. Your options are limited. You can continue with modifications and hard milestones with penalties, or cut bait and move on.
Looking at this, realizing that they were not seriously invested in this effort, I cut bait. There’s no way I could imagine, even if they were working up till today, that they would produce something that we could not have ourselves, without some effort. So if I took 1 month off and did all the work myself I could have produced a far superior set of documents. I paid them to do it as I run a business and can’t take 1 month off.
That was a mistake.
For anyone else considering using these types of companies, pay nothing upfront. If they aren’t invested in working with you and helping you raise capital, well, they shouldn’t be working with you.
The first quote is due to Samuel Johnson, and the second is due to Benjamin Franklin.
You need them to hang together with you, and focus their efforts on rapidly and effectively creating a set of documents that will meet the objectives, and then go forth and get some capital.
This said, we are no longer working with this company, “their” materials (the warmed over versions of our materials) have been archived. Call it a memorialization of a bad decision I made. I don’t hide my bad decisions, I learn from them.
All this said, we still need to raise capital.
We produce some of the fastest single storage systems on the market, as well as some of the most scalable cluster storage units. Our systems are in strong demand with financial services firms, with research firms and universities, engineering shops, etc. … we have positive cash flows and are profitable … our risk profile is low, and our upside is very high.
One would think that it would be a no-brainer.
So we are focusing upon growing revenue, increasing our customer base, increasing all the important organic growth elements.
And if a good offer of capital or purchase comes along, that would enable us to invest more into the company, all the better. We’ve had one offer on the company last year, but it was based on some significantly flawed assumptions on the part of the offerer, and the offer was not even on the reasonable or realistic side. This year, we are doing even better than last year (and our need for capital has increased so as to handle this load). They are back, but I doubt we are going to see a better offer, or even a reasonable one. We’ll see.
Happily, we are in the process of switching banks to one with a strong entrepreneurial focus. One of our capital issues should be (hopefully) abated. I have to see what the limits on it are, but for most operations, we shouldn’t have a problem. No more coronaries for my wife.
And we have a number of seemingly large orders coming down the pike. This will help as I can plow all that capital back into the company. Hire some more folks to handle technical load. Hire sales/marketing people to help grow revenue.
We will pursue capital opportunistically. If its there, we’ll go after it. If not, I don’t like wasting my time/efforts. I have a company to run and grow.