When I arrived at Red Condor, I knew it was troubled financially. Tim Flood had told me when we got started. I will cover why I joined at the end of this as it is a personal story, but I want to talk about what we had to do to keep things going in
the few months before the company got sold.
Tom Steding was the CEO and he was raising money to keep the company going. My second day on the job was a visit to a VC firm. The challenge was that the business case was no longer what a VC wanted to invest in. The market was
mature and prices were low for the products and services. The existing investors were not going to pony up any more money. So Tom restarted the process going after high net worth and private equity investors. But at that point we were in
the 2nd half of April.
Employees were completely informed of what was going on. Tom had a meeting every week called "Tea with Tom" that updated folks on the current state of the finances and business. This was both good and bad for me in my position. We
had some folks looking around for jobs that were more stable. But running a 24/7/365 service meant that we needed to have staff to cover all the time and we needed to hire when people left. Tim McAllister and I would review resumes for
new folks to cover the hours. Our first screen was that the person was unemployed. We concluded that we could not, in good concious, hire people away from stable jobs. I figured the worst thing that would happen to the unemployed is that
we would reset their unemployment clock. I worked with Dave Zimkowski on what bills we could pay. We would figure out who was likely to cut us off any pay them. We would repeat this on a weekly basis.
The time to raise money was growing short. By the end of May 2010, we were effectively bankrupt. With the end of the May payroll, we could no longer cover the PTO of all the employees if we closed the doors. This is a legal requirement
and it meant that the BoD would have to cover the costs out of their pockets. Luckily it never came to that. We were in negotiation as well with St. Bernard Software in San Diego to buy the company. The challenge was that the deal would not
close in time for us to cover payroll. Which led Dave Zimkowski and I to beg one of our investors to cover our June operating expenses. I feel very bad about this, because he got nothing for that money out of the eventual deal. But I could not
see any other path to get people paid. So if you worked for Red Condor during that time, you can thank Don Green for personally covering your paycheck.
It was clear that we did not have the runway to get any money raised, so we began to focus on getting the St. Bernard Software deal closed. We delayed paying the executives and worked on diligence. I had to buy access to Sharepoint
Online and pay for it out of my pocket to make a data room. We reached a tentative deal with St. Bernard as an asset purchase. That sucked for our shareholders but at least most folks would get to keep their jobs. Nobody was particularly happy, but we were desparate. We covered 1/2 the operating expenses in July out of Red Condor and St. Bernard covered the other 1/2 as part of the deal. On 8/1, the deal closed and St. Bernard took over.
So, we scratched and clawed and did what we had to. That kind of hand to hand combat with keeping things alive was a very different experience than what I had faced at AFC. There we sat on $1B or so in cash. What we could have given at Red Condor for even $1M. But seeing people who believed in us and the company so much that they stayed was a great thing. As for me, it was always intended to be a temporary thing. When I joined my wife wanted to move to Connecticut and I figured that the worst that could happen was that I would get a couple of months of pay while we figured out that move. It didn't work out that way, but I found a group of people and a product that I really liked.
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