The three of them sat in the airport bar and stared at their pizzas. They had multiple problems on their hands now. First off, they had just bombed out in front in their biggest partner presentation to date. This was a problem because of the obvious amount of corporate embarrassment. But it was also a problem because the gorilla had just been alerted to their plans. They had tried to keep as much under wraps as possible, but a certain amount of strategic intelligence had to be given up. If the gorilla decided to come after them, they had just supplied the first batch of bullets.
The second problem was their next investment round. Of course, the second round would include their current investment group. The VCs always invested in subsequent rounds because they didn’t want to get diluted by the next group of investors. Loading an additional slug of money into each subsequent round guaranteed that they would keep their large chunk of the return to be made. However, they had no intention of leading the second round. Someone else now needed to come to the party and set the next valuation of the company. Otherwise the existing VCs were just making their own money more expensive. The unspoken agreement was that they would give their precious little startup more money if needed, but someone else was going to have to stick their head out and set a valuation. This was the aforementioned lead investor. Only after that happened, would the current investors jump back into the pool.
The third problem was more prosaic, but no less troubling. The damn software didn’t work. During the whole car ride back to the airport, Peter was discussing their problems with Dan Powell. As the chief of the client software, he was the first person to come before the inquisition. As it was turning out, things were even worse than anticipated.
Dan and Peter were just now discovering what Steve and Paul already knew: Their graphics engine was for shit. After the demo, Paul had looked through the log files for the session, and suddenly the truth was there in black and white. The graphics software was spending more time fighting with itself than communicating with the outside world. They had placed all their eggs in one basket, and that basket had just detonated into a thousand pieces.
Which brought them to a bar in an airport. Peter was adamant that some decisions be made before they boarded the plane back to California. Or as he put it, they better shoot someone before their board did. The obvious candidate was Kevin, but this presented a problem. As much as he had failed to deliver, he still was the most experienced person in the company when it came to graphics. Some might argue that the problem was less the engineer, and more the management of that engineer. Under this argument, Dan then came into the bull’s-eye as his direct report. However, Dan was writing some fairly good code for the company, worked like a dog, and was beloved by all. This meant that the crosshairs had to move up one more rung on the organizational chart.
Todd.
Even before the discussion began, Steve knew where they were going to wind up. A string of rumblings, innuendo and mistakes were now coalescing around their beleaguered CTO. What Steve had to quickly decide was whether he was going to try and save Todd or not. An outright battle was dangerous because Peter enjoyed unswerving loyalty from the board. Steve had noticed this in their first board meeting. Two of the board members were rubber stamps. Whatever decision Peter arrived at on a subject, they would immediately fall into line. With Todd on the board as the other co founder, the four represented a quorum. Even with Todd becoming the decision instead of a decider, the deck was stacked against him.
Todd getting axed now was probably just admitting the obvious to everyone. He and Peter were barely on speaking terms, and the tension had split the company into two camps. The fact of the matter was they had crashed and burned in front of a huge company, and someone was going to have to take the bullet. Steve almost suspected that Peter knew the graphics engine wouldn’t hold up, but had allowed the development to continue to create a big enough crisis to dislodge his old friend. Todd had a bundle of options already in the company, a house, and skill sets that were in high demand. If he did get drop kicked out the airlock, he would have a new job before his feet hit terra firma.
Just like that, Steve had blown up a founder. It was almost disturbing how rationally he could dissect a problem, divide it into positives and negatives, and arrive at a solution. Even if that solution meant firing someone from a company that he had helped start. Steve almost felt like the executioner that had been invited in by the victim. On the other hand, this was the game they had all signed up for. This was the way the valley worked, this was the way startups worked, and this was the way Steve worked. At the end of the day, the only loyalty a startup man ultimately had was to his own shares.
Stivo just sat back and watched Peter and Steve pound the nails into Todd’s coffin. He felt he had seen everything in Hollywood, but this was a level of lethalness that even he was unaccustomed to. He watched the execution play out, then he asked the question. “So, who becomes our CTO? Do we promote someone from inside or bring someone from outside?”
Peter and Steve immediately changed gears. Peter was first into the breach. “I think we should probably go outside for three reasons. First of all, with all the work we have in front of us to make this right, I can’t afford to take anyone off the line. We need all our programmers programming. Second, I think we need an outside person who can bring a different perspective to the problems. And third, I already know who it is going to be.”
Steve laughed to himself. This confirmed what he had suspected. Peter already had the person lined up, which meant that he knew there was a problem, which meant that the AOL meeting was a setup. So go the startups of our lives. “Who did you have in mind?”
“Brent Dorman. He was manager of a client team when we were working for Casa Lazarus. He called me a couple of weeks back, and let me know that he is thinking of leaving for greener pastures.”
“Wait,” said Stivo. “Didn’t you have to sign a non-poaching agreement with Lazarus before you left. He can kill us all if we violate that.”
Peter smirked. “True, we did sign a non-poaching. And that means that we can’t hire anyone away from Lazarus. However, if someone quits, and then we hire him, we are not in violation. It’s a fine line, but companies have been using it for years to get around the problem. Frankly, non-poaching agreements aren’t worth the paper they are written on.”
“Why do you think he would be a good fit?” asked Steve.
“Well, first off he is available. We are going to have the board all over us when we return, and we need to let them know that this did not surprise us. We can show that we were aware of this building problem, and we have already been taking steps to rectify the problem. It shows that we are being proactive in our management. Brent was very good at managing teams that released products on time, and when our board looks at his resume, it will scream “big company engineer who delivers results.” That’s what they will be looking for. Plus I know him, and we can keep him in control. He is not a trouble maker like Todd was becoming.”
This was an interesting comment, but Steve kept it to himself.
“Here is the other thing we need to be proactive about,” said Peter. “The board is really going to push us on why we are continuing to press forward with the 3D virtual worlds. I think we need to create a lite version of our software that will work without the big graphics engines. I am rethinking Dan Collins’ idea about Hollywood Squares.”
“Hold on,” said Stivo. “You just spent two hours last week telling everyone in the company that three dimensions was crucial to the successful deployment of multi-user communities. Now you are telling us that this isn’t a religious stance after all? That’s the kind of about face that the investors will jump on immediately. If they feel you are not committed in the direction you are taking the company, they are going to have a serious problem.”
Peter held up his hand. “No. This is not an about face. I still do believe that we have to be in 3D for our audio communities to work. However, it is becoming clear that the world is not ready for this. And the majority of the installed base of hardware is not able to handle it anyway. If we had shown AOL Hollywood Squares, we may have gotten their attention. We have to listen to what our partners want and adapt to that. That’s what you told us, right Lawrence?”
He had Stivo here. Live for your partners was his constant mantra. Peter plowed ahead without waiting for a response. “Right now the problem is we are the only people who understand why 3D and multipoint conversations are so important for each other. The way to show the rest of the world the validity of that is to give them a solution that does not have it. Then they will love the community, but want more functionality from the interface. In drug terms, Hollywood Squares becomes our ‘gateway drug’ which then drives people to the big product. Plus, by taking out the rendering engine we have probably doubled our addressable market.”
Stivo was not going to give in so easily. “Yes, Peter, I agree that we have to listen to our partners. But if it looks like we are making all our strategic decisions solely based on that, then we are nothing but a bunch of reactive twits. It’s a delicate balance. Tactically you have to be ready to throw the wheel over at a moments notice. Strategically though, you never alter course.”
Peter nodded. “I will grant you that. But first we have to make sure that the next tactical decision is not to throw us overboard. Let’s respond to the problem at hand, act like a united front, and then we can adapt tactically. Agreed?”
They all nodded their heads. Steve threw some money on the table and they all rose as one and headed for the gate. Steve was left with one thought as they walked down the corridor.
So this is what a lynching looks like.