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Looking for advice...

Hugh-4
Greetings.

I am currently working with a small Web startup whose demise is imminent and several people will lose their jobs.  The staff (who have gathered some rare-ish expertise) would like to continue with the business but have no money to invest themselves.  The model seems eminently sound but the CEO (and founder) has made far too many mistakes (with strategy, with sales, marketing, technology and staff) and appears to have no business sense.  There is a trickle of business coming in but not enough even to cover the overheads.

The (private) investors have (perhaps naively) spent more than £1/2m and, I understand, have no confidence of seeing a return.  I estimate another £1/2m would be necessary to put the company on a sound footing.  My questions are as follows:

A.  Has anyone seen this situation before where the CEO effectively ruins their own company?
B.  Is it worth approaching the investors with a view to removing the CEO and investing the same again?
C.  How long would you estimate it could it take an outside investor to buy the company in a fire sale and get going again?


Many regards
H




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Re: Looking for advice...

Angus Fox
Unfortunately this happens all the time. Honestly it is often best to start again. 

So often founders get obsessed with being infallible and ignore market analysis and pricing and technology advice.

On value - the value in a fire sale has no relationship whatsoever with the investment. Effectively if the business has failed it has no worth - only liabilities. Another reason why a clean break is often desirable bacause founders often have totally unrealistic expectations of residual stock holding or value.  

Angus
Ps email me off list if you want to talk some more tomorrow. 

Sent from my iPhone
On 20 Jun 2010, at 15:05, Hugh <[hidden email]> wrote:

Greetings.

I am currently working with a small Web startup whose demise is imminent and several people will lose their jobs.  The staff (who have gathered some rare-ish expertise) would like to continue with the business but have no money to invest themselves.  The model seems eminently sound but the CEO (and founder) has made far too many mistakes (with strategy, with sales, marketing, technology and staff) and appears to have no business sense.  There is a trickle of business coming in but not enough even to cover the overheads.

The (private) investors have (perhaps naively) spent more than £1/2m and, I understand, have no confidence of seeing a return.  I estimate another £1/2m would be necessary to put the company on a sound footing.  My questions are as follows:

A.  Has anyone seen this situation before where the CEO effectively ruins their own company?
B.  Is it worth approaching the investors with a view to removing the CEO and investing the same again?
C.  How long would you estimate it could it take an outside investor to buy the company in a fire sale and get going again?


Many regards
H




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Re: Looking for advice...

Steve Karmeinsky
In reply to this post by Hugh-4
On Sun, Jun 20, 2010 at 10:17:01AM -0400, Angus Fox wrote:

>    Unfortunately this happens all the time. Honestly it is often best to
>    start again.

It depends, it can be worth buying the remnants of the company to get
the IP (if there is any) and some staff who know what they're doing.

>    So often founders get obsessed with being infallible and ignore market
>    analysis and pricing and technology advice.

Or are too obsessed with strategy and visionary stuff (and/or
themselves) that they fail to look after the day to day.

>    On value - the value in a fire sale has no relationship whatsoever with
>    the investment. Effectively if the business has failed it has no worth
>    - only liabilities. Another reason why a clean break is often desirable
>    bacause founders often have totally unrealistic expectations of
>    residual stock holding or value.

That's why it's a fire sale, you're either saving the company form going
into admin, or buying it out of admin. Either way you're buying it for
what you can salvage not what was put in.

Steve

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Re: Looking for advice...

Deborah Huisken
In reply to this post by Hugh-4
Hugh -

Are you considering leading this organization? 

If you can demonstrate a viable plan for how to take the company forward with existing assets minus the CEO, then I would think investors would be willing to listen.  Of course they will be listening more closely than the first time they invested since it's looking like their investment is going south; having said that, if you have a good enough plan, you might be able to help them save that investment, so why wouldn't they listen.

However, if you are just trying to save your own job and that of your colleagues, short of making your CEO see what you see is wrong with a view to making necessary changes, which is unlikely, I don't think you have much of a chance, to be honest.

If your team wants to stay together, you might want to investigate kiwork.com, which is set up with the intention of helping displaced teams stay together.  But I think the replies of Angus and Steve are accurate.

Deborah


On Sun, Jun 20, 2010 at 10:05 AM, Hugh <[hidden email]> wrote:
Greetings.

I am currently working with a small Web startup whose demise is imminent and several people will lose their jobs.  The staff (who have gathered some rare-ish expertise) would like to continue with the business but have no money to invest themselves.  The model seems eminently sound but the CEO (and founder) has made far too many mistakes (with strategy, with sales, marketing, technology and staff) and appears to have no business sense.  There is a trickle of business coming in but not enough even to cover the overheads.

The (private) investors have (perhaps naively) spent more than £1/2m and, I understand, have no confidence of seeing a return.  I estimate another £1/2m would be necessary to put the company on a sound footing.  My questions are as follows:

A.  Has anyone seen this situation before where the CEO effectively ruins their own company?
B.  Is it worth approaching the investors with a view to removing the CEO and investing the same again?
C.  How long would you estimate it could it take an outside investor to buy the company in a fire sale and get going again?


Many regards

H




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------------------------------
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Dancing Star International
One must embrace the chaos within
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Partnering with savvy entrepreneurs to
 develop their businesses and themselves
UK cell:  0798 521-4520
VoIP:  +1 617 275-5706
Skype:  deborahhuis
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Re: Looking for advice...

Hugh-4
In reply to this post by Hugh-4
Deborah

Yes, I have discussed running the company with the staff.  For two reasons (which I don't wish to discuss in open forum), I don't think that an approach to the investors will necessarily be all that successful.  As I have nothing to lose, however, I may well do so this week.

I'm also interested in approaching other investors but I have no feel for the process of buying a failing company, ditching the CEO and how long it is all likely to take.

Thanks for the link, btw.  (It's ki-work.com).



On Sun, Jun 20, 2010 at 8:17 PM, Deborah Huisken <[hidden email]> wrote:
Hugh -

Are you considering leading this organization? 

If you can demonstrate a viable plan for how to take the company forward with existing assets minus the CEO, then I would think investors would be willing to listen.  Of course they will be listening more closely than the first time they invested since it's looking like their investment is going south; having said that, if you have a good enough plan, you might be able to help them save that investment, so why wouldn't they listen.

However, if you are just trying to save your own job and that of your colleagues, short of making your CEO see what you see is wrong with a view to making necessary changes, which is unlikely, I don't think you have much of a chance, to be honest.

If your team wants to stay together, you might want to investigate kiwork.com, which is set up with the intention of helping displaced teams stay together.  But I think the replies of Angus and Steve are accurate.

Deborah


On Sun, Jun 20, 2010 at 10:05 AM, Hugh <[hidden email]> wrote:
Greetings.

I am currently working with a small Web startup whose demise is imminent and several people will lose their jobs.  The staff (who have gathered some rare-ish expertise) would like to continue with the business but have no money to invest themselves.  The model seems eminently sound but the CEO (and founder) has made far too many mistakes (with strategy, with sales, marketing, technology and staff) and appears to have no business sense.  There is a trickle of business coming in but not enough even to cover the overheads.

The (private) investors have (perhaps naively) spent more than £1/2m and, I understand, have no confidence of seeing a return.  I estimate another £1/2m would be necessary to put the company on a sound footing.  My questions are as follows:

A.  Has anyone seen this situation before where the CEO effectively ruins their own company?
B.  Is it worth approaching the investors with a view to removing the CEO and investing the same again?
C.  How long would you estimate it could it take an outside investor to buy the company in a fire sale and get going again?


Many regards

H




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------------------------------
Deborah Huisken, PCC
Dancing Star International
One must embrace the chaos within
 to give birth to a dancing star
Partnering with savvy entrepreneurs to
 develop their businesses and themselves
UK cell:  0798 521-4520
VoIP:  +1 617 275-5706
Skype:  deborahhuis
Blog:  www.dancingstar.com/blog
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RE: Looking for advice...

Brian Milnes
In reply to this post by Hugh-4

The most cost effective route is to let it fail, and purchase it back for a nominal sum (e.g. £1) from the administrator.

 

From: [hidden email] [mailto:[hidden email]] On Behalf Of Hugh
Sent: 20 June 2010 21:35
To: [hidden email]
Subject: Re: [entrepreneur-1056] Looking for advice...

 

Deborah

Yes, I have discussed running the company with the staff.  For two reasons (which I don't wish to discuss in open forum), I don't think that an approach to the investors will necessarily be all that successful.  As I have nothing to lose, however, I may well do so this week.

I'm also interested in approaching other investors but I have no feel for the process of buying a failing company, ditching the CEO and how long it is all likely to take.

Thanks for the link, btw.  (It's ki-work.com).


On Sun, Jun 20, 2010 at 8:17 PM, Deborah Huisken <[hidden email]> wrote:

Hugh -

Are you considering leading this organization? 

If you can demonstrate a viable plan for how to take the company forward with existing assets minus the CEO, then I would think investors would be willing to listen.  Of course they will be listening more closely than the first time they invested since it's looking like their investment is going south; having said that, if you have a good enough plan, you might be able to help them save that investment, so why wouldn't they listen.

However, if you are just trying to save your own job and that of your colleagues, short of making your CEO see what you see is wrong with a view to making necessary changes, which is unlikely, I don't think you have much of a chance, to be honest.

If your team wants to stay together, you might want to investigate kiwork.com, which is set up with the intention of helping displaced teams stay together.  But I think the replies of Angus and Steve are accurate.

Deborah

On Sun, Jun 20, 2010 at 10:05 AM, Hugh <[hidden email]> wrote:

Greetings.

I am currently working with a small Web startup whose demise is imminent and several people will lose their jobs.  The staff (who have gathered some rare-ish expertise) would like to continue with the business but have no money to invest themselves.  The model seems eminently sound but the CEO (and founder) has made far too many mistakes (with strategy, with sales, marketing, technology and staff) and appears to have no business sense.  There is a trickle of business coming in but not enough even to cover the overheads.

The (private) investors have (perhaps naively) spent more than £1/2m and, I understand, have no confidence of seeing a return.  I estimate another £1/2m would be necessary to put the company on a sound footing.  My questions are as follows:

A.  Has anyone seen this situation before where the CEO effectively ruins their own company?
B.  Is it worth approaching the investors with a view to removing the CEO and investing the same again?
C.  How long would you estimate it could it take an outside investor to buy the company in a fire sale and get going again?


Many regards


H




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Deborah
------------------------------
Deborah Huisken, PCC
Dancing Star International
One must embrace the chaos within
 to give birth to a dancing star
Partnering with savvy entrepreneurs to
 develop their businesses and themselves
UK cell:  0798 521-4520
VoIP:  +1 617 275-5706
Skype:  deborahhuis
Blog:  www.dancingstar.com/blog
[hidden email]
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Re: Looking for advice...

FTired
Administrator
In reply to this post by Hugh-4
Hi

I would be a little careful when approaching the investors, unless you know the relationship beteween them and the CEO. Sometimes they may take it in the wrong way.
If you feel that the company is going pear shaped, ensure you put down your thoughts and let the CEO know, then try to meet a 'friendly' investor for a informal chat and to air your concerns, noting that you have already informed the CEO of your concerns.

Based on that meeting proceed, if you get one investor on your side, he will be a great help. Of you a company is only about clients, and if you have a great relationship with them, then it becomes even easier to move them across to a new entity, hence start working on that first.

Iqbal



From: Hugh <[hidden email]>
To: [hidden email]
Sent: Sun, 20 June, 2010 21:35:28
Subject: Re: [entrepreneur-1056] Looking for advice...

Deborah

Yes, I have discussed running the company with the staff.  For two reasons (which I don't wish to discuss in open forum), I don't think that an approach to the investors will necessarily be all that successful.  As I have nothing to lose, however, I may well do so this week.

I'm also interested in approaching other investors but I have no feel for the process of buying a failing company, ditching the CEO and how long it is all likely to take.

Thanks for the link, btw.  (It's ki-work.com).



On Sun, Jun 20, 2010 at 8:17 PM, Deborah Huisken <[hidden email]> wrote:
Hugh -

Are you considering leading this organization? 

If you can demonstrate a viable plan for how to take the company forward with existing assets minus the CEO, then I would think investors would be willing to listen.  Of course they will be listening more closely than the first time they invested since it's looking like their investment is going south; having said that, if you have a good enough plan, you might be able to help them save that investment, so why wouldn't they listen.

However, if you are just trying to save your own job and that of your colleagues, short of making your CEO see what you see is wrong with a view to making necessary changes, which is unlikely, I don't think you have much of a chance, to be honest.

If your team wants to stay together, you might want to investigate kiwork.com, which is set up with the intention of helping displaced teams stay together.  But I think the replies of Angus and Steve are accurate.

Deborah


On Sun, Jun 20, 2010 at 10:05 AM, Hugh <[hidden email]> wrote:
Greetings.

I am currently working with a small Web startup whose demise is imminent and several people will lose their jobs.  The staff (who have gathered some rare-ish expertise) would like to continue with the business but have no money to invest themselves.  The model seems eminently sound but the CEO (and founder) has made far too many mistakes (with strategy, with sales, marketing, technology and staff) and appears to have no business sense.  There is a trickle of business coming in but not enough even to cover the overheads.

The (private) investors have (perhaps naively) spent more than £1/2m and, I understand, have no confidence of seeing a return.  I estimate another £1/2m would be necessary to put the company on a sound footing.  My questions are as follows:

A.  Has anyone seen this situation before where the CEO effectively ruins their own company?
B.  Is it worth approaching the investors with a view to removing the CEO and investing the same again?
C.  How long would you estimate it could it take an outside investor to buy the company in a fire sale and get going again?


Many regards

H




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--
Deborah
------------------------------
Deborah Huisken, PCC
Dancing Star International
One must embrace the chaos within
 to give birth to a dancing star
Partnering with savvy entrepreneurs to
 develop their businesses and themselves
UK cell:  0798 521-4520
VoIP:  +1 617 275-5706
Skype:  deborahhuis
Blog:  www.dancingstar.com/blog
[hidden email]
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