The million dollar napkin and other lessons from the dot com boom
We recently began sorting through the accumulated memories of a wide and varied collection of pictures, clothes and other such items upon which the ideal garage sale is built. In short, trying to determine what of our junk would be considered a treasure to someone else. Interestingly enough, many of the items that Jennifer and I now classify as junk, were at one time considered a found garage sale treasure.
Of course sorting through these items also represents a stroll down memory lane, where flashes of our past can in the here and now, stir both a smile and perhaps even a tear.
So when I unexpectedly came across a 14 year old dinner napkin in which the details of a multi-million dollar agreement had been hastily scribbled, I could not help but smile thinking about the wild west adventure that was the dot com boom (and eventually bust).
Ahhhh . . . who could forget those heady days when tens of millions of dollars were exchanged over steak dinners followed by single malt scotch and good cigars. My personal preference was a 16 year old Langavulin (although on occasion I did enjoy the 21 year old Distiller’s edition), with a Montecristo Number 2.
Lesson Number 1: Take Time To Enjoy The Ride
I can still vividly recall, what started out as a simple dinner between company presidents. We had met one evening in February 2000 at a tony steakhouse to ruminate about the future of high tech.
Across the table from me sat the President of a company that traded publicly on the Toronto Stock Exchange “TSE”, which to US readers is Canada’s equivalent of the NYSE. In a moment on honest reflection my counterpart had expressed surprise at how his stock had rapidly ascended in a matter of weeks from a low dollar valuation, to almost cracking the ten dollar per share mark.
While he speculated that this upsurge, which as the company’s founder and one of its largest shareholders more than quintupled his personal wealth, was due to their spate of recent acquisitions, he was not entirely sure as to how he achieved this thin air ranking. He also admitted that while he did not know how he arrived at this point of increased affluence, he expressed his desire to stay there.
Lesson Number 2: What Goes Up . . .
On my side of the table, I had over a period of several years, built up an organization that had two things I would soon find out made it an attractive takeover target. The first was a solid revenue stream with significant annual profits in the millions of dollars. I had also developed what would become a patented software process that would provide a competitive advantage that was hard to come by during the dot com boom years.
As the main course and discussion casually flowed into dessert (a vanilla creme brule if memory serves me), and then to loosened ties and anecdotal musings, he seemingly out of nowhere asked if I would be interested in selling my company. Perhaps due to the warm ambiance of the restaurant and the satisfaction of a just enjoyed good meal, I said I might be if the price were right. He then asked the obvious question . . . what price would be the right price?
Quickly calculating in my head our annual profits over the previous three years, as well as the sales forecast for the present one, instead of throwing out a number I shared this information asking him what he thought it was worth?
That is when he took my napkin and in what felt like a furious matter of seconds detailed in writing the outline of a purchase that would upon closing more than a year later be worth $12 million dollars – including an upfront payment of $1 million cash.
Lesson Number 3: . . . Must Come Down
Of course, and as was the case with many others during that crazy time of unbridled optimism, the prosperity ride came to an abrupt end as reality caught up with both the mighty giants such as Nortel and JDS Uniphase, as well as the aspiring future giants. The company that acquired my company was in the latter group. What is the old saying about what goes up, must eventually come down?
I was, at least for a time, able to survive and even thrive after the company that purchased my firm fell into receivership. Unfortunately the bust aftershocks eventually wiped out a significant percentage of my client base as well, and with it 85% of my new company’s cash flow.
In the end, and for all intents and purposes, all that remains beyond the recollections of a memorable experience is ironically the napkin itself.
Lesson Number 4: Success Is Not Final and Failure Is Not Fatal
Oh well, at least I will always have Le Biftheque Steakhouse . . . which ironically is also no longer in business.
I also have a sense of gratitude for being able to have experienced a period of such excitement and success. It was as they say a great ride.
Today I have a wonderful family and am doing something I love more than what I did during the heyday years . . . writing.
In the end the best lesson is that there is always a second act, and even a third act. So if you find yourself in a spot, hang in there because Churchill’s words are so very true; Success Is Not Final and Failure Is Not Fatal. The best is always yet to come . . . even if you can’t yet see it.