Bear On Business

I had just finished a pitch to a Private Equity firm.  They had about six people in the room, and though John Scarano and Ken Desgarennes were on the phone, I was the only one from our team there in person.  I asked if they had any questions.

“Why you doing this?” is what I was asked.  It caught me off guard.  It was clear from the context that they weren’t asking specifically about Zayo.  It was a more general question.  It was directed at me.  To make sure, I asked a clarifying question.  As most bearonbusiness readers know, I have been fortunate in my career and had several cash-out events.  This Private Equity firm was aware of it.  The question that I was being asked was: “You don’t need the money so why you working so hard.”

My guess is that they learned the size of my golf handicap and figured there was at least one other area that could use my time and attention.

I wasn’t ready for the question.  Not surprisingly, my answer was incoherent, inarticulate, and uninspiring.

But I thought about it afterward and I have a better answer.  It involves Hobbs.  Not Neil Hobbs, the fixer of Level 3.  It is Roy Hobbs, the aging right fielder for the New York Knights.  I’ll explain in a later post.

Yesterday, I shared some great words from Steve Martin.  It is something we can all use for motivation in our business life.  Before we leave Steve Martin, let’s enjoy one more of his skits from his first album “Let’s Get Small”.

Steve Martin wrote in his recent autobiography “Born Standing Up”:

“I learned a lesson:  It was easy to be great.  Every entertainer has a night when everything is clicking.  These nights are accidental and statistical: Like lucky cards in poker, you can count on them occurring over time.  What was hard was to be good, consistently good, night after night, no matter what the abominable circumstances.”

The book centers on the formulative years of his career–prior to when he achieved success.  It is well written and entertaining, but in a low-key way.  He is introspective and honest.  I enjoyed the read.

The specific quote is about two thirds the way through the book.  He quit his main job as a TV writer for shows like the Smothers Brothers and Sonny and Cher and took to earning a living solely as a stand-up comedian.  He discussed how he would tape shows so that he could identify when he stumbled onto something that worked well–nights where he was drawing good poker hands.  He would then use this “luck” to refine his routine so that he’d be consistently good.

I probably over-use the phase “blocking and tackling” as in “we want to be good at blocking and tackling”.  I use this to mean I want my organizations to do the little things consistently well.  To me, blocking and tackling is the foundation of any company.  I think this is similar to what Steve is talking about.

My daughter Kailey is 14 years old.  When I was 14, I bought Steve Martin’s album “Let’s Get Small“.  I probably listened to in 50 times.  No exaggeration.  I still chuckle when I recollect some of the skits.  Smoking was one of the skits from the album.  Take a look: 

Tomorrow, I will share a serious side of Steve Martin–something we can all use in our business careers.

Cynthia Carpenter, who is providing marketing leadership at Envysion, provides context:

“I believe this tag line works well to underscore our mission to go beyond loss prevention and help our customers “see” improved operations, profitability, marketing and training. Further, this tag line is relevant for customers in numerous segments, beyond those that we have already penetrated. For those of you who are linguistics wonks like me, “See” is an imperative verb that not only plays off of vision and video, but it also tells the reader what they will do/can aspire to with Envysion. Therefore, it’s exciting and intriguing. It also sounds simple, which mirrors the simplicity of using our application.

I like it. Thanks Cynthia as well as all those at Envysion who contributed.

Matt Steinfort wrote a good post last week on MVaaS.  Some managers express caution on video surveillance because it is “big brother-ish”.  Matt uses game-films as a counter to this.  Football coaches rely on filming games and studying them later as a means to improve execution.  Why shouldn’t businesses?

What does Mike Ditka have to do with this?  He is my favorite football coach.   That’s all.

Market Force is a roll-up of Secret Shoppers.  It is located in the Boulder area and is funded by several of Colorado’s venture capital firms.   The nature of its business has a tie in with what Envysion is up to.  I am hopeful that the two companies develop a tight strategic relationship in the future.  With this on my mind, I thought I’d hop onto Market Force’s web site and see how they are doing.

Karl Maier is the CEO and Co-founder of Market Force.  I don’t know him well, but I know him well enough to know he is a great guy.  He also has a terrific reputation within Colorado’s venture capital community.  I was pleased to learn from the web site that Karl named Ernst & Young Entrepreneur Of The Year for 2008 in Rocky Mountain Region.

Congratulations Karl!

Steve Wilson is an account executive at Envysion.  He was with us at ICG Communications in 2005/06 and joined Envysion about a year ago.

Envysion has had account execs deliver $300,000 or more sales in the month’s past.  However, they have been driven by a single large transaction.  In July, Steve has a chance to hit $300,000 through more than 10 separate customers and several distinct brands.  However, time is not on his side.  He is at $110,000 as I write this, with only about 6 business days left in the month.

Will he do it?   I’ll let you know.  Good luck.

I let Danny know that I was interested in combining his business with ICG. “The problem,” Danny reported back to me after consulting with his board, “is that we’d have to agree on relative equity value.” Danny knew our EBITDA was a lot higher than his, and concluded we’d have a problem when discussing who ends up with what.

“No problem there,” I offered, “We would offer you cash.”

Now this was a foreign concept in the 2005 telecom industry. A cash based offer for a fiber based telecom on the upswing was strange indeed. The bubble bursting was so fresh in everyone’s memory. Who would possibly fund this?

I showed my investors the proforma of ICG combined with OnFiber and it was, to put it mildly, a huge value creator. Frankly, I don’t know if they would have supported this, as we never had a chance to find out.

Danny went to his board and our overture was the light at the end of the tunnel they were awaiting.  Instead of having discussions with us, they instead decided to launch a formal auction process. Their investors were ready to move on.

By the time the auction began, ICG moved on as well. We were 25X in the money and our investors and certain members of the management team wanted to convert paper gains into cash in the bank. Reluctantly, I went down this path though I firmly believed we would leave money on the table. Hindsight, it turns out, proved we were all right—the cashing out allowed everyone to benefit from the exit, though time also proved that ICG was worth much more than we sold it for.

Anyway, OnFiber’s process was launched and….

OnFiber went into cash preservation mode in 2001 through 2003. They didn’t have much of their $151M left, but they got their spending under control.

Other fiber based telecom providers fell completely apart. They continued to burn cash while running out of money. They were left with no choice but to sell—and the market at the time was anything but generous. These companies sold for pennies on the dollar.

OnFiber became a hunter. However, they didn’t have much cash to use in their hunt. Nor could they use their equity, as it was deeply under water. So you might think of OnFiber as being on a scavenger hunt, setting their sights on the most wounded of fiber prey.

Last week’s posts covered Telseon, Sphera Optical Networks, and C2C. All three were acquired by Danny Bottoms after the bubble burst.

In 2004, I led a buyout of ICG Communications. In 2005, my team and Danny’s spent some time together. It was clear that the resurgence that we were seeing at ICG was also manifesting itself at OnFiber. The two businesses together would make a nice platform to do a Zayo-like roll-up of fiber based providers.

So I decided to make an overture…