The years 2000-2003 produced the steepest downturn in technology spending in history as the Internet bubble burst and took with it the telecom equipment boom and several others.
Stock prices declined rapidly. 9/11 happened. Venture capital and private equity money dried up. The M&A market evaporated. Technology spending plummeted. Customers stopped spending money. Silicon Valley turned in to a ghost town of sorts for all but the luckiest companies. Mine was one of them.
Our team’s journey
I was CEO of video technology startup SkyStream Networks. Before the bubble burst, we looked like every other successful startup. Rapid growth, hiring and happy customers buying our leading edge technology.
We filed to go public on March 8, 2000. Unfortunately, the NASDAQ peaked two weeks later, and it was downhill from there. We were forced to withdraw our filing in late May that year and hunker down.
By late 2002, our bank account was nearly dry. We furiously cut costs. We laid off almost 100 people. We cut employee salaries by 10%, officers by 15%, mine by 20%. We renegotiated our materials contracts and negotiated three-month payment terms. We hired a bankruptcy attorney.
As CEO, I called customers and begged them to pay us, even before they owed us the money. But that wasn’t enough. In December of 2002, we furloughed all of our employees for three weeks, only hoping we’d have money to pay them in January. We even fired the plant watering service, and I went around the building and unscrewed every other lightbulb to save energy costs. And so much more….
On December 11, 2002, at 9:45 pm, we got a handshake deal with a new investor and our existing ones. But it took three months before we actually banked the money. While waiting for this to occur, we continued to explore bankruptcy. We lived hand to mouth, refusing to pay for any products or services, as we squirreled away cash to meet the payroll every two weeks.
Our building landlord had the Santa Clara County Sheriff try to evict us for non-payment. I ripped the eviction notice from the front door of the building and threw it in the trash. We were not going down!
Perseverance pays off
Between March and June 2003, we put $29 million of new cash in the bank. We paid off our debts. We negotiated a much more reasonable rent payment with the landlord. Every investor reinvested in the company. We kept all our customers. We kept all our suppliers. We kept all of our employees. We never missed a payroll. We hit our financial targets.
SkyStream Networks achieved solid profitability by 2005. A year later we sold SkyStream to a public company and in 2007 we sold that company to Ericsson for $1.4 billion. A thousand other startups vanished through this period.
I’m often asked how on earth we pulled this off. It seems like miracle after miracle to the casual observer. But the answer is quite simple. I had a great team.
Throughout the history of Skystream, I honed that team for the task at hand. As the company’s first and only CEO, hired in 2007, I handpicked my executive team for the rapid growth phases. But as the tough times hit, I needed to make changes on that team to be sure we had the “right people on the bus,” as Good to Great researcher and author Jim Collins so aptly puts it.
When we got to the pure survival phase, I needed to make more team changes to be sure we had the expertise and staying power to make it through the storm.
Ingredients for a great team
As a member of this team, I can tell you that we were not just a family, we’d probably take a bullet for each other. We were completely interdependent as great teams are. We would not take “no” for an answer. Failure was not a word we subscribed to.
How does one go about building a team like this?
How do you know when to make changes to adapt to a changing business landscape?
Who do you bring on to the team?
And if, as is usually the case, you inherited your team and didn’t have the luxury of building it from scratch, how do you diagnose problems and fix them in order to build a high-impact, great team?
I’m leading a one-day UC Davis Graduate School Management Executive Education program, “Building and Leading Great Teams,” that will give you the tools you need to understand optimum team assessment, design and performance, and put these concepts into practice. The program is experiential with hands-on team exercises that will ensure you learn from doing, not just listening. Behind every good leader is a great team. I’m excited to help you build yours soon!