Sunday, June 15, 2008

The Pigs at the Trough

In 1983 I incorporated myself as a one-man consulting firm. (I did this three times during my working life, each time promising myself to hire no one, each time keeping that promise). I would consult on personal computers, mainframe programming, federal procurements, and management in general.

John, the owner of a consulting company that my boss and I had used in the past, put me in touch with Joe, the president of a direct marketing (junk mail) company. John and Joe were two of the founders of this company, which had grown to twenty-five or thirty people, and which provided the data processing and some printing for clients - companies like Office Max and Bed, Bath & Beyond, (not actual clients of this company) which periodically mailed catalogues to customers and potential customers.

I did a lot of assembler programming for them, first as a consultant, and after several years as an employee. The employment offer was for six figures and Joe and Sean (the Executive Vice-President) readily agreed to my one condition - that I would never report to anyone other than the President or Executive Vice-President.

There were two of us who were six figure programmers with a great deal of freedom. We seldom reported to anyone at all and often got involved in efforts outside of programming. The average age of the company's employees was probably twenty-four or twenty-five, and we had much experience that they did not have. I was forty-five when I was hired, and the other, Jay, was a few years older than I. Jay referred to the two of us as "gold collar workers" - not quite in keeping with the general definition, but it seemed to fit anyway.

This was a great company to work for, particularly in the early days.
Everyone was friendly and helpful, the younger people (18 to 25, say) were exceptionally responsible, most of the employees socialized together, and it was not uncommon to see someone stay after work voluntarily to help someone else who had to stay to get something done.

The President, Joe, was Mr. Personality. Great smile, much enthusiasm, and concern for those who worked for the company. The goal was to build the company to the point where it would go public or get itself acquired, and eventually it did get acquired. But before that . . .

The company began to grow, which was good news and bad news. The good news is obvious, but the bad news was that Joe suddenly realized that he was worth seven figures, on paper, at least, and it changed his personality. He had been the kind of guy who not only would do anything for you but couldn't wait to do it for you, the kind of guy who might say, "Why did you have to think of that? Why didn't I think of that?" He became the kind of guy who couldn't wait to say, "I bought a new camera last night. Nine hundred dollars."

The company grew, eventually to around four hundred people, built its own building and moved into it, and became more bureaucratic. Some of that last is unavoidable with growth. When you have thirty or forty employees it's no big deal if they want to walk into the computer room and run their own jobs, for example, but you can't handle the confusion if you allow that with four hundred employees.

But the main problem was that Joe (and one or two others) got greedier and greedier. Several members of the Board of Directors had founded a printing company on the side with the intention of adding to the size of the work for which the junk mail company was responsible. It would farm out the printing to the printing company. Alas, this second company was not a success and wound up owing the original company a substantial amount of money.

The pigs were at the trough now, and the Directors would vote themselves huge annual bonuses and then send the managers and supervisors out to tell their people, "Well, it wasn't such a great year. We don't have much money for raises . . . ."

I became very uncomfortable with this. My friends on the board were screwing my friends at their desks, and I was unable to do anything about it. The final straw was that one year they voted to forgive the printing company a five hundred thousand dollar debt owed to the original company. This was a clear conflict of interest, and that debt should have been paid out of their pockets, but they effectively screwed the original company, and once again there "wasn't much money for raises."

I quit. I just couldn't stand to watch it any longer. I knew at the time that it was going to cost me a bunch of money whenever the company was sold, and it certainly cost me more than a half million dollars. I was unemployed for nine months and subsequently started all over at $50,000 a year. But in this world you do what is right or you collaborate in what is wrong, and I wasn't going to collaborate in shafting my friends, some of whom are still my friends today.

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