By William Lieberman, an EO New York member and founder of Xtiva Financial Systems.
The life of an entrepreneur is full of highs and lows, stressful times and fun-filled times, joy and despair, external validation, and sometimes, a demotion. We have all heard the stories. Founder/owner starts a firm. It grows like a weed. And then, the firm hits the wall. The founder tries to fix the underlying problems, but to no avail. Investors, board members or even employees become impatient. Finally, a power play occurs and through a messy divorce (usually never anticipated) the founder is out and a “professional” CEO is brought in to “take the company to the next level.” I have read and heard these stories many times. It never dawned on me that I would be in that position. But, by taking a look in the mirror, I made the right decision for company, my shareholders, my employees, and even for me.
I started Xtiva Financial Systems, a provider of sales compensation software solutions to the financial services industry, back in 1998 with a partner. We raised capital, added employees, alliance partners, products, and were able to grow the firm to US$10 million in revenues in 2008. In 2008, however, we hit the proverbial wall with the largest client contract in the company’s history. Without boring you with the details, suffice it to say that we lost US$2.5 million that year. Then, the Great Recession hit and we found ourselves having to cut staff from 56 people to 36, and we cut salaries on more than one occasion as well. We have since turned the corner and things are slowly picking up with 2011 revenues forecast to be back around US$10 million; we will be profitable.
In addition, over the past few years, we a) had our bank put us in “workout” for missing our bank covenants (and found a replacement commercial lender), b) were sued by our strategic investor (we settled), c) had revenues drop 15 percent last year, d) almost ran out of cash, e) lost a major client, and those are just the big ones. Along this rollercoaster ride, I decided to leave my wife of 17 years and file for a divorce. I had to represent myself (even though I knew nothing of the law) for over a year because I could not afford an attorney. Four years later, the trial has ended and I will wait for another nine months for the judge’s decision.
Xtiva has a five-person board of directors with three outside members. About a year ago, they became very concerned about Xtiva’s performance and worked with me to help improve my game in leading us out of the mess. Even with all my personal distractions (preparing for trial which started this past January), I threw myself at the problem with their coaching. But, as trial approached, it became too much for me to handle. I met with one of the board members who had been a true mentor for me. He has always told me that it is critical that every leader “look in the mirror” to understand their own strengths and weaknesses. I spent a lot of time talking with my partner and soul-searching. Would it be best for the company for me to make a leadership change? What would I do? Would I be out of a job? Could I survive at the company that I helped build for 12 years and not be the “go to guy”? After many months of discussions and dealing with my divorce trial, I decided to step down as CEO and hand over the reins to my partner.
The three outside board members disagreed with the decision as they believed we should have brought in a new, outside CEO with experience in taking companies from US$10 million to US$100 million. However, my partner and I did not think that was the right move. In the end, they all resigned because they did not want to fight us.
Fast forward to today. My partner has taken the leadership role and is doing a fantastic job leading the team, meeting with clients, helping close new sales, and leading a money raise for fresh new capital. This has enabled me to finish off my divorce trial work and focus in on what I am good at: running the business as opposed to leading it. My background is in finance and analysis. I have assumed the role of chief financial officer and chief administrative officer. I still sit on the board of directors and still have my ownership stake. But, by focusing my energies on my areas of excellence, I no longer stress about the things that I am not good at and, at some level, have a load off my back.
I am more energized than I have been in a long time. My trial is done. I have a wonderful fiancé. My company is starting to thrive once more with new investors, new board members, new employees and new sales. I looked in the mirror and saw that I could much better serve the company by changing my role and not trying to do more than I was capable of. It has been a rough few years, for sure. But, by sticking to a few basic principles, I am on the path to coming out the other side in much better shape:
- Never Give Up. It sounds trite or even cliché, but it really is true. I cannot tell you how many times I ended up on the mat, having been knocked down by the latest cutback or lost client or negative court ruling. I just had to learn how to pick myself up, dust myself off and get back in the ring. I really leaned on my family and my business partner for emotional support during the darkest days. They always had my back and I knew they would be there for me, no matter what. And, trust me, drowning your sorrows in liquor never helps! You just wake up the next day with a wicked headache!
- Always Know Your Options. The worst situation is one that is hopeless. While there were many situations that were beyond my control, I always made sure I knew my options. Whether it was as simple as working out a new personal budget for reducing my expenses or as extreme as thinking through the process and implications of filing bankruptcy, I made sure I knew the various paths and corresponding risks / outcomes of each.
- Keep Your Chin Up. It still amazes me how many people remark about how I have such a positive attitude when I have had so many negative experiences in my life. I joke with them by saying, “I laugh so I don’t cry.” In truth, I really am a positive person. I believe that I will come out the other side a better person. By surviving so many trials by fire, I know I can make it through anything that life throws at me. I have shown my daughter how to succeed in the face of adversity. I have proven to myself that no matter how bleak things look, there is a better day around the corner.
It all comes down to always believe in yourself. Listen to your gut feeling and stay true to the path that you know will lead you to the pot o’ gold at the end of the rainbow. If you get knocked down along the way, then you will be that much more satisfied when you succeed. Trust me.