June 28, 2012
Leigh Buchanan | Inc. magazine
David Williams was semiretired before becoming CEO of Fishbowl for what was supposed to be a severely limited engagement. The company, based in Orem, Utah, is a $12 million provider of inventory-management software. As told to Leigh Buchanan.1. Bearer of Bad News
My first job at Fishbowl was to end it. This was back in 2004. I was semiretired and sitting on the board of a medical-device company whose owner was Fishbowl's majority shareholder. Fishbowl had failed to deliver a viable product in three years, and the shareholder was understandably out of patience. With Fishbowl's founder no longer in the picture, he asked me to wind things down.2. Hold on a Second
When I arrived at the condemned business, I met six people—all smart, industrious, and with families to support. None had been paid for a while, but they were still working on the product, which they assured me was almost ready. I found them inspiring and asked the shareholder for a stay of execution. In short order, we finished the product. By the first quarter of 2005, Fishbowl was profitable. Over the next five years, Fishbowl grew to $8 million in sales and 90 employees without assuming debt.3. What? Again?
Then, in September 2010, the investor, who still owned 78 percent of Fishbowl (the remainder was employee owned), dropped a bombshell. He urgently needed to pull his money out of the company. We had 90 days to buy his interest, or we would be sold.
This was the throat of the recession. Who would invest in us? I reached out to everyone. Over the next couple of months, 58 people trooped through our office and looked at our financials. But everyone wanted a majority share. And I didn't think any of them would be like our current shareholder—a great guy who trusted me and hadn't been down to the shop in five years. Our autonomy had made us what we were.4. To the Rescue!
On December 30, at 5:57 p.m., the staff had gone home for the holiday. I was alone in my office when an e-mail arrived from Zions Bank, a local institution. It was an offer for a seven-year loan large enough to cover our shareholder's immediate needs. With the money expected in 60 days, our shareholder agreed to a carryback contract for the outstanding funds on essentially the same terms we'd received from the bank. Rescue!5. ...Sort of
Only, it turned out to be the slowest, rockiest rescue in history. A change in the bank's lending rules required us to reapply. Our first loan officer was sidelined by a skiing accident; the next left the bank. Zions underwent an internal audit that froze its lending operations.
Finally, on May 2, the bank reported it was ready to close. "Hallelujah!" I said. "There's just one small issue," the loan officer told me. "We can only give you two-thirds of what we agreed on." That left us with a shortfall of more than half a million dollars. "Well," I said. "That's not very good."
I called the members of my executive team into our boardroom and laid out the situation. And bless their hearts, they started pulling out their checkbooks and their credit cards. Listening to these people brainstorming all the sacrifices they could make was extraordinary.6. Your Money, Sir
That May, we hit a sales record--twice our biggest month to date. The profits covered almost the entire shortfall.
Maybe it's the rebounding economy. Maybe it's new interest in our product from larger companies. Maybe it's everyone realizing how much staying together in this business means to us. But those outstanding results have continued. In December, we paid back the entire Zions loan--more than six years early. They came to our company, and we presented them with one of those giant checks. Everybody danced. Even I danced.