When I tell this story only real entrepreneur’s get it. Most people, especially accountants, but even those who work in sales in big organisations guess the wrong ending. It was back in 2002 after the Dotcom meltdown, Enron, the stock market crash etc. A very bad time to launch the UK end of a software start up. Unfortunately, that hadn’t put me off and two years in we had sold only one deal. I was funding the UK out of my own pocket. No loans. No other investors. My share was 40% of the UK company, enough to make a good wedge from a liquidity event. But that was a fantasy, I was burning through reserves to disaster. We badly needed cashflow. I was prepared to give 50% off the price of the software. This would generate a contribution and services revenue on installation and support.
With this offer my colleague Rob had a bite from the UK end of a US tech company. I was on my way to fly out to Ireland when he phoned. “The Finance Director says he will go ahead but he doesn’t want to pay anything for the software”. He said. This is how it is when a certain type of customer smells you are desperate. They ask for more. I said ok but in return I wanted to sign the deal today. I could be there in an hour. They agreed. Just enough time to do a deal and get to Luton airport.
In the meeting room Rob was with the Finance Director’s number two. The most important man in finance himself was not honouring me with his actual presence. We had some chit chat and then I said I agreed to their conditions. We would supply the software for nothing if they paid for services in full and signed today. Rob had the paperwork. I signed it. The lackey took it to the Finance Director. He wasn’t away for long. He came back and said the Finance Director now wanted more. He wanted a 50% discount on services as well.
Note: I was tempted to write this up as dialogue with me speaking in a kind of east End gangster voice and vocab like Bob Hoskins or Lenny McClean, which I actually did, but that would distract from the main point. Although I haven’t worked out what the main point is yet. My hunch is it is going to be something to do with my tribal dislike of accountants and their money obsessed materialist values in contrast to the higher values of entrepreneurs (like me).
Keeping to the basic facts, this is what followed. I stood up, said nothing and walked slowly to the window where I gestured for the messenger boy to come and stand by me. Then I pointed outside at my Porsche in the car park and asked him to look at it. It wasn’t any old Porsche, It was a brand new top of the range 911 Turbo, an impressive looking object. It made every other car look like it was black and white in a colour photo. I asked him to ask himself whether I looked like the kind of bloke who needed business that bad. I said it in a way that conveyed I was genuinely concerned about looking needy.
I went on to point out that the trouble was my colleagues are my friends, and I would not send them to work somewhere that valued them so cheaply and disrespected them so much. I questioned whether the next thing the Finance Director might ask was for them to empty his bin. My dramatic delivery was becoming increasingly seething and I was freely interspersing expletives. I concluded by saying that when I woke up in the morning and looked in the mirror, I wanted to see someone I could respect, so all in all thanks for your time but no thanks, we will be on our way. Of course many of my spoken words finished with “ing” on the end, and by the end I was looking straight into his face from the sort of very short distance that makes middle class English people feel extremely uncomfortable. My eyes had drilled right through his head into his melting brain. I sometimes wonder if I would have done this had he been a great big, broken nosed second row forward. I was hamming it up (if you have watched “Snatch” think “Brick Top”). But I was steamed. I think I would have.
My colleague Rob, who was in his mid-thirties back then had worked with me since his first job after graduation. He is now in his fifties. He called me today and we laughed about this story. Back in 2002, it was the third start up we had done together. From the corner of my eye I could see him trying not to laugh. The messenger boy was looking totally out of his depth. Obviously, this was not normal behaviour. But I felt we had to turn a corner. I could see the Finance Director’s position. He perceived a vulnerability he could exploit. This was a hard time for many businesses (though theirs was “flying”, they supplied scanners for airports, and this was not long after 9-11). From my point of view we really needed the money. We were heading towards insolvency, and it would have paid the wages for a few months. Using accounting logic, they were on very strong ground. They held the aces. It was my move and I made it.
At this point, when I am telling this story, I ask listeners what they think happened next. Did we turn it around? Did we get the deal? Most people guess that we did.
Wrong. This completely misjudges the entrepreneur’s mindset. Of course, we didn’t get the fricking deal. There was no way I would do business with this company and its jumped up, exploitative head of finance who hid in his office and communicated by a messenger – who he might as well have given his handbag to. I became an entrepreneur precisely to exercise power over this kind of scenario. My career mission was to show that you can run and create a business on principles higher than money. I would prefer the business to die rather than surrender. I enjoyed walking away. Looking back this is one of my favourite (and most talked about) victories. Yes, we needed that lifeline of cash but not as much as I needed to make a point to a figure who represented a culture I despise. I imagined him as an executive house owning (five bedrooms / three ensuites / two BMWs), typical Home Counties, accountant. In my experience people working in the finance function are the most likely to be of this conspicuous consumption type.
Rob and I had a brief laugh in the car park and I set off to catch my flight. At Luton I abandoned the car in the short stay. Expensive but the only way to make it. On arrival in Cork the day got more bizarre. I picked up a hire car and had to find my way to Killorglin on the N22. The motorway lasted two miles, it took me West to the exact place where the EU infrastructure grant ran out and rural Ireland began, and, I had no map. I rang home and for two hours my wife directed me by consulting Google maps. I read names off signposts (when there were signposts). She told me which way to go. A very stressful day. I checked in at a small privately run hotel, dumped my bags went to the bar, and fell into the arms of Irish charm and hospitality. The locals told me I was there to visit Fexco. “How do you know”, I said. “There’s nothing else to visit”, they said. Then they explained all about Killorglin and its famous Puck fair, which I must go to one year. It was a classic rural backwater.
The next day, sure enough, I visited Fexco (www.fexco.com). Not what I was expecting. Fexco ran currency exchanges around the world, the European Western Union franchise, the Irish National Lottery and the Irish National Tourist Board website and a lot of other high-powered stuff from a very modern data centre, plonked in the middle of a field. It was fascinating. Everyone I spoke to was proud of the Fexco story. It was started by Brian McCarthy, a bank manager who used his own cash to exchange dollars to help American tourists during a banking strike and – he never stopped. The data centre was like a little corner of Silicon Valley in an Irish bog. Beside it was a huge house. “That’s Brian’s” I was told. For lunch we went into town. “Brian wouldn’t build a staff restaurant as that would kill trade in the town centre”. Sure enough, the cafes and bars were full of well-paid IT workers sharing their rewards. I am sure the Finance Director I had (not) seen earlier would sneer at this paternalistic benevolent capitalism and would cry over the money the company was losing by not selling sandwiches to its employees. But Brian was a real entrepreneur. He had soul. Sure, he made money. Plenty of it. But he understood his responsibilities went beyond maximising profit. This would have horrified Milton Freedman and the whole sick movement that views the exclusive role of business as maximising shareholder value. A movement that is so well entrenched (especially amongst the accounting fraternity) that it has survived every shock it has caused. Let’s list a few: the dotcom meltdown, the Enron, WorldCom fraud crisis, the 2008 global banking crisis, and most recently, the divisive impact of rising inequality caused by the “efficiencies” of offshoring, outsourcing, recruiting cheap migrant labour all of which led to the protest votes for Trump, Brexit, Wilders etc that are derided as “populist” by people who have maintained their power, status, and incomes, while others lost theirs. As you can tell I am no fan of the way capitalism has veered over my career. And I am one. A capitalist.
Before Ford moved 40,000 jobs from its car plant at Dagenham to lower wage economies it was a paternalistic employer. I know. because I worked there. The Ford Utd football team played in the Southern League as semi-pros. The Ford social and leisure centre was better than most towns. Children of Ford employees got a Christmas present and a summer trip. The unions always demanded more but Ford was a good employer. When it moved production to lower wage countries, I saw it as treachery. 40,000 jobs at Ford and many more in related businesses were vaporised. It did more damage to east London than the Luftwaffe. When my brother’s friend told me he was running a project to move the admin jobs of a huge UK insurance company to India, I felt the same way. As I do today when I hear about the NHS, UK construction and agriculture reducing their UK training investments to recruit qualified employees from low wage economies. As a tech supplier I have witnessed many of these projects and seen their true impact. They rarely produce the operational benefits they promise. I have seen companies bring these operations back inhouse but by then the “shareholder interest” model has already paid out. The boost to share price that executives capitalise rolls in at the announcement stage. It is trousered upfront. My experience is that no effort is made at the completion stage to validate whether the promised benefits have been “realised”. This is how millions of people in the developed economies lost well paid and secure employment. It was a way for shareholders, consultants, and executives, to make money out of hyping their future prospects on capital markets.
Privately run firms have more freedom. Analysts and activist funds can’t bully them so easily into making changes to “improve” margins. In some cases that freedom is not responsibly used, but many entrepreneurs and family firms regard their colleagues as friends and partners and support their local communities. That is the business model I subscribe to. Responsible, benevolent capitalism is far more important to me than owning a Porsche. For many of the stereotypical accountants I come across, owning a luxury car and and executive house is intrinsically important. Monetary and material reward is reason itself. Perhaps because they manage money it has an epigenetic effect, or perhaps the profession attracts a money focused DNA profile. Accountants operate at the pinnacle of the professional reward hierarchy. High pay is guaranteed not by performance but by the mechanism of being a regulated occupation that uses qualifications to artificially control supply and inflate price. In this culture BMWs and executive homes are important because they prove higher rank to inferior professionals. And, that is why I asked the junior accountant to look at my Porsche in his car park. I didn’t care about the Porsche. Within 12 months it had gone, sold to generate cash for a struggling business and I was driving a ten year old Volvo. My personal self-esteem and status remained intact. I was still an entrepreneur. The only thing I lost was the ability to piss off accountant’s (and their like) at their chosen game of advertising personal status by possessions.
An entrepreneur, a real one, is seeking much more than that. Entrepreneurs are trying to create and prove something. If they succeed then money is a measure and a proof, but like an artist or architect or a composer, performance and creation are a part of the mission. To own the car and house (the most common icons in the Home Counties hierarchy) is not enough, you must get there the right way, by doing something original and creative that you believe in, by taking risks and answering questions about yourself, otherwise it does not satisfy the entrepreneurial gene.
I will return to this in other posts. What makes you like this? A fascinating question. Is it nature or nurture? A bit of both? Is it necessity, maybe all other doors were closed to you? Is it the thrill?, Is it art for artsake?
What is not a fascinating question is “what makes somebody want to become an accountant?”. That has only one answer.
Finally, some of my best friends are accountants.
