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Six Ways to Rebound after a Setback
by Robert Jordan

 
   
 
   

I interviewed 45 highly successful company founders, each of whom started, grew, and sold a company for approximately $100 million or more, or took their company public for $300 million or more. Along the way, I discovered that they all share one trait in common: resilience.

These entrepreneurs all faced at least one crisis that should have stopped them in their tracks; instead, they bounced back stronger, smarter, leaner, and meaner than before.

Here are six ways they did it:

Dip into your "reputation capital."

Sometimes with startups, you've spent so many years talking about and working on the concept that your very reputation is on the line if it doesn't go forward. When GE withdrew research funding from Rock Mackie's radiation therapy project after four years, he had to lay off his entire staff and scramble to get funding for TomoTherapy during the dotcom bubble. But Mackie never gave up because he had something to prove -- that a university professor and a handful of brilliant grad students could launch a world-class company. Now the company employs 600 people and was just acquired by Accuray for $277 million.

Keep a Plan B in your pocket.

Baxter Corporation's president Bill Gantz must have remembered his grandmother's warning about putting all his eggs in one basket. His company raised $42 million in 1992 -- a lot of money at that time -- to develop what they thought was a perfect drug with no side effects that could cure lung infections in cystic fibrosis patients. There was only one problem: After doing a clinical trial, they discovered it didn't work. Luckily, Gantz had identified another drug along the way that worked really well, and had convinced the owners of that drug to license it to Baxter before he knew about the failed trial. He didn't think he would ever need it, but as it turned out, that "Plan B" drug saved his company -- and led to the sale of Baxter to Chiron Novartis for $720 million in cash.

Recognize opportunity when you see it.

The turning point for Lakeview Technology came when Bill Merchantz put his company's new software in at a really big client -- New York City Transit Authority. The software didn't work. Worse, it even destroyed some of the client's data. For some reason, his engineers were on vacation or out of town, so he and one team member spent 72 sleepless hours inventing disaster recovery software to solve the problem. In the end, he lost the big client, but built the business on the new disaster recovery solution -- which became a home run. Now Lakeview's clients range from Allstate to McDonald's.

Be loyal and you'll get loyalty back.

Before Raj Soin's Modern Technologies Corporation became a company employing 3,000 engineers, it was a startup begun with $1,700. In the early years, when cash flow was a problem, he would charge his credit cards in order to make payroll, no matter what, hoping payments would come in to cover the credit card balances later. The crisis peaked one day when his wife, the company's bookkeeper, walked into his office in tears. All of their cards were maxed out. There was no more money to pay for anything -- including their employees. Oddly, none of the paychecks bounced. Three months later he discovered that some of his loyal employees hadn't been cashing their paychecks, knowing the company was in financial trouble -- because they believed in Soin and believed his idea would eventually succeed. It did.

Let hungry mouths inspire you.

Bonnie Baskin had a secure university medical research job, but faced a dilemma. Her boss wasn't supportive of her need for flexibility. A single mom with two young boys, she needed a job that would allow her to work around her parenting schedule, on her own terms. With a $50,000 loan from her family, she quit her stable job and risked it all to start ViroMed Laboratories -- a lab that could test for HIV and other STD viruses, right at the beginning of the AIDS epidemic. It was a gamble, but worth it for the sake of her kids. Baskin eventually sold that company for $40 million in 2000, and spun off a second one, AppTec, worth nearly twice that.

When all else fails, just start over.

The founder of Cyborg Systems, Mike Blair, spent $20 million on object-oriented technology and then saw it all go up in smoke when Java beat them to the marketplace. He faced a crisis: how to get everybody on his team back to re-engineering a product that they spent a fortune on and never really got to market. He decided just to shut it down, write it off, and start over. Sometimes, he says, you just have to admit you've made a mistake and move on.


       
   
 
       
   

The Author

Robert Jordan

 

Robert Jordan has been launching and growing companies and helping other entrepreneurs do the same for the past 20 years. He is author of How They Did It: Billion Dollar Insights from the Heart of America (RedFlash Press, www.HowTheyDidItBook.com), a collection of interviews from 45 leading founders who created $41 billion from scratch. His newest endeavors are RedFlash project implementation team, and interimCEOinterimCFO, a worldwide network of interim, contract, and project executives.

 
       
   
 
       
   
Many more articles in Creativity & Innovation in The CEO Refresher Archives
 
       
   
 
       
   
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Copyright 2011 by Robert Jordan. All rights reserved.

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