Saturday Spark #35
By Susan Hunt Stevens, Founder & CEO
Several years ago, I experienced the terrible feeling of being taken advantage of, for someone else’s financial gain. I had certainly experienced bad behavior before. In one role, I instigated an investigation that charged over 60 employees with theft and their union with racketeering. But this felt different because the person on the other end was someone that I liked and thought I could trust. I believed our businesses would be stronger together than apart. We all worked in the impact and responsibility space, which perhaps lulls you into thinking people are more honorable than in other sectors.
There will always be a difference of opinion about why this next sequence of events happened. The net is that we had finalized the legal paperwork to sell our company to their company for one price. However, a week before the transaction was supposed to close, that price got cut in half. The entrepreneur told me point blank that if we didn’t sell for that lower price, they would go build everything we’d spent the last six years building. We faced a horrific dilemma, having just shared literally everything with this much larger, better funded company in a due diligence process.
When I told our lead investor and board members what had transpired in the conversation, the expletives flew. The strong belief was that this change was not just bargaining in bad faith. It was done, perhaps intentionally all along, to take advantage of us or irreparably hurt us.
I didn’t have a lot of time to dwell on how furious I was. I had a company to get back on track that had been horribly distracted by this process. We need to raise capital quickly. We needed to overhaul our product as customers wanted what the other company did, what we did, and a bunch of things that neither of us did. We had to assuage customers who knew about the potential transaction and were nervous, in some cases, that we were going to sell and, in other cases, that we hadn’t.
Our leadership team made a series of very painful decisions, including that we would basically cut ourselves in half to free up funds to begin the necessary product expansion. We brought in an interim COO so I could focus on fundraising and hire a head of product and tech to guide the platform expansion from primarily sustainability engagement into the additional modules.
It wasn’t easy, but we raised the capital we needed and expanded the platform successfully into social impact (including new giving functionality launched this week), holistic wellbeing and positive workplace culture. We’ve grown and achieved profitability. The other company did launch a knock-off of what we do. But there is a secret sauce to HOW we do things, not just what we do. We’ve heard they are learning that the hard way.
The end of this story could easily have been less positive. There are hundreds of start-ups who have experienced similar behavior and much, much worse from larger companies. Some people will say, “well, business is business.” I don’t buy it.
As leaders, we can’t be afraid of difficult decisions. There are times that we may need to back out of or change a deal, end a partnership, fire someone, walk away from a customer or work hard to win away a customer. The first question to ask yourself is why. Are the motivations ethical? Then, you need to choose how you behave. I was certainly not happy about the change in price. The timing was thoroughly suspect. But there was a stated rationale, whether I agreed with it or not. The situation became egregiously unethical, in my opinion, with the threat. Just one sentence in six months of conversations told me what I really needed to know about this person’s character.
I’ve heard recently about a large company that’s starting a team focused on ethical leadership. It’s much more than a rebranding of their compliance function. It’s tackling the underlying motivations and behaviors of their people to help them know what ethical behavior looks like in various situations. People are complicated. We make mistakes. We have lapses in judgment. But if standards for ethical behavior are clear, communicated regularly, the consequences for lapses visible, and good choices celebrated, an ethical culture will prevail. I firmly believe that those are the businesses and business leaders, in this age of transparency, that will also prevail.
Quote of the Week: “In times of great stress or adversity, it’s always best to keep busy, to plow your anger and your energy into something positive.” – Lee Iacocca
What is Saturday Spark:
As the leader of a purpose-driven company, I’m challenged daily to ensure our company is “walking the walk” and that I’m personally leading with purpose and impact at the forefront. The result is that I read, think, and learn a lot about the intersection of purpose, impact and leadership and have a few successes and a lot more “lessons learned.” I realized that my own insights may be helpful to other purpose-driven professionals if I took the time to reflect each week. If you find this inspiring, practical or helpful, I’d be honored if you shared it with your colleagues, your families and your friends.
Read Previous Week’s Spark: Creating Space for Your Soul