Few years’ back I came up with an idea to keep track of service and maintenance of cars/trucks on a smart card. Having worked in Europe for few years, smartcards where a hot thing and with bright future. Ah well.
I proceeded to file for a patent, which took almost 14 months to prosecute and secure, and over $100,000. I won the patent then it was time to raise money and organize a team.
1. Raising the fund:
Because of my many years of doing business overseas it was not too difficult to raise money, given my performance and my professional integrity. One of my clients agreed to come in as partner together with others. My share of 1/3 was a developer and manager of the project while the overseas investors put up the entire funds.
As it happens one of them ran into financial difficulties and did not pay his share, so I used my own money to pay for his shares including collateralize my stock holding even taking out second mortgage… Big Big dumb and stupid mistake… Never ever do that.. Let the company go down the drain but never ever put what you have a risk for the business.
2. Selecting a team:
The business required both technical and business. On the technical side there was an Israeli company with advance technology in the field of smart card technology. A business associate of mine introduced me to the company and I negotiated an agreement with them to provide the technology (software) and the hardware. The company sent one of their top software developer to the Washington area where I made several appointments for him with local dealership to understand the automatable dealership software and who they electronically file all the service and maintenance records. Upon his return they filed a proposal of 9 months to develop and test the software. Well, they worked at but it seems it was not their priority since they were gearing to go public and my project was one way for them to present a large business opportunity to go the market and raise money.
As it happened, they did raise the needed capital using my business idea and contract with potential investors.
However when it came to the software they did a very shitty job of it and they were late, quite late… and when their team arrived in the DC area to test the software, none of what they did work and I had to hire a professor from University of Maryland to help fix what they could not fix. Lacking a technical team I was at their mercy and the delay and false start lost me a big opportunity to go public (more on this).
Finally we fixed the software but we lost precious time and confidence with dealership and industry, but never the less we proceeded any way.
To help develop the business and marketing, I hired a former VP of a Premier top of the line German car manufacturer who also happens to be the former president of a smaller European car manufacturer. To be the be the president of the company… he was also a head of a major though smaller European car manufacturer.
I also hired a VP of an extended warranty company to be the VP in charge of marketing.
Meanwhile I continued to work overseas and trying to earn income and enough money to pay there top of the line and expensive executives.
As it happened both were losers and my advice to any one… never ever hires a have been … these top executive can only go down and never go up. Hire a hungry young MBA willing to make something of himself and succeed and never higher guys who can only go down and who are used to big expense account, dinners, wines etc… and charge the small struggling start up company.
Also never ever hire anyone with a salary that is not tied up to performance… Once they have a contract they simply don’t give a shit about happens as long as they get their fat check every month.
3. Legal Team:
Ah well, lawyers are no better than these car guys, specially when one of them is using your business to score a point for partnership, and keep dragging the business and legal process so that he can keep billing until he secure his partnership. I lost a big big opportunity to go public with the idea, since it was a hot idea when .com companies were raising millions on names only without a product. And I had a product and had a patent to support it.
4. Conclusion:
· Never put your house or saving at risk for a business… no matter what, and if necessary let the company and business go down the drain rather than risk your personal financial security and lose your business too.
· Never ever higher a technical or business partner who will use your business relations to go to the market or secure a big contract using your business as bait to catch the big fish and you lose every thing.
· Always make sure that you put a substantial sum as penalty for poor of failing product… let the SOB pay for their failing and make sure that their failure is not all charge to you.
· Never ever hire a have been, top executives who are used to big bucks and perks to head a start up company because they will milk you along the way as they buy themselves time to get a better job or secure retirement. A had been can only go down never go up… and the bigger they are the bigger they fail because they do not have the time or the smart to learn something new.
· Always make sure you hire a young energetic smart young graduate who will work hard to succeed and who will also make you succeed.
· Always tie up compensation to both salary and performance and never salary alone… it gives no one any incentive to succeed since they are guaranteed the money… They will work hard when they know they have to perform and deliver to the bank account.
· As for lawyers, even the best lawyers are out for themselves… think 100 times before you hire a lawyer who will help you with your business.
I lost over $2.5 millions on this project and I continue to be angry with myself, have not reached peace with my self having put my family and their financial security at risk and I put my self at great financial risk… I did not mind if I lost the business because of the economy or bad product, but to lose it because off these so-called top of the line executive is a crime…
Sami Jamil Jadallah
Fairfax, VA
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