Jacques Mattheij

Technology, Coding and Business

when crisis hits

In the lifetime of any business there will be at least one, and possibly several crises that are ‘life threatening’. In other words, if you deal with them in the wrong way, your business may cease to exist.

During the decade+ that I’ve been running ww.com, we’ve had several such crisis situations, and even though each of those probably aged me a year or so in a few weeks’ time, we somehow managed to stay alive through all of them. The first rule of dealing with a crisis seems to be the most obvious piece of advice anybody could ever give you, but that somehow always is forgotten the moment a crisis hits: don’t panic.

Let me give you a brief tour of the most horrific moments that we’ve had to live through. Hopefully, if and when your own company is hit by a bad one, you’ll find some solace in that we got through and that if you keep your head cool, you probably will too.

The first crisis that I can clearly identify was when the advertising market imploded. There was almost no warning whatsoever, but 247 (big advertising broker at the height of the .com boom) being late with one payment tipped me off that there was trouble brewing. For a moment I thought ‘nah, just a glitch’ but then my natural paranoia got the better of me and I wondered ‘what if’. What if they go under? How will we survive? We had 25 people on the payroll at that moment and even though we were going very well, we could not survive without a solid source of income for very long. In a few weeks’ time we threw together the ‘elite’ package and just when 247 went bust, we rolled out the premium offering, and signed up a few thousand people. Very close call! Competitors were going bust left-right and center, but we managed to survive (barely) with what you’d call a ‘freemium’ model today. This instantly curbed our growth, we went from double digits monthly growth to being almost steady overnight.

The second crisis was pretty nasty too. This time, one of our minor shareholders made off with the source code of all the software we wrote and sold it to a German corporation. They had access to the code because of a joint venture arrangement, but obviously, that did not make it legal for them to re-sell the code as though they owned it. Within 24 hours we filed suit in court in Berlin, an injunction was placed on the use of the code by the recipient, and a lengthy court battle ensued. Which we eventually won (4” of paper further, as lawsuits come, this was a pretty mild one).

Finally, our IPSP (IBill) went bust, taking a few hundred thousand dollars of our money with them. Through a bunch of connections we traced our money to a bank in Israel that gave it up under considerable pressure. Of course that didn’t help us to continue processing, but coincidence would have it that one of our former employees had started an IPSP, and he signed us up overnight, and the money continued to flow.

Each and every one of those could have killed us easily. The pattern here is that when the crisis hit, for the first half hour or so I was literally in a state of panic. I really believed that this was it and we weren’t going to make it. Then, a bit calmer I would take a walk, to be away from the scene of the wreckage for a bit, a beach walk or some other place that has nothing to do with work. Think things over for a while, and very methodically list all the alternatives, or even components of alternatives, contacts that I’ve got, knowledge that might apply. And within an hour or two, what seemed like a ‘certain end’ would usually morph in to ‘maybe’, and by the end of the day there would be a battle plan. Maybe we’d die, but we’d die fighting.

And as the battle progressed the mood would change, maybe we’d die but we’d postpone it as long as possible. Maybe we’d not even die. Maybe we’d come out stronger or better than we went in! And invariably that’s what happened. I guess giving up is not really in my nature.

A friend of mine that runs a start-up was hit by a triple whammy a few months ago. It took a lot of IRC time to get him to calm down, to become methodical and to start seeing clearly again, that there are options, even if it may seem that there are none. Whatever the situation, the only thing that can really kill your company, is you. As long as you keep an open mind, as long as you’re willing to throw yourself at the problem with full dedication, rely on your network and your buddies to have your back, listen to good advice (and recognize bad advice) your first crisis need not be your last. In the end within a few days the situation was more or less under control.

Of course, it’s it always possible that a crisis is so overwhelmingly large that you end up losing anyway. Giving up immediately is one way of never finding out, crises are unavoidable if you plan on running a business for an extended period and you have to be prepared to deal with them head on so one day you can tell your friends a nice story around the campfire.

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