Thought Sparks I Rita Mcgrath
HOW CAN WE HELP?
WHEN YOUR CUSTOMERS’ CASH DRIES UP…
With all the turmoil surrounding the collapse of Silicon Valley Bank, the pullback of Venture Capital money and other nail-biting financial moments, how should you deal with customers who suddenly don’t have the money to pay their bills? The very wise Ron Boire offers a perspective.
WISDOM FROM HARD EARNED EXPERIENCE: THERE’S NEVER A PROBLEM
UNTIL YOU HAVE A PROBLEM
My partner at Valize, Ron Boire, has a deep well of experience from years spent at companies large and small, many of them iconic. In this moment, when an entire generation of young business leaders has never experienced a bank run or seen formidable institutions abruptly shut down by financial regulators, I thought a story he tells of advice he gave to a young entrepreneur was profound. You don’t learn this stuff in books!
Read the Story!
BUT, WELL, THERE’S A PROBLEM NOW.
Our entrepreneur felt his firm would be relatively protected from the aftermath of the collapse of Silicon Valley Bank. Their money was safely deposited in a major money-center bank. Their clients had always paid regularly, and they had a good solid pipeline of new business lined up. They had a few invoices out, so their only concern was whether they were going to get paid.
Continue the Story!
BUT, WELL, THERE’S A PROBLEM NOW. pt.2
Ron said to him, with his characteristic candor, “Well, I don’t think you have to worry that you ’ re not going to get paid because you ’ re not going to get paid. Moreover, don’t worry, because you are literally the last person they’re going to pay. When money gets tight, who’s on the list of who is going to get paid? I’m going to pay my employees. I’m going to pay my taxes. I might pay the rent, but I’m probably not even going to do that. I’m going to pay the electric bill light bill, and maybe the phone bill. That’s it. And once you ’ re past that list, you stop paying people. And you hunker down.”
the Story!
Continue
SO BE HUMAN.
Well, this doesn’t sound too cheerful, does it?
Even in this tough situation, Ron offers a great perspective. As he explained to me, “My advice in a situation like this is to be human, to be their friend. And be proactive, call them up and say, Hey, listen, I know you ' re in a tough spot. I know you can't pay me. Don't worry about it. When you get the money, pay me. "
A STORY FROM 9/11 AND SONY
As they chatted, Ron continued, “let me tell you a story. When 911 happened, I was at Sony, and I was the President of the Sales organization at that time. We had a very large customer on Wall Street. It was called J&R Music, and J&R sold a huge amount of electronics which they bought from us to people who worked in the World Trade Center area and Wall Street. The company was run by a woman named Michelle Friedman, who was powerful, and very accomplished. I had a relationship with her because I used to run the New York sales office so knew her, but she was not always the easiest person to deal with. But she dealt with me, and we got along because we were both really straight shooters.
Read the Story!
A STORY FROM 9/11 AND SONY pt.2
“After the Twin Towers came down, her customers vanished and even worse, her premises was taken over by the New York City Fire Department. They threw out all the inventory to clear the floor space for what they thought would be hundreds of wounded to be triaged. I knew she would never be able to pay our bills. I called her and said not to worry about it – to look after her people and her business as best she could and that we would be there for her. Years later, she righted the business, paid us in full and became one of our best customers.”
Read the Story!
A STORY I THOUGHT SHOULD BE SHARED
Our Valize team is spending this week enjoying being all together in person (a rare pleasure!). When Ron shared this story with us, I thought it was worth sharing with all of you.
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