Lesson From The Edge

The photo you see is of a laptop computer. It’s almost 10 years old, it’s very heavy and it doesn’t work at all any more. Yet it holds a prominent position on a shelf in my office. Why? So that it can be a constant reminder of how the drive to be successful can sometimes make you abandon common sense and logic and bring your company close to ruin. Here’s how I learned that lesson.
In 1999 Thinsolutions had revenues of less than $500,000 and we were at a pivotal year in our company’s direction. We were investing heavily in the development of our hosted/cloud offering and we were trying to ramp up revenues in all facets of our business. Much like today, we were focused on the services that we provide to clients–the sale of hardware and software was ancillary but something that was appreciated by our clients as it saved them time and effort. 
So what happened? What happened is we (I) took our eye off the ball. As part of the effort to ramp up sales, we hired a new salesperson. Let’s leave this salesperson nameless so as not to damage anyone’s ego. Actually let’s call the salesperson WSE (pronounced Woo-see) for Worst Salesperson Ever. Mr. WSE was not green; in fact, he came from a reputable competitor in town and was ostensibly successful and well-connected. Mr. WSE had worked for Thinsolutions for several months and had not produced one sale and, for that matter, very few proposals. The pressure to make a sale was certainly mounting.
I can remember like yesterday coming back from vacation and learning that WSE had landed a big sale. Apparently he had a major airline (one with a hub in Cleveland) call and asked us to quote some expensive laptops. Again, this was 1999 and a high end Compaq Armada laptop at the time ran a cool $3,500. We had already sold a dozen or so to the airline at this point. I asked WSE if he had checked out the references, etc for the account and he held up a list of references that he was faxed and said, “Uh-huh, all checked out.” Being that WSE was from a company that focused a lot more on hardware/software sales, I deferred to his experience in this area and we continued to sell laptops and actually had them shipped (about 4 or 5 at a time) to various branch locations of the airline. Deferring to WSE’s experience ended up being a HUGE mistake.
A couple weeks after the last of the laptops shipped; we got a call from the FBI. Getting calls or visits from the FBI in your personal or business life is generally not going to be a positive thing. It was definitely depressing when the FBI advised that we and several other IT Service companies had been duped by a scam artist. The scammer/thief posed as a legit purchaser from the airline and had associates positioned at all of the 5 or so addresses to which the computers were shipped. More bad news followed: our insurance did not cover uncollectible accounts receivables which was how the laptops were defined. While this makes sense (how is insurance supposed to cover every deadbeat customer that a business doesn’t fully vet?) it certainly did not help to improve the mood in the office at the time.
Ten plus years later, I can actually almost smile about all of this but at the time it was tragic.. The stolen laptops were showing up all over the country – sometimes in the back seats of drug dealers cars. A few of the laptops were returned, but by the time they made it through the legal channels, they were not worth much. Some of the members of the scam gang were actually apprehended and spent time in a federal prison in Texas. For years afterward we would occasionally receive a check from the prison for a couple of dollars or less—money taken from the prison earnings of the perpetrators. We never cashed the checks.
The lessons learned in this story are pretty obvious. Stick to the business that you understand and you remove a lot of the risk involved. More importantly, trust your employees after they have proven they are trustworthy. Any one of us could have and should have picked up the phone ourselves to verify the customer was legitimate. With a deal this big – we (I) should have.
Oh and in case you were in any doubt, Mr. WSE and Thinsolutions parted company shortly after the first conversation with our friends at the FBI.
I used that laptop every useful day that it had, for about 7 years until it stopped powering up. Now my $92,000 laptop sits on a shelf in my office. It rests among the rewards and accolades we have earned in the years since, as a constant reminder of the age-old saying: “if it sounds too good to be true, it probably is.”

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One Response to Lesson From The Edge

  1. Mom Fischer says:

    WOW!!! What a lesson learned.

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