If at first you don’t succeed; call it version 1.0
Andrew Mercer, Footdown Chairman, recalls how the unforseen demise of his first major company led to the creation of Footdown and Footdown's F1.1 Organisational Intelligfence Platform.
One fine Summers day in California, I sat in the offices of one of the leading venture capitalists in Silicon Valley, waiting the arrival of the two key investors in One Meaning. They were running late, but I was assured that they would be here shortly for this impromptu meeting…
My mind drifted off, looking out over Sand Hill Road from where much of the world’s venture capital is controlled. I sat amongst the trophies of now famous initial public offerings. Those little glass slabs that denoted the incredible sums that had been paid for the shares of companies that the venture capitalists had nurtured, or perhaps, more accurately, gambled on successfully.
It was remarkable how far we had come. We began corporate life in a tiny office above a McDonald’s in Maidenhead, UK, but we now resided in stylish headquarters in Palo Alto in Silicon Valley. Just 18 months earlier we had raised a substantial amount of venture capital, which enabled our move to California. Sun Microsystems had just paid $250,000 for a single server licence of our new product, we had a global distribution agreement with Oracle and Microsoft was courting us for a significant joint development agreement.
By most people’s standards we were doing well, but I still felt that I was a few pages behind where I needed to be in the mythical entrepreneurship manual – “How to keep your shirt when the venture capitalists get involved.” The growth of the company and demands on my leadership meant that events always seemed to be driving my destiny.
Shaken from my thoughts by Tom and Andy’s entry into the room, and our exchange of pleasantries, I had little time to prepare myself for what they had to say next: ”We’ve decided that if the company is to raise an adequate second funding round it needs a new CEO…...you can stay on as chairman if you like”.
Devastated doesn’t begin to describe the range of emotions that flooded my brain. This was the first time in my life that I had publicly failed. I started to think about all that we had achieved and what specific events had lead to my demise, but I had no context within which to pinpoint the specific errors. Was it that there were particular aspects of the business that were not functioning correctly,or had everything just taken too long? It was clear that they had lost confidence in the leadership and vision of me, the founder, yet 18 months ago they had entrusted me with such large sums of money…so what went wrong?
Six weeks later
With our temporary CEO conspicuous by his absence, we were summoned to a windowless room at our corporate lawyer’s office to be told the VCs were shutting us down with immediate effect. Of course our situation was not unusual. For every ten companies that venture capitalists invest in, on average only one is expected to make the windfall profits we all associate with venture capital. I knew that when I started, but as Dr. Robert Jarvik, the American inventor, once said: “Entrepreneurs are visionaries with a poorly developed sense of fear and no concept of the odds against them.”
Overwhelmed with the thought that I had become a failure, I tried desperately to figure out what to do next. Our lead VC quickly established the tone of the meeting when he asked the two insolvency experts involved – one of whom was on the phone from England – how much it was going to cost to shut the company down. The money men hurled figures around; the UK insolvency expert got bogged down in the minutiae of some trivial insolvency point and hogged the phone. Our finance director, also on the phone from England, saw himself being struck off for allowing the company to continue trading, when we couldn’t pay our debts. I drifted off temporarily, pondering how I was going to move my family and all our belongings back to England, if the August salaries weren’t paid. We had lived well in California and hadn’t thought to prepare for this possibility.
Listening with increasing despair as they prepared to liquidate my company, I suddenly thought – I wonder if there’s another way? I asked Tom and Andy if they would risk the money it would cost to close the company down mid month, on the chance that I could find a buyer in the next two weeks? Tom and Andy, who by now trusted me about as much as they would Walter Mitty, looked shocked and appalled at this suggestion. They didn’t want to prolong the agony of the company’s demise any longer than was absolutely necessary, and really didn’t want to believe there was any hope of saving the company. But our lawyer, Don, took control of the meeting at this point and gave me the opportunity to explain how I might do this. Don, a quiet self effacing man, was one of the big power brokers on Sand Hill Road (What’s that? Can we say Silicon Valley instread?) and even VCs bent on destruction generally listened to him.
To everyone’s amazement, including Tom and Andy’s, they agreed to pay the August salaries for all employees and settle any urgent debts to the taxation authorities; but not a penny more. This gave me a last chance.
I had two weeks.
On the 14th October 1998, somewhat more than two weeks later, Oracle Corporation announced the acquisition of One Meaning Inc of Palo Alto.
Today, the One Meaning technology and many of the people who developed and supported it, continue to play an important part in Oracle’s global success. I feel good that my faith in the value of my business was vindicated but still sad that I didn’t have the opportunity to steer the business that I conceived, all the way through to maturity.
After returning from California in 2000, I started Footdown to help other leaders avoid the mistakes that I had made with One Meaning. As you read this note, you will have realised that nearly 15 years later Footdown is still in existence and combines my software heritage with additional life lessons learned from the front line of business development.
As Footdown built its reputation and client base I was able to pursue an interest in renewable energy. With a smart team around me, 2OC ( whose goal was reversing CO2) signed a £400m deal with National Grid plc, the bluest of blue chips, to build up to 8 renewable power plants on sites across the UK. The joint venture was secured on the back of NG’s fat balance sheet and the government’s Renewables Obligation, which guaranteed prices for renewable power. What could possibly go wrong this time?
Legislation changed. National Grid was forced to pull out. It was One Meaning all over again. And all this happened just as the financial crisis of 2008 came crashing around us. Somehow, we managed to acquire the JV and even as we closed down over £100m worth of signed contracts, we started building again, - on our own. The City just wasn’t lending. But they liked our idea and this time the money men came good. We raised just under £100m in debt and equity to build a world first renewable power station in the heart of London. It powers Europe’s biggest sewage works and the country’s only desalination plant.
Building on that success, the same team is now looking to revolutionise the powering and cooling of data centres. Carbon-12 will use Energy from Waste plants (who burn rubbish left over after recycling) to power and cool data centres renewably. Data Centres are overtaking aviation as CO2 emitters and their power demands threaten an already strained grid capacity. The growth of the Cloud means data centre expansion is exponential, so I feel proud to be enabling this renewably.
And within one of those data centres, the meta data of iFootdown will help business leaders like me, who have often struggled to read the runes in their market.
Footdown has quietly been building a piece of software with the returning One Meaning team of John Potter CTO and Alan Gater Head of product Development with an incredible development team headed by Ian Percival.
It shouldn’t surprise the software experts that the application should attempt to be an encapsulation of my organisational/entrepreneurial experience.
It is a meta driven tool and has taken over 7 years to develop.
Maybe we will not sell it to Oracle this time!