I don’t even really start at the Bronze Age.

If the truth be told, I actually start from there and go back to the development of homo sapiens wandering out of West Africa as as they emerged from the multiple failed hominids that didn’t quite make it.

It’s a strange hobby, I know, but apparently it appears to really be my hobby . . .  after all.

I didn’t really think about it as a hobby until one day when I was pontificating endlessly driving with my wife, Janet, and our three sweethearts.  After a ten minute diatribe on the development of intelligence in hominids, she turned to me and said, literally after eighteen years of marriage, “Wow, you really do need a hobby, don’t you?”

Since I really don’t know the stats on the most recent football scores, even though I still follow Notre Dame regardless of its inability to cleanly win a game, or what teams played in the World Series, or even what season of sports it actually is, I realized in that conversastion that early anthropological development actually was my hobby . . . as lame as that must sound.

In any event, and back to the subject of this blog, I happened to be reviewing an ancient map of the Aegean Sea for no particular reason except to simply connect the dots between modern cities and how they evolved some 3000 years ago.

Something occurred to me in the process.

If you take a look at some of the most historical spots in the development of human history, they tend to be strategically positioned in incredible ways, the implications of which become obvious almost immediately.

• Babylon sat at the nexus between the Tigris and Euphrates Rivers in the Mesopotamian Peninsula, labeled today the “fertile crescent” in what was then Babylon (now Iraq), bordering Persia (now Iran).
• Alexandria, home to Egyptian civilization and allegedly to the largest library in the ancient world, surrounded the shores of the Nile River and the Mediterranean Sea.
• For Carthage, in the promontory of North Africa’s Tunis, no boat would dare traverse the distance between it and Sicily without paying an ancient Seafarer’s Toll, what would clearly be considered today “protection money.”
• Rome, centrally located on the Mediterranean and an equal distance between North and South Italy — well, not much more needs to be said about Rome.
• Athens sat at the base of the Greek peninsula with full access to the Mediterranean and the Aegean Seas.
• Troy guarded the entry point from the Aegean Sea to the hellspont with its access to the Sea of Marmara and ultimately through to the Black Sea.
• Byzantium’s “Constantinople” a/k/a Istanbul guarded the Black Sea itself and became the gatekeeper from the Sea of Marmara to the Black Sea and ultimately . . . to the Eastern world.

I could go on, but I’m sure you get the point.

It’s not as if I didn’t study ancient history in school, as I’m sure you all did. It’s just that it hadn’t been quite so clear to me until I saw the ancient map through my eyes today. Every one of the metropolitan cities I just described had life cycles not of ten years, fifty years, or even of one hundred years. The shortest of all of them was centuries more than that.

As I thought about the map of Antiquities, I considered historical perspective interesting, but it hadn’t occurred to me that there was any application to modern business theory. As I thought about it some more, however, the obvious became more obvious.

Were you to take a look at the region around Babylon, Alexandria, Carthage, Rome, Athens, Troy, or Byzantium, you would see a massive list of cities, townships and regions whose names none of us know. And the reason is very simple: they don’t exist anymore. Most have perished, and those that exist are “also rans.”

On the other hand, when you track the empires built around the cities I just mentioned, the shortest length of time in which that particular city influenced the world was 600 years – that’s the least amount of time – and the largest has survived to the present time, of course, including Istanbul, Rome and Athens.  And that’s just in the region, although the same holds true on a World Map of Antiquities for other regions of the world.

That simple observation, whether it is profound or obvious or, frankly, just plain wrong, flies in the face of anything that I’ve ever said about business.

In my first published book, Finding Your Niche, I wrote that a mediocre business concept, effectively executed, trumps a brilliant concept poorly executed, every time. As I now take a look at a map of Antiquities, I have to question that fundamental assumption, which by the way, I now also have to question based upon my personal experiences and observations over the past two years.

Each of the cities I just described was tumultuous. They had ups and downs. They were captured. They regained their independence. They got captured again. They regained their independence again. They were devastated by internal corruption.  They were destroyed by natural events.  They were raised to the ground . . . more than once  And so forth and so on. But, at the end of the day, they all survived and they stayed relevant and meaningful.

On the other hand, when each of the other cities within their sphere of influence got hit by any of the above, they were gone. Simply gone. They became nothing more interesting than artifacts from digs orchestrated by modern archeologists. The reason, it appears to me, is that while they might have been effectively executed at one point in time, they simply were not brilliantly positioned to withstand the test of time.

That same rule applies to business today.

There is no question that there are businesses that sit in a strategic position and, because of that, will continue to endure, no matter what. Is General Electric one of those? Probably.

Is AT&T one of those? I suspect so.

Microsoft? Yes.

Apple? Probably.

But when we take a look at AOL, or Yahoo, or Blackberry (RIM), or Sears, or Netflix, or candidly the most recent of our IPO’s — Groupon — which went public two weeks ago, or hundreds of others, my thought is that it is unlikely.  They might surf trends, or be effectively executed . . . but brilliantly positioned?  I doubt it.

Strategic positioning doesn’t span years, or decades. It spans centuries, if not millennia. While for profit companies like the East India Trading Corporation or Wells Fargo might not have survived a millennium based on their current positions, they clearly survived centuries based on their strategic positioning.

I remain committed to tactical effectiveness and consistent, if not compelling, execution; but, in reviewing these Old Maps, I have a new found respect for the turf a company has homesteaded for itself: the turf which we call strategic positioning.

I had read an article about a year ago. It was actually about myself and the seminar business I had built.

It talked about the fact that I had blamed the demise of my seminar business on the Great Recession.

I had certainly made that statement, but I had not implied, directly or by inference, that the Great Recession was the only reason the seminar business died. There were several other reasons that had nothing at all to do with the circumstances of the Great Recession or the circumstances surrounding the capital structure of the company, which also contributed.

In fact, if I were to rate them all, I would say that the capital structure of the company was third (the subject of prior blogs); the Great Recession was second, and, if the truth be told, the primary fundamental reason for its demise was the disruptive nature of technology.

Yes, the disruptive nature of technology. 

I know that many of you have heard that technology is disruptive.  However, I suspect very few of us have probably sustained or absorbed the direct and immediate impact that a disruptive technology had on our individual businesses. It is akin to the disruptive result of automobiles on the sale of buggy whips ninety (90) years ago, or of cell phones on pay phones, or of DVD’s on VHS’s, or of streaming video on DVD’s, and so forth and so on.

Good grief.  The pages of the Wall Street Journal are blood stained reporting on businesses and industries that have and are perishing in the midst of the technology rapture.

I just didn’t realize mine would be one of them.

I remember attending a convention of the Factoring industry some fifteen (15) years ago and commenting from the podium that the internet would fundamentally change their businesses. Truthfully, I really didn’t know how that would occur. I just knew that it was a powerful instrument and that it had to result in some influence on the way they operated their businesses. Of course, in fact, it did, even though I was met with skepticism at the time, and didn’t honestly know what I was talking about anyway.

All of us know how price comparisons are occurring. We know that the internet is incredibly efficient at delivering information, whether it’s on branded goods in our favorite grocery store, or on mortgage rates or insurance, or on footwear delivered overnight, and so forth and so on.

Similarly, I knew that the internet, over the next fifteen (15) years, would have an effect on our seminar business.

But what I didn’t know is in what ways. In the beginning, we saw some effect, but not terribly substantial and certainly not producing any significant result. As a matter of fact, the best years we ever had were from 2003 to 2007, when everyone in America was printing money in their businesses and the internet was a distant disrupter.

But, with each passing year, I saw more and more significance in the influence the internet was having in lots of different ways. However, it wasn’t so much the internet as it was the development of a derivative product that I hadn’t honestly thought about in the early 2000′s:  the evolution of search.

Let me explain.

Our seminars sold information. We did not sell tangible products; we sold information.

Information is very valuable if it is proprietary. Indeed, it continued to remain valuable even after the development of the internet because the information, although available, was buried in the gigabytes of information which may or may not have been accessible and certainly not in any recognizable or communicable format.  And, unfortunately, our information did not have the imprimatur of earning participants a diploma or a university degree.

Therefore, while the internet might have been somewhat disruptive to our business, it was not substantially harmful since it just simply proved that, in a sea of information, the most efficient way to obtain relevant information was to attend a proprietary seminar where it would be created, packaged and delivered cogently.

On the other hand, what happened in the later years of the seminar business was the development of search engine technology. Each of the search engines became more and more powerful and acute in identifying information that was relevant to the subject at hand. Therefore, by 2007, if you wanted to search for information on conducting a short sale, or an options straddle, or a triple net lease transaction, you could do it with a few strokes of your fingers and you would have more information than you could digest in a month.

It had the following attributes:

• Everything was free.
• It was comprehensive.
• Some information had agendas, but much information did not.
• At the end of the day, while some information was worthless, a great deal of the information was valuable.
• You could do it from the privacy of your own home without anybody being involved. 

And, by the way, did I say that it was free?

The Internet was disruptive, for sure.

But search technology was even more disruptive because it enabled a consumer to pinpoint information which was relevant to them, pay nothing, and digest the information in a useful way.

Fast forward one year.

My wife, Janet and I were getting ready for a Halloween Party. She wanted to do a spider cake. She went online, stroked the appropriate terms, and ended up with a recipe, not only in print, but also with a video narrator. She had her recipe in less than ten (10) minutes and, guess what . . . it was absolutely free. . .and tasted great!

Welcome to an era in which information is valuable, searchable . . . and free!

At the end of the day, the internet, with its culture of free exchange, free information, free communication, combined with a communality and culture of free sharing, made the business of selling information virtually impossible.

The seminars that made us the 800 lb. guerilla were “How to” seminars. They were legitimate and real. They were valuable, constructive and useful. However, they required a business model to make them work. The internet, combined with search and consolidated with the joint culture, ultimately killed that business model, at least in any format I was prepared to accept.

That does not mean that there are not other information-driven business models that work or may work.  It does mean, however, that mine no longer did. 

Seminars were not dead on arrival. But they ultimately became dead on delivery.

Consider my seminar business another case study in the annals of Darwinian economics relevant to each of us as we play out future scenarios for the businesses each of us runs!

So, it occurred to me, for today’s blog, that I switch to a meat and potatoes topic and talk just a bit on the functional components of an operating business.

A business, large or small, only has four major parts to it. If it’s a small business, those parts can be combined into one person. If it’s a large business, those parts can be subdivided, sub-subdivided, and sub-sub-subdivided into multiple parts. However, at the end of the day, there are still only four major parts to any business.

A business consists of: marketing, sales, production, and operations.

Every one of those is critical to a business operating successfully, and therefore has to be done by somebody even if, with a sole owner, one-person shop, it’s the same person.

A quick review:

• Marketing is the process whereby you identify and communicate to a prospect database, as qualified and targeted as you possibly can.
• Sales is the process of converting those prospects into customers or clients of your business with an eye towards an on-going relationship, rather than the transactional sale.
• Production is the process of developing, delivering and fulfilling the marketing expectations of the product or service you offer.
• Operations is the process of supporting the marketing, sales and production processes, with such things as facilities, equipment, legal, accounting, and so forth.

In a small business, one or just a few people tend to address all functions. And that is perfectly okay. However, when they do, they need to realize that all four of those functions need to be addressed. From my experience, for example, the owner or owners of the business tend to be strongest in a particular function. I have met people who are incredibly strong in marketing and sales, but who can’t fulfill to save their lives. I’ve also met an owner or owners who are exceptional at designing and delivering a product, but can’t market or sell. In truth, each one of those functions is a complete function unto itself and has to be handled as such.

In a larger organization, on the other hand, the challenge is exactly the opposite. Each of those functions is an equal function. However, the corporate culture develops through a process of bifurcation so that each one of those continues to subdivide until the corporate hierarchy becomes more important than the underlying four functions. It’s at that point that the organization is functioning for its own survival, not to meet the needs of the customers or the marketplace.

I’ll return to the more extended essay blogs in the next few weeks (for better or worse).  But, in the meantime, this is a short blog with a simple and defined message.  Each of those four functions should have one or more individuals driving the results. An organization simply cannot survive or grow if all four functions are not handled or are not handled properly.

I happen to be one of those cross-over Republicans who voted for you in 2008 because I firmly believed that then President Bush had made a mockery of our international relations, had badly handled the economy, and had not brought any substantial intellectual wherewithal to his job.  I did not see your opponent having a clear enough vision of what needed to change.

On the other hand, I saw in you a forceful personality, an acute mind, and a nuanced thinker, with a balanced respect for America’s position in the world and a bold willingness to tackle our economic challenges.

I also saw a politician who had very little by way of a record, what was probably the most liberal voting agenda in the Senate–at least for those times that you actually voted–and a bias towards believing that government was the solution to all problems.

My friends pointed out those short-comings (I even remember distinctly one particular late night dinner discussion on the topic).  And, while I saw them, I simply could not get myself to believe that with your sharp intelligence and crisp analysis, you would not grow and learn while you were in office.

Unfortunately, I have not seen that.

What I have seen, however, isn’t pretty.  I have seen a president who:

• Confused the aspirations the American people had when they bought into the change you promised with a de facto license to grow the power of the federal government more than any predecessor you have had since Franklin Delano Roosevelt;
• Betrayed the leadership position we gave you by delegating that authority to your subordinates in the Senate and the Congress, who had only been elected by their states or districts, not by the nation as a whole, and who drove partisan agendas, not national ones;
• Professed a love for the wisdom of Abraham Lincoln while pursuing an agenda that has torn America apart, not sought to bring it together;
• Pursued economic policies which have increased both our debt and our national deficit against our GDP/GNP to staggering percentages akin to developing nations;
• Advanced an anti-business rhetoric that has made business paranoid and uncertain of your motives;
• Continuously apologized to the world for what America has done or how it has behaved;
• Misunderstood that communication and effective leadership are too different things; 
• Continued to remain so aloof from the American people that you began reminding us of effete John Kerry, not the self-assured, approachable and well-spoken campaigner we saw in the election;
• And who, when it’s all said and done, has simply been so arrogant, you believe you’re the change we need, not the change in the right direction we all thought you promised.

I could go on.  And it’s obviously less about policies and more about your understanding of your role.  Obviously, the die is cast for this mid-term election and the losses your party will suffer.  So let’s leave that part behind us and let me respectfully offer some suggestions as to what your next two years need to look like if you intend to be anything but a one term self-absorbed act.

• Get out of  Washington and truly travel the country.  By that, I don’t mean those choreographed town hall and factory Kodak moments your handlers orchestrate.  I mean to truly travel the country, Gandhi style, or, if you will, Steinbeck style. . . with your dog.
• Ditch the teleprompters.  For heaven’s sake, do you really need teleprompters after two years in office for anything other than the State of the Union?  A teleprompter to you is what a mirror was to John Edwards:  a source of vanity, not gravity.
• Lead as President of the entire country–of all of us–not as a puppet of your party, or worse, a wing of your party.
• Reduce the debt and deficit as a percentage of the GDP/GNP every single year with a plan in place to do the same until we are fully balanced and self-supporting.
• Use America’s position in the world to lead change, not apologize for it.  You don’t need to do that as a GW Bush cattle rustler, but you can’t lead change without sticks combined with carrots if you intend on being respected.
• Play nice with the Republicans as you revisit health care legislation, not to abandon it, but to modify it in a way which addresses Republicans’ economic concerns.
• And finally, above all else,listen to your kitchen cabinet of America’s CEOs to see what policies you should promulgate so that business, not government, can finally start creating jobs again.  The entire world knows that until our employment starts meaningfully improving, nothing else will.  That is, after all, your #1 priority.

That’s enough for now, Mr. President.  It’s self-evident that Americans aren’t just mad in this election; as Peggy Noonan puts it, they’re livid.  And with just cause.  Focus on the items above and you might not only be able to deliver on the changes you promised in 2008, but you may even have some Republicans cheering for you again in 2012.  Godspeed!

In any event, the communications tended to suggest daily P & L statements were overkill and why (for heaven’s sake), as an entrepreneur, do I find that much necessity to be as granular and introspective as to daily performance.

I thought it was an appropriate question and I want to simply comment on it as a follow-up.

As an entrepreneur, at the end of the day, as odd as this may sound, I have never been particularly focused on net profit or more particularly “making money.” Frankly, I consider that to be one of my personal primary weaknesses because my focus has always been on creating a business enterprise and taking a look at what it looks like after it has been built.  I have called that in the past operating in the rear view mirror.

The entrepreneurial process for me has always been more sculptural than it is financial. Hence, it is very easy to become immersed in the art of entrepreneurism when you are not incessantly focused on financial results.

The brilliance of seeing, on a day by day basis, the financial outcome of your endeavors, is that it keeps up front, direct and very personal, whether what you are accomplishing is making money or not. As obvious as I’m sure that is to so many people, it has never been obvious to me, even though I’ve made and lost hundreds of millions over the years.

The first reason why daily P&Ls make sense is because it keeps upfront what the objective of the entire enterprise is – to make money. Absent that granular accountability, it becomes extremely easy to get wrapped up in the artistic process and lose sight of the primary objective.

Secondly, it provides the accountability that fosters survivability. As I continue to ponder the Goldman Sachs testimony and the position that they will no doubt argue in the SEC’s civil action, as well as any other derivative class actions, what is a cogent argument is that they did what they needed to do in order to survive. Had they not hedged when they did, had they not hedged aggressively, and had they not, in their words, turned lemons into lemonade, they might very well have been victims of the Great Recession, not profitable survivors of it. Goldman’s CEO, Lloyd Blankfein, as well as others, were very clear that their first and foremost objective, mandated by their investors, stockholders, clients and regulators, was to survive the seismic shifts in the economy.

Survival is the second reason.

And, finally, third, is the tangible fingerprint that a daily P&L statement provides as to the operational nuances of the business. There is nothing more revealing than a P&L statement along with its folders and subfolders in understanding the cost structure of revenue production in a business. The greatest calamity is when the information you review is dated by 6 weeks, is smoothed out over moving averages, or is otherwise not actionable in real ways.

Far more effective is understanding the numbers on a day by day basis where the opportunity to modify is upfront and in your face. Provided the information is accurate, and provided the information reflects operational contingencies, the opportunity to respond quickly, once decisions have been made, is paramount. It is little wonder that, after reviewing the numbers on a daily basis, the senior management team at Goldman saw the need to shift their strategic position in the housing market in a way which reflected both aggressive hedging in the short term and aggressive shorting in the long term that turned what could have been a financial debacle into an enormous profit in less than two months.

Is it also any wonder that they are making record profits, regardless of whether their stock is being tossed about by the crashing winds of regulatory libido?

So, the takeaways?

Real simple: daily P&L statements for three reasons:

• The profit motive up front and center
• Accountability and survivability
• Visibility and transparency

Good lessons from a painful process!

The European Union (EU), sharing a common currency (Euro), in conjunction with other international funding sources like the International Monetary Fund (IMF), will be required to pony up a trillion dollars of what is fundamentally European TARP dollars to save, at least initially, the government of Greece but, in the long run, save the banking backbone of Greece as well as of other European nations. 

That is the sound bite. 

What is sobering is to reflect on the comparisons between that and what is happening throughout the United States.

The United States is not, at this juncture, as top heavy as the EU in terms of social spending, but it is certainly getting there. In addition, as the percentage of debt to GDP continues to rise in this country, the dialogue appears to be shifting away from the recession and towards the long-term impact that much debt implies.

Over the past two years, massive government dollars were needed to be pumped into the economy in a quasi–New Deal scenario to stabilize the economy and to stabilize domestic banking operations. However, along with that, of course, has come continuous expansion of the deficit as well as of the overall federal debt.

Along the same lines, most (if not all) states (which also share a common currency), face operational deficits and debt of their own. And those numbers at both the federal and state levels, are compounded by the amount of off-balance sheet liabilities associated with entitlements, including unfunded pensions and health care commitments.

The U.S. markets made clear today that the twenty-four hour euphoria investors and traders felt on Monday in applauding  the EU bailout is over.  It’s not that the bailout wasn’t appreciated, or frankly as necessary as the federal intervention in this country.  But the real question and the more serious dialogue shift to the not so easily answered dilemma: “yes, but what happens tomorrow?” 

“But will you still love me tomorrow?”

How do we satisfy those debts in the future without severely impacting entitlement programs by EU members that continue to be socially generous?

And concommitantly, how do we address the burden of our federal deficit, debt and unfunded future entitlement liabilities, as well as the state deficits, debts and unfunded future entitlement liabilities, when the math simply doesn’t work?

There is no doubt that very rational totally algorithmic trading last Thursday created a cascading effect on rapidly declining prices on the major national exchanges.  However, is it not also possible that the very personalized fears and hubris in this country about our own eroding stability and escalating debt were triggered by the street scenes of rioting Greeks angry about being stripped of their entitlements?  Could that be us in 10 years? 

The markets appeared to feel like that.

I am not suggesting for a second that our situation is similar to that of Greece or any country in the European Union.  But I am suggesting that the conversation has shifted.  We are no longer discussing whether there is a pulse in our economy–there appears to be one.  We are no longer discussing whether we are now, finally, beginning the process of GDP growth–we are. 

But I am suggesting that we are slowly waking up, on this morning after, to the realization that the debt overdose we took last night may have had side effects worse than the malady it was intended to cure.

But, I do have to say, that my fundamental bias away from judgment and towards observation was severely strained as I listened to the Goldman Sachs hearings this past week.

Obviously, the testimony is driven by people who had been substantially lawyered – after all, there is an SEC civil suit and there is always the possibility that the charges could escalate based upon additional sworn testimony or disclosure of emails.  Hence, the individuals involved were probably cautioned to be as minimally responsive as they possibly could.

However, a cliff notes summary of the consolidated testimony no doubt indicates, based on what’s come out so far, at least the following:

1. Goldman was obviously in a long position initially premised upon the assumption that all was well in the mortgage and housing market.
2. Perceptions began to change towards the latter part of 2006 as certain Goldman traders started to identify trends, at least in the subprime market, suggesting that not all was right with the world.
3. Based on those discussions and ongoing conversations and analysis – apparently daily, Goldman eventually transformed its entire trading position to embrace a hedging strategy against  its long position.  That strategy consisted of creating financial instruments to short the market, selling the instruments, and accelerating the shorts. In option (and gambling) terminology, they were “doubling down” on their initial trades. And, based on the testimony on Capitol Hill, they didn’t just double down, they used every potential leverage point available to redirect the risk profile from their initial long positions.
4. They found out in less than two months, according to the testimony, that the strategy was working. In fact, they discovered that the strategy was working so well they were making money hand over fist. Based on the corporate commitment to that strategy, Goldman not only wiped out its exposure to its long position in a faltering housing market at every level (not just the subprime level), but they also happened to stumble on a strategy which was making substantially more money on the short position than they had initially been making on the long position. In light of that, they put on the gas and continued to short the country’s residential market, bagging record quarterly profits thereafter.
5. Of course, nobody at Goldman took personal responsibility for doing anything wrong, by legal or ethical standards, towards themselves, the country, investors, or their clients.

I’m still processing how I’m feeling with all of that.  

The slippery slope at Dynetech began to be felt in early 2007. It’s not that our numbers were particularly bad (we were still very profitable), but we were not, on a seasonable basis, producing the numbers that we would have expected for that time of year. In fact, the metrics we typically track were relatively weak for Q1 2007.

Frankly, I thought that it was us. I beat up operational people. I beat up the managers. I took personal responsibility. I launched more initiatives with more acronyms than I can even recall by name. But my thesis at the time was that we had to right the ship because something we were doing was wrong.

By the end of Q2 2007, we were losing money on just under half of our teams. With 34 teams on the road, we had at least 16 that were consistently showing negative weekly performance.

As we all know, the real estate bubble burst in September 2007, which cut our 34 teams down to 22. By that point, our retail operation (which is what we used for new customer acquisition) was losing close to $750,000 a month. We  were still making money across the board because of our latent customer base, but continuation of the customer acquisition process became problematic.

As I discover today in the Goldman hearings and as I read through Michael Lewis’ new book, The Big Short, during the first half of 2008, as the entire financial sector melted down, Dynetech, the company that had been built on America’s prosperity, was melting down too. Our 34 teams went down to 16 teams and our 600 employees were cut in half. The terrible thing is that, even based on that, we weren’t able to right the ship. It went from bad to worse.

By October, 2008, the month American consumers went on strike, Goldman made record profits.  In our neck of the woods, Dynetech hit a wall. As the numbers were flowing in from the remaining teams we had in the field, it was obvious that we were about to be overrun by a tidal wave.

2009 was the year of  that tidal wave.  The real estate meltdown in America had wiped us out because it had wiped out the real estate wealth Americans had created. The financial meltdown wiped out a significant balance because it had also wiped out a significant balance of America’s financial wealth. And the final straw wiped out the purchasing power of consumers nationwide.

So, as I sit here and listen in real time, I find myself literally sick to my stomach…but wondering why.

• Is it because I realize that they are just so much smarter than I am?
• Is it because I saw all of the evidence, but never looked at the right places in the economy to find the real reaons (something Goldman did)?
• Is it because hundreds of millions, if not billions of dollars, of our customers’ wealth had been wiped out in the great Tsunami?
• Is it because I allowed myself to lose so much control that I wasn’t able to make the adjustments as fast as the very smart financial pros were at Goldman?
• Is it because so many people across the country lost so much?
• Or that there was so much pain and suffering close up in the lives and families of our laid off associates?

I will always refuse to be a victim. And I will always refuse to complain. But I must say that I am still sick to my stomach.

Here’s what I do know for sure. I just simply wasn’t smart enough to see it coming, understand why, and protect myself and the people in my sphere of influence enough to have protected themselves.  I’m not beating myself up over it, but I do know that it will never happen again!

My Dad was.

He was Air Force. He fought in World War II . . . in Italy. He took his discharge after the war, spent two years in civilian life, and went back into the military with my mom, the first Italian war bride. He spent the next 20 years in the Air Force, eventually retiring as an officer.

That really doesn’t qualify me for much.  At least not as far as the military is concerned.

It doesn’t qualify me to engage in battle. It doesn’t qualify me to say that I served my country in the armed forces. And it doesn’t qualify me to understand the pride that our servicemen carry with them for the rest of their lives once they’ve served.

But it does give me somewhat of an inside track.

As a young child growing up in an Air Force officer’s household on military bases, I was incessantly exposed to the fundamental values of military life.  I was steeped in them everywhere; and, God knows, Dad made them explicit. 

From the frequent gatherings we used to have at the house where I operated as the 11 year old bartender who could whip up a drink for virtually any request, to the living room conversations with all those ex-World War II and Korean War Vets–conversation about modern America and the Soviet Union would be fast and furious…and I was left mesmerized.

I learned any number of life’s lessons during those days until Dad retired from SAC and headed back home to south Philly in 1963.

One particular one surfaced recently.  I had not thought about it for years.  But after this Chapter 11 experience (and on the verge of filing my Chapter 11 Plan), I think about it all the time now days.

It’s the fundamental maxim that in military service no man is ever left behind.

I can’t tell you how many times over the past several months I’ve had people tell me that I should just simply cut and run. “Larry, why do you need it? It’s time to to  move on to your future. You owe it to yourself and you owe it to your family.”

Really?  Do I?

“Larry, it’s not about you.  These have been terrible times.  Everyone will understand.  Use the situation as an opportunity to start over.”

“Larry, we can put a dress on it, but it’s still a…!”

“Larry, nobody will remember a couple of years from now.”

“Larry, who are you serving?  Take care of youself.  Everyone else would do the same.”

And on and on.

And I recognize that these comments are not from hard-hearted people.  And they have my best interests at heart.  They’re my friends; my colleagues:  the people who have either stood by me or watched me these many years.

And I appreciate their counsel…and their friendship!

Yet throughout it all, resounding in my ears, reverberating in my mind, is not just the military motto, it’s an entire upbringing: “never leave anyone behind.”

With my upbringing, I don’t have a choice…smart or stupid.

I can’t cut loose and move on. I just can’t do that.

I can’t turn my back on the shareholders who believed in me. The customers who followed me for over a decade . . . or two. The creditors who gave my company credit because they knew I was at the helm. The community who supported me and my ambitions for growing my company. 

I just can’t cut loose and leave them behind.

If I did, I’d leave myself behind…my soul behind.  And, of course, I’d ultimately leave my friends behind.

I don’t know if it’s smart or stupid; naïve or prescient; glorious or inglorious.  What I know is simply that I just can’t do it.

So, I will work to emerge out of this Chapter 11 and I will be submitting a Plan (a Disclosure) this week where nobody will hopefully lose a dime so long as they stay with me.  And while I don’t know if it makes good business sense to try to emerge with such a heavy burden on my future, I don’t think I’m prepared to accept the alternative.

After all, nobody should be left behind!

I was freshly off of reading the news releases about our loss of signage rights to Dynetech Centre, which had been purchased by the law firm moving into the 15th floor we occupied a mere two months ago and which cost us several million to develop.  So,  I immediately said, “Oh, that’s easy.”

He said, “Really?”

I said… “Sure, Sweetie.  Because there really were only two reasons.”

“So what were they, Dad?”

“Well, first, a failure of principled discipline, which eroded internal defenses. And second, an unfortunate collision of overpowering external forces which could only have been defeated by the principled discipline which had failed.”

Needless to say, Jared wasn’t at all sure what to make of that.

He said, “Okay, Dad, start over. What you are talking about?”

“Sweetie Pie, Rome was noted, during its entire history, for its enormous internal discipline. It had initially developed internal discipline for its own defense, but had eventually used it to conquer most of the known world. As a result of that, we know Rome and the Roman civilization to this day for its incredible influence and achievements.

“At the end of the day, however, and as a result of its own complacency, its own sluggishness, its own bureaucratization, and its own unprincipled sloppiness, Rome’s internal defenses eroded to such an extent that it became a target for external forces which, sooner or later, would defeat it.

“Did you get that one, sweetie pie?”

“Maybe, Dad, so what comes next?”

“You end up with a perfect storm provoked not by coordinated attackers from the outside but by the random activity of multiple destabilizers, all of which ultimately met together at the center of the known world – Rome. Every avaricious tribe. Every invading force. Every ambitious leader.  Every free radical. Every imposter.  They all concurrently and consecutively battered down the walls of a weakened Roman civilization until they ultimately caved in.

“In earlier times, they wouldn’t have had a chance. But after years of internal degradation, the external forces were overpowering.

“Make sense, sweetie pie?

“I got it, Daddy: internal collapse in the midst of external invasion.”

Well, that was the extent of the conversation. I put Jared to bed and I started walking downstairs.

And I realized, as I was walking down, how I had pretty much already lived through a very personal Roman experience of my own.

As I continue to process what transpired at Dynetech over these horrendous two and a half years, I begin to recognize so very well that the Great Recession, as that external force has become known to businesses, was clearly an incredibly powerful invader that represented the perfect storm in so many ways.  After all, who would have conjured it?–a real estate collapse, a mortgage collapse, the demise of the financial sector, a credit freeze, escalating unemployment, and eventually all topped off by a cash strapped consumer unwilling or unable to buy virtually anything–all within a two year time frame.  Overpowering external forces indeed!

At the same time, however, what I also recognize is that there was a time in which our internal principled discipline would have defended our walls and protected the body of our citizenry in a way we were not able to do by the time the Great Recession was in its fullest fury.

I’ll publish a future blog about what that principled discipline looks like in granular terms, because it is very structured (probably more significantly than most entrepreneurs could imagine) and it held us in good stead for many years as a leader in the industries we served.  

But for today’s thought, what I want to emphasize is that as powerful as the Great Recession was, there really is no invading force powerful enough to defeat a defender in its home turf if the defender remains principled and disciplined. 

Had we not allowed our own internal discipline to loosen; had we not let our guard down, so to speak; had we not gotten sloppy in our execution; had we not thought with our hearts rather than with our minds; had we not confused the objective with the process; had we not allowed all of that to occur over the past several years–the Great Recession, as powerful as it was, would never have levied such carnage.

No matter how destabilized, the defender ultimately always has the upper-hand, so long as the defense is based on the structure and discipline of what made the defender so powerful to begin with.

It’s a lesson too late to salvage this round in the ongoing pendulum swing of life.  But it’s a lesson I won’t forget when  our walls are back up and we’re at it again…but next time, I’ll be remembering the simple lesson my bath time conversation with Jared recalled–the two reasons why the greatest civilization in the world fell.

I thought I would share it with you.

Let me give you the context of why I thought it worthwhile.

As I have been fighting the demons of this dark period over the past several months, I’ve been attempting not only to deal with the day to day issues which emerge, but also to construct…or reconstruct, as it were…some understanding of what it will take to create order out of chaos.

I found personal consolation…as well as marital consolation for Janet…in telling Janet that we have to look at today from some point in the future. We have to see what we are going through not from today’s lens, but from a lens looking back from some time one, two or three years from now.

That’s not just wishful thinking, mind you. I truly believe that. And I truly believe (historically and experientially) that this moment is simply a freeze-framed moment in time.  After all, history is written looking backwards;  only newspapers are written in real time. 

And as I personally look back in my life, I sometimes do my best to reconstruct what I must have been feeling at the time I experienced whatever that particularly difficult time was.  And yet, today it often looks far different.

Let me discuss it through.

When we created Dynetech in 2000, we had no proof of concept, an untested business model, no revenue, and a cash flow burn of $700K in 1999 and $1.2 million in 2001. I lived off of credit cards, trading income, a little lawyering, a little speaking, and relatively small investments from friends and family–with a wife and two kids.  We only actually made money, for the first time, in 2002.

It wasn’t a totally black period, but it was certainly dark. And it was personally bleak for the two of us.

When Janet told me she was surprising me by bringing me to a Disney restaurant in September of 2001 for my birthday, I told her how distracted I was because we were struggling to make payroll that day. As I saw the tears well up in her eyes, I instantly regretted what I had said and reassured her that we would figure it out and it would be OK. Don’t worry:  it would be OK.  We went and I spent the rest of the evening salvaging her moment and rebuilding our intimacy.

We kept dealing with the issues of the moment for the balance of the year and into the next; working with vendors we owed money to; creating new products and services; rethinking and tweaking our business model: on and on, throughout 2002. Eventually, the clouds parted, the days brightened and we came out for our brief respite in the sun.

Between 2000 and 2007, we built a company that had gone from losing a consolidated $1.9 million on neglible revenue to grossing $256 million and $28 million in annual profit by the end of 2007.

And we topped out employing  just shy of 600 people–close to 1,000 household members were part of our family universe.  Some 15 associates had married each other.  Twice that number had married others.  20 newborns joined our ranks.  And 35 or so had reported buying their first homes or an additional investment property at our Annual Training Day.

Unfortunately, the latter part of 2007 and all of 2008 and 2009 were not nearly so kind. And I’ll address that in some other post.

But here’s the point I want to make right now.

My friend, Steve Ruttenberg from Seattle, sent me an email over the Christmas holidays which I want to share with you.  He said, in the midst of a fully developed message, “Larry, reserve all judgment of the present until it becomes the past.” He then went on to say that the frame within which we see life must be that of living in the now, but by seeing it from a detached point in the future. 

That frame blew me away.

I understood that each day I live through is a moment in time…and I have to live through it. But what Steve’s message gave me was the opportunity to recognize that the only way to gain perspective over what I am doing today is to conceptualize it from a perth several years away. That is, after all, where “perspective” (perthspective?) comes from.

That frame doesn’t make the job I have to do today any less difficult or problematic, but it definitely makes the process less painful and the outcomes more hopeful.

And most of all, it’s germinative.  It’s procreative.  It spawns a picture of the way it will look in the future, so that, from that spot…that perth, I can look back at where I am today and connect the dots.  “Here’s where I’m going to land; here’s where I am:  hence (looking backwards), here’s what I need to do to bridge the gap.”

I know that I will have to wake up tomorrow and face whatever the day brings.  Through some of it, I’ll be shadow-boxing; and through other parts, I’ll be securing my game face:  regardless, the cycle will continue to unfold and the outcomes will continue to be tallied.

But Steve, it helps me to know that you took the time to remind me to reserve judgment until the present has become the past. 

Thank you for sharing…and for caring!