

Confessions of an Entrepreneur's Wife - hwijaya
http://www.inc.com/magazine/20060301/confessions_Printer_Friendly.html

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sutro
This is one of the better pieces linked to from HN in some time, yet most of
the comments here are critical of either the author or her husband or both.
Critics, please raise your hands if either you or your spouse has raised $10M
in a depressed economy, nationally launched a new consumer product into a
hyper-competitive industry, and achieved multi-million dollar revenues while
trying to hold a marriage and family together. Anyone? Bueller?

~~~
christofd
What's questionable about the article is that it portrays entrepreneurship
being so extreme and anti-social. It's about running a business. Bill doesn't
do a good job here.

He's great at marketing and raising money but that's not what a company
survives on and continues to pay people's paychecks and paying back his
investors. Summary: the company founder did a poor job at taking care of
employees, investors and his own family. Is this considered desirable behavior
these days?

I thought we learned something from two market crashes after 2000. This is
basically a typical reckless Gen-Xer dot-com story risking it all and going
broke. I'm amazed his investors (which got screwed) even gave him money.

~~~
sutro
You imply that you could have done better. So please share your relevant
comparable experience. Ever raise $10M and bear the weight of those investor
expectations? Ever been CEO of a multi-million dollar company? Ever launch a
manufactured consumer product? I suspect that it might be a bit difficult. I
suspect that what is best for your investors, your partners, your employees,
your customers, your family, and yourself might not always be the same thing,
which I suspect might lead to many difficult decisions along the way,
decisions which unfortunately will later get called into question by a peanut
gallery of HN readers who consider themselves business experts because they've
built a couple of websites.

~~~
christofd
Well, I've raised and received an acquisition offer of about that number, but
the startup team quickly disintegrated. Guess what, I don't put this on my
resume! It was a failure and caused a major fallout under several friends!

Regarding the "built a couple of websites" - I've worked for startups in
bioinformatics/ AI and for public research projects with several million bucks
funding.

I'm sorry but my heroes are company owners that can sustain a business for a
long time and give back to the community. Not quick scams that screw over
investors. I know quite a few startup founders (in IT) here in Ontario,
Canada, that know how to support their people. And these aren't guys building
websites, but in the 'top 10 awards, up and coming in Canada'.

~~~
sutro
The guy hung in for 6 years on a modest salary, not quitting until his hand
was forced when the bankruptcy court rejected his buyout offer. How is that a
"quick scam?" He kept the business close to the edge of solvency because he
was optimizing for growth rather than profit on the entirely defensible theory
that he needed to quickly get the business to a size where economies of scale
would work in his favor. (It's a strategy that Bezos used at Amazon in the
early years too, consistently forsaking profit in favor of growth and
operating in the red to do so.) Investors know the risks involved. Nothing in
the article suggests that they were "screwed over" as you claim. In fact the
"risk it all, go for broke" attitude that you blame on the CEO is more likely
attributable to his investors, who are going to push for strategies that
result in a 5x-10x ROI.

~~~
christofd
Sorry, for the long comment in advance. But this issue is something that has
been bothering me for a long time.

Agreed, I give the guy all the credit for hanging in for 6 years and as
mentioned before his strength in raising capital and marketing. He's
definitely not ordinary.

But in the end - does he have a sustainable business, where he gave back to
the community? Is he in the ranks of a stable company owner, who can finance
his children's and his employees's children's college education etc.? I know
people like this and I don't know that much about how hard it was for them to
outlast. But this is the measure of success. Not the 'almost' go-big-go-bust
success displayed annoyingly in many American business zines (Inc, Fast
Company, Business Week, Wired etc.) during the dot-com era... and this recent
article.

Daimler-Benz, Siemens, GE... they are all still here and it took them a long
time to grow. History is on my side on this issue: 2 major market crashes -
dot-com and now real estate. My family lost a good portion of their retirement
money as many others have. The end result of so much hype in the market is
hazardous to society.

Summarizing, raising capital with inflated growth targets is a thing of the
90s. Growing a business slowly is the way to go, unless you have a major
technology or product breakthrough.

I must add - this is a personal view. Many others will still achieve success
growing quickly.

~~~
sutro
Your concerns about recent economic down-cycles are misplaced. Our economy
needs _more_ not less entrepreneurs like the CEO profiled here. He ultimately
failed but he went down fighting to keep alive a new business that provided
new jobs. And he pioneered a new market segment whose inheritors will employ
many more people in the future. That growth-creating ripple effect will leave
a bigger impact on his "community" than most people can ever lay claim to.

There are plenty of villains worthy of your scorn, from banksters to
bureaucrats to politicians. Yet you blame a business-building job-creating
entrepreneur for trying to grow too quickly? Daimler, Siemens, et al were once
the size of Switch Beverage Co, and their initial investors also took big
risks for the expectation of big returns. Had this guy succeeded in creating
the next Coca-Cola, you probably would have been singing his praises ten years
hence. It sounds like what you really object to is failure.

BTW, the next time you try to raise money, be sure to show _deflated_ growth
targets to your prospective investors, then let us know how that works out.

~~~
christofd
I can certainly see your point. But yes, I do blame an entrepreneur setting a
bad example trying to grow too quick and burning through lots of cash. I
inherently do not see this as such a big admirable success story.

Further, I strongly object to the sensationalist reporting of such business
magazines. Why don't we hear more about the quiet guys slugging it through and
building something lasting?

Also, I don't fancy yet another beverage product on an already overcrowded
consumer market and the tendency of the business owner to believe that he can
only succeed by growing big fast. Why doesn't he believe in the strength of
his product. If it's good, people will buy. He inherently believes people only
will buy it if it's big. And that's wrong with the picture.

He has not created any new knowledge on how to make beverages and trained
specialized staff accordingly, which would create positive skill feedback
loops in the region of his plant. He's buying juice wholesale and outsourcing
production to a local plant that makes everything from Coca-Cola to beer. This
is just all marketing: take two kinds of juice, mix em, carbonate it and
market the crap out of it. Where are the jobs created out of that? And I don't
think he has created a viable plan for young people to follow his footsteps:
the plan was to go big and he went bust. His only lasting legacy seems to be
staff turnover.

Further, I suspect flaws in his management style, because it seems like he's
putting out fires constantly. Something's not right here.

I don't think the world needs more entrepreneurs like him. He's clearly a very
financially motivated guy, who doesn't believe in growing a great product
organically. We need more great product companies instead! (Ironically, "the
switch" does sound like a really neat product: 100% healthy juice)

Historically, companies that had product experts (engineers) in management
have outperformed MBA run companies many times over. The lesson here is: build
a great product and the rest will follow in time. I have the stats to back
this claim over a 50 year period (study done at MIT comparing MBA-run
companies to engineer-run companies).

Yes, I don't want to ever again create a business plan and pitch to VC's based
on the growth curve of the Internet. What a f*ing joke. But that's my mistake.

~~~
sutro
_I inherently do not see this as such a big admirable success story._

I doubt anyone, least of all the CEO or his wife, would disagree with you. But
their failure is instructive, and telling the story of their failure takes
courage.

 _sensationalist reporting_

There was nothing sensationalist about this article.

 _Why doesn't he believe in the strength of his product? If it's good, people
will buy._

I'm sure he did believe in his product. But to think that you just set a new
kind of beverage on a few shelves and then let the product quality take care
of all of your sales, marketing, and brand-building for you is incredibly
naive. Apple's products get a lot of acclaim, yet Apple still spends a fortune
on advertising and on its distribution outlets.

 _He has not created any new knowledge on how to make beverages_

Whether he has or hasn't is not evident one way or another from the article.

 _growing big fast_

Economies of scale are present in beverage manufacturing just as they are in
online retailing, search engines, and social networking. So all of your
objections to his high-growth strategy also apply to Amazon, Google, eBay,
Facebook, etc. But this guy is an easier target for you given the outcome.

 _young people_

He did a great service to young people by replacing all of the crap chemical-
laden sodas sold in California schools with his 100% juice alternative.

 _I don't want to ever again create a business plan and pitch to VC's based on
the growth curve of the Internet_

The Internet will remain the best bet for growth in the world economy for
generations to come. Choosing not to leverage that will only hurt your future
business prospects.

~~~
christofd
_Sensationalist Reporting_

There is something odd about the glossy way business mags display
entrepreneurs as heroes and even more when they are tragic. It's part of the
same hype culture that I despise.

 _Growth Businesses_

Google is a technology and product breakthrough - Pagerank, GFS, BigTable,
MapReduce, AdWords, Server Design etc. Amazon - Cloud Computing,
Recommendation Engine. Facebook - Social Graph. These are deserving growth
businesses that have built out a true market niche. I don't see the beverage
market in that same category.

 _Knowledge, Young People, Jobs_

Building a beverage like this is not like hiring and training Master Brewers
from Weihenstephan in Bavaria or red wine experts from Bordeaux. Packaging
juice bottles is a minimum wage job like any other. I don't see the armies of
new employees that will be created in this market segment.

~~~
sutro
A different kind of hype culture exists here on HN, which glorifies
engineering, discounts sales and marketing, and considers non-technology
businesses unworthy of respect. I'll bet if you were stuck on a plane next to
this CEO and were somehow able to talk to him with an open mind you would
learn a lot.

~~~
christofd
Fair enough.

------
christofd
What I don't get is why this guy (Bill, the entrepreneur) is always teetering
on the brink of disaster. The story with his design company almost owning his
brand, because he didn't specify the contract under which they created design
work for him, is telling. He seems like an energetic and very creative sales
guy, who burns easily through money, but doesn't look at details enough. Also,
his staff turnover rate doesn't sound good either.

Why is he always so unstable? Come on, if you have an account like Costco or
7Eleven, you are making money. You should be able to run a stable business
taking it from there - but then the job is not about being that creative
anymore but about operations (just like in a big company).

An entrepreneur friend of mine, who has been in business for over 40 years
always says: "It's not what you make, it's what you keep!". Entrepreneurship
does not need to be this extreme as it's portrayed here. I know enough company
owners that coach sports for youth teams on the weekends and spend enough time
with family.

~~~
HeyLaughingBoy
It's probably a very low-margin business and that doesn't leave much room for
error. Software businesses are about the highest-margin ones out there and
that can skew your perceptions when you look at other fields. I think this guy
took on a lot more than he expected to and that was the source of a lot of the
problems: energy only takes you so far. At some point you need actual
_knowledge_ and that's where hiring experts helps.

The instability comes from the fact that he's not just getting these big
contracts, but at the same time is trying to grow rapidly. Were he just to
settle at a certain level of sales and stay there for a few years, he'd
probably be running a profitable, but smaller business.

Instead he swung for the fences and struck out.

------
jimboyoungblood
Bonus reading: [http://www.bevnet.com/bevblog/2007/11/new-book-on-the-
switch...](http://www.bevnet.com/bevblog/2007/11/new-book-on-the-switch-
disappoints/)

~~~
tc
Best quote:

 _Neither of the company's two founders, nor any of their successors, can
alter the product's basic economics._

This former executive claims they were trying to sell a product for $1.29 that
cost them more than $1.00 to produce and distribute. If true, this sealed the
company's fate regardless of any drama or inattention to detail.

------
trevelyan
This woman sounds remarkably selfish. She admits to not working during the
three years her husband was starting the company and spending summers on
vacation with her child learning Spanish, yet her catalog of grievances
includes the strange claim she has lost time that could have been spent
publishing and socializing.

Couldn't she have churned out a couple of articles while on vacation in Spain?
Or maybe have saved some cash by spending the summer at home.

Unbelievable.

~~~
breck
Really?

I think sharing this personal story with all the details is a very unselfish
thing. I would say the exact opposite.

I think giving up her husband so he could work all that time, and raising
their daughter practically alone, is very unselfish.

~~~
alexitosrv
She tries to present the facts, but her insatisfaction skews the story.
Actually, I think sharing this personal story with all the details mainly from
her viewpoint can be deemed as selfish behavior.

------
DannoHung
How do you have a situation where you make a funding deal, the guys only come
through with half, and they still get their equity share?

~~~
ams6110
I've personally seen it happen twice. A company that has a reasonably well
developed product is short on cash. Some "white knight" appears with a big
investment, but the deal drags out, the company is forced into bankruptcy, and
the so-called savior acquires it for a fraction of the original investment
amount. Seeing this same scenario here makes me think it must be a common
predatory tactic. Lesson is, if you've got a good product but are short on
cash, be very wary of big investors.

------
mahmud
What a whiner. My girlfriend is a musician, and a very driven and inspired
woman. I don't think she will ever describe herself so publicly as
${MALE_ADJECTIVE}'s wife.

Stop deriving your identity and self-worth from your partner; writing is not
the sort of thing that one has to put on hold because one's partner is busy
making business .. quite the contrary, the fucker is busy at home and away,
crack those fingers and get cracking!

------
Andys
> the CEO said, "it's better to have 1 percent of 10 million than 100 percent
> of nothing."

A false dichotomy, surely.

The voice in the back of my head says its better to have >=50% of something
small with real, stable growing than 1% of 10 million where you are trying to
outsmart the wolf packs of the VC industry.

------
edw519
"When I think about those start-up days, I realize I've given up far more than
I had planned. Years of writing, of books and magazine articles I could have
published. I lost a friendship, an airplane, a lot of money. I sacrificed
years of socializing that could have sparked new friendships. I lament the
toll on Bill's health, and Lily had no choice in giving up precious years with
her father."

Therein lies the biggest difference between the entrepreneur and the non-
entrepreneur: he looks ahead and she looks back.

~~~
prospero
Being an entrepreneur means that you can't reflect on the consequences of past
choices?

~~~
edw519
Never said that.

I also never met an entrepreneur that would have said OP's quote either.

------
keltecp11
This is really well done... some relationships in my life have certainly been
affected by, well you get it.

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knightinblue
I love the design of their site - www.switchbev.com

~~~
inglorian
Yeah, that flash intro that you can't skip isn't at all annoying...

~~~
knightinblue
I meant the 'switch between what you want and what you don't want'.

It's creative.

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psranga
I was bothered by the lack of introspection in the article.

~~~
timr
Oh, come on...a long, well-written essay, and the best you can do is a one-
line swipe at the author? At least _explain_ why you think she lacks
introspection!

The comment voting here is getting to be really bad.

