Monday, August 9, 2010

The Fall of a Giant

It has been nearly a year since I made the promise to share more about how Zoom survived our start-up phase while battling one of the largest corporate giants in America.  I am well aware that my competitors are reading these posts daily and I have first-hand experience dealing with their attorneys so I must also protect my team from future battles.  Goliath put us on notice that all the Zoom partners are forever bound to never speak about "trade secrets" we learned while working for them over the years.

If you did not see "the Story of Zoom", please read this first and then come back here for the rest of the story.

The Final Days at Goliath...

It had been nearly a year since several of us got the idea to leave Goliath and become a competitor.  The meetings with our world-class attorney with ties to Washington D.C. and the countless hours of top-secret preparations encouraged us to enter the battlefield.

Jeff was the first one to leave.  He held on as long as he could but the new quotas were impossible to attain in a market where almost 100% of the customers were actively advertising.  Jeff had become the first victim in the plot to eliminate us, one by one and replace each of us "with five monkeys that could do the job for less pay", our district manager told his colleagues.

Jeff applied for work in the internet division before his impending termination.  When they checked his references, our district manager lost it and told his counterparts that Jeff was "on the plan" and about to be terminated.  He drove over to meet the top people on the .com side of the business to review 400 applications.  His purpose was to uncover any of us that might attempt to switch from print sales to internet sales.  He uncovered one name and pulled him from the files, declaring that none of us were worthy to have jobs there.  Jeff's future bosses really liked him and his stellar credentials.  They lobbied to get him but they told him he would be the only one allowed to work there.  The rest of us were black-balled from every branch of this monopoly that owned six competing publications in our market.

Jeff was able to monitor the print division at his new job and quickly become one of the top reps in the nation.  His bosses were incredible, they treated him very well.  We were concerned that he may become so happy that he would lose interest in our start-up plans.

Our attorney advised us that an attack by Goliath was inevitable.  We knew too much about the business and our status as top reps made us targets.  Our battle plan was centered on inventing software and protecting ourselves against claims that anything we created was property of Goliath.  In order to accomplish this, our software developer needed to quit first, then begin writing software code that was time and date stamped.  Anything invented during employment with Goliath would not belong to us.

A timetable was set up that started with Christmas Eve, Steve's last day at Goliath, and ended one week before St. Patrick's Day, our target launch day.  One by one, each of us quit our jobs.  Carmen, the number one rep out of 2,000 was the most stunning in his departure.  He waited until the third week in January, 2005, to quit.   All of the bosses were out of town.  He turned in his final paperwork, said goodbye to a few key people and then typed, "I quit" on his computer.  He sent the email to his boss and walked out the door.

I was the last one to quit.  I gave a two week notice two days after Carmen and hoped they would walk me out the door as they had done for a couple of my future partners.  Some new software had just been installed and it was not working properly, causing major headaches for everyone in the company.  It was such a nightmare.  Every morning, I showed up, hoping to be escorted out of the building.  At this point, our start-up plans still remained top-secret.

On my final day, I completed my paperwork and said good bye to my peers.  The general manager asked me to come into his office.  Our regional manager was with him.  He said, "God, I sure hope that you don't ever compete with me."  I answered, "if I ever do, I will give you the same dignity and respect that I have given all other competitors for nearly twenty years".  The smile on his face disappeared as I shook his hand and exited.

As I said goodbye to our human resources person, she told me that enough people had quit recently to start up a new magazine.  I agreed with her and walked out the door to meet my future partners.  A meeting had been set up that evening to make the final preparations to get our last partner on board.

We met in the conference room the next morning with our ex-boss, the founder of Auto Trader in San Diego.  He had sold out to Goliath exactly five years and one day earlier.  His non-compete agreement was set for five years.  Non-competes are legal in California if you are the seller of assets and provided there are reasonable time constraints on the non-compete period.  Five years is at the extreme edge.

If took us approximately thirty minutes to convince David that he should join us.  We offered an equal share in the LLC and no day-to-day duties.  We were most interested in using his great reputation to add credibility to our new company. 

We nick-named Valentine's Day, "the Valentine's Day Massacre" because five employees walked out the door at Goliath on that day.  We were accused of sabotage but had nothing to do with people leaving other than a few we had hand-picked to join us.  People were leaving because they no longer wanted to work there.

After all of us had left Goliath, we began contacting customers about our new magazine, Zoom Autos. War was declared by our ex-bosses.  All employees were called into Goliath's conference room and our names were put up on the board.  We had become the enemy.  During the meeting, we received virtual text messages regarding the war plans and were able to get the information to our attorney for our counter-attack.  In a two page letter, our attorney pointed out flaws in the war strategy, advising Goliath that we knew the law and we would hold Goliath accountable for any illegal actions.  We were able to obtain a video showing an employee vandalizing one of our racks and we forwarded the video to their attorneys.  We also discovered missing Zoom racks in Goliath's warehouse and filed police reports to document all the facts.  When the police showed up to help us recover our racks, Goliath told the officers that they had no idea how our racks showed up there.  We were steadfast in keeping our company alive.

The suits were flying in from all over the country.  They could not believe that something as large as this could have taken place without inside help and a witch hunt began.  Many at Goliath were loyal to us and innocent  people suffered just because they were our friends.

The final week that Steve was completing our new software, he told us he was one week behind.  There would be no time to test his newly invented software.  Instead, we just typed and hoped that everything would work.  Goliath found out about our software challenges and told our customers that we would not launch as promised.  I will never forget typing ads at midnight on deadline day.  Our screens kept going black.  Steve was a few cubicles away, laughing as he added the final code in the final hours.  When he hit the "send button", everything worked flawlessly and the printer received our first Zoom Autos magazine in time to launch on St. Patrick's Day, 2005.

Five years and five months later, we are still here.  Goliath promised all of our customers that we would not last more than 90 days.  They are the ones that laid off more than 4,000 employees and stopped publishing auto magazines throughout the country.  They also shut down all other competitors which they owned in favor of internet only.  Ironically, they allowed the top print reps to join the internet teams.  Had they given us the same opportunity to change divisions, Zoom would never have been born.

Today's post is in honor of all the brave people who joined Zoom.  I have never met a team of people so dedicated and loyal.  We are living the dream thanks to all who believed in us and today we are in three cities.

If you have dreams, don't listen to the dream killers...go for it.  Don't be afraid to fail.  You will eventually succeed as long as you keep getting up.

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