I told you the story of getting in everyone’s face at a ‘friendly’ company dinner party, and how if they didn’t do their friggin’ research they’d fall flat on their happy faces.
Then I told you about getting in El Presidente’s face about the fact that they weren’t even running an actual business because after 2 1/2 years they still had not demonstrated that they knew how to MAKE ONE DOLLAR.
I emailed the president and board of directors and declared the company to be nothing more than a sink-hole for private investment money. I stated that I personally considered pitching a person on investing in the company an act of deception.
El Presidente strikes back:
For two and a half years, I have endured Perry’s various tirades both in Board meetings and in front of my employees, and I have bitten my tongue both out of friendship and respect for a man of unquestioned expertise in his field.
Unfortunately, Company building, as opposed to income building, is not his expertise.
If the Perry Marshall method is so effective, I defy him to name me one person, using his method, who has built a billion dollar business.
Well, the answer is almost certainly none because there are, relatively speaking, few billion dollar businesses.
How about a hundred million dollar one? Fifty? Twenty? Ten? Well, maybe ten, if you count the development of five separate two million dollar businesses building a ten million dollar shop.
The fact of the matter is, knowing those clients of Perry’s whom I have met, only one has a business in the eight figure range, and that business is almost thirty years old and does not owe its growth to that size to the Perry Marshall method.
Several of his devotees are doing well, from an income standpoint, but also so thoroughly burned out that they now look to scale back or sell their businesses. Several have gotten no where at all.
I have heard Perry’s arguments about a revenue silver bullet being out there. If that is true, how come no one else is doing these online courses Perry describes? [OUR INDUSTRY] is a highly entrepreneurial world, with plenty of people ready to start businesses on their credit cards.
This industry is one where there truly is no new business under the sun. So why are there not five or six of those out there already?
Well, taking a somewhat broader view, there are. [COMPANY A] invested 100 million dollars building its online course work. It is of the highest quality, and supported by annual shipments of those low margin [PRODUCTS] as well.
They endured year after year of no profitability and even brutally low sales for the first four years and now are profitable with 160 million in sales. Sound familiar? How about [X COMPANY]? [Y COMPANY]? [Z COMPANY]?
I am sure our offering, characterized by the poor quality presentation I have seen in Perry’s own online/teleconferences, would meet with the immediate ignominy it so richly deserves.
[OUR INDUSTRY CUSTOMERS] are savvy purchasers of products and services, and they will not long tolerate poor quality and half-baked presentation that comes from businesses built on credit cards.
Further, once we had done such a thing, the well would have been permanently poisoned for our future since reputations are hard to shed in this market.
I invite the world-wise reader to consider the following examples: what were Yahoo’s sales at the 2.5 year mark from get go or until they got that big dollop of capital? Or Google’s? Or MySpace or Facebook’s?
I guess there are always the examples of Dell, Apple, and HP (among others) that started in the proverbial Perry Marshall-esque garage, but in fact those tall tales are nothing but that, tall tales.
None of them went anywhere until some cigar chomping capitalist threw in a lot of money. Otherwise, they would have remained what all Perry Marshall businesses are: sole proprietorships existing in fringe markets.
I regret it if Perry did not understand that the high eight figure out-year revenue meant capital would have to be raised, but the text of the plan was quite explicit. It spoke quite directly to raising equity of, hold onto your seats, 16 million dollars!
We would have to do two and a half [“A”] deals plus what we have already raised to equal that.
It is always disappointing when a market does not cooperate and deliver you instant or even early financial success. But every business of any consequence I can think of didn’t, on the time scale about which we are speaking.
I take Perry’s comment about deception quite personally because I know the history. I was there when three other execs and I built a business of 250 million dollars in sales in two years. We had 60 million in capital that enabled us to do that and, at the end of that period were still not profitable.
That business is now one of more than 800 million dollars in sales and highly profitable. If we had undertaken €œsome course correction€ at that point, the story’s end would have been quite different.
We had actually tried a direct sales method with much less capital similar to that advocated by Perry early on and it flopped completely.
So I will undertake no such fanciful course correction. This corporation is a Delaware €˜C’. The Board has both the wherewithal and the right to terminate me as CEO any time it so pleases.
Perry, as a Board Member, has the right to enter just such a motion into the record, compelling the rest of the Board to vote on his proposal, if he can get a second.
You want a course correction, Perry? Find me the capital you originally signed on to be part of the team to raise, the $16 million on the plan you agreed to before there was a [Board Member 2], [Board Member 3] or [Board Member 4] in the picture.
Give me those funds, and then, if I fail, you can hoist me on your €˜I told you so’ petard, but not until then. Now I will take my part.
It is nothing short of miraculous that this Company is even still alive, and that can be toted up EXCLUSIVELY to three things:
1. My leadership
2. My personal sacrifice and that of the Company’s employees
3. The fund-raising heroics of [Board Member 0] and [Board Member 1].
When this company succeeds, it will be exclusively attributable to the above plus [Board Member’s] expertise to find us larger dollar figures and my ability to keep this idea alive and sell it along the way to literally scores of people from all walks and all levels of investing sophistication from the highest to the lowest.
And now, in conclusion, I will make you the deal of the century, Perry.
On December 31, I will meet you for lunch. If, at that time, you still feel the same way, I will happily buy your shares for what you paid for them: $100,000. You will have suffered no loss whatsoever and earned about 60 thousand in cash on which you only paid tax on 20. Pretty good deal, huh?
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I’ll share more scorching emails with you in Part 4….
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