Sex gets in the way of business
Investing in a Business September 23rd, 2009One company that I invested in kept asking for more money from me and its other shareholders. The investment opportunity originally came from one of my ( share ) brokers. ( Not proved to be a very reliable source of investment opportunities ! ). The management team were supposedly “ very experienced “. It was being run by a Venture Capital outfit. It was, of course, a “ surefire bet “.
After a couple of rounds of investing there was a big change in the senior management of the company and a new Chairman took over from the old Chairman and M.D. Clearly something had gone on !
In a letter announcing the change of management there was yet another request for more money. I decided to make an appointment with the new Chairman and flew up to meet him.
I said that I had obviously read what he said in his letter but I was looking for more detail on what had happened and why it might be worth investing yet more money bearing in mind that nothing much had happened with the money that they had already been given and that the old management team was now mostly gone.
Is this “ off the record Chris ? “ he asked. I said that I was happy for it to be if that was what it took to get the full picture.
“Well”, he said, “ the truth is that the M.D. and the Marketing Director ( a lady ) were having an affair and they spent more time in bed together than they did running the business “. In addition they had managed to establish a couple of businesses “ on the side “. These businesses included one that acted as a reseller to the business that I invested in which was basically a manufacturer. Profits from this business were going to the old M.D. ( They obviously had time for some things then I thought ! ).
I thanked the Chairman for his honesty and then asked him where, exactly, were the former Chairman and the Board of the venture capital company when all this was going on ??
There was, of course, no good excuse for this. These “ highly experienced people “ simply did not have their eye on the ball. They were not watching the business closely enough and the M.D. and the Marketing Director were able to run a business, unimpeded, in an awful state, establish side-line businesses and indulge in hours of sex together whilst being paid for it !!!
Morals of the story:
– Just because you have experienced people overseeing the company does not mean that they are actually doing their job
– Warning bells should sound when repeated requests are made for money
– If you are not getting regular financial updates there is probably something wrong
– Sex and relationships often get in the way of good business!
September 23rd, 2009 at 8:15 pm
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
September 24th, 2009 at 12:16 pm
Hi Allen, Thank you for your kind comments and for adding me to your RSS reader. Regards, Chris.