What Can We Learn From VIA?

To those of us who stick our necks out there to create jobs, the last thing we want to do is lose. We win. That’s what we do. Winning is what makes us tick.
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Don't ever laugh as the hearse goes by for you may be the next to die.
- The Hearse Song


Those words have stood me in good stead my whole life. They rang true again on the eve of CEDIA earlier this month when we all heard the news that VIA International ceased operations, leaving everyone (employees, vendors, subcontractors, customers and many others) holding the bag. We love to stand, gape, rubberneck, and judge when tragedy strikes. Monday morning quarterbacking is one of our favorite past times. Does any of this sound familiar? “We would’ve done it better. I knew it was coming all along. Those greedy owners.”

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Could this have been you? It could’ve been me, that’s for damn sure. Our businesses are all woefully undercapitalized. How many of you have working capital percentages in excess of 25 percent? In other words, most of our businesses need a ton of cash on hand to cover worst-case scenarios. For every dollar we bring in, we need to keep 20–25 cents on hand in case of emergencies and unforeseen circumstances. Our company does $4 million annually. That means we should have around $1 million readily available to cover anything that comes our way. Before you finance guys start pounding me in the comments, I understand there are myriad ways to calculate working capital needs, but my example is extreme on purpose (the percentages vary widely and you can find out more about calculating working capital needs here). The point I’m trying to make is we’re all undercapitalized. Our capital needs are much greater than we think and find ourselves scrambling to make payroll, pay vendors, and keep things running smoothly more than we’d like to admit. In VIA's case, had they had sufficient working capital, they could've weathered a cash crunch better. That said, there are numerous reasons businesses fail and I have no firsthand knowledge of why VIA failed, but undercapitalization seems pretty likely.


Do you keep customer deposits in a separate account (a lockbox) and track it as a liability? We don’t. We should. What other sins do we all commit in the name of “making it happen” on a daily basis? If we don’t learn from VIA’s demise, we’ll repeat it. If we don’t all become better business people, we’ll pay the piper at some point. Let VIA’s felix culpa shake us to the core. Stare at it. Learn from it. Don’t turn away from it. Lean into the nauseous feeling you have right now reading this. Channel it into your own business. In the words of Dave Ramsey, let’s all “live like no one else so we can live like no one else.”

Our antidote to undercapitalization is RMR. Slowly and steadily it builds. Slowly and steadily we don’t care about cash anymore. Apparently, VIA had the same idea with monetizing their service contracts and eventually planning to sell them. What else will level out the heavy peak-and-trough cycle of customer deposits and retainage payments? We need a better strategy to deal with adversity. We need to prepare for war and pray for peace. We need to reach out to our brothers and sisters in the VIA family and hire them. We need to heal this wound.

I didn’t work at VIA, but knew many of the players. Julie Jacobson’s CE Pro article had 130 comments last I checked. Many of the comments talked about poor communication internally and overly bureaucratic processes. It’s amazing to observe how we each perceive the truth (our worldview). Understandably, employees left holding the bag are enraged and laying blame. Julie and a few others injected some great color into the comments with an explanation of how banks can call lines with no notice whatsoever. I don’t know what took place, but do know after having seen the dotcom collapse firsthand, that nobody wants to lose a business, and the notion of a golden parachute is generally more of a contrivance than a reality.

To those of us who stick our necks out there to create jobs, the last thing we want to do is lose. We win. That’s what we do. Winning is what makes us tick. Losing is not an option. There’s always a path through the dark places. I'm guessing the folks who founded VIA, who put their financial security on the line, did not want to let anyone down. Entrepreneurs tend to be irrationally optimistic people. Even when things are down, we need to put a good face on it because most of our employees aren’t equipped to handle what I call the “raw feed.” That’s fine. The die was cast long ago. We’re all different. Those of us who start and run businesses and those who work for those businesses will always have different worldviews. Neither is right or wrong. I've been on both sides of the equation: I’ve been laid off with no notice, and I’ve laid others off with no notice. Business can be nasty at times. That said, think of the companies that will rise from the ashes of VIA. I'm not sure I would've started Livewire had there not been an economic implosion of the web industry after 9/11. The market is always shifting.

I’ve been through the demise of numerous companies as an employee. Most of the time, I knew something was up well before the company went under, but I usually dismissed it as my own paranoia. In all cases though, I landed on my feet after the initial shock and it always resulted in a better opportunity. To any VIA employees reading this: your experience makes you a valued veteran, someone with war stories, wisdom, and highly desirable player on anyone’s team. Mark my words. If any of you don’t have a better story to tell in one year than you do today, I’ll eat my hat.

Someone will eventually roll our industry up (maybe this time at a regional level). Everywhere there’s an impossible task, right around the corner stands a Thomas Edison, Elon Musk, or Leonardo Da Vinci. When we do roll up, where do you want to be? I’d rather be the one with the CEDIA approved chart of accounts, showing double digit net profit and best practices implemented in my organization. What’s the worst that can happen? You get the house ready to sell and often find you don’t want to leave because you just made all the improvements you never got around to.

What I learned (and will continue to learn) from VIA is nothing's ever as good or as bad as it seems, and the dawn will bring a new day for those left in the lurch. I'm looking forward to seeing what the next few months bring. Since we live in America, you can bet it will include a ton of irrational optimism, risk-taking, and new entrepreneurship.

Stay frosty and see you in the field.

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