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To grow the company, we’d needed additional capital, and Syd had pulled it together for us. The fly in the ointment at present was that we’d agreed to allow the second tranche to pull out later this year if we didn’t meet our metrics. Currently we were behind the eight ball on profitability, given the poor results of the food division. We also needed another large acquisition, or two smaller ones, to meet our overall growth target.
Josh had been the one to suggest getting into the organic food business, but so far it wasn't meeting our expectations——or anybody’s expectations.
I put down the spreadsheets. “Well, this just proves what we knew already. We don't have the scale yet to have this make sense.”
Melinda’s reply arrived.
MELINDA: A few months maybe
This was perplexing, but then I didn’t know much about Melinda’s family, only that she had grown up in Texas with two brothers and could turn on that melodious accent whenever she wanted. Not having her around was going to put a serious crimp in my plans. She was key to the corporate-foreplay component of our deals.
Veronica poked her head in. “The call is set up, if you’re ready?”
I nodded and punched up the call on my desk speakerphone.
If there was one thing I understood about Syd, it was never to delay giving him the bad news.
“Hi, Syd,” I started. “You’re on speaker here, and Josh is with me. We want to go over the preliminary numbers for the foods division with you.”
“Hi, Josh. Craig isn’t with me today. He’s off to Corsica with his latest wife,” Syd laughed.
“How many does that make?” Josh asked.
I rubbed my ring finger nervously.
“Four now,” Syd answered. As the CFO of an internet startup, Craig Barnett had become quite wealthy, even by my standards, and had decided to spend his money accumulating ex-wives.
It was just as well that Craig wasn’t on the call. As a previous CFO, he liked to get a little more into the details of the numbers than I cared to go. Syd and I tended to agree that long-term strategy and our progress toward it was more important than quarterly key results. But Craig often reminded us it wasn’t the CFO’s job to see it that way.
Josh fidgeted in his chair. I kept telling him Syd's bark was worse than his bite, but it didn't keep the bark from scaring him.
“Well, the summer is a bad time of year for that business isn’t it?” Syd asked.
“That's what I was just telling Liam,” Josh offered.
“And how bad is it right now?” Syd asked.
Josh opened his folder. “The preliminary numbers say we’ll be about negative twenty percent for the quarter.”
“And how much is that in total?” Came back over the speakerphone.
“Forty million in round numbers,” Josh answered.
Syd whistled over the phone. “Wow, eight hundred Suburbans is more than we were talking about a few months ago.”
Syd had taught me that talking about numbers in millions made them seem smaller than they were, so he liked to talk in clearer terms: how many Chevy Suburbans you could buy if you rounded the price to fifty thousand per vehicle.
Josh was sweating this, so I answered for him. “Yes, it is.” There was no sense in trying to sugarcoat this. We hadn’t projected it would be this bad.
“And how much better will it be in the third and fourth quarters?” Syd asked.
“We should be able to about halve the number,” Josh told him.
“Liam, you guys said last time that the basic problem was one of scale, and I assume you have a suggestion.”
“We've been pursuing the solution to this problem,” I said. “The only quick way out of this is to be more aggressive on the acquisition side.”
“Didn't we say that last quarter?” Syd asked.
