This is a story of stupidity and survival, of a young company with a lot of money and poor leadership. This was us in the early 2000’s. We had raised a substantial amount of money from one of the top venture capital firms in Silicon Valley. The board brought in our first CEO from outside of the company to bring us to a level “worthy” of the amount of money we raised. This CEO was supposed to be our savior. Coming from the luxury retail brand Louis Vuitton, he had the experience to make AXIS a high end boutique business that would expand across the country. Unfortunately he didn’t quite get the fitness industry. He was a nice man, but his real expertise was in spending the cash we had raised on fancy furniture and outrageous rents. He handed out company credit cards like candy and needless to say, he was not around long.
“The sign of insanity is to keep doing the same thing and expect a different response.” -Albert Einstein
The next choice to lead AXIS to greatness was the antithesis of our first CEO, with no luxury business experience and poor leadership skills at best. He came from the rental car company, Enterprise. With the disposition of used car salesman and the emotional intelligence of JAWS, he was ready to shake things up. And he certainly did.
“Jaws” had the idea that a hierarchy had to be established. He seemed to be of the camp that the boss and the top leaders of the company were more important than the people doing the work and driving the revenue. Needing to set the stage, one of his first power moves was to fire an employee on the AXIS training floor in front of clients and trainers on a busy morning. Genius move! 😉 This particular trainer was not only AXIS’ second employee, but she also happened to be the trainer of the lead VC of the venture firm who funded us. The story gets better…
Scott: “I got a nasty call from the client/VC and he dressed me down. I deserved it!! While “JAWS” had been hired by the board and given free reign to make AXIS succeed, I was the founder, and had to take responsibility for his actions. I tried the CYA (cover your ass) tactics that everyone used at the time and the bullshit HR lines that nobody believes. That was just the beginning of the fun.”
The client/VC, loyal to his trainer and not to the company he funded, proceeded to call and write letters to his trainer’s clients eviscerating AXIS. Even though the client had a fiduciary responsibility to the company, his anger overcame his judgment. He hired an attorney on the trainer’s behalf to sue us for unlawful firing. As painful as it was, we were stupid and deserved the thrashing we endured. We ended up paying out $35,000.00 to settle, but the damage was done and the trust was gone.
You spend years building strong relationships, but it takes only a few seconds to destroy them. The moral to this story is to love your people, respect your team, have the courage to do the right thing and most of all, own your mistakes (and those of your team members). If AXIS was able to succeed through this self imposed catastrophe, the lesson here is that there is always a light at the end of the tunnel.