Down, But Not Out

Ep. 3 How Farms.com Survived the Dotcom Crash

September 02, 2021 Nick Hollinger Season 1 Episode 3
Down, But Not Out
Ep. 3 How Farms.com Survived the Dotcom Crash
Show Notes Transcript

In the third episode of Down, But Not Out Nick talks to Joe Dales about how his company, Farms.com, had to restructure after an attempt to grow too quickly. After a new CEO takes too much of a growth risk, Joe had to deal with financial hardship and laying off 80% of his staff. Since Joe’s Down, But Not Out moment, he has been able to lean on his team and grow Farms.com to a multi-million dollar business with over 130 employees. Find out how Joe came to terms with downsizing and how he was able to rebuild his company from the ground up.

Hello everybody and welcome to another episode of Down, But Not Out the show where founders tell their real-life stories of entrepreneurial resiliency. I started this show after my one company Visitor Queue was dealt a death blow by Google that led to us almost losing all of our clients and all of our revenue and that would have happened if it wasn't for the hard work determination and resiliency of our team. I love a good underdog so these stories resonate more with me than the story of the one billion dollar exit or the story about how your company IPO'd these are stories of grit meant to inspire you the listener to keep fighting as entrepreneurs and business owners we will have our backs against the wall multiple times so let hearing these stories be your fight song your hooraw that thing that gets you out of bed on those tough days. This episode is brought to you by my company Visitor Queue, identify the anonymous companies visiting your website so your sales team can follow up with them start your 14-day free trial at visitorqueue.com. Now let's dive into this episode today I'm joined by Joe Dales, household name in the agricultural and food industry throughout North America, Joe has been founding companies before it was cool and managed to not only ride the wave of the Dotcom bubble but build an iconic brand out of it in farms.com Joe is a sought-after board member for a handful of companies as well as the co-founder of the RH Accelerator in London, Canada which is currently invested in 16 companies with the aim of helping the ecosystem in Southwestern Ontario thrive knowing Joe personally I can say he is the man to go to if you have a problem and or need to be introduced as someone as he seems to always be one to two connections away from anyone, Joe thanks for being on the show are you ready to share your Down, But Not Out story? Yeah thanks Nick I appreciate that and yeah my background I've had a long career in the agriculture and food industry and about 20 years ago, I don't usually tell this story but you know it's usually a couple of beers in the in the bar story if you really want to hear it but we had started farms.com and were rolling along fairly well we had raised a lot of Venture Capital we had operations in Canada and I moved down to Memphis, Tennessee with my family to get some of our US operations up and running and we had taken on three VC partners, Venture Capital partners, and first it was all predicated on a quick IPO and we're well positioned for that with farms.com but we missed the the window which is probably fine but we still had a lot of cash and we were building the company out, brought in a new CEO and he was fairly impatient with the growth opportunities and after probably a year and a half after, probably 2001 they decided that they wanted to shut down the company and because the VCs that all come in as prep shares and we were common it was going to be a bit of a mess and at the time the company had a it was burning a lot of cash because we had a lot of cash they wanted growth but there was quite a gap in profitability and we used the word "burn rate" in those days so we basically didn't want it to go down and we still wanted to do it like we were bringing innovation to farmers it was just way too early, we we're still just learning to get on the internet and the internet was early but we were well positioned and we had some good business models they were just very immature so we kept the relationships with the VCs and I basically went to them and said you know let it go down on our watch and just leave us a bit of cash in the company and we'll unwind this and so in a down round we bought back the interest from the Venture Capitalists we accomplished that we had a bit of cash in the company everybody thought the company was going to fail and so we had to restructure really hard so we shut down a bunch of offices we had to let a lot of really good people go probably went from 100 plus staff down to 20 plus and refocused and if you weren't attached to revenue and and line of sight to getting your business profitable you know we had to mothball some of those projects and so we restructured and in six months we were breaking even again which was pretty remarkable but just shows you when you solve problems and you focus and make things happen and then you know for 20 years we were able to build out farms.com and grow it out to you know now it's probably 120 130 staff around the world and offices in Canada the US, England, and Asia so sometimes you have to do the hard stuff, a lot of sleepless nights a lot of stress but you realize it's a long game and a lot of our staff that we spun out we remain friends with and some of them started companies and so I look back and we still have good relationships with a lot of those people it's just you need to be creative problem solver. Yeah so you were a co-founder in farms.com and now at that time I think it was two brands or three brands and now it's still multiple different brands as well and great brands, recognizable, and as you said it turned into a success so you were co-founder new CEO was brought in, turned out that you were burning too much cash in order to continue which is why they wanted to shut it down- I think there was, no we've got to remember it went from Dotcom exuberance and IPOs to Dotbomb with no IPO and no exit that's it and so and everybody- So were you evaluated at similar to where the Dotcoms were where they were just getting these ridiculous evaluations even though they didn't have the revenue and you guys had revenue but you were aiming for that high growth and then the bubble burst and you were one of the casualties of that bubble bursting it sounds like. Well, just expectations swung like crazy right in those days but we took advantage of the opportunity you know raise money in the US with some great Venture Capitalists and you know had a great run there on that and then probably crazy expectations but you know we just you know it was what it was and we just restructured and then turned it into a real company it just took longer. Yeah, so you mentioned you laid off about 80 employees give or take I imagine that was pretty hard and it didn't look like it doesn't sound like revenue took a big dip because it was just you were projecting this growth. Yeah, we were too early, we were just burning too much cash right so we needed to restructure on that so and then actually afterward sales were you know we got focused and really built it out on real customers and real revenue real focus. Yeah and you've been able to grow as you said, so you went down to 20 employees, and now as you mentioned farms.com is at 120 130 and revenues in the millions obviously. Great company, great company, very profitable growing nicely great diversified product line everything from media properties to things like agcareers.com and careers in food and yeah very very diversified. You make it sound so easy Joe, I imagine this is a very tough time and maybe it's at the time that heals all is that it? No and I think yeah I don't mean it too it was pretty stressful at the time right we thought we were going to lose everything so what you learn is you just have to focus and try to get things done and deal with the challenge right and you realize it's not over until you say it's over and I think at RHA we try to teach all our founders to be resilient, be creative, be resourceful, and then don't give up right you find if you don't give up opportunities present themselves and if you have confidence and you've like if you've had some struggles before it just gets it you get better at it right and, first few times and I know you've had some challenges in your business you know the first few times it sucks, it sucks all the time but that's what we do yeah we build companies and you overcome challenges creatively and so I think the more you do it the the more confident you get in your team and yourself your own ability and you realize there are solutions you just don't have to do the hard stuff and so yeah cutting staff's never never fun but you know you have no choice right you have you have to do what you have to do so making those hard decisions is critical. Yeah I like what you said there about it always sucks but you just get used to it right it's one of those things where it'll never get, it'll always hurt but it just starts to hurt less as you you've gone through it multiple times I think that's an important point for anyone going through their first kind of big curveball or big crisis that this is the first time and it's gonna this is gonna be probably the worst and you could deal with the exact same thing two years down the road and it will feel a bit better because you've already dealt with it. Well, and your confidence comes up too right and you know you'll learn, the great companies are born in the blast furnace right you know what do they talk about you know diamonds come with pressure Yeah, that's where great entrepreneurs come from too right. That's why founders tip their hat to other founders especially if you've had some success because you know that we all know we had to make payroll we all know when you know we lost big clients we all know when we lost key staff and we had to restructure and pivot and you know it the more you do of it you know then you don't sweat the small stuff and you kind of manage what you can control what decisions can you make what do you have to do to make it work so and the numbers are important right never running out of cash, making sure you make those hard decisions and then living with the consequences if it doesn't work out all right what else can you do so I wouldn't say it's lucky I'd say it's just a process I'd say it's a process and you get better at it over time and it's still stressful though it's always stressful. Yeah, I like that point about every entrepreneur having their story right and going through it, and if you haven't yet it's coming it's probably gonna it's on its way if you stick around long enough and you take enough shots something's gonna happen. Was there a point in time where you so that it sounded like the new CEO or part of the team at least wanted to fold up but this down round saved the company was there a part in there where you wanted to give up whether it sounds like there were conversations in there walk us through that a bit? We could, the easy thing would have been to walk away and give up and and start over but we looked at it and we thought about it and we had enough confidence in ourselves that we'll fix this and we had some other challenges over the years you know prior to this where we were battle hardened a little bit and the downside wasn't so down so you just you learn you get a bit of a feel for your team you get a feel for your abilities and then you know the other thing that happens I think too is when you think of think of sports analogy you know if you're playing a great team and you rise to that occasion and you win you know it's a great accomplishment so fixing and turning around a company in a pretty tough situation really does give you confidence and it does kind of bullet proofs you and so giving up it's over and so not giving up sometimes you have to know sometimes you do have to retreat and really pivot off something but a lot of times you know the difference between winning and losing is kind of in your head so you just decide you don't want to lose and be determined and persistent and resilient and all those things. And almost with sports as well I think entrepreneurship is the difference between winners and losers also just keep showing up just keep trying to play keep playing and eventually the more shots you take the greater the chance that you- Not being afraid to lose or not being afraid to win I guess right you're absolutely right is half the battle and being consistent and not taking shortcuts and all those things so yeah it's fun yeah I enjoy it. Anything that you would do differently going through that experience yeah not your whole career I'm sure there are a few in there but going through that experience is there anything that you would change in hindsight? You know you kind of learn at the time in your career you're young you've never done certain things before so you know if you could go back yeah you'd play the cards quite a bit differently you'd played them now but yeah I try not to look back I try to just look forward and just get better every day right so I was a little bit weak in corporate governance I didn't understand how boards work just because I was a young founder so since then I've gotten better at it you know joined a bunch of boards got trained, trained myself you know now hopefully some of those lessons we'll be able to impart to our RHA companies so it's just continual improve yourself right so that's something that you can control and you just put the work in doing the work. I like that's a good lesson I think there's always from these the time I've done them I think every one of them has their own takeaways of like know you're legal to know your corporate governance ensure your tech stack is solid there's always these laws Watch your cash flow. Watch your cash flow is always a good one I check mine weekly just to just ensure I didn't miss anything was there something from your personality or background that kind of helps you get through this from your whether it's your upbringing or I don't know just a character trait that you have? Yeah I'm not sure I think founders that are in the business world they maybe self-select I tell people if you don't wanna take on that risk and the pressure of being a founder you know just go get a good job right but if you do want to do that this is part of the price you pay to build companies so it's not easy it's not simple and you know probably 90 out of 100 people don't even start so people like you are rare to begin with and then when do they say nine out of ten startups fail so you've got to be pretty darn good and so working on yourself and that's where Dave and Brian and I, we try to work with you guys to make you better you know the the products will morph and change and where you start and where you finish are two different things but you know the founders in my mind are are really critical and founder development you know helping you guys we can't do the work for you but we can give you sounding boards we can you know dust you off when you get you know kicked in the teeth and then pop you back out and then cheerlead for you really hard and say hey let's you can do this you know it's not not rocket science but it it's gonna you know it's gonna it's gonna challenge the living heck out of you. Yeah and just for context for everybody Joe, Brian and Dave are all the founders of RHA Roundhouse Accelerator here in London which Visitor Queue's a part of and when we went through our near-death experience I remember Joe was there the whole time and would just tell me that it's not as bad as you think like we've all gone through this he would tell me his horror stories and be like wow that actually made me feel better. Well we just wanted you to be confident that you just have to fix it right you know yeah fix it or you won't but don't give up and you pivoted hard and you know made it work and we're really proud of you and what that does the next time that happens you just manage you know you get bigger at it you get better at it and then you can handle more complexity and bigger challenges right you've gotten over the first few hurdles and now you're ready for the next one. Yeah like we were saying the second and the third one they still hurt but they get easier and that's the reason I started this was because hearing your stories and hearing everyone else go oh I've got a good story for you because you're in the dirt right now and you're fighting for your life you should hear this story about these people that did you've shared a lot of good lessons so far and I just wanna I guess end it and ask like if there any other for the founder that's going through that hard time or that they're in their pinch right now or any other lessons that you haven't shared so far? Well and I usually ask young founders where they are in their financial accounting skills because that's how the game is scored so you really need to be good at accounting and I wasn't but I trained myself over the years to become really really skilled at accounting so I can look at statements now I can look at the situation I know where the money is and how it flows and stuff like that so I encourage people hey if you don't have strong accounting and that's really how the game is scored so being really good at business you know will help you it'll help you make better decisions right it's hard to be creative it's hard to be right when you aren't quite sure you know how the money flows and how everything works so that's usually the one thing that I ask early founders all right if you're a tech founder that's fine but you're going to have to train yourself to be good at accounting. Yeah I think that's a good take away a lot of the issues that we see are financial and cash flow based right or it always comes down to the cash flow because you need to ensure that you're protecting your bottom line even if your problem wasn't directly related to cash flow. Okay Joe I appreciate you being on the show just a brief recap you co-founded farms.com things were going great throughout the early 2000 bubble burst you had to downsize the company it almost went under you took a down round saved it and grew it to now being 130 employees and doing really well and doing great things for Southwestern Ontario I know quite a few people that work there and a great success story a great Down, But Not Out story. Yeah and I think just the only other thing is just build your team right, you can't do it all yourself and I certainly was a small part of it, really it was the team that did all the great things I'm blessed to find some of them and I'm kind of really proud of how they reacted and you know built out a great company so you can't if you want to go far go with the team if you want to go fast go by yourself right Words of a good leader there they always default to the team right it's true you really do need you can only go so far by yourself or continue on and that's I think an important lesson as well, you're going through these moments I think Joe would agree that I leaned a lot on my team I was like hey I found inspiration from them I found a lot of my will and my fight from talking to them and being able to motivate them motivated me which was a good lesson as I went through that experience perfect all right thank you, Joe, for sharing your Down, But Not Out story. Thanks, Nick take care of yourself.