I Took Over The Company From The Crooks

By Todd Wille (ghosted by Kevin Woo) | Forbes

The FBI was waiting the day I returned to Unify Corp. It was Aug. 21, 2000. I had previously worked at the Sacramento, Calif.-based application development, database and migration products company for four years, between 1995 and 1998.

Steve Whiteman, then a Unify board member and today the company’s chairman, had called me a few weeks before to ask if I’d be interested in coming back to Unify, where I had been controller and chief financial officer. He had explained that the former chief executive officer had committed securities fraud and overstated earnings and was likely to be tried for insider trading and securities fraud.

By the time I arrived, the stock had dropped from a high of $42 to $1, major international customers were taking their business elsewhere and the staff was, to put it mildly, demoralized.

Still, when I heard about the challenges facing Unify, I said to Steve, “Let’s get going and save this company.”

When I walked into the offices, 19 humorless strangers greeted me. “Mr. Wille,” one of them said, “we’re from the FBI, the Securities and Exchange Commission and the Department of Justice. We need to have a word with you privately.”

The information the federal agents then gave me was worse than anything I had expected. The company’s revenue was approximately $3.5 million per quarter, but the cash burn was about $6.5 million, so we were losing $3 million every three months. At that rate, I estimated, the company would run out of money in less than 90 days. They also informed me that 39 shareholders had filed a class-action lawsuit against Unify.

That was defining moment No. 1.

I briefly considered filing for bankruptcy protection, just to get some breathing room. I called a bankruptcy attorney so I could fully understand the options and was told that to start I would have to write a $400,000 retainer check. I knew that in a few days I had to make a payroll of $300,000, and that that would take nearly all our available cash. I said to myself, “We’re too poor to go bankrupt.”

I knew I had to stop customer defections fast, because the company needed recurring licensing revenue to stay in business. To stop customers from leaving, I made four key strategic decisions.

First, I appointed the head of customer service to be vice president of sales. The reason I did that was because he had the confidence of our customers. They had known him for years and trusted him. I encouraged him to call every customer and talk to them every week. Let them share their concerns and frustrations. Ask them to please be patient with us. Some of the conversations weren’t very pleasant, but he continued to call, listen and reassure our customers that we were going to save the company.

My second major decision was to give the product development team focus. I decided to tell them to talk to customers too. Ask the customers what they needed, and then go build it. We were supporting products that were old and didn’t represent new revenue opportunities. The product development team did indeed go on to build new products based on significant customer input.

Third, I hit the road to meet with key customers myself. There was one particularly memorable day when I met with 60 of them in London. I think of it as Don’t Blink Day.

The CEO of a firm that sold accounting software confessed to me in front of the entire group that he was uncomfortable signing a $100,000 contract for the following year because he wasn’t sure we would be in business. I gathered my thoughts, looked directly at him and said, “You know what? You’re right to feel the way you do. But if you don’t sign your contract, I will be out of business, and your worry will become reality. Then your company will need to find another supplier for database development tools, and it will unfortunately be a long, complicated and potentially expensive process.”

The room went dead silent for what seemed like an eternity. Then the CEO of our largest customer in Britain broke the tension by saying, “You know what, Todd? That makes a lot of sense. Let’s make sure that doesn’t happen.”

That was defining moment No. 2.

Fortunately, many of our customers arrived at the same conclusion as that CEO, so a vast number of our agreements were signed, and cash began to flow. That allowed me to focus on my fourth but most important priority, the employees who had been brutalized by the CEO fraud scandal.

Senior corporate managers often operate with two separate sets of messages, one for the executive staff and the other for the employees. I decided early on that there would be only be one message–the absolute truth–even if it hurt and could scare people.

I held weekly meetings with the entire company, and I told everyone everything. I said when we were almost out of money. I said I didn’t know if we’d be all right or not. Most difficult of all, I said, “Tomorrow 35 of you won’t be here. Today will be your last day. I’m sorry.”

The heart-to-heart all-hands meetings paid off. Over the next 18 months, only one employee left the company voluntarily. Two senior staff members offered their resignations if the action could save employees working for them. The staff was truly selfless.

It has been nine years since that first defining day, and in the last three years Unify has made three acquisitions that effectively tripled the company’s size, added to our stellar suite of software tools and solutions and broadened our customer base. Today our customers are a who’s who of the world’s most admired businesses. Our stock, which was once delisted by Nasdaq, is trading on the exchange again.

I’m often asked if I’d be interested in finding another ailing company to rescue. I can’t imagine why I’d want to do that. Not only is once enough, but I’m having way too much fun here now.

Todd Wille is the chief executive officer of Unify Corp. In 2008, the American Business Association named him the year’s best turnaround executive.