Stephen Shu, PhD

I thought I would relate a case I had in a startup situation where I had felt that I had reached the lowest point in my personal and professional life. I was really choked up, and it was probably the first time I have ever had something mental shut me down physically. But I think this case also reflects some aspects creativeness and caution that are bred into people working for startups.

I was contacted by an individual in Caracas, Venezuela. We’ll call him Mr. P. Mr. P. purportedly has a background in the enterprise software market and connections into the financial services space, a sector very ripe for my company’s product. Through pure chance, I happen to talk with one of our sales directors who actually has worked with Mr. P in the past. The past experience with Mr. P was positive. The prior company (in the same market space) got a number of high-level meetings with customer prospects and a mini-roadshow in Venezuela. One deal actually came though and was signed. Trick, however, was that Mr. P wanted his sales commission up-front (i.e., before receipt of first payment from customer). To make a long story short, the key person that signed the deal at prospective customer changed jobs, and the vendor lost the deal. Mr. P., part of a population where the economy is under terrible duress, no longer had the money to pay back the vendor. Our current sales director still speaks very highly of Mr. P.

So I decide to move forward. What does that mean? Well in a startup situation, and especially in cases where you do not have the Board’s blessing to pursue international speculation, you either need to get cash up-front or do a commission-only based deal. Went with later approach here. Additionally, I did not agree to pay for any expenses. Let’s get things rolling first.

I start to have a number of phone conferences with prospective partners (e.g., IBM distributors) and customer prospects. Mr. P. prepares some good presentations for us, and I verify some of the phone calls, discussions, and exchanges with people I know, people who have done business in Latin America. I even use informal networking to get connected to folks at IBM who manage the Latin America operations, tell me things about doing business there, and can verify that the people I am talking with as IBM distributors are actually IBM distributors. Early on, I also get introduced to a Mr. V. who is supposed to be able to broker additional connections, but on my first call, I wasn’t so sure about the fit.

A few weeks into the various calls (I never traveled to Venezuela btw), Mr. P. starts to indicate to me that he needs an advance of money. The highballing starts to come on strong. He has set up conference calls, cannot pay for food to eat, traveled to different parts of Latin America, etc., and I have not sent a single cent to him. I consult with our director of sales. Compressing things a bit, I am still cautious, so I roll out phase 2 of my "jerk manager" approach. I tell him that I cannot advance any money, but that I will send up to $750 in three pieces (perhaps not the exact amounts), and that each piece is tied to a milestone: e.g., phone conference with customer (both business and technical contacts), verification of pilot install of software, and signed order form (of a qualified, credit-checked customer) for training. He say "great". OK.

We almost complete through the second milestone, but have some issues with the Java virtual machine implementation in the IBM AS/400 environment.

Then something happens out of the blue. Mr. P’s son has been in a motorcycle accident. He will lose his arm if he does not get surgery. Mr. P. does not want to take his son to a public hospital, but wants to take him to a private one. Please advance the rest of the $750. Offline, I call the special crimes division of the FBI to see if they’ve ever heard of this one before. No guidance there. But they do have four full-time people manning the customer services lines to handle the Nigerian email scam. FBI says to me that they can’t make any recommendations here, but that it sounds like I’m doing all of the forward and backward chacking I can.

In the end I try to console Mr. P., but I also indicate that it is not my money to advance. It is shareholders’ money. I ask to let me speak to the doctor and the hospital. I say that I am not comfortable advancing money to him directly, but will pay the hospital directly, using some of my own money. He says OK. To make a long story short again, I get one of my friends that can help with the language to connect me to the hospital. I go through a number of different departments, and finally get so caught up with transfers, that I spare my friend the rest of his time with helping me out pro-bono. I ask Mr. P. why I cannot reach the person at the hospital, he says to call Dr. V.

In the midst of all this is where the low point happens. Mr. P. calls me out of the blue. He is sobbing. He tells me that he had to take his son to the public hospital for immediate surgery or the arm would be lost, but it turns out that his son has died.

It is even hard for me to recall how I felt at that moment, but I felt directly responsible for the death of his son. I had not advanced money to take him to the private hospital. While I had moved quickly to verify circumstances, it seemed as if I was not rapid enough. My mind and body shut down for 24 hours.

A few days later, Mr. P. tells me not to worry, that he will be gone for about a week to bury his son.

My mind starts to work again eventually. Hmm. V is a name I’ve heard before. Where have I heard that name? Let me scan my address book. There’s a Mr. V. that is a business development person. But what’s this? Dr. V (the scheduled surgeon for Mr. P’s son) has the same telephone number as Mr. V. Now V is a common name, but this seems odd. I eventually try to mention this to Mr. P. He has no explanation other than in his distraught mental state he must have confused things.

Mr. P. and I never seemed to trust one another after that series of incidents. Our business ended, and the company shareholders were out $250 and about 2 weeks of my time in paid salary. To this day, I do not know whether Mr. P’s son had died. Mr. P. let me know that it was not my fault though. One of my close friends told me that I need to see the movie, "The Spanish Prisoner". Probably both Mr. P. and my friend are right.