By Jayson Jarmon, CEO, LuxWorldwide.com
On the fateful day that the NASDAQ peaked, Saltmine Creative merged with MPL2.com (an Eastside venture-funded company) to form Saltmine LLC, one of the largest independent Internet development companies in the world, with nearly 500 employees; offices in Seattle, Bellevue, Chicago, and London; and annual revenues of about $50,000,000.
Fifty. Million. Dollars.
When I look at that last fragment, it certainly suggests success ... but that was one of the worst years of my life.
I was President, and then President/CEO. I like to kid myself that we merged with MPL2.com in order to protect our flank and keep the larger national and international players out of the Northwest (MPL2.com itself was just a product of mergers - it had been stitched together from the remains of Meridian Partners Limited, Parallel Communications and Vista Internet Solutions). The truth was we were tired of being poor, and we wanted to be rich like so many of the other people we were watching prosper in the Internet space. You see, in the year Saltmine made all of that money, my partners and I still made very modest salaries, channeling all of the cash back into the company … even after our joint ownership eroded to 30% after the merger.
That's right, we were the founders and C level directors of a $50M company that had an estimated street value of about $200M, and we could barely pay our mortgages.
A brief digression: I am sadly reminded at this point of how I had run into Dave Oreck - yes, the vacuum cleaner CEO-at an Ernst and Young retreat in Palm Desert about that time. I had just done some interview or other and he was watching me. As he stepped up to clip on his mic, he felt compelled to warn me about the danger of losing control of Saltmine in the midst of all the Internet speculation. His words ring back to me through the years like a distant thunder clap.
The real reason for the merger, of course, was to create a package deal that could be sold to one of the huge public roll-ups, where the key investors and founders could take some money off of the table and everyone would prosper. Our hope was to develop some security for ourselves, our employees and their families, and for the investors we had inherited from MPL2 with merger.
Then the NASDAQ crashed, the VCs panicked. Many employees from the MPL2 side of the company who had been led to believe that riches were imminent, became ... angry (WARNING … this link includes explicit language!).
We had been told by grinning investment bankers with perfect suits and haircuts that the combined companies would sell in a matter of weeks or months at the most. A "no-brainer," they said. When that didn't happen, it became clear we would have to survive as a viable company without further investment or any buyers. My job was to make the impossible situation work without investor support, in a market with the bottom dropping out, and in an environment where the employee's expectations of getting rich quick had been utterly thwarted.
