I know I don’t talk about it much on these pages – for some reason I feel the urge to separate church and state more often than not – but on a day-to-day basis I run a business that makes things. Physical things. Things that will last for a hundred years. Or so we hope.
These physical things aren’t cheap. In fact they’re very expensive. More expensive than any other comparable product in the category, at least those also manufactured in North America. We get away with this price premium because we’re the Singer 911 – simply the best in the world in our little niche. We also take cutting edge technology and leverage it to a somewhat staid application to make something exquisitely cool. We started growing organically in 2013 and we continue to grow organically today, but we’re still very small in the grand scheme of the industry and we probably always will be. We like it that way.i So no Softbank investments wanted or needed, thank you very much.
Anyways we recently had the
mis good fortune experience for one of our installation partners to go belly-up without having paid us a dime on an invoice well past due. The damage was over CAD $100`000, which wouldn’t break us if we were never paid on it, but wouldn’t make our shareholders very happy and would deprive us of valuable resources to invest in R&D (first and foremost) as well as important things like marketing, which generates the leads required to keep us growing organically for years to come.ii Being an unsecured creditor to the bankrupt (former) partner meant that we were looking at pennies on the dollar from the defunct company’s trustee, if anything at all. Thankfully – and this was the first time anyone on our team had to exercise this legal option in 35+ years in the industry – there were surety bondsiii on the project that we could call on, and all we had to do to get ourselves noticed and rise to the top of everyone’s radar was put a lien on the project.
Liens have been around since Roman times and what they do is both fascinating and ruthlessly effective. In the world of real estate and construction, they’re essentially a legal claim against property for the amount of the unsettled dispute that’s registered against the land title. Once registered, the client sees it, the other trades and suppliers see it, the general contractor sees it, and no one is quite sure why someone in the supply chain isn’t being paid, but they can see quite clearly that this is the case. What then happens very quickly is that payments stop flowing, materials stop moving, and construction comes to a screeching halt, so perhaps unsurprisingly my phone began ringing off the hook with calls from the GC asking how we can make this enormous thorn in their side go away tout de suite. At that point, I got to practice my exaggerated “late night FM DJ voice” complete with mirroring, empathetic listening, and guaranteed execution, just like a real hostage negotiator (thanks Chris Voss)!
Sure enough, two weeks later and a sizeable cheque arrived in our lawyer’s trust account with the rest coming this spring to make us whole, the lien was removed, and we were no worse for the wear other than a lesson learned to choose our partners even more selectively, all at the modest cost of a few grand to our legal team. The whole affair was an object lesson in staying calm, seeing adversity as education, the value of ancient technology as much as innovative technology, and the eternal value of WoTs. There’s something to be said for all of that.
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- Sleep ad libitum ftw! ↩
- We’re in an industry where the time between first contact with potential clients to getting paid on a job is regularly 3-4 years, so we have to look much farther ahead than your random Candy Crush or NFT platform. ↩
- There are many kinds of bonds, of course. In finance, bonds are basically preferential debt, sometimes exchangeable (ie. “convertible”) for equity shares at a later date, but construction bonds are insurance purchased by the owner and/or general contractor in the event of poor performance or non-payment. ↩