and his colleague, who was a banker, had two seats on the board. They wielded
that power to their advantage—offering the company money, but on very onerous terms, says Rodrigues. Then the lead investor used the decrease in sales,
which had resulted from sales consultant’s lack of product placement, as an excuse to lower the stock value. This made it so that if they did take the money,
Waldner and Rodrigues would lose their majority stake in the company and
their control of the board. If that happened, it would not be too long before
the investor could take control of the company.
“Trust your instinct. Most entrepreneurs are risking
everything they have
because they believe in
something at a cellular
The Setback that Could Make the Cracker Crumble. If all this was not over-
whelming enough, one day Rodrigues got a call from his distributor, United
Natural Foods International (UNFI), saying that they were about to send back
$250,000 worth of product. A few months earlier, their UNFI buyer had made a
large purchase order, but then left the company. With all the new stores Ro-
drigues had been told the product was being sold in, moving that kind of in-
ventory seemed doable. However, since the sales guy had actually only placed
the product into a small fraction of the promised stores, this huge amount of
inventory was still sitting in a UNFI warehouse with only a few months left until
its sell-by date. Panicked and hoping they could get some help moving the
product, Rodrigues put in a call to Jerry Schwartz, vice president at Natural
Specialty, the brokerage company where their old UNFI rep who made the
$250,000 order was now working. Schwartz’s response to Rodrigues was, “Well,
if these crackers are so great, why haven’t I ever heard of them? Send me some
product and when I get back from traveling in a couple weeks I’ll try it and
we’ll talk.”
“Those two weeks sounded like an eternity at that point,” Rodrigues
remembers.
Then they got another call. One of their brokers was urging them to attend
the SOHO Business Conference & Expo to promote their product. In debt and
about ready to lose everything they had ever worked for in their lifetime,
Rodrigues and Waldner told the broker they just could not go. But the broker
persisted.
Rodrigues vividly remembers the next moment—the lowest moment in the
history of the company—with tears welling up in his eyes. “At that point, Mary
turned to me, mustering up all the courage she had, and asked, ‘What would
”level and that feeling is driven by instinct.”
we do if we were doing well right now?
We would go, right?’” So Waldner and
Rodrigues used what was left of the
credit on their American Express card
to buy tickets to the show in Orlando,
Florida.
“Mary later told me that on that
flight, she was so down that she wanted
to die,” says Rodrigues, choking back
his tears again.
The trip to Florida saved the company. They ran into Schwartz at the
show and he tried the product and
loved it. He had their old rep take on
the account and he was able to move
all the product in less than two months.
In addition, they won the court case
with the sales consultant, whom the
judge said, “acted in a less than forthright manner.” And what about their
lead investor? Well, rather than accepting his money and terms, with some inheritance money and funding from
other investors, Rodrigues was able to
raise what they needed to move from
the 7,500-square-foot co-packing facility
to their own 54,000-square-foot facility.
And, since their lead investor had de-valued the company’s shares, Waldner
and Rodrigues were able to use the
money they had raised to invest in their
own stock, regain control of the board
and vote the investor off.
Insight No. 3:
Know Exactly What You’re
Getting Into and Don’t Forget to
Follow Your Instincts
While it seemed like the worst was
behind them, as Mary’s Gone Crackers
continued to grow, again they reached
a point where they needed more
money. This time the funding came
from a a venture capital (VC) group.
While the VC group seemed to have
good intentions, after a short time
Rodrigues realized they had their own
agenda. So he sought out every piece
of information he could find about
VCs. In his research, he learned that
many VCs follow a certain “recipe for
