Chapter 48: Winners and Losers

Company Developments

December 1994 – March 1995

“Hey, Will, it’s Martin here,” the person on the phone said. “Just a reminder, it’s coming up time for your company’s Annual General Meeting, and there’s a few ideas I want to run past you.”

He suggested it was time we appointed a ‘Board of Directors’, four or five people who I trusted to provide ‘corporate governance’ and review the major decisions of the company.

“I assume at the moment, you’re pretty much running things by yourself, with input from Lisa, Michelle, Mary Beth?” he said.

“Yeah, and David, Debra, some of the others will have their say,” I said.

“There’s nothing wrong with that, so far you are making good decisions, things are running smoothly. But having a good board of directors not only shows the regulatory authorities that you are a serious, fair dinkum company, but you get that independent input, the people you have all work within the company, and maybe are too close to the day-to-day operations to have that overall, objective point of view. Think about who you might want, but ideally, they should be people with business experience, who share your vision for how the company should be run. They do not need to be computer experts, just have a sound business knowledge and experience.

“I’ll send you some boilerplate words for the Annual General Meeting of the shareholders, how to appoint board members, and an initial agenda for your first board meeting. The only legal requirements is there is at least one meeting of shareholders and one board meeting each fiscal year, that satisfies the requirements of the corporations law. But you might want to consider having board meetings quarterly, at least in the initial stages.”

“What about having you on the board?” I asked.

“No, my role is your external counsel,” he said. “The same as Brett, he’s your external auditor; we both have important roles in the company, but it’s just as important that we don’t confuse those roles. I am there to provide a source of legal advice; are the things that you want to do within the law, is there anything extra in terms of reporting or record keeping that has to be done, is there any conflict of interest or something that might attract unwanted attention from the regulatory agencies. If I am not part of the board, if I was not involved in making those decisions, then I can be truly independent, and give you sound advice. The same with Brett, his role is your auditor. It’s important for good corporate management and governance that we don’t confuse roles and responsibilities; having good separation of powers can avoid a lot of problems.”

I thanked him for the advice, and told him I would get back to him in a day or two, once I had sorted out who might make good directors. That evening, I spoke with Mary Beth, Lisa and Michelle, to get their thoughts, and I asked Mary Beth if she thought her father would be interested in being on the board. She felt he would enjoy it, and suggested I ask my father.

“Now that your father has retired, he’s probably at a bit of a loose end,” she said. “But he’s got lots of high level management experience; he would be a valuable addition to the board.”

“What about Alexa” Lisa suggested. “She really knows how to run a business, she’s a successful business owner and manager in her own right, and I’m sure she would be more than willing to help. She has so many contacts across all sectors of industry, too, I mean, look at all of the companies and businesses she refers us to!”

“Murray Allen would be good as well,” Michelle suggested. “He’s still very much in tune with technology, and he would be very keen to mentor and help you.”

“Okay, that gives us four board members,” I said. “I’ll call all of them this evening.”

“Don’t forget to include yourself as ‘managing director’,” Mary Beth said. “You need to make sure you have a formal role on the board.

After we had spoken, and there was general agreement about who should be on the board, I called all of the potential board members, and asked if they would like to be involved. Each of them was very keen to serve and help out, and the next day I got back to Martin with a list of names. He told me that he would start to prepare the necessary documentation for both the AGM and the appointment of the board members, with the actual AGM scheduled to be held at his office a week from next Monday, on December 12th.

The agenda for the AGM was restricted to only what was required in the corporations law, confirming the appointment of the directors, officers and external auditor, and the acceptance of the annual return documents. That would conclude the AGM, and then the inaugural Board Meeting, with the newly appointed directors would take place. Martin had suggested that the discussions on future business expansion and plans be deferred until the board meeting, and each of the company management would brief the board on their part of the business. That way, we would bring all of the board members up to speed on what we were doing, and what potential business we had coming in the pipeline. We could then discuss plans with the board, and they would be able to ask us questions to understand just where we were coming from. All of us had our views on what sort of future expansions we should be looking at, we were in the enviable position of getting more work offers than we were able to take on. One question that always came up at our business development meetings was whether we should expand; take on more staff so that we could accept these projects, which we would otherwise turn down.

The shareholders Annual General Meeting – the only shareholders were myself, Lisa, Michelle and Mary Beth – went smoothly; it was really a case of ‘rubber stamping’ the selection of board members. Martin had prepared the meeting minutes in advanced, listing the board members, along with other agenda items, and we signed the minutes, so they were ready to be filed with ASIC as part of our annual return. We then switched over to the formal board meeting, Martin handed out information to the four new board members on what their role would be, how the meetings should be run, and the proposed agenda for this first meeting. As well as the four new board members, the other formal attendees were myself, as Managing Director, Michelle as company secretary, Mary Beth as Chief Financial Officer, David as Chief Technical Officer, and Lisa as Human Resources Director.

The first part of the meeting, once Martin had outlined how the meeting would be run and what was on the agenda was to formally introduce everyone – the only people who really didn’t know each other were Murray and Alexa, everyone else knew the others. However, it was important, as Martin said, that we knew what each person’s role and responsibilities were, what their background was, and what expertise they brought to the company.

Once the introductions had been done, it was now down to discussing the current state of the company, and areas we saw for future development. Mary Beth presented the financial report, and immediately Alexa asked questions about the high levels of money we had in our bank accounts.

“It’s all to do with our predicted cash flows,” Mary Beth said. “For most of our contracts we don’t get paid until the work is completed and accepted; but they are generally four to six week jobs. However, the main contract with the State we are only paid at various milestones, which could be several months apart. So we need the buffer, as it were, so we can pay salaries and other bills between receiving those payments.”

“Fair enough,” Alexa said. “You could look at a floating overdraft with your bank, but that takes a lot more work to manage. What you are doing does make sense.”

“The other approach would be to have a great mix of shorter term contracts,” I said. “That’s one thing that will come up a bit later, ways we can take on more projects without overextending our existing staff and causing work to suffer.”

David then spoke about the projects that we had on our work schedule, and how we were constantly getting more work requests coming in than we had the staff to handle.

“We could probably do twice the volume of J.D. Edwards installations and upgrades, if we had more staff in that group,” he said. “It’s not just the software experts and engineers that we could use more of, we only have three project managers, to lead all of the projects. We do not want to have people just working on something without a good manager there in charge of the project. But finding good people to fill those roles isn’t easy.”

“I’ve also been reticent to take on more people to meet a short-term need,” I said, “where we may not have the longer term business to be able to afford to keep them. I don’t want to take someone on, only to have to lay them off six months later.”

“It sounds to me that’s not going to be a problem,” Jack said. “Looking at the opportunity list that David has put together, you’ve got plenty of potential jobs in the future, what would be the certainty of all of these opportunities being converted to contracts, if you had the staff, David?”

“Well, they are all the ones that we consider ‘solid opportunities’, those that I am very confident if we put in a bid, we would get the job,” he replied. “There’s probably that same number of possibles, where the chance of winning the work isn’t a certainty. But if I was a betting man, we could easily have work for another twelve or fifteen J.D. Edwards and AS/400 engineers, and the work for them would be ongoing.”

“And those projects are all the short term, four to six week jobs?” Alexa asked, and David said that was the case. “Well, there’s your cash flow solution, get the extra staff and take on more of these jobs. They seem to be very profitable, you have a great record of success with them, they are low risk, high reward jobs, and they are the ones you should pursue as a top priority. I assume there’s no issue about employing another fifteen or so staff, Lisa?”

“No, not really, our processes and systems are running pretty smoothly now, we have a bunch of spreadsheets that make payroll and tax deductions almost automatic,” Lisa said. “If we got over a hundred employees, then we get into the area where there are some other structural and establishment changes we need to make, those HR management activities that legislation would require us to do. But I can’t see us getting that big, not for the foreseeable future.”

“This area, the ‘Internet in a Box’ solution and service you offer, that seems to be a growing business,” Jack said. “What impediments are there to expanding that?”

“Several,” I said. “First, staff, people who understand networking, Linux, and are able to put together the components to build the hardware; secondly, space. Now, we are using a room in my house as our development lab, but if we took on more work, we would need more lab space, plus storage for components, and a proper remote support infrastructure. If we had a good training room, or a presentation room, that would go a long way to helping, too.”

“Sounds like you’ve outgrown working out of your home,” my Father said. “Have you thought about getting your own office space, with the facilities for lab space, parts and equipment storage, and the other things you need?”

“No, I’ve always felt we should be working on site at our customer’s,” I said.

“Well, you’re moving beyond that,” he said. “Time to start looking for some proper accommodation, get that set up with the facilities you need.”

“Maybe I could toss something in here,” Alexa said. “One of the floors in the building my office is in is about to become vacant, it had been occupied by a dental practice, but the two dentists are retiring, and the whole floor can become available for you, with some rearranging of other tenants.”

“But would the building owner, the landlord be prepared to make those changes that we would need?” I asked.

“You’re talking to her now,” Alexa said. “Bitola owns the whole building, so whatever you need isn’t a problem. My brothers would be able to do any fit out changes you need, as you know.”

“Martin, would that pose a potential conflict of interest problem?” Mary Beth asked. “One of the board members arranging a deal involving property they own?”

“Provided everything was done at market rates, under standard terms and conditions,” he replied. “There were no shady quid pro quo arrangements, no wink and a nod deals, I can’t see a problem with it. Once there’s a lease, just run it past me and I’ll make sure there’s nothing likely to bite you in the arse.”

“That sounds like a solution then,” my Father said. “Where is that building located?”

“Marrickville, on Illawarra Road, about two blocks down from the railway station,” Alexa said. “There’s good parking behind the building, too.”

“Well, I suggest that you – who should look into it? Will, Mary Beth, David, come up with a costed plan for moving into that building, see how much it would cost to fit it out with the facilities you need, bring that back to us, and if it makes sense, go for it. Is that how we should work, Martin?”

“Sounds like the board has a proposal before it, does everyone agree with John’s suggestion?” Martin asked.

Everyone on the board agreed that it was s sensible way to proceed, and the extra accommodation would allow us to take on more staff, too. Alexa arranged for a meeting with the three of us, and she would have Chris and Philip there to go over fit out options too.

“That will probably eat up our cash reserves,” I said.

“Are you forgetting about the ‘Bank of Bitola’?” she said. “That’s one thing we do, is provide funding for the expansion of our associated businesses, at rates none of the banks can match.”

Well, I could not really refuse Alexa’s offer, and we made plans to inspect the accommodation and start planning what we might need in terms of facilities. Apart from the decision on the accommodation, David was asked to look at recruiting more staff to beef up our J.D. Edwards consulting practice and our networking / Internet group.

Later that afternoon Alexa emailed me the floor plan for the space that would be available in the building, and we started working on how we would want it fitted out. As well as a large conference / training room and the lab, we thought we could get several individual offices next to an open area with a number of workstations set up. A storeroom for equipment and components, a place where we could have filing cabinets and other storage, plus a computer room. David suggested if the money would allow, having our own AS/400 where we could work on our own copy of the J.D. Edwards software would be useful.

“We wouldn’t need anything big, maybe one of the new F series models, an F02 or F04 would be sufficient. Do you want me to get a quote from IBM for one?” he asked.

What he said made a lot of sense, if we were going to have a place where we could do presentations to potential customers or run training courses, having our own hardware and software would be essential. Along with an AS/400, we started to make a list of all the systems we would need, along with phone systems and internet connections. I called Patrick Tarpey to get a quote and specification for a suitable PABX system, similar to what we had at home, but with a great number of extensions, and complete in-dial capability.

We scheduled a walk-through of the office space this coming Friday; Chris and Peter Ramos would have their demo crew strip things back to the core of the building and we could see just how much space we had at our disposal. We would then sit down with them and plan the fit out, see what could be done with the money we were prepared to spend. Alexa said that Bitola, as the building owner, would bring all the common facilities – the toilets and public spaces – up to current standards, plus fit out the walls, redo the carpeting, ceiling panels and lighting themselves, so all we would be up for was the actual office furniture, decor, phones and data cabling. It sounded like they were doing a lot, but Mary Beth said that given we were signing a long lease, that was pretty much standard in the commercial real estate business.

“Look at it from Alexa’s point of view,” she said. “It’s not costing her anything to have your company located there; they own the building outright, so the only costs are council rates, insurance and utilities. Which won’t change whether we are in there or not. Therefore, for her to spend a bit of money fixing up the empty floor, so she can rent it out to us makes good business sense. And from a personal perspective, you will be working very close to her, just a floor below her office, so you can get together for some ‘afternoon delight’ every day!”

“Well, I don’t plan to spend much time working there,” I said. “I’ve still got the job to do for the State; I’ll be working pretty much full time onsite with them. I see the only people working in the offices at Marrickville will be those currently not allocated to a customer, or people working on building the Internet in a Box devices.”

“And providing remote support for those devices,” David added. “Part of what we can set up in the new offices would be a remote support centre for our customers with a support contract for their internet gateway server.”

“Do we have enough network and systems engineers to take on that level of support?” I asked him.

“I’m working on a proposal for us hiring an additional two engineers,” he said. “We are going to have enough support business to cover those costs; the way things are going we might need three, or even four engineers, those devices are proving very popular.”

We talked more about what facilities we would need to provide a comprehensive remote support capability for customers with our Internet gateway device. We had designed them to provide secure, remote access to investigate problems, make configuration changes and apply software updates from a central support location. One decision that we needed to work on was whether to move the codebase to one of the newer ‘distributions’ that were starting to appear. The initial ‘Softlanding Linux System’ that we first looked at was proving to be a bit buggy and unreliable, there were two different distributions based from SLS, one called ‘Slackware’, the other ‘Debian’, produced by Ian Murdock. There was talk around the Linux development community of other forthcoming distributions, with ways to incorporate a better package management capability to make it easier to include or not include various software products.

By the time the site inspection came around on Friday, we had a good idea of how we would need the space fitted out, I had made some floor plans with various layout arrangements. The one we favoured had the conference / presentation room at the front, to the left as one would exit the elevators (and underneath Alexa’s office), with a reception desk opposite, and a sitting area for visitors between those two areas. A controlled access door would lead to the staff accommodation, which would have four managers’ offices, with floor to ceiling glass looking out to the main staff area. Workstations would be set up for twelve people, and behind that would be the main lab and equipment assembly and testing area, the computer room on the other side of the hallway, next to the toilets. The back part of our space would have storerooms for files, reference books, replacement parts and the like, plus a staff amenities area. That last area would include tables and chairs where people could sit and eat, a small kitchenette area with a fridge, microwave and coffee making facilities. I asked about showering facilities, and a room where we could put some bunks, to provide sleeping accommodation on those occasions when people would be working later into the evenings. I didn’t foresee that happening all that often, but it would be good to have the facilities when we needed them.

We did not want the individual offices built along the outside wall, obscuring the natural light coming through the windows. Instead, they would be on the opposite side of the staff area, between the toilets and the computer room, against the back wall, where there were no windows. Walking around the actual space, with all the interior walls removed, I realized just how much room we would have. Chris said they would be refurbishing the toilets first; personally, I could not see anything wrong with them, but apparently, they did not meet the latest building code requirements, and each would have to have at least one handicap accessible stall fitted.

After we had seen the actual space, we went upstairs to the meeting room at the Bitola offices. I showed Chris and Paul the plans we had drawn up and they pulled out a large set of blueprints for the floor, and started sketching the proposed walls on them. Paul had a small box with some cutout scale plans of office furniture and workstations, and they positioned them on the plans so we could see how things might fit in. Alexa suggested we have three small meeting rooms at the back of the main staff accommodation, next to the wall between the office space and the computer lab.

“It’s useful to have rooms for people to meet, if there are two or three people who want to discuss something, without disturbing everyone else in the open plan area,” she said. “You’ve got the space for it, why not use it?”

Her suggestion made a lot of sense; having some small rooms where two or three people could meet and discuss things, and not cause their discussion to distract other people in the area would be good. That was how we used one of the offices in our work area at the State Office Block, and it had proven very successful. The next discussion was the fit out of the main conference room. Chris suggested we use a number of smaller tables, which could be configured into a classroom arrangement for training courses, or moved so they could be fastened together to form one large conference table. We would have to work out what audio / visual equipment we might want in that room, but that was a task for later.

“Now, the next thing to determine is the colour scheme,” Chris said. “Here are some samples of workstation dividers, we can have a combination of that soft pinkish colour – they call it ‘dusky rose’, the grey and that soft teal.”

“Dusky rose?” Fiona said. “That’s more like ‘aroused areola pink’, that’s how I would name that colour!”

“That depends on whose nipples and areolas we are talking about, Fee,” Lisa said.

“Well, the colour of mine then,” she said, defiantly.

“Areolas aside, I think they are good colours,” I said. “What about the walls and carpeting? Should we look for a similar ‘dusky rose’ on the walls, and maybe some sort of light grey on the floors?”

“Can do,” Paul said. “You don’t want some alternating carpet tile colours; say a light and dark grey in a checkerboard pattern?”

“No, I don’t think so,” I said. “In the science building at University, next to where the Maths Department computer was located, they had that style, light and dark brown. One day, I noticed the pattern of the tiles was strange ... and looking down the hallway, someone had moved the tiles, to spell out the words ‘FUCK OFF’ in the pattern. So no, I don’t think we want to give the opportunity for that. Just a single colour will be fine.”

We showed them the ideas we had for the main reception area; Lisa had made a quick sketch of how she wanted the area laid out, a few chairs for people to sit on, a low table, and the main reception desk. She suggested that we should get some good framed prints of Georgina’s ink and watercolour drawings of historic buildings around Sydney, and asked if there were suitable lights that could be mounted on the ceiling to illuminate the pictures.

More details were added to the large floor plan that Paul had, including the locations and numbers of network outlets, where we would want phones, and the type of storage shelves in the storerooms. Chris showed us some photos of possible work benches, similar to ones that Frank had in his company’s engineering lab. He mentioned that they had a special anti-static surface on them, designed to prevent static electricity build-up and damage to the electronic components. With the overall fit out plan agreed on, Chris said he would get a formal contract to us by the end of next week, so they could start on the work. He estimated things would be finished by the end of January, which gave us time to get Telecom to install the data lines, Patrick to source the PABX equipment for us, and us to arrange for whatever computer equipment we would need.

Paul and Chris left, saying they would start work on the construction plan this afternoon, and as we were about to go, Alexa asked if she could request a favour.

“Frank’s daughter, Monica, has just finished business school, and she is looking for a job,” Alexa said. “I was wondering if...”

“If she could work as our receptionist?” Mary Beth finished the question for her. “I can’t see why not, maybe we can interview her next week, and see if she would fit in.”

“It’s not just her work abilities,” I said. “What is just as important is that she has the right attitude to become part of the team, she fits the culture of our group. She would have to have the initiative to be able to work without direct supervision, not to be intimidated by some of the others, not to let them get away with too much. There will need to be some maturity there, if you follow.”

“I think she would have all that,” Alexa said. “She’s refused point blank to work for her father’s company, because, in her words, ‘everyone would assume she got the job because she’s her father’s daughter, not on her abilities’. Which would be true, she needs to show that she’s worthy of the job she gets.”

“We’ll line up a time through you to interview her,” Mary Beth said. “Can you get her to send me her resume, maybe email it to me?”

“Thanks, and don’t feel obliged to give her the job, just because I asked you,” she said. “I think she’s smart and good, but she has to convince you that she’s worth employing, that she will be a good match for your company.”

“Well, if she’s suitable, why not give her a job?” Mary Beth said. “She’s family, so we should help her to get a start in life.”

“Thank you, I know Frank would really appreciate that,” Alexa said.

“Well, it’s not as if you and the others in your family haven’t done us lots of favours,” I said. “That’s how things should work; we do what we can to help everyone.”

Over the next few days things seemed to be well in hand, Chris and Paul were starting on the fit out, Lisa and Georgina were getting the artwork that would go up on the walls – Georgina was excited about her works being on display, even if not in a gallery. David and Phil were planning the lab and networking requirements for the office, while Mary Beth made lists of the office supplies that we would need. Mary Beth and I interviewed Monica for the position of receptionist / office assistant, and she seemed to be ideal. Smart, confident, great organizational skills and she was the image of Alexa, at least an eighteen-year-old Alexa.

For my birthday dinner, Lisa, Fiona and Michelle took me out for a meal at the Willoughby Hotel; like some of the previous times, we got one of their private rooms, which gave us the privacy to talk freely.

“Did you know what our house, what Banksia Lodge is worth now?” Lisa asked me.

“No idea,” I replied, “I don’t keep up with things like that. But if I had to make a guess ... four hundred thousand?”

The others laughed at me.

“Higher!” Michelle said. “Much higher, Will!”

“Close to six hundred thousand,” Lisa said, “and probably more if you were prepared to wait for the right buyer.”

“Well, it’s all academic, I’m not remotely interested in selling the place,” I said. “I love living there, it’s perfect for us, I love the big yard, all the rooms we have for guests, and the studio is great. Why would I want to sell it? I would only pay a shitload more to get another place with all of the features we like, so why put myself into debt for no real advantage?”

“You may not have to borrow all that much,” she said. “Not with the money you’ve got saved up.”

“Do you want to move?” I asked Lisa.

“No, not really, like you I love our house. But I was just wondering ... we have all this money just building up, and wondering what we should do with it.”

“Well, I can’t think of anything I really want to spend it on,” I said. “As we’ve seen in this past year, we shouldn’t assume that the income we have is guaranteed, the contract with the State Government could end, and we might not get a new one. It is good having that buffer of savings. However, I have never been into accumulating possessions, just because I can. Like the car, I know it’s about sixteen years old, but with the new engine that Stan put in earlier this year, I cannot see a reason to change it. Sure, I could trade it in on some fancy-schmancy BMW limo, like the one Alexa drives. But why? Would I be any happier with it? Not really. You’ve heard the saying, ‘he who dies with the most toys ... is still dead.’ I’ve never had being rich and having lots of expensive toys or a big mansion as aims in my life. All I ever wanted to do was play music, teach and research.”