What I Learned in the Recession: Never, Ever Give Up
For the first eight months, 2008 was a really good year.
Elauwit Media, a community newspaper company founded by long-time friend Dan McDonough, was entering its fourth year. Dan had persuaded me to drop out of school a few years before to join this adventure, which had become a rapidly-growing example of how community news, and print, could still thrive in the digital era. We were crushing it.
Elauwit started with a single newspaper in Haddonfield, NJ, and by the end of 2007 we were in seven towns across South Jersey. I lead the company’s sales and marketing efforts, and in 2008 our two-dozen employees were in the thick of an expansion into the Main Line of Philadelphia. Year after year of success had instilled a sense of arrogance about our constant, upward trajectory.
We were on the precipice of a violent change in our fortunes. Within the following twelve months, we would have to fight harder than ever not to grow — but to stay alive. And through the process of painful cuts, personal and financial near-ruin, and absolute exhaustion, would discover that we were tougher than we could have imagined.
“We’re in great shape.”
Beginning in 2007, there had been rumblings that the subprime mortgage crisis would drive the economy into recession. The idea seemed abstract, and at times downright ludicrous, for our business: mortgage brokers had certainly trimmed back their ad buys, but the company ended the third quarter of 2008 up more than $240,000 year-over-year — 22 percent growth in a supposed recession!
A decade later it’s hard to recall why, but in late August, Dan called a meeting with myself and Alan Bauer, my counterpart on the editorial side of the operation. We decided to meet on a Sunday morning, and spent the day discussing what appeared to be a worsening national economic situation and the steps we should take. We sat in the conference room reviewing budgets, spends by advertisers, and projections; we unanimously reached a conclusion: “we’re in great shape.”
Success had given us a blind spot for our own business, and a strong belief that as the economy deteriorated around us, we would be resilient and spared any real pain.
The newspaper business is highly cyclical (or, at least it was a decade ago). Most newspaper companies lose money in the first quarter, are slightly profitable in the second (thanks to spring advertising), lose money again in the third quarter due to a summer slowdown, and then book the bulk of their profits due to fourth quarter retail advertising. Elauwit Media’s business cycles had been especially predictable, as the company had an exceptionally diverse business: the top 10 advertisers accounted for under 15 percent of billings, which had insulated us from fluctuations in certain companies or industries.
Labor Day 2008 broke the cycle.
For the first few weeks of September, we waited. Sales reps went back to their accounts and scoured for new ones. No one was biting, but we didn’t feel concerned. Why should we be? We’d already looked at things, and we were in great shape.
The crash for us didn’t come in the form of a large drop in business, or a period of punishing client defections. Summer ended, and the clients never came back.
“We simply can’t afford to pay you.”
On September 15, 2008, the market crashed. All the signs we’d been ignoring through the year, and in early September especially, suddenly felt very, very real. The market’s plummet made me numb; what was happening felt almost removed from reality. But the gut punch of conversation after conversation, advertiser after advertiser, cutting their spend made it all exceptionally real.
Dan summoned me and Alan to his office on Wednesday morning, September 17. He needed to know how things looked. I had to look both of them in the eye, and admitted we were failing. Miserably. October projections were worse than September, and there was no reason for optimism. In less than an hour, we made a number of swift, painful decisions that in hindsight, were the beginning of our new normal.
We pulled up an Excel sheet and went line by line through the company. Not only revenue and expenses, but examined the moment each dollar would be in our bank account. The company was not sustainable; eliminated every dollar of spend that wasn’t core to the business, and a significant number of positions in both sales and editorial — including the expense of our own.
Each day of extra pay mattered; the layoffs had to occur immediately. Before lunch, I had the most painful professional conversations I’ve ever had to have, over and over again. The odds that any of these people would find new employment was negligible. Each asked me what they could have done to save their job, and my honest answer was the same: “Nothing. We simply can’t afford to pay you.” While Alan and I restructured our respective teams, Dan went to work and restructured virtually every payment and vendor arrangement was had.
Dan, Alan and I regrouped after lunch. In the course of several hours, we’d put the company on a new course — one of absolute survival, no matter what it took. The early afternoon meeting we had on September 17 was the last time we would meet on a weekday until 2010. Business hours were too precious to spend on anything except generating revenue or cutting expense, so we agreed to meet that coming Sunday at 10AM.
We proceeded to meet every Sunday for the next two years.
“I think your car is getting repossessed.”
My age, and the success we’d experienced, gave me an irrational sense of confidence and optimism, even in September 2008. Sure we’d had to cut our pay to a pittance, but I truly believed I’d find a way to turn things around and make it work in short order.
The pain was deeper, and longer lasting, than any of us imagined.
My apartment was the first thing to go. By early 2009 it had been several months since I’d paid rent. I still remember sitting down in the property manager’s office: I could not pay. And I would be out by the end the week.
The next shoe dropped weeks later. I was at my desk, when one of my coworkers interrupted me: “I think your car is getting repossessed.” I ran out of the office just as a tow truck driver was cutting through the fence and into our parking lot. The whole office watched from their windows, as I pleaded to at least retrieve my personal belongings from the car.
“When you’re going through hell, keep going.” I kept Churchill’s war mentality in my mind at all times. As the entire world around us was in crisis, there was simply no other option except to work harder, and keep pushing through. Every blow we took: defaulted advertisers, personal financial ruin, exhausted savings, and sleepless nights, only strengthened the resolve to fight harder.
The shared pain also created a unique, and enduring, sense of camaraderie that I don’t believe could be replicated under less dire situations.
We had to furlough the employees we kept from time to time, meaning financial pain for those on break and extra work for those still in the office. I watched as people on the team struggled, suffered home foreclosures, and lean holidays. To a person, everyone kept going.
My favorite meal of the recession was at the McDonald’s in Marlton, NJ. This particular location offered a special of two quarter-pounders for only $2.99. On multiple winter evenings, Dan and I worked to scrounge up enough cash to share that meal; one burger each. 10 years later, I still laugh at the absurdity of how nice it felt to share those burgers, and how removed from reality experiences like that still feel.
“Bet Your Job on It.”
Elauwit Media kept surviving. Year-over-year revenue dropped nine percent, more than $65,000, in the last 16 weeks of 2008, and it kept falling. The first six months of 2009 were another 25 percent below the previous year — more than $300,000.
We took a painfully close look at our sales strategy. It was imperative to not only reverse the trend immediately, but to do it with fewer resources available than ever.
I broke our sales team into two pieces. Our reduced team of experienced reps were tasked with a larger territory, and asked to focus exclusively on customer service and retention. We couldn’t afford to lose any more customers, and I had seen that the inefficiencies of seeing customers in person made it difficult for those reps to do much prospecting or business development outside of referrals.
To get us growing, we spun up a completely separate team focused exclusively on new business. These reps would sit in the office, and make 75 to 150 calls each day — cold-calling every business in our territory to qualify them, and set appointments.
As for me? I ended up in front of virtually every piece of new business for years. I would make an early-morning stop by the office each day to handle vital items, and by 9AM was behind the wheel (in my retrieved car!). The inside team would set appointments for me throughout the day, and in a pre-cloud time, text message me updates on where I was going next and whom I was seeing.
Into the early evening each day I would take appointment after appointment. I would then end up in the office until after dinner each night, processing our new agreements and handing things off for the team to manage. It was absolutely exhausting — but invigorating. Being that close to a few new business wins each day kept me motivated, and believing the tide could be turned.
Each week, during our Sunday meetings, Dan, Alan and I would review the next seven days of financial performance. I was put on the spot each week for a projection, and we quickly discovered that my optimism was inappropriate for our situation. Dan developed a credo: each week we’d make a projection, and I should “bet my job on (us making) it.” Today, I am an exceptionally accurate forecaster of my company’s performance.
The relentless focus on every dollar was company-wide. Stephanie, the office manager, determined that purchasing discounted ceramic coffee cups would save $150 a year over the Styrofoam ones we’d been using; we made the switch. Alan figured out how to trim one inch of paper off our product size, saving thousands annually. And Dan continued to renegotiate everything from our lease to our printing contract.
It was a team effort, born completely from unity of purpose and recognition of the need to act urgently.
The fourth quarter of 2009, business finally began to turn around. After four straight quarters of revenue declines, we posted a gain — $55,000. We were still just shy of 2007’s numbers, but it was finally movement in the right direction.
As the company charged in 2010, we had our mojo back. Not only were we making money again, but we had recovered the swagger that defined our early growth. Orange t-shirts, an Inc. 5000 appearance, and excitement about our future expansion replaced the exhaustion of the previous year. We had the mentality of a survivor.
What remained, though, was even more valuable. Our next phase of growth was driven forward by the sales model we’d invented out of necessity in the darkest days of the recession. Although we added new people, the bifurcated approach to current and new business kept sales expense low and growth high — and was completely innovative for the newspaper industry. Maximizing the ROI of every dollar in sales expense meant the return was that much greater when we could invest.
Elauwit had out-survived most of its competitors in the market, and had a better sense of who it was and how it delivered value than it ever had before. With every advertiser that prioritized us over their own paycheck in the worst of times, we gained an appreciation for why we mattered to our customers.
The team was focused, and confident. More than a year of pushing forward under the most difficult of conditions showed everyone what they were capable of, and caused us to achieve things we might have said were impossible without additional resources. As the company continued to grow through 2010, the underdog, fighter mentality never left — and it defined Elauwit Media until the day it was sold.
A decade later, I have no desire to ever re-live the time from September 2008 to September 2009. Each day, though, I recognize how I was forged in the crucible, and how it sharpened me as a person in a way that no other experience possibly could have.
Dan and I will always share a unique bond. We’d been friends long before the crash, and our friendship has waxed and waned in the years since, but what we discovered about each other’s character, drive and ability during that time will forever endure. And I believe that commitment, trust and drive has been at the core of every success we’ve shared at Woden.
The recessions made me a more competent businessperson than any MBA could. Being faced weekly with tough decisions of real consequence, surviving week after week, and selling countless deals that were the difference between making payroll or not taught me how to wring every dollar out of a business. It’s allowed me to appreciate the value of a committed team, the need for internal alignment, and know the importance of betting on yourself.
Most importantly: it’s made me, and anyone that survived through those times, indestructible. Every challenge in business pales in comparison to what I already survived in 2009. Any lost client, missed opportunity, or short-term crisis has to measure itself against Sunday mornings with Alan and Dan.
When we finally decided to stop our Sunday meetings and reclaim our weekends, there was almost a sense of melancholy. We’d endured, brought the company back to health, and had it growing again. Even then, it felt almost like a small surrender to return to normalcy after fighting so hard for so long. But, the truth is: nothing ever returned to normal, and nothing’s ever been the same since. And my life, and business, have been the better for that0