Learn more about Jonathan Lowenhar at ETWadvisors.com.
I’ve long been curious about why founders start what they start. So I’ve more regularly started to ask, and the stories are incredible. Allow me to share one that moved me.
The patriarch of a family sees a unique opportunity to buy a small company and enrich his young family. He buys a struggling business seeing potential hidden to the casual observer. He is proven right. For a while, the business thrives as the preeminent seller of a local commodity. The patriarch expands operations, increases output, and accumulates great wealth. Meanwhile, he raises his children, who in turn mature, get married and have children of their own. The family is deeply embedded in the business working in nearly every function from sales to operations. The company continues to grow, and the patriarch, wishing to seize upon the momentum, redirects the company profits into growth. He increases inventory, opens new locations, and even buys a handful of former competitors.
But not long after, the marketplace begins to shift. Profits first dwindle and then vanish entirely. The patriarch projects confidence and funnels savings back into the company to hide the setback. But the market shift was not just a blip, and losses mount. To maintain the illusion of stability, the patriarch swings desperately. He sells off assets and raises debt levels, all to maintain production and employee levels. But the spiral had a predictable conclusion, and one day the creditors arrived. In a flash, everything was gone. No fortune, no jobs, no savings, nothing.
The family was devastated. They all moved into the family estate now so leveraged that it too might be seized any day by the bank. Blame was in the air. Feelings of betrayal and depression marked every meal and family gathering. The patriarch was out of options, money, and time to save his family.
There was, however one small glimmer.
One of the small subsidiaries was just barely keeping alive. The company was one of the acquisitions the patriarch had purchased years earlier. It sold a declining technology but featured a low-cost structure and few employees allowing revenues to still match expenses. One of the patriarch’s children, his 2nd born son, ran the business. It was the last profitable entity across the family’s once-thriving empire.
The 2nd born son had watched, as so many across his family had, in horror as his family fell from wealth to poverty. He had been raised in affluence. He attended private schools and completed his college work overseas. But despite the privilege of his youth, the son did understand hard work. The patriarch had introduced his 2nd son into the company at a tender age. Before he reached his 15th year, he had already worked across more departments than many of the company’s more experienced veterans. The 2nd son loved his father. In fact he deeply loved his entire family. He loved his sister and her two sons. He loved his older brother and his triplet daughters. More than anyone else, though, the 2nd son loved his mother. The thought that this sweet woman would suffer in her golden years was too much for him to accept. The fall of the family empire had sent his mother into a deep depression. Something needed to be done, and the 2nd son knew of only one path forward.
He had to save the company.
The son shaved all the expenses possible from the business. He gathered his team, as well as his younger sister, and set about trying to identify a way to repurpose their dying technology to the modern needs of the marketplace. They experimented relentlessly. Most of the attempts failed, but then they learned of a new government initiative that sparked an idea. Their old technology could serve a very new purpose. There was a chance that if positioned just right, the government would choose their company as the national provider. The nearly obsolete nature of their technology in this rare case could be an advantage. It was less expensive to deploy and more reliable than the more modern (and still experimental) alternatives. The government agreed.
They won the contract, and a new company was born. The son led his small team for months to work days and nights, through weekends and holidays, to deliver. Failure was not an option. Failure meant his mother’s last financial hope would vanish.
They delivered on time.
— How do I know this story? Because this is the origin story of one of our portfolio companies. The story is still unfolding, but I can share that the young business is thriving, the family mortgage has been paid, and the prospects of a stable retirement for the patriarch and his wife are again possible.
Every startup founder I know says they won’t let themselves fail. They work relentlessly, inspired by an origin story often not publicly known. The next time you meet a founder. I highly recommend not asking just what they are working on, but rather why.