In the Beginning

First, What Do I Mean by Failure?

"Fail early, fail often." That's the new mantra of Silicon Valley. Many venture capitalists won't finance an entrepreneur who hasn't failed at least once. So, why do I position failure so negatively? First, my singular focus is on decision making. I define a decision as taking actions (or not acting) to bring a situation from the current state to some desired state. Not achieving that desired state is failure. It's that simple. Now, let's get on with the book.

My Story — My Failure

My first significant failure happened when I was just hitting my stride. Up to that point, failure happened to other people, not me. Fail was a four-letter word. I didn't get where I was by failing, and I certainly wouldn't get where I was going by failing.

I had taken a new job running a subsidiary of Citibank, aka Citigroup, based in Bogota, Colombia. It put me in the vortex of a shotgun wedding between my company and local investors. We had been forced to sell majority ownership to local investors by a government decree called Colombianizacion or "Colombianization" in English. We had to sell 51 percent, giving the local investors control.

As further background, these were the days of the "wild, wild west" in Colombia ('83–'86). All heads of major multinationals lived as if we were kidnapping targets because, in principle — at any moment in time — we could be. So, I had armed guards, 24/7 at our fenced-in home and a safe haven built in the house with a short-wave radio to Citibank's security arm. I generally had no preset schedule, two offices and, unannounced, I would occasionally work from home.

I rotated cars, drivers, and routes to work, sat in the front with the driver, and sometimes drove while he sat beside me. I did everything except have lead and follow cars (conspicuous and costly), and I would not allow my driver to carry a gun. First, because in a kidnapping, the driver is the first one to be taken out, and second, I would rather have been kidnapped than shot.

Citibank paid for two security consultants, Mike Ackerman and Lou Polombo. They were ex-CIA and based in Miami. The core strategy we followed at their recommendation was to be a harder target than my colleagues who were high-profile heads of other multinationals. The theory was that, when a kidnapping was being planned, the kidnappers would stake out two or three targets and then choose the one who was the softest target. Ackerman and Polombo maintained that nobody was bulletproof. You just needed to be harder to hit than others around you. The head of Coca-Cola, who did have armed lead and chase cars, said he felt safer in Bogota than he did when he visited Coke headquarters in Atlanta, unaccompanied by his private army.

While I was living in Colombia, kidnapping touched my life twice. First, the father of the woman who ran operations for me, Ana de Vieco, was kidnapped. I will never forget the day she came in to my office and burst into tears as she told me what happened.

The second was when an executive of a multinational company was kidnapped. His behavioral patterns were too predictable, the makings of a soft target. When the multinational bought dollars for the ransom, they had to use the black market. My operations folks checked the bills to ensure they weren't counterfeit.

The icing on the cake was that Citibank would not disclose whether they would pay ransom or not. The policy was to not disclose this to anyone because if the answer were yes, and the word got out, that would heighten one's risk of being kidnapped. Comforting. So that's the backdrop for this story.

The local capital market was small, and the wealth in the country was concentrated. This meant Citi had to sell the shares to wealthy families. Call it arrogance or just a strong belief in our expertise; whatever it was, we were awful partners. We had no expertise in, or patience for, dealing with an uninitiated (into banking anyway), outside board of directors.

All this joint venture stuff fundamentally meant that, deep in the organization, at the operational level, outsiders could question what our management team had decided to do. We would have to justify our decisions to outsiders. Not only that, none of our partners knew our business. We struggled to cope with these outsiders questioning our decisions. It just was not part of our DNA. We were in more than one hundred countries, and we were minority partners in only two others. In both of those, we had bought our way into the minority position because of the attractiveness of the franchise and not sold ourselves down because we were forced to as in Colombia. Even though the ownership end result is the same, how you got there makes a big difference.

In choosing our partners, we carefully selected families with the finest reputations. They were also three families who had no previous business ties and were from different cities. That gave us some sense of comfort that the three were unlikely to band together against us. We believed there would always be one of the three we could bring to our side in a dispute.

On their side, they were delighted to have the opportunity to invest with a prestigious multinational. Our organization became a substantial player in the local markets with twenty-six branches spread across the country. Our shareholders recognized their limited knowledge of our business and agreed to us having the unilateral right to appoint one of our employees as the president of the company, while they maintained a veto never exercised. On all other matters, they had control. It was an uncomfortable and complex situation.

The Chinese have a saying about parties who sleep together with different dreams: the romance is unlikely to endure. Not long after I arrived, one of the three families sold out their interests. The buyer was a self-made man in the construction industry with a reputation for corrupt practices. Just putting the facts together (self-made man, construction industry), a prima facie case was made for an undesirable shareholder and partner, to say the least. Imagine saying no to that guy in the boardroom! Was he a version of Tony Soprano or was he just James Gandolfini playing a part? To our shareholders, the answer was clear. He was an unacceptable partner. Given the backdrop of the Colombian environment at that time, this was not an unreasonable conclusion for them to reach.

What was his agenda? Was he trying to legitimize his operations? Was he trying to climb the social ladder by sitting at the table with two of the finer families of the country and our organization as well? It was likely some combination of all three together with a nose for an opportunity for "green mail," meaning the purchase of enough shares in a firm to threaten the...