The Day I Woke Up Without Arms And Legs.
First of all I’m really really sorry to say that my Newspaper project did not survive – not sorry for me (I take all responsibilities) – I just hate myself for bringing other people (employees and partners) and service providers into trouble – it feels unfair and coward-like… The recession and my stupid communications over summer (we delivered the yearly report 2 months too late) killed us. The simple explanation is that sales did not meet budgets and therefore since Thursday I have been talking to the people backing me and to myself (I have personally put DKK 105 million into this project – money that I have been borrowing – VERY BAD CHOICE) – and over that weekend I had to make a hard decision.
DKK 75 million was suddenly not enough – since the price to break- even suddenly doubled – and after working 9 months 24/7 (having learned more then the previous 10 years) with an increasingly dried up (dead) financial market – I simply could not see a way to continue…..
5 REASONS for my Sunday decision
1) Budgets tilted
– and all the cash I injected after summer was sucked up by the Tax Gyus – and August salary became a problem) – the August sales came in at only 60% of budget (we were canceled off media plans due to the negative press we received in July and our job market initiative lost traction) and pre-booked sales suggested that September sales would miss budget by a similar percentage or more (and this is despite that fact that we were still selling more advertising millimeters than any other newspaper in Denmark).
2) Overall Danish (Global) recession
– it’s coming with an ugly speed – and the first thing that retailers and big advertisers will cut = advertising. Today Media Market in Borsen even talks about no difference without Nyhedsavisen in the market.
3) I’m too inexperienced
– I’m too soft, too optimistic and romantic – I did not have enough pessimistic fantasy to imagine that budgets could break so fast – and that the recession is reality – it is all very strange. My management skills are beaten by any kindergarden manager (I respect them a lot by the way)..
– all papers in Denmark starts every morning by carrying money to work – and we have been working for the advertisers – and with pre-booked sales for September suggesting that we may actually sell less than in May, I suddenly started to doubt whether we could make money even in a JV with another player*. Prices never go up as fast as they go down – and competition will not stop with one competitor less.
5) My EGO
– suddenly I was afraid whether I was doing this to prove myself and because of the love of changing industries. I saw all my own cash being GONE – and personal bankruptcy as an option (I’m fighting it THESE DAYS since my funds dont give any cash – my investments have no value in a stressed sale – but dont feel sorry for me -> that’s how entrepreneurs work) – and suddenly I got a wakeup call.
Conclusion: Since I invest with passion and with a naive trust in management – I should only do smaller deals.
Even in a partnership with Metro or Berlingske – we would not be able to make money within 12 months!
*When Svenn Dam told me that on our trip to Stockholm after visiting Metro – I started sweating in that cold way – you know what I mean?
We asked Metro for a sales price for the Danish operation and as an alternative suggested a JV – but they obviously have way to much self confidence with Kinnevik (a VERY STRONG holding) backing them. And despite their trouble in the stock market – I felt that they would not give up – and join our wild operation. But I really had the hope – and our talks with their chairman were very open.
Berlingske (Mecom’s Danish operation)
I have had 15-20 conversations (calls and breakfast) with David Montgomery since June – Berlingske wanted to help us to close down (but I never wanted to do so – I have really believed in this with my heart). This Irishman with 35 years in the industry has been playing me like a piano – always suggesting collaboration – potentially buying – but always just cool and impossible to get a firm agreement with. Even when we 3 weeks ago sent an offer to take over Berlingske (see my previous post on how much under pressure they are) – David has been cool and just saying: “Morten – there are no magic bullets – I’ve been in many newspaper wars and it takes a long time and costs a lot of money – but it never really changes anything…”. On behalf of Baugur and Me – I proposed a deal where we would have closed down Nyhedsavisen solvently and then I should work for Mecom out of London- as a consultant (and this is subject to a lot of speculation – since some people think that I was not allowed to negotiate about this). The fact is that Mecom probably didn’t have the interest (nor the money) – and I could not find money to shut down solvently. It actually hurts me that rumours say I have been paid to close down – I would never EVER take money to do that without then closing the paper paying everyone what they were owed. And yes we had negotiations – but hey FUCK – isn’t that pretty normal when you have lost DKK 100 million? So FUCK you idiots – using your self pity to put this out.
I have had a couple of talk with them – but they have their Metro interest – amd they ALSO smelled that I was starting to doubt – what other reason would I have to call… (Yes I’m not too smart).
The top 3 Norwegian papers are all gongho – on trying to take over Edda – the Norweigen part of Mecom. They had designed a hostile takeover of Mecom’s loans trying to buy GBP 600 million of loan for less than face value – and that way get the control of Mecom the day they could not meet their debt governance ratios on the loans. But this was too far fetched with my wallet size.
– All employees
I have had +50 sms/emails from employees who lost their jobs and feel sorry for me – strange – that’s so amazing. And during “bankruptcy aftermath drinking” – no one blamed me – all positive. Thats probobly first time in history)
– Baugur and Thordis from Stodir who gave me this chance – and the most fair deal EVER and NEVER jumped out of any commitment (and I would do this again if I could guaranty a solvent closing).
– Morten Nissen Nielsen – this gyus works like no one else – a bit young in his management style and optimistic – but DEEP RESPECT.
– Simon Andersen (this guy will be BIG)
– Michael Elmhoff from distribution – who handled the closedown in Aarhus and all the violent threats from the newspaper delivery employees
– My Family and Friends – who haven’t been able to talk to me for 9 months
Call me stupid – not trustworthy – whatever – it’s OK – I fucked up. I take all responsibility. It was MY MONEY (and all I had and had access too) – and it will be 18-24 months in hell from here – but I will start and invest with my knowledge and build companies for life – and I’m scared but not stopping – Im just back to ventures without money. Sorry.
THE (SEMI) BITTER AFTERMATH – from an optimistic id(ea)iot
Nyhedsavisen have done something historic (let’s call it a DKK 1 billion gift to The Danish Democracy) – and its unfair that Berlingske and JP/Politiken gets DKK 300 million in government subsidies – while Metro and Nyhedsavisen gets nothing – cal me bitter :)
If just the financial markets would have picked up in MAY – ohhh – we could have done it. FUCK FUCK FUCK I hate to loose – and I will see my psychiatrist to get over this – and not get bitter… There are so many things that we could have done if.. if… if… :) But the fact that USA (land of the free) handed over their credit institutions Freddie & Fannie to the state sunday and Lehmann Brothers down 50% yesterday – these events can tilt the world economy :( – and all my startups are hurting from it. No money in the market.
I never in my life had a lawsuit and hope it will stay this way – but given my personal guarantees it might be hard to avoid this time – fingers crossed.
I said that I would not give up until my arms and legs where cut of – and basicly thats NOW. I followed my instinct – and failed – and I will do it again – probably not this big a deal – but lots of smaller. I’ll be back