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Tech veterans share the horrors of business deals gone sideways

Greater Victoria’s high-tech industry has for years been lauding its successes, and telling anyone who will listen about its incredible growth.

Greater Victoria’s high-tech industry has for years been lauding its successes, and telling anyone who will listen about its incredible growth.

And while the multibillion-dollar industry that employs about 22,000 people appears on the surface to be skipping along under nothing but blue skies, it knows there are deep, dark secrets hidden in the nooks and crannies of tech firms everywhere.

Thursday night, about 100 tech insiders caught a glimpse of some of them.

The Victoria Innovation, Advanced Technology and Entrepreneurship Council hosted its first F**kup Night, throwing back the curtain to reveal that sometimes it goes spectacularly wrong.

At turns raw, honest, funny and poignant, a trio of veteran Victoria technology leaders bared a little bit of their souls. At times, the candor caught both veteran colleagues and young tech newbies off guard.

The stories touched on fundamental mistakes, minor oversights, poor judgment and bankruptcy.

“Too often, we talk about the successes and we don’t spend a lot of time talking about those dark moments and thinking about the things that haven’t gone right,” said VIATEC chief executive Dan Gunn. “The reality is, if you’re a tech entrepreneur, there will be failures and success.”

F**kup Night, which started in Mexico in 2012, is now a global movement with more than 100 cities in 35 countries taking part, each of them offering a stage for companies to tell the world what went wrong.

Former Contech Enterprises chief executive Mark Grambart told the crowd about the deal and the errors made leading to the pet product company’s bankruptcy in 2015.

Starting with the caveat “this will not end well,” Grambart talked about a poor decision to implement new systems with a new acquisition that led to orders not being shipped and revenue drying up.

“We made no money, and because we made no money the banks didn’t increase our line of credit,” he said, noting that was the beginning of the end.

Grambart said they got complacent as they were veterans at acquiring new firms. He said his is a cautionary tale to remind other entrepreneurs there is always time for due diligence, not to rush a deal and to take the time to do post-merger integration right.

These days, Grambart said, when he feels comfortable he gets worried. “I ask myself, what am I missing,” he said.

Grambart, who is currently a mentor at VIATEC, said being able to share the story is important.

“It’s a bit of community building,” he said.

“I’m sure I’m not the only one with a story like that. It does go wrong, but it’s about how you react and how you work through it. There’s a lot of learning in there and that makes you better.”

Todd Dunlop agrees. The founder of tech firms Neverblue and RingPartner, Dunlop said talking about failure is as rewarding for those sharing the stories as those who hear them for the first time.

“Being able to show a lot of the companies that I mentor that there are ups and downs is rewarding. We all go through these f**k ups, but there are way more ups for all of us than there are downs,” he said.

Dunlop said being able to look back and reflect on his mistakes was therapeutic. “It forced me to look at all those lessons and maybe even apply some of those to my companies now,” he said.

Dunlop shared that after the sale of affiliate marketing research firm Neverblue in 2007 he was riding high, but was brought down to earth by a legal fight started by a patent over tracking technology.

The only winners of the costly legal battle were the lawyers, and Dunlop learned a lesson to limit his exposure and keep a sharp eye on the fine print.

The fight also bled into his new ventures as he became cautious — not in a good way — and stopped innovating and growing.

Dunlop said he hopes sharing his story will open the doors for others. “When you are being a little bit vulnerable, the hope is you’re opening an exchange with others,” he said.

Clayton Stark, head of technology at game developer Kixeye, has never been shy about sharing what’s on his mind.

A 27-year veteran of the tech scene in Victoria, Stark was up front saying when Mercurial Communications delivered its version of Netscape to America Online more than 10 years ago, they screwed up.

“It was a huge deal,” said the former Mercurial chief operating officer.

But the project and its numerous widgets and features shipped to the client without a key piece of the pie — analytics that would have allowed AOL to track and measure the new product.

Stark, who put analytics in the hands of one of his developers, said it’s a lesson in paying attention to detail and to things that you may not necessarily find all that interesting.

“Don’t be blinded by doing just what you love,” he said.

Like Dunlop and Grambart, Stark sees value in making a mess of things. “It’s humbling,” he said, noting he has learned to think things through. “These are ripe opportunities for increasing your leadership capabilities.”

aduffy@timescolonist.com