A Party of Lies

CHAPTER 1

THE SET UP

PRELUDE

My eyes opened gradually to the fresh and vivid Florida sunlight that I have come to love in the morning. My two Labrador retrievers are sprawled across the recently vacated spot normally reserved for my wife, snoring contently. As it is with most mornings, I lie there trying to think about what had happened the day before and what I needed to do today. Then it hit me: nothing, absolutely nothing! I had absolutely nothing to do that day, and I remembered why.

The sense of relief that splashed over me is hard to describe. Was it like a drug-induced feeling or just a natural euphoria that one experiences after a great workout? It certainly wasn’t as profound and intense as the relief felt on the day after I had resigned from my last company, affectionately known in the trade as the Evil Empire. That feeling was so joyful and exciting, like scoring a winning touchdown. I had kept my cool and beaten them at their own game. This feeling was different, a touch of sadness, because after all the hard work, for the first time in my life, I had not achieved what I had set out to do.

We were a start-up alcohol beverage company intent on rapidly building a successful brand, selling out, and retiring rich! The sales team were all industry veterans with all the right contacts. Little did I know in the beginning that we would eventually be brought down through mismanagement by our top company officers. Forget our competitors with their millions of dollars and huge brand names; we developed into our own worst enemy.

As the dogs continued to contently snore, I thought back to the day it all began. That was five years ago. I wasn’t a quitter, but pushing the rock up the hill every day, day after day, with no breaks will eventually crush any person. It was a challenging and an educational run, but when lips move, people lie.

I was exhausted and tired of all the lies. In any business, at the end of the day, all you really have is your personal integrity. I never did lie, and my pants will never be on fire!

WHO AM I?

My name is Chad Everyman, and I have been in sales for over thirty years. After failing miserably at studying to become a vet in college, I switched majors and received a B.S. degree in sales and sales management. I ran sales routes for two major consumer product companies for five years until I was recruited into the wine segment of the alcohol beverage industry.

Even though I started on the lowest rung of the totem pole, I knew that this was the business for me—and being an avid consumer didn’t hurt either. I loved the product, the people, the relationships, and the freedom from mountains of paperwork required by my previous jobs.

Every year I improved, obtained a more in-depth knowledge of the trade, and was promoted. Finally, I had achieved the status of a vice president/division manager, reporting directly to the company president. I had a great compensation package, huge expense account, and more perks than you could imagine. Twenty happy and productive years at the same company were about to come crashing down, and my life would be dramatically changed in the aftermath.

Before this story can be told, it would helpful for you to understand how the alcohol beverage industry functions.

HOW THE SYSTEM WORKS

Some of you might think that a large part of the job of people in the alcohol beverage business is to sample our products and get drunk every day. While several folks have chosen to do just that for a variety of reasons, we really are in a numbers game, but with a couple of twists.

The way alcohol gets to you as a consumer is through what we call a three-tier system. Three types of businesses are involved until the final transaction. The first business group is suppliers; they are the primary source of any wine or liquor brand. They are either the brand owner or a business that acts as an agent to sell to the distributor network. Because of consolidations in the industry, suppliers are now mostly huge multinational companies. However, there remain several midsize or small start-up supplier companies that are significant for two reasons. First, due to the intense big-brand focus by the bigger companies, there remains a niche for those willing to market a wide selection of smaller brands. This ensures that the consumer will have a much wider selection of products at retail. The second reason is these smaller suppliers are willing to launch new and innovative brands, sometimes even in untried categories. Most major companies are unwilling to gamble with the investment needed to introduce a new brand successfully. Their marketing geniuses with their impressive MBAs are more likely going to stake their corporate careers on safer marketing activities like line extensions or changing a current brand’s packaging or label. But who needs another me-too flavor in vodkaland or rumville? How many times have you been unable to find your favorite brand because someone changed the label? The major companies sit on the sidelines and watch for a hot new brand introduced by a small, nimble company. They pay a premium for it and put their considerable muscle behind the new brand, expand it’s market share and recover their investment.

The second tier in the industry is called the distributor or wholesaler. This is the middleman between the supplier and retailer/ restaurateur. Most consumer product companies ship their products directly to a retailer’s central warehouse, and from there it is shipped to each store outlet. Legalities and logistics make this type of effective and efficient system difficult in the alcohol beverage business. The only time optimal efficiency happens is when you are dealing with a control state. These are states that act as retailers and control their own sales of spirits and sometimes wine. In this case, the supplier, sometimes using a broker, or sells direct to the state’s warehouse, and the state distributes to their own stores. This can be more profitable for a supplier: cut out the distributor network and you only need to pay a broker a fraction of what the distributor would normally make in profit. Most of the time, bars and restaurants in control states must buy directly from the state stores, and this can dramatically push up their costs. Depending on the state’s markup, retail prices can range from very expensive to downright cheap for the consumer. Conversely, in the open states, most distributors are family-owned operations, many originating as bootleggers who went legit after Prohibition. This tier has also been substantially consolidated over the last ten years and is now dominated by multistate corporations that, in turn, are dominated by large multinational suppliers. All this makes it very difficult for a new supplier to find a distributor. Thank God it is still a business where relationships count for something; you’ll get a meeting if you have the proper contacts.

The third tier consists of retail stores, bars, and restaurants that buy from the distributors or the state. These are the places that sell directly to consumers. It is illegal for a consumer to buy direct from any of the other tiers, unless you are in a state that allows direct shipments from a supplier such as an out-of-state winery.

The myriad of laws and taxes governing this industry differ from state to state and can be very confusing. How many times have you traveled in different states and been confused about retail prices or the time stores and bars open or close? It makes no sense, but it won’t be changed anytime soon.

So that’s the system, stacked against the little guy. If you can struggle through it successfully, and there are examples of this happening, you can become very rich.

That is what I set off to do in the spring of 2002.

CHAPTER 2

THE GREEDY IMPLOSION

THE GREEDY IMPLOSION

The falling of the Twin Towers wasn’t the only collapse that occurred in New York City in the fall of ’01. Thomas F. Wayward Inc. was being acquired by a multinational company headed by a diminutive, megalomaniac named PJ Mess. To help finance the deal, the Spirits and Wine Division’s brands were to be auctioned off. Thomas F. Wayward’s Spirits and Wines Company was doing $6 billion in annual gross revenue, with $500 million in profit. Selling off these very profitable brands was like getting rid of Michael Jordan and thinking the Chicago Bulls would have a shot at the championship. There were other entertainment industry business units of the Wayward Company, including theme parks, movie studios, TV production facilities, and music. These units as a whole were not as profitable, especially after several movies tanked in the few years leading up to the sale. Keeping this group of business units was equivalent to letting one jobless son live with you rent free, forever, and estranging yourself from the other, a Harvard graduate.

Wayward was a public company, but with a significant ownership position held by the original founding Songuy family.

Wayward’s CEO, Brad Songuy, had a lifelong yearning to be involved in the entertainment business, Brad initially made a run at the stock of a major entertainment company but eventually backed away from attempting a hostile takeover. Swimming in cash and profits, Brad negotiated to buy an entertainment company from a major foreign corporation. Brad’s desire to be a player on the Hollywood scene caused major changes at Wayward that were not viewed favorably by Wall Street. Brad’s grandfather’s classic remark about rich families was shirtsleeves to shirtsleeves in three generations. I always assumed he was referring to our distributor family ownership. The first generation was bootleggers gone legit, while the second generation were more educated and took the business to the next level. The third generation, who really hadn’t had to work hard, either ran the business into the ground or sold it to the bigger distributor networks. Little did I know how prophetic the Songuy grandfather would be for the future fortunes of the Songuy family.

The culture of employees resembled that of a family, maybe a little dysfunctional, but still family. Family is always proud of its A players, but doesn’t necessarily jettison its C players either. That’s why there was some complacency and an attitude of having a job for life. Trying to fire someone in this environment was like trying to get fleas out of a Florida house in the middle of summer. It wasn’t going to happen easily.

All of this was about to dramatically change for the people in the Spirits and Wine Divisions. As the finalization of the sale approached, we all anxiously awaited our fates, like ants watching out for the kid with the garden hose.

FLIGHTS OF FEAR

Everyone in my generation remembers where they were when President John F. Kennedy was shot. I was in my third-grade class in Cleveland when they made the Kennedy announcement. They sent us home from school that day. Everyone was somehow affected by 9/11, and I’m sure you remember where you were that day as well.

On that day, I was conducting a divisional regional managers’ meeting at the Residence Inn in Danbury, Connecticut. My managers loved fancy hotel rooms and gourmet dinners and were slightly pissed to be staying out in Danbury, Connecticut, where the accommodations were as elegant as a Marine barracks (but with in-room porn), and the fine dining consisted of leathery horse meat at Chuck’s Steak House. They really wanted to be in Manhattan for these two days so they could enjoy the level of hospitality and luxury to which they were accustomed. The last thing I wanted to do was spend another night in a hotel room because of my extensive travel schedule, so I opted to have the meeting fifteen minutes from my home. I felt like the stern father managing a bunch of unruly teenagers at a slumber party. Usually, I try to reward my managers for their hard labor, thus keeping morale high; but we had some serious work to do, and I felt for once like being a little selfish and wanted to sleep in my own bed.

At about 9:00 a.m., the banquet manager burst through the door to tell us a plane had hit one of the World Trade Center buildings, and we went out to the lobby to watch it on TV. Things were to only get worse as the morning progressed. After unsuccessfully trying to restart the meeting, we went to lunch and proceeded to drink martinis, not wine. I finally made the decision to set everyone free to try to get home, with several guys driving all the way to Chicago. I don’t mind saying to this day that by sticking by my guns and deciding not to meet in Manhattan, we weren’t trapped in Manhattan; I looked like an idiot savant or a goddamn genius. But 9/11 wasn’t the only major issue facing my employees and me.

It looked as if Empire Spirits and Wine was going to acquire the Wayward Wine Division, of which I worked at as a divisional vice president. They had initially planned on sending all sales employees to California in late September for interviews, but I was certain those meetings would be canceled. Any company that was sensitive and in their right mind would not have put employees on a plane two weeks after that disaster. Not Empire; we were told to go, and I was as scared as a Klansman at a NAACP convention. Nevertheless, the next thing I know, my administrator and I are sitting in first class, in the emptiest plane I’ve ever been on in my life, and drinking heavily. Since I’m 6’4", 235 pounds, and a bodybuilder, the flight attendants asked me directly if I would assist the crew in case of emergency.

Damn right, I said and realized I wouldn’t be much good to them drunk. So I decided for the first time ever not to take advantage of the usual amenities of first class and remained sober.

The thing that bothered me the most was, what kind of company would make its potential future employees fly during this very frightening time? If this was how they were treating us before we officially worked for them, then what kind of slave labor, gulags, were we jumping into if we made the cut? They said we were going out to have discussions; what the hell did that mean? I told all my people these discussions were actually going to be job interviews and to come prepared with resumes and recent accomplishments, and to be ready for the Spanish Inquisition. I did.

COLD STEEL EYES

As my administrator and I were driving to the Napa Valley, we received a phone call from one of my female regional managers with a rumor about who would be my new boss. It wasn’t really about whom the boss would be that was amusing the living hell out of both of my female managers either. It was the fact that the new national sales manager could be a female, which is very rare in the chauvinistic wine and spirits industry. Now I have no problem with working with or for any woman in business, as long as she’s competent and doesn’t play the gender card. My two managers seemed to think this was going to be a bombshell of change for me, but I was more curious than anything, wondering what she would be like.

The next day we assembled in the meeting room waiting to meet the new boss. Chandra was a blond woman of medium height, a face that had once been pretty, and cold steel eyes. She possessed one of those indefinable bodies that looked like she had stopped working out. She eventually made her way into the throng standing around in the room, and I spotted her talking to one of my female regional managers. I went up to introduce myself, being careful not to interrupt their conversation, and then out came my first sentence. It was one of those lines you thought was funny at the time, but you wish you could grab the words in midair and stuff them back in your big mouth. I heard you were blond, so this must be you by process of elimination, I said. The look of contempt on her face contrasted nicely with the look of horror on my regional manager’s face. If we had been seated, my regional would have kicked my leg hard under the table. Chandra and I shook hands, and the meeting began right after that, thank God.

We were told we