Just Managing: Second Chances
Few of us get the chance to go back and do things over, especially
with the full knowledge of how to get it right next time. Steve
Giordano was given that chance (OK, maybe it was thrust upon him),
and he's taken every advantage of the opportunity.
Giordano is co-founder and CEO of Digital Now, a digital imaging
company he launched four years ago after losing control of his former
company, Floppy Shots, which was sold out from under him.
Giordano's first venture was a pure labor of love - two loves,
in fact. In 1994, after taking early retirement from the armed forces,
Giordano launched Floppy Shots, which combined his two great loves,
photography and computers. Floppy Shots produced equipment that
converted pictures into digital images through high-speed scanning.
It then sold the enabling technology to photo shops that offered
the service to individual consumers. Although successful, the business
was fairly capital-intensive, and Giordano sought working capital.
The good news: Giordano landed venture money to fuel his growth.
The bad news: He lost the company as a result.
According to Giordano, he came into work one morning in 1995 and
discovered that his majority investor had sold the company. He tried
to work out a compromise with his new bosses, but Giordano ended
up walking out a mere two months later, intent on forming another
company based on his same passions. Naturally, he and his former
company became embroiled in a messy legal battle that eventually
was settled in court.
Giordano learned a painful though powerful lesson from the experience:
Without financial control, he could never have real control of any
By launching Digital Now, which uses the same digital-imaging
technology as Floppy Shots, Giordano made sure to retain control.
He became partners with IXLA, an Australian company that was an
early investor, but he never ceded majority control.
He did however, share his power. The second time around, Giordano
took pains to make all the employees owners of the company. The
nine founding employees he took with him from Floppy Shots were
given 20 percent of the equity to share among themselves, with the
expectation that they would assume responsibility for the company
just as owners would.
Finally, from a product perspective, Giordano made the decision
to evolve the company's technology, which now focuses on online
photo delivery for photo shops.
Yet one of the most interesting choices Giordano made recently
was to go public - on the Australian Stock Exchange. The company
wasn't large enough to go public on the American exchanges, and
IXLA's ownership stake presented a rare opportunity to launch in
the land Down Under.
"By going public on the Australian market, we could retain control
of the company, stick to our original vision and still move forward
with the company," Giordano says.
The move appears to have paid off. Digital Now has used some of
the $30 million in IPO proceeds to purchase two major scanner manufacturers.
As a result, the company has gone from $6 million in revenue in
1999 to a projected $20 million this year.
The moral of the story is not that everyone should rush to the
other side of the globe for easy finance. Listing there was not
a novelty tactic, but a clever use of existing resources. Most companies
have more than one potential source of finance that could set them
on the path to growth, and wise owners select the money that best
lines up with their strategy. Sometimes that means angel money,
sometimes that means VC funds, and sometimes it means bootstrapping
The moral is that you should maintain financial control of your
company. Digital Now needed working capital to grow quickly because
Giordano wanted to avoid losing control. He was fortunate enough
to have access to a public market through his partnership with IXLA
and resourceful enough to take advantage of it
Today, Digital Now finds itself competing in a much larger market.
Giordano's original company was purchased by PictureVision, which
has since been acquired by Kodak. He now finds himself going up
against the photo giant - and is enjoying the challenge.
"It's always important to have competition pushing you along,"
he says. "It sharpens your skills."
Read or print the Intro
and Chapter 1.
Read the book reviews at Inc
Read the publisher's press
this book from Amazon.com.
the companies that Tom discusses in the book
Hear a recent lecture by Tom on the Startup Garden
Buy my book and I will send you a worksheet and list of local
and industry resources for your startup. Simply send me an email
with your zip code and type of company and I will email you the free kit. Thanks!
Managing – articles that Tom wrote for The Industry Standard and some
written for Inc., Fortune Small Business, Harvard Management Update, and other
Read about other
books and web sites about starting your own business.