Tireless. Kim Lorenz
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needed. They were simply trying to sell the customer what they currently had, and price was their only sales tool. The customers also were primarily buying on price because that was all they knew! If we could show the customer a better way to reduce all the costs, not just the price paid, we represented far greater value to that customer, but it required change and a different way to look at the opportunity.
We had come up with a different plan in order to succeed. Though it might seem like a foolish decision, we actually found it best to hire salespeople from outside the industry—the less experience in both sales and tires, the better! I know you might be questioning this strategy but think about this: it is easier to teach a brand-new habit and knowledge base than to change the old. You know the saying, “You can’t teach an old dog new tricks.” Same example here.
We endeavored to apply the same wisdom to hiring service people. Most of our hires had no experience changing and handling large commercial tires, driving a large service vehicle, or making service calls on customers. It was a slow process to do this training correctly, but it paid off. The company was growing, and more importantly, garnering an exceptional reputation while gaining market share. This caught the attention of some international firms, and the results almost crushed our little enterprise.
We had started with zero market share. Now, after two full years, we had maybe 5% market share. We were competing with big companies like Goodyear, as well as large independent operators—some who had been in business for a few generations.
Though I had experience in my earlier job with many of the world’s largest transportation companies such as UPS—who was operating many thousands of trucks—and other large commercial operators, our new company was too small to properly service these larger companies in the beginning. A commercial tire operation had to have 24-hour service, which meant they were able to respond quickly at any time in order to keep the customer moving or repair vehicles on the road, handling truck breakdowns or tire failures. The good news was that we kept in good standing with our contacts at these larger companies. I knew they greatly respected both John and me after having built relationships with us over the years. Someday, we knew our company could grow large enough to be able to handle these customers and markets.
One morning, everything changed for us. The world surrounding our new venture was turned upside down. We had been served a U.S. Federal Court summons. A large international corporation, called Bandag, was suing us for patent infringements and was asking for an immediate injunction to shut down our operations. We were still a small, fledgling operation at the time. We had maybe 40 employees, but the competition was starting to see us as a threat. Bandag was a large Fortune 500 firm, while we were a very small company.
Immediately, our energy and focus shifted to surviving this lawsuit and impending manufacturing shutdown. As you may recall, we started this company with the purchase of a retread manufacturing facility in a bankruptcy auction. We had bid on the equipment, bought said equipment, and shipped it all to Seattle to set up our first manufacturing facility. The equipment had been manufactured by the world’s largest retread rubber and equipment supplier, Bandag, from Muscatine, Iowa. Our new venture was not a Bandag franchise, however. We did not use any Bandag rubber, and we had not once said that we were a Bandag dealer. We had no idea how things had escalated to the point of a lawsuit.
Bandag was not only asking for an immediate injunction to shut down our operation, but there was also a monetary component that would follow. If this lawsuit were won, we would lose everything we had put into the company thus far. Our success would be ripped right out from underneath us. We only had a short time before we had to appear in front of a federal judge who could shut us down in a matter of minutes, so we knew we needed to act fast.
The original attorney who helped us set up the new corporation, Pete, agreed to work with us again. He set up a meeting with us to strategize. After our meeting, he agreed that we were not violating Bandag’s international patents as the equipment was sold in a public auction, meaning there was no copyright or patent infringement at the time of purchase. Bandag had allowed the equipment to be sold on the open market.
As if the impending court date wasn’t threatening enough on its own, it didn’t take long for our competition to hear about the ordeal and use it to their advantage. Since the local Bandag dealers were a part of the suit, word traveled fast around the area. One customer called that very morning, catching us off guard, to say the least. This negative information could seriously cut into sales and customer confidence if they feared we were going to be shut down.
“I heard your company has been shut down? What’s the deal?”
We knew that we needed to do some damage control—and fast. Luckily, we had a top-notch attorney on our side. We had no idea how crucial that would be in the long run.
As we sat in a large federal courthouse with our attorney by our side, I couldn’t help but think of everything that could possibly go wrong. I can’t say either of us had spent much time in a courtroom before this, especially federal court! I hadn’t got much sleep the few nights before, and the stress of it all was wearing heavily as I thought about our employees and how this wasn’t just putting our livelihood on the line—it was theirs, too. I had to remind myself to breathe as I listened intently while a well-polished, New York City attorney pleaded the case of how this little start-up company was causing irreparable harm to an international firm. The attorney went on to share how Bandag had visited many of our biggest customers looking for evidence, fishing for any incriminating information that could be used against us. This was also eroding customer confidence in our firm, as those customers were being interrogated by someone from a highfalutin, New York City attorney’s firm.
Unfortunately, we had a few customers that expressed concerns regarding the viability of our new business, and one of our larger accounts had already stopped doing business with us as a result of this lawsuit. We also learned that the judge knew of Bandag’s founder, who had passed away a few years earlier. Things looked very bleak indeed.
Our attorney made the case for our fledgling company, laying out all the reasons he did not believe Bandag had any right to bring suit for patent infringement. The situation seemed like a re-enactment of David and Goliath as we both sat there, completely helpless. Our whole future, our whole lives, hung there in suspense for what seemed like an eternity that day.
Though the judge ruled against the injunction, it wasn’t the end of the road for us. Bandag was not able to shut down our operations yet, but they weren’t going to give up without a fight. Even though we were still able to run our business, we had the constant threat of financial ruin looming over our heads. Bandag would file other injunctions, interview other customers, and make our lives very miserable for a long time to come. It was an obstacle we had never expected. Our employees were wondering if we could still pay them and keep them employed. Customers were questioning if we would still be in business.
The following year, Bandag filed an injunction appeal but failed again. Even though we were successful in defending the lawsuit, the financial burden of attorney fees looked like it could be our demise. It was hard to see if there was a light at the end of this tunnel, and if there was, it might be a locomotive ready to crush us.
While all this lawsuit business was going on, at 3:00 AM on a cool, wet, Seattle-type, gray October day, my wife and I welcomed our third child into the world. Feeling both euphoric and exhausted, I remembered I hadn’t checked my messages all day since we had been at the hospital. Still, no cell phones or text messages then. I picked up the phone and dialed my voicemail.
“Hey, Kim! It’s John. I know you’ve probably had a long day, but Pete needs us at the office at 8:00 AM sharp tomorrow. It’s gotta be important. See you there.” Tomorrow was now today, this morning, just a few hours after Jill gave birth to our third boy (Jill needed a girl, but that was never meant to be).
I maybe slept about an hour before it was time to head over to Pete’s to see what all the fuss was about. Imagine my surprise when I walked in to see the Bandag attorneys! They made the trip to Seattle as Bandag management had decided they wanted to settle the case that morning, out of court. John and I knew that our key witness had totally refuted what the Bandag attorneys thought was their best opportunity to win. Still, it