When New Headquarters Turn Into Real Headaches

There’s probably no other time in a company’s history that invokes so many emotions than when it moves into a brand new, sparkling, mega-sized, purpose-built facility with their name adorning the facade for everyone to see. Even if one is traveling past at highway speeds, rest assured, the emblazoned trademark will have been designed as to make sure everyone knows just who resides there. For many it’s the celebratory achievement of a lifetime. For others it’s the first in what may turn out to be a string of expansions. All are to be celebrated as achievements in the life of a business. However, just because you finally reached this pinnacle doesn’t mean you can’t be knocked down (or in some cases knocked out) before the plaster is dry.

People look to the many new building projects happening currently in Silicon Valley (e.g., The new Apple™ or Facebook™ headquarters et al) as a form of proof positive that these companies are here to stay. The size and scope of their facades are in some way representing the size and scope of their invulnerability to near term business calamities or upheavals. In other words the building in the eyes of many represents security much like what a fort or castle represented in days of yore. Yes, in some ways size and scale does indeed matter. And in other ways the subliminal message it projects of having the funds available to acquire such a presence is in itself important. However, what it doesn’t do is what most think it does: Protect a business, from going out of business, faster than any other business.

A business with thousands of employees that just built a brand new mega park or “campus” can go bankrupt and be out of business within months of moving into their new digs just as fast as a solo-preneur can renting a store front in a downtown location. In the world of business: there are no guarantees. The only thing that is guaranteed is: just when you think “you’ve made it!” and thought bad things (regardless of size) can’t or shouldn’t happen based on the size of your new projected business image – is precisely when it will. New digs are just another step along the path of a businesses life. It protects one from nothing. When the facade of the building allows one to present a facade of hubris to one’s business – chances are: that’s exactly when reality will strike. Let me give you an example…

When I was still living in the Northeast I worked and traveled to Boston daily. This was in and around early 2000. At the time there was a considerable office construction project taking shape on the interstate I traveled known as Rte. 93. This was an office complex directly adjacent to the highway and was no small office park that one would equivocate with the term “park.” This was what has now come to be known as “a campus” with hundreds upon hundreds of thousands of square feet of office space. Parking spaces for thousands of cars and more. As I said, “this was no small office park.”

You knew the size and scope (along with the associated costs) when I watched construction crews one week descend upon the highway itself and begin construction. To add a little clarity; one needs to remember this is taking place during and on the same road just 15 miles North outside of Boston, home of “The Big Dig”. Touching, let alone putting a pick and shovel into a federally designated interstate in Massachusetts is not something for the faint of heart (or checkbook). Yet, here was this grand park being built where not only was the building construction sizable. They needed to design and build their own on and off ramps where none existed previously from the interstate. This part of the project alone with all its red tape and construction hurdles (not to mention costs) demonstrated who ever was developing and footing the bill for this project meant business. Real business. So with anticipation I like many other commuters watched the daily progress. (Along with the occasional halt in my own progress caused by many a traffic jam.)

Then one day I drove past and noticed they put the company name on the facade of one of the buildings. The name was Genuity™. (aka Genuity Inc.) Personally at the time I had no idea of who or what they did. However as I continually drove past I wondered just how many people would be employed there (it turned out to be thousands). I did a little research back then only out of curiosity and found they were hiring like crazy looking for all types of personnel from managers, support staff, V.P.’s of this, that, and the other thing and a myriad of others. As I drove past I pondered about people coming from other parts of the country possibly uprooting their kids from schools and more, and what it takes to make that decision based on all the inherent disruptions. (When you’re commuting to Boston everyday. trust me, you get many opportunities to do a lot of thinking because what you aren’t doing is what commuting implies. i.e., moving! And yes, for those wondering I commuted to, and through “The Big Dig” daily. Matter of fact I was one of the first to go through it when it finally opened.)

People talk today as if Silicon Valley is, and was, the only place on the planet where technology as well as innovative companies start or started. I would like those of that ilk to remember the Boston area had its own high tech catch phrase such as “America’s Technology Highway” (aka Rte.128/U.S.Rte. 95). Within a 50 mile radius of Boston you had firms such as Wang™, and DEC™, and a host of others. All with new buildings (more like towers) that garnered enough real estate and blacktop to make one think “Silicon who?”  So for some to think “well unless you’re in Silicon Valley – you just don’t get technology.” I would say: “Au contraire!” So much so we here just might see what many there refuse to even consider. Let alone see. i.e., It can all come to a screeching halt faster than one can contemplate kale vs arugula for their corporate catered lunch.

As soon as it seemed the Genuity Campus opened it was learned it was closing being put up for lease as well as for sale. In the blink of an eye of what was deemed “won’t happen” did happen. Suddenly a deal that was thought to be as solid as the foundations built for the new campus complex crumbled. Here’s 2 short paragraphs from an article  “Genuity Faces Bankruptcy As Verizon Ignores an Option” by Seth Schiesel and Simon Romero NYT™ 7/26/02 (funny how this date is also today’s) that shows just how fast things can change:

“Yesterday’s announcement sent Genuity’s stock plummeting by 89 percent to close at 29 cents, pushed Genuity into default on $3 billion in loans and raised the possibility that the company might have to file for bankruptcy protection within months. If that happens, Genuity would take its place alongside WorldCom’s UUNet division and PSINet as former highflying Internet ”backbone” companies operating under bankruptcy protection.”

“But Genuity said yesterday that it had no idea that Verizon was planning to drop its option when Genuity called on the banks Monday. ”This is absolutely coincidental from our standpoint,” Susan Kraus, a Genuity spokeswoman, said yesterday. ”We had absolutely no knowledge of what Verizon was going to do.””

After laying off half its workforce in one fee swoop it was reported (although the sources were unnamed) that after the bankruptcy sale if what was left of the then company (they were subsequently purchased by Level 3 Communications™) would even continue to lease any space in their once heralded newly constructed headquarters.

This was just another in a string of such revelations that took place in the technology space in New England. For a little more insight on more of these types of “building debacles” that seemed so right at the time but ended up going wrong here’s another article from early 2005 from the Boston Business Journal™ highlighting a few (of the many) others that had transpired after the last tech bubble.

I write this for I found it interesting that many of the reporters as well as the reporting of the tech world are heralding the coming of age with all the new highly publicized construction projects within Silicon Valley. “Unicorn” moniker-ed start-ups as well as large new headquarters seem to once again becoming all the rage as to justify no need to worry – “for this time it’s different.” Maybe it is, and maybe it isn’t. But just like a lot of things in both life and business: History may not repeat – but it sure does rhyme.

I remember when DEC™ (Digital Equipment Corp.) and Wang Laboratories™ were seen as near invincible growing leaps and bounds across the business landscape. I remember watching the construction of Wang’s towers go up one after another, after another as they seemed to build another one monthly. I remember all the “good” these types of companies did for their employees as well as the communities. (Wang for one rebuilt “The Music Hall” in Boston into the now critically acclaimed “Wang Center”) Rte 128/U.S.Rte. 95 seemed haloed ground to technologies comeuppance. It seemed as if nothing could derail the expansions. Till it did. And just like the expansion dwindled – the construction stopped all together. Sometimes as in one of the articles above reports: before it even got started.

Shiny new facades are a great notch in the belt for many a business. But that’s as far as it goes. It’s an accomplishment, nothing more. It protects one from the perils of business that are around every corner in no more of a fashion than a styrofoam wall will stop the cannon fire of a competitors onslaught. It’s just a place to conduct business from. It’s not what constructs the business. Never get the two mixed up or what may transpire next is the shiny new facade is what marks the tumbling of a whole charade. For when the looks of one’s business are transmuted into the success for one’s business. Many of us have read this book before.

And they all end at Chapter 11.

© 2015 Mark St.Cyr