Zero to Tesla

by Sanjay Singhal

  Novatel currently makes the Minstrel line of wireless modem cradles for the Palm (PALM: Research, Estimates) family of products, as well as for Handspring Inc. (HAND: Research, Estimates) and Casio pocket devices. Customers include Verizon Wireless, AT&T Wireless (AWE: Research, Estimates), OmniSky Corp. (OMNY: Research, Estimates) and GoAmerica Communications Corp.

  I had moved the company to San Diego. I had invented the Minstrel line of Palm cradles, and I had gotten the initial contracts. I was far from being exclusively responsible for Novatel’s success, but I was a core component, and my options would have been worth $5 million if I’d stayed with the company. I hadn’t capitalized on my work at Novatel, and Nikean was a flaming disaster.

  I CAN’T PAY ALL THESE BILLS

  Once I realized it was over, it was over. I did get one further call, from Brian and Michael, who told me they had reviewed my diligence material and were willing to put in their $10,000. I told them thanks, but that it was too late. I knew $10,000 wouldn’t make a difference, and I told them to keep the cash. I was turning down money. It was really over.

  Another thing that was over was my six-year marriage. Over the following weeks, my wife and I reached agreement on separation of assets, and she made it clear that she would be returning to Canada where she could begin working again and supporting herself and our daughter.

  I was ashamed and depressed. When VideoDrive failed, I had called up all my investors and explained what happened, which they all appreciated. I had so bungled Nikean that I simply went back to Canada, into hiding. I stayed with a variety of friends in Toronto for a month, hoping I’d find the energy to deal with the mess I’d created, but it just seemed too daunting, and since nobody associated with Nikean knew where I was, I had relative peace.

  I knew, though, that I’d have to find a longer-term solution, and in April I went home to my parents in Fredericton. I explained to my father everything that had happened and then went to my old bedroom and didn’t come out for two full days. My mother brought me food regularly, and I read novels. Occasionally the phone would ring, and I would ignore it, but gradually people found out where I’d gone, and I began to get more and more calls from creditors. Since many of them were in the United States, they didn’t bother trying to reach me when they realized they were calling Canada. However, I’d gotten some Canadian credit cards and other debts as well while I was securing investment from unaware banks.

  My parents knew enough to answer the calls with, “He’s declaring bankruptcy.” Amazingly, this phrase shuts down most creditor calls immediately with a curt, “Let us know the name of the bankruptcy trustee as soon as you have it.” My father, more knowledgeable in “in-the-trenches” business than me, had me calling my Canadian creditors and negotiating to bring down the amounts owed to ten to twenty cents on the dollar. We tried to find out how to declare bankruptcy in the United States and Canada together, or how a Canadian resident could declare bankruptcy in the United States, but no lawyer or accountant was able to give us a straight answer. It would have cost over $20,000 to consult multiple Canadian and US professionals and do it “properly.”

  I settled on a simple Canadian bankruptcy and hoped the situation in the United States would resolve itself, which it eventually did as everyone realized I was gone and they couldn’t come after me in Canada. Even though I secured an agreement with the Canadian banks and cell phone carriers to reduce my debt to a manageable level, there was one debt I couldn’t negotiate down, and that was spousal and child support, which I’d been neglecting since getting separated six months earlier. Combined with the other debts, the amount became large enough that it would be a significant additional burden on my parents to pay it off. I, of course, had nothing to contribute.

  When I brought the support payments to my father’s attention, his attitude toward the creditor negotiations changed completely. He said, “Son, I thought I’d be able to negotiate down your debt, but now I think you’re going to have to declare bankruptcy. You got yourself into this mess, and it will help you to get out on your own.”

  “But the amount of debt after talking to all the creditors isn’t really that bad is it?” I asked. “It’s just the family support that’s large.”

  His response was, “I’ll be damned if I spend any of my money to get you out of your personal problems. Go ahead and declare bankruptcy.”

  ---

  The bankruptcy process itself was ridiculous. First, it cost $3,000 to even start the process and hire a trustee. Where a bankrupt person is supposed to come up with this, I have no idea. In my case, my family covered it. Then of course, all assets I owned were to be signed over to the trustee for sale and distribution to creditors. My wife had gotten anything of material value in our separation settlement, so I had no assets to speak of. I briefly considered declaring my golf clubs but decided to just leave the form blank. The trustee didn’t seem all that interested in investigating.

  Bankruptcy lasts for nine months, and then it’s on your financial record for seven years after the original declaration, so forget about getting a credit card or car loan during that time. The most shocking part of the process was when I was told I’d be paying $200 a month to the trustee for “administration” during the nine months of bankruptcy proceedings, along with 50 percent of anything I made above a poverty threshold. This money didn’t go to pay off creditors; it was just a penalty going to the trustee. Worse, I was told that if I got a high-paying job, my bankruptcy would be extended by a further twelve months, and 50 percent of my surplus income during that time would continue to go to the trustee. I had the mild comfort that my support payments would be deducted before income was declared surplus.

  So to summarize, I had to pay to start the bankruptcy, I had to pay a monthly fee to stay in bankruptcy, and if I made an effort to get a good job and recover, essentially 50 percent of my salary would be taken away and not even used to compensate my creditors. My father and I were both appalled and tried to stop the bankruptcy, but once it’s filed it can’t be taken back. In the end, it was going to cost me more to go bankrupt than it would have cost to negotiate settlements. Plus I would have been able to avoid the seven-year financial stain, not to mention the stigma of bankruptcy in general.

  The final insult was the bankruptcy counseling sessions. I was required to attend three one-hour sessions. At the first session it became clear that I wasn’t the target audience. “Hello, Mr. Singhal, please have a seat. I understand this is the first time you’ve declared bankruptcy?”

  I didn’t realize people went bankrupt multiple times. “Yes, this is my first time.”

  The guy at the front of the room, Frank, was in his forties and humorless. I thought he was probably a reformed multiple-bankrupt himself. He said, “Please review this form, and check off all the types of debt and associated amounts that put you in bankruptcy.” I looked at the form, and in an attempt to shock Frank I included my US debts. It was a total of $500,000 spread across credit cards, cell phones, suppliers, consultants, support payments, and investors.

  Frank looked at the completed form and began the heart of the session. “It appears that you’ve had a problem controlling your purchases.”

  Duh, yeah I thought.

  He added, “It’s important to realize that making only minimum payments on credit cards substantially increases your debt load.”

  I knew that. That’s why I always paid off my credit cards in full…until I stopped paying them altogether.

  He then began in a pedantic tone, “Mr. Singhal, you don’t seem to understand. It’s important to match your expenses to your income. Clearly you are spending more than you’re making, and we have to work together to reduce your expenses. For example, how much is your monthly phone bill?”

  I suddenly realized that Frank had no clue what had happened to me. I hadn’t gradually gone bankrupt by having a high mortgage payment and spending too much on ice cream sandwiches and DVDs. I had five-hundred-fricking-thousand dollars in debt. H
ow was reducing my phone bill going to help? I said, “Um, Frank. I think my situation is different—”

  “Now, now, Mr. Singhal, everybody who has declared bankruptcy feels that their situation is different and that they’ve been wronged. Trust me, everyone needs to learn the same lesson, and I’m here to teach it.”

  I sat back and settled in for a series of lessons (complete with overhead slides) on what it means to be financially responsible. On one hand, of course, I did need a basic lesson in matching expenses to income, but I needed it to be taught to me by an entrepreneur or investor, not Frank the Condescending. That said, the bankruptcy did teach me one lesson: “Don’t spend money you don’t have.” And it applies just as much to entrepreneurs as to the more typical targets of bankruptcy proceedings.

  With all the payments and conditions in place, I returned to my parents’ house, returned to my bedroom, and returned to my collection of Ken Follett novels. The bankruptcy process left me with no interest in getting out of bed and getting on with my life. I liked my mom’s food, and I had a large collection of novels.

  YOU’RE NOT LAZY, BUT…

  My lack of interest in returning to society (and moving out of the house) got my parents worried enough to send me to a psychiatrist friend of theirs, Dr. Jamal, to get an assessment to see if I was clinically depressed. I had suspected I had issues with depression at various points earlier in my life, but going through a checklist of symptoms, it was never obvious. Back in 1995, the checklist included items like, “Do your knees get weak when you laugh?” and “Do you have difficulty sleeping?” The knee thing was just weird, and I slept too much, not too little. They’ve since updated the list of symptoms.

  Dr. Jamal took copious notes during a one-hour session with me and came back with the diagnosis that I was indeed depressed, but he also suggested that I might be manicdepressive or bipolar. I was taken aback and denied it immediately. I knew manic-depressives were crazy people, and I certainly wasn’t crazy. I was an educated, successful, normal person except for very recent events. I couldn’t be crazy.

  Oddly enough, I was happy with the depression diagnosis. That meant I wasn’t lazy—in fact it was a great defense for all the times in my life that I didn’t feel like getting out of bed. But I wasn’t crazy; in fact, I felt great during the times I wasn’t depressed. Even when I was depressed, I wasn’t unhappy, just uninterested in the world. I didn’t think I needed medication, and I planned to just snap out of it, as I always had in the past.

  My parents continued to worry about me, insisting I try various nontraditional “cures,” including wearing a copper bracelet, keeping a lucky gem in my pocket, and seeking treatment by a yogi from India. “Dad, seriously, a yogi from India? He’s not coming just for me is he?”

  “No, no, he’s here to run some Hindu temple sessions. He’ll be staying with us at the house, though, and you should let him try to help you.”

  “Okay, fine, I’ll try it, but do I have to do yoga? I hate yoga. I hate meditating, too, it’s boring.”

  “No, none of that. He’ll do all the work.” That sounded good to me.

  Two days later, the yogi showed up, and my father asked me to get a picture of myself in a frame to give to the yogi. I found a framed picture in my room and handed it over to the yogi, wondering what was going on. He told my father, “I will sleep directly beneath your son, look at his picture, and think cleansing thoughts. That will help him to get better.” I rolled my eyes and went back to bed. Later my father asked me if I could sleep on the left side of my bed, so that the yogi could sleep in the bed that was already underneath my room instead of having to move the bed or sleep on the floor.

  The next morning my mother came into my room with a breakfast tray and a huge smile on her face. I just wanted to sleep, but she wouldn’t be put off. “How are you feeling this morning?”

  “The same as yesterday.”

  She smiled, patted my head, and said, “Just give it a few more days.” I didn’t have to do any yoga or meditation, so I was happy to just lie on the left side of my bed while the yogi thought good thoughts and, presumably, stared at my picture. I didn’t get better, but the yogi’s temple got a nice donation from my family anyway.

  GET BACK ON THE HORSE

  By the summer of 1998, a couple of months after the bankruptcy, I was starting to feel better. My father convinced me I should start looking for a job again, and I agreed. I put together a resume that glossed over Uniden, Nikean, and Novatel (fired, bankrupt, fired—what a track record), and I called a recruiter in Toronto. True to her word, my ex-wife had moved back to Toronto six months earlier, and I wanted to be there to be close to our daughter.

  My parents decided we’d all drive to Toronto as a road trip, and the recruiter lined up a few interviews for me while we were visiting. I saw three companies and got an offer from Newbridge Networks as a senior field engineer for $70,000 a year. It was substantially less than I’d been making in my previous jobs with PRTM, Qualcomm, and Uniden, but I was desperate to get my career going again. In the end, I declined the offer because of the title, not the salary. “Senior Field Engineer” was just too much of a fall from Director, then CEO/Founder, and then CEO-in-waiting.

  It was the end of the road trip, and the recruiter called me to say, “Something just came in. You can meet with another telecom company for a sales role—do you have any experience in sales?” I said that I didn’t, but I’d be willing to meet with them. I had to leave the next day, though, to get back to Fredericton. I wasn’t that keen on doing the interview. The Newbridge offer had killed whatever confidence I had, and I wanted to get back to my parents’ place to nurse my wounds.

  The recruiter said, “No problem, I’ll see if I can set something up for this afternoon. Does 5:00 work?” He called me back to confirm a few minutes later. I was starting to psych myself up, thinking that maybe this time things would go well, when he called me back. “Sorry, it turns out he can’t meet you this afternoon. He has another conflicting appointment. Can you delay leaving tomorrow and meet with him?”

  I was deflated. “No, we really have to get back. I’m not really a sales guy anyway,” and I hung up the phone, dejected. Maybe I was going to live with my parents the rest of my life.

  The next day we set out to drive back to Fredericton, and we were just passing the outskirts of Toronto when the car started to make a whirring sound and several lights I’d never even seen before lit up on the dashboard. The car still operated, but my father insisted we get off the highway immediately and get it checked. It turned out that we’d broken a fan belt. It was a simple repair, but it was going to take a day to get the part and get it fixed, so we made plans to check into a hotel for the night.

  As we were driving to the hotel, my father said, “Hey, you can probably make that interview now, call up the recruiter.”

  “Why bother? He didn’t sound that excited about it, and I probably won’t get it anyway.” But my father insisted, and I found myself with a lunch meeting for the next day with Ed Scott, a sales manager with a company I’d never heard of: Scientific Atlanta.

  The next day at noon, I walked into the rooftop restaurant of a suburban Marriott hotel, where I saw Ed sitting alone at a corner table, wearing a crisp blue sport coat and contemplating a large salad. Ed himself was a cross between a teddy bear and a middle linebacker, and he gave me a big smile as he rose to greet me. He pointed to the iron pinky ring on my right hand as I sat down. “You’re an engineer. What type?” I reflexively rubbed the ring with my right thumb, a habit I’d developed when I was just graduating from engineering and the university had bestowed me with the ring as a symbol of my accomplishment. I always felt a flush of pride when somebody recognized what the ring signified (all Canadian engineering graduates have one).

  I said, “Electrical. Why do you ask?”

  “Just curious. How much sales experience do you have?” Right to the point. I told him that I’d never been a sales person per se, but that I’d do
ne business development.

  “But people tell me I’ve got the right personality for sales.” I cringed even as I said it. I did have sales experience with my entrepreneurial ventures, but the recruiter had told me to avoid talking about them, and I knew sales didn’t show up anywhere on my resume.

  Ed made a noncommittal sound and asked how strong I was in telecom technology. I immediately got energized, always happy to talk tech. Ed was a sales guy, but he knew a hell of a lot about engineering. Ten minutes later we were engrossed in a conversation about my first significant engineering project in university, fourteen years earlier.

  I excitedly described my accomplishment. “I figured a way to do simple speech recognition for handicapped people. We couldn’t analyze the entire word someone spoke, so we just checked the first few milliseconds, then a similar duration a second later, toward the middle of the word. It was brilliant at the time. And you won’t believe this—we did Fourier transforms with an 8085 chip.”

  “But the 8085 didn’t even have multiplication. Why didn’t you use the 8086?” Ed replied.

  “We had a fixed budget, and we couldn’t afford the 8086. Geez, if we’d had the money, we would have gotten the TMS32010 signal processing chip and blown everyone away.”

  Ed stayed with me through an arcane conversation that most people wouldn’t have recognized as actual dialogue. We shared a laugh. “Oh yeah, that TMS32010—everyone wanted to get their hands on that one! Ha ha ha.”

  Apparently Ed and I were both not-so-closeted geeks, and we hit it off. “Well, I think you’ll understand our products,” he told me, “but I don’t know if I can hire someone with no sales experience.”

  “Give me a chance, and I’ll prove I can do the job.”

  Ed thought for a moment, then responded with, “Okay, let’s give it a shot.”