"When we hit the wall with our first company, we realized we had to shut down and start over. So we called our employees together and brought everybody through the history of our company. We let them come to the same decision we did. One guy got up and walked out of the meeting, but everybody has their own way of dealing with change."

--Ron Schmelzer, cofounder of software company ChannelWave, which cut its staff from 14 to 6. After retooling, it raised $7.5 million in venture capital, increased its staff to 75, and nabbed big customers like 3Com and Nortel.