First Albany began wrestling with a valuation of the company--a key step in preparation for raising capital. Heard thought the company was potentially worth $100 million, but he considered $40 million an acceptable floor. First Albany priced the company at $10 million.
Heard was livid. "I have an M.B.A. from Wharton," he says, "and if there's anything you learn at Wharton, it's how to value a company." Heard, who says that First Albany neither presented Buoyant with a single outside investor nor provided justification for its value projections, began to feel that First Albany was looking to undervalue the company with an eye to purchasing chunks for itself--at a bargain price. Frustrated by First Albany's valuation and by his own disagreement with his colleagues over Buoyant's direction, Heard never completed a business plan. First Albany denies intending to lowball the valuation and says it did not succeed in finding outside investors because Heard failed to finish a business plan.
As time marched on and internal tensions mounted, Heard began to feel cut off from the decision making in his own company. To alleviate a space shortage, he had moved in September 1996 to a satellite office 13 blocks away from the Buoyant headquarters, unwittingly compounding his isolation. When First Albany offered to invest $1 million, some of which would help to launch Buoyant's Internet brokerage, Heard felt peripheral to the discussions with the bankers. Gibbs insists that Heard "ultimately became uncomfortable with the idea in the form that it was. But there was a part of the company that wanted to continue [working on the joint venture], and we were trying to figure out if that was really possible." Heard emphatically denies having lost faith in the project. "I was simply locked out," he says.
Other executives, including Justus, Golden, and Walton, were growing increasingly frustrated with the dysfunctional setup. A Rubicon was crossed, Heard says, when a Buoyant executive working on the brokerage project asked him for help in refining a proposal for it. Heard went in on a Saturday to do so, only to find himself later excluded from the final deliberations about the on-line brokerage's business plan. First Albany, he says, "refused to show me the business plan for the project that I had initiated."
Signs of Mutiny
By late fall the partners were barely speaking to each other, the bankers were alienated from Heard, and the whole operation was paralyzed by antagonism. It was all hands against Cap'n Heard, he realized, when Gibbs related some unflattering remarks that had been made by staffers. "Frankly," Heard says Gibbs told him, "I've been told that you have to be managed out of the way." As the extent of the turmoil became apparent to Heard, he grew frantic. Around Thanksgiving, there was a meeting at First Albany's offices to review financial controls and practices at Buoyant. In Heard's view it had a maddening purpose: adopting new rules to prevent him from spending money without approval from a management committee.
When Gibbs and the Buoyant executives at the meeting approved a crackdown, Heard flew into a rage. The next day, Heard told Gibbs and First Albany they were fired--effective immediately. Gibbs shot back that he would have to consult Buoyant's executive committee. What executive committee? Heard demanded to know. He informed Gibbs that the company's charter did not provide for one. Despite Heard's protests, the committee--a longtime, informal, working group of company executives, including Trueman, Golden, and Justus, met with Gibbs. (Walton was part of the committee but wasn't at the meeting.)
Even Trueman felt threatened by the rumblings below deck. The discord seemed to Heard and him to be a full-fledged staff mutiny led by Justus, Golden, and Walton. Justus, the company's executive vice-president, was ambassador to several of its largest customers. Golden, the chief of technology, supervised Buoyant's crucial programming work. Walton headed up production. They had close links to workers and key customers. They also had compensation packages tied in part to the company's success.
"Seemingly, they were aligned with me to get Heard out," recalls Trueman, "but what really came out was that they were their own party--they didn't need me, and they didn't want him....They said, 'We control the clients, we control the key relationships, we control the workers, we have the real power in this company.' " The three men told Trueman that they were supported by 50 to 60 other staffers. (The company had grown steadily as work for such large corporate customers as Dow Jones, Mercedes-Benz, and Simon & Schuster poured in.) Trueman didn't want to test the claim. With Heard's support, he reasoned, he might have fired the three executives; but without a united front with Heard, he believed his choices were limited. For one thing, Justus, Golden, and Walton were not just executives--they were on the verge of becoming pivotal stockholders by virtue of the varying amounts of company stock promised to them as an employment inducement. Also, Walton was the executive who worked most closely with people on the floor, and he was extremely well liked. Trueman feared that if he had a showdown with the mutinous executives, most of the staff might jump ship. Without a workforce, there would be no company at all. Justus, Golden, and Walton, recounts Trueman, told him that " 'we will go on together as a company, but you will have a limited role.' I accepted their offer, tried to negotiate a little bit, but they had no intention of staying." Trueman, finally, threw in his lot with the managers, but he says he did so reluctantly. The three executives remained on board.
Justus, Walton, and Golden, as well as First Albany, declined to provide a detailed account of their roles in the maelstrom, citing past litigation among the participants. But they insist any action they took was in the interests of the company. "We were the guys who were caught in the middle," explains Justus. "What do you do when a company can't make decisions?" "I loved working at Buoyant," says Golden.
