Getting Really Ugly
Ultimately, Heard acknowledged to himself, he could not save his company. "When things got really ugly, my first instinct was to preserve the value of the firm and get out of there," he recalls. He told himself, "Take some cash, go on, you can go someplace else."
In negotiations that lasted for two months, beginning in early December 1996, Heard and Trueman hammered out a number of agreements specifying how one or the other would buy his partner out. Nothing came of them. In fact, Trueman's mistrust of Heard had deepened when he'd discovered that Heard had been in personal bankruptcy during the formative stages of their partnership.
Trueman felt that Heard had withheld that critical piece of biographical information from him at a time when he had an overriding right to know it. Heard insists that his bankruptcy, triggered by a former client's long-delinquent bill, was irrelevant to his partnership with Heard. Whether that was right or wrong, Trueman grew only more disaffected with Heard.
On December 2, 1996, Trueman and Justus signed a letter declaring their satisfaction with First Albany and formally rescinding Heard's termination of the bank. And the stinger: "We are committed to promptly removing him [Heard] as an employee of the company...." At the bottom of the letter, they indicated that they were sending a copy to Heard and his lawyer. Yet Heard says neither he nor his lawyer received it, and he claims that he was deliberately kept in the dark. Justus and Trueman say they can't explain what happened.
Any brief good cheer that the holidays brought evaporated after New Year's Day. On January 2, 1997, from his perch 13 blocks uptown, Heard, deadlocked with Trueman and isolated from the staff, fired off a number of letters to employees, seemingly a last-ditch effort both to reassert control and to release his anger. In one letter Heard ordered Justus not to discuss Buoyant with investors or investment bankers and not to go to customer meetings unaccompanied by Heard. Justus was to clear all outside correspondence with both partners and cease doing any business until he had provided Heard with a complete report on his activities. Heard also told Justus to E-mail to both partners a daily log of his activities. Heard's lawyer followed up with a letter threatening to sue Trueman, Gibbs, and Justus. The company's value, the letter charged, had plummeted "from at least $40 million to approximately $4 million, suffered a decline in annual growth from 300% to minus 50%, and [had] no apparent prospect of recovery."
As the infighting threatened the company's business relationships and hurt cash flow, Trueman went to court to request that Heard be barred from conducting the company's affairs. The court ruled that neither partner could make any decisions without the other, producing the final and fatal deadlock. During a spurt of open warfare, as Heard recounts the events in court documents, his E-mail access was cut off and his telephone messages were hidden or suppressed. Golden acknowledges that Heard's E-mail password was temporarily changed to prevent him from sending inflammatory messages to employees. Meanwhile, Heard admits that he visited the offices after hours and broke the locks on company filing cabinets--where he found some of the correspondence between his colleagues and First Albany that he says he hadn't seen before.
One charge swirling around Heard concerned his mental state at the time. Heard explains, "I do not know what they said to employees, but employees were given the impression that somehow I had gone off the deep end." In fact, according to former Buoyant employees, Heard's volatile personality was the subject of frequent discussion in the office.
Even in the atmosphere of mistrust and foreboding, the suddenness of the company's demise was stunning. On a cold February morning Heard walked into the office and announced there was no money to meet payroll. Besides being out their pay, several staffers found themselves without the promised equity they'd been anticipating. Stock was never issued, though the papers had been drawn up and were awaiting signatures. "At the moment that Buoyant when under, I owned an eighth of the company," says Golden.
The staff scattered to other employers. Walton, Justus, Golden, and 10 colleagues decamped to a Manhattan new-media rival, Spiral Media, run by a friend of Justus's. Spiral was tiny compared with Buoyant. After the migration it grew rapidly by adding several former Buoyant clients, including Reuters and Viacom, as customers and by considerably expanding the business it had with AT&T. "That place is Buoyant, as near as I can tell," says Trueman, noting that the nucleus of the creative team moved over to Spiral.
But Heard wasn't going down without a last stand. Six months after the employees walked out the door, he filed a lawsuit in federal court against his former executives and Spiral Media, alleging that the executives participated in an "illegal effort to seize control" of Buoyant and, having failed, that they took customers and intellectual property elsewhere. The settlement involved a complex, Solomonic distribution of the company's software and other assets. Heard settled for a token $22,000. First Albany forgave its $100,000 loan in return for some intellectual property and the right to hire some of Buoyant's staff.
The Buoyant experience did not live up to the promise of the company's euphoric name. But it does prompt reflection on what might have been. "There was a tremendous amount of talent there," says First Albany's Gibbs. "Jim is a very bright, forward-thinking guy. They were in a field that when we first got involved looked very hot. And you know, it is very sad that ultimately they couldn't come to a common vision and that they had to go their separate ways and on such bitter terms."
For Trueman his separate way is launching a new strategic on-line development group, Netmethod. And for Heard it is trying to revive Buoyant with a new crew, including replacing himself as CEO while he launches a new on-line retail company, Present Co. In his new venture Trueman has a partner; Heard does not. This time neither Trueman nor Heard is embarking on a 50-50 partnership--not with anyone.
Russ Baker is a freelance writer based in New York City.
