The Phoenix Partners

Phoenix Partners, LLC's debut in the business world made a splash nationwide when it was picked up by AP and Reuters. Cell phone videos taken by some of the Pathway people who attended the meeting were posted to YouTube and Facebook, and one of them was used in a CNN report. The last week of December was full of catchy headlines. "Pathway rises from the ashes"; "Santa comes to Kelton"; "Miracle on Kelton Boulevard." Someone labeled a photo of me, "The new George Bailey." Best of all were the side stories about the fall of the old Pathway, the shuttering of its plants and how its former workers were facing a Christmas without jobs or health insurance until Phoenix came along, illustrated with the face of Troy Tenneson labeled, "Mr. Potter," "Ebenezer Tenneson," and my personal favorite, "Scrooge McTenneson,"

Inevitably, the media focus became, "Who are these people?" Searching for information about us turned up the usual social media and professional credentials for all of us...and the story of my divorce from Kathy, her marriage to Troy Tenneson and the events leading to the deaths of Callie and Rose. I declined all requests to discuss my personal tragedy with interviewers, but we had made me "the face of Phoenix" knowing that someone would dig the story out on their own and run it anyway. And how could they not? It was an irresistible real-life soap opera. Arrogant millionaire takes over small town's biggest employer and fires a third of its hapless workers. Arrogant millionaire seduces and steals the pretty young wife of one of the hapless fired workers. Arrogant millionaire and the faithless pretty young wife go to divorce court and try to steal the hapless fired worker's little girl from him and fail, their army of high-priced lawyers in five thousand dollar suits defeated by a small town country lawyer who is the fiercely protective older brother of the hapless fired worker. The faithless pretty young ex-wife of the hapless fired worker tries to kidnap their little girl and ends up getting both her daughter and her own mother killed, run down by one of her new husband's trucks, a lumbering symbol of the wealthy running roughshod over the "little people" who stand in the path of what they covet. Instead of crumbling under the heavy weight of this loss, the hapless fired worker joins with other hapless fired workers to start a new company, and six months later they come to the rescue of another company's hapless fired workers who were thrown out of work by the same arrogant millionaire and hand out $1,500 gift cards, bringing them hope for the coming year and saving Christmas for them all.

You can't make this shit up.

Some of the stories were hard to watch. Especially difficult was the "human interest" story that started in front of the Maitland Mills plant, then moved to the front gate of the Coffee Creek Correctional Facility in Wilsonville where Kathy was serving her sentence for manslaughter, and finally ended standing on the spot in front of Lee's Garden where Callie and Rose were run down. I had to turn it off when the reporter went snooping around inside the restaurant and showed the little family altar in the back where Mom burns incense in front of little framed photos of my grandparents, Dad, Callie and Rose.

Paul swore he wasn't behind the reporter and camera crew who ambushed Tenneson coming out the front door of his holiday festooned high-rise condo building in downtown LA and asked him if abducting Callie and assaulting Rose had been his idea and if he felt any responsibility for their deaths and his wife's current incarceration. Tenneson screamed something that was mostly unintelligible but I thought I made out "failing" and "losers."

It was the sharpest jab anyone had scored on the bastard yet, so if Paul did whisper something in someone's ear I guess I can live with that.

The answer to the question of whether I'd just be the mouthpiece for the "new Pathway" or be hands-on with business development, marketing and sales turned out to "yes." As I had anticipated, Pathway's previous, non-Tenneson managers were eager to return, but they needed some handholding to make a transition from merely thinking about restoring the "old Pathway," to building a new Pathway that could fill consumer needs in markets that had existed either barely or not at all when Tenneson had acquired their company six years ago. And even though the Phoenix strategy had been formulated by all four of us with input from fired Maitland marketing analysts who we hired as consultants, as the person who had stood on a stage before the entire company, handed out those $1,500 Christmas gift cards and made all those statements about how we'd all build the new company together, it fell to me to make the pitches that would fire up people's enthusiasm.

It ended up taking four months to get the shuttered Pathway plant up to full working order. Part of the delay was because Tenneson and his people had utterly neglected just about everything required to keep it running. There were numerous safety violations that had to be corrected, loads of deferred maintenance on equipment, and some equipment that flat out had to be removed and replaced. This included the offices as well. Every computer was at least four years old, so we just replaced them all. Dennis removed the hard drives from every decommissioned workstation, laptop and server and stored them for a "secret data project" (more about that later), and then we donated everything else to the local school system and to various local nonprofits.

We upgraded our rehired people as well. After the first of the year, every employee who was not yet called back to full-time work was signed up for some kind of training. Some updated their skills for their current jobs, while others learned new skills that would enable them to handle the new equipment we were adding, such as robots.

"Are these robots going to mean job cuts?" the union rep on our new management board asked.

"The plan is not fewer people," Marty explained, "But higher output using the same number of people. The company we used to work for maintained essentially the same headcount on the floors for over 30 years. But in that time we more than doubled our output."

"No growth?" one of the finance reps asked.

"Not in headcount," Marty replied, but in everything else, yes, there was growth."

"The population of our little town didn't change significantly, either," I pointed out. Some people said the company and town were 'stagnant'; we called it stability."

"They had layoffs," the union rep pointed out.

"It was a purge," I said, making no effort to mask my bitterness, "They swept out everyone who had opposed their takeover of the company and wasn't willing to be a 'team player' as they turned the place to crap." There were nods all around.

"Are you confident we can sell twice as much Pathway product as we used to after what happened to our quality the past few years?" asked a marketing rep.

"Not right away," I admitted, "Not until we can show customers we lost that the old Pathway quality is back. 'Pathway is back and even better than you remember it' is going to have to be the basis of our customer outreach for some time on the old standbys.

"But we aren't going to just sell the old Pathway standbys. We're lining up some private label contracts that will keep the floor humming. And there are new product categories Pathway can move into: organics, high end sugar-frees, gluten and grain free. These weren't significant markets when Tenneson management took over and they ignored them, but demand is starting to grow and we can help it. We're not going to just stop ignoring change and start keeping pace with it, we're going to be part of it."

If you follow this business, you probably already know that the US market for gluten free products grew more than 60% during the four years that followed this conversation. The new "Pathway GF" product line we introduced in the summer of 2012 brought in nearly a third of our total revenue, and cemented my image as a prophet in the eyes of Pathway's marketing group.

Meanwhile, the new Maitland Mills, having fired all those marketing analysts we were using as consultants, totally missed the explosion in gluten-free product sales.

The first year of "New Pathway" was, for me, a lot like the months I had worked on the Phoenix cooperative, but on a much larger scale. Instead of driving all over Oregon and southern Washington developing new relationships with suppliers, distributors and retailers (which I maintained as we added them to Pathway's list of potential business partners), I was flying all over the US to work on both new and renewed relationships for Pathway. In many cases the renewals were with businesses the old Pathway had alienated with poor quality product, late shipments, short shipments, billings for shipments never delivered and non-payments for deliveries received. Even though we had rehired Pathway's marketing team and sales reps, everyone -- and I do mean everyone -- seemed to want to hear Pathway's new managing director personally repeat the promise that the people who had ruined their good relations with "old Pathway" as they ran the company into the ground were gone for good. And of course, I never missed an opportunity to stress that the "old Pathway" was Tenneson and our "new Pathway" was not.

My cross-country public relations tour seemed to have a beneficial effect. Before long our sales reps were reporting rising orders for returning products. We also signed several contracts to produce and package store-branded products that were similar, but not identical to what we sold under our own brand. You might think that would have us competing with ourselves on grocers' shelves, but since we weren't spending any of our own money to distribute store-branded products (they were shipped to the store chains' main warehouses and distribution to their retail outlets was their responsibility) or to advertise them, our net revenue per unit was actually pretty close to that of our own Pathway-branded product.

Our business plan was starting to work.

We held two meetings every quarter. The quarterly Pathway meeting was an all-hands for the entire company, the senior management in the company board room and the rest of the company able to log into a secure web meeting using their employee ID numbers. As a privately held company Pathway wasn't legally required to conduct such meetings, but we had promised openness and we delivered.

The quarterly Phoenix meeting was closed-door. Marty, Lucy, Dennis and I in the boardroom, Arnau, Sofie and Phil Barnes, our New Mexico corporate counsel on web. Alex and Paul logged in as well, but generally were silent observers unless they heard something that they needed to weigh in on as our personal attorneys. As the majority shareholder, Arnau should have been our chair, but as he and Sofie had declared themselves silent partners in all matters except those directly related to Troy Tenneson, the task of chairing the meetings rotated between the four of us who were onsite at Pathway.

"Call to order," Lucy declared. It was our third meeting, the one year anniversary of the signing of the Phoenix Partners partner agreement, one month remaining before the Q4 Pathway meeting, and it was her turn at bat.

"Move to waive minutes of last meeting?" she asked.

"So moved," I said.

"Second," Marty added.

"Objections?" There were none.

"Updates from last meeting?" We spent an hour going through our usual list. Sales, plant performance and upgrades, employee morale, technology projects, etc.

"Last item," Lucy said as she hit the key to put her PowerPoint slide on the screen, "Financials."

There was silence. We were stunned.

"Pathway will end Q4 in the black."

"That's a year ahead of your projection," Arnau noted, "How...?"

"The Champion Markets contract," Lucy explained. "We're providing their entire line of store-branded hard-baked snack foods. And it was unplanned."

"Unplanned?"

"I met their CEO at the Grocers Association show in Vegas in February and gave him the full private-label supplier pitch," I explained. "He was cagey about their plans at the time, but in March they announced a seven-state expansion into the Southwest. By the end of Q2 they had twenty new stores open and their existing supplier was overloaded doing both breads and pastries and hard-baked snacks. So now that supplier has transitioned to doing just fresh-baked and we're doing all their hards. Nobody lost any work, so it's win-win and they even shared their recipes with us so there's been no change in product that customers will notice.

"It's a one-year deal with options, and the new Champion stores have been doing well," I added, "So it's looking good for sustainability."

The new Pathway's first holiday party was December 21, 2012, our last "working" day of the year. The company provided the basics; turkey, ham, mashed potatoes, salad, soft drinks and some desserts. Everybody was invited to bring potluck dishes, and just about everybody did. Families and children were invited, someone dressed up as Santa (no, not me) and we used the projector in the conference room to screen "It's a Wonderful Life." While no adults were looking, I taught some of the younger kids that Mister Potter's first name was "Troy." Never miss an opportunity.

After the gift exchange (everyone was told not to spend more than $20 and gag gifts were encouraged) we did a drawing with some better stuff as prizes, then brought out take-out containers so people could divide up what was left of the company-supplied food (we had brought in a lot), and it was time to bid everyone farewell until next year.

"Before everybody heads off for the holiday, we want you to know how much we've appreciated your efforts this year as we've worked to build our new Pathway," I announced, "And to let you know that when your last checks of the year are deposited or mailed to you, there will be a little something extra in them."

Applause. Everyone applauds Christmas bonuses, right?

"It's going to be the same amount for everyone," I continued, "And it's not a Christmas bonus.

"It's profit sharing."

Rising from the ashes: Phoenix distributes profit sharing checks to Pathway workers

December 24, 2012

Kelton Record, Business Page

A cheer rose up at the first holiday party of the newly reborn Pathway Bakeries when the managing director of the company's parent company, Phoenix Partners of Albuquerque, NM, announced a profit sharing bonus at the end of the company's first year in business.

The Record has learned that each worker received $500. Pathway currently employs 325 full time workers.

"As a privately held company we do not comment on earnings," Phoenix Managing Director Geoff Lee told the Kelton Record, "Pathway's workers all gave 100% and more this past year, and Phoenix has decided to show appreciation for that support by distributing the entirety of this first year's profits equally to all employees. We look forward to the coming year as we continue to build a new Pathway on the ruins left by the owners of its predecessor."

Never, ever miss an opportunity.

The next round of our war of words against Troy Tenneson and Tenneson Equity Partners came from an unexpected source.

The termination of 150 employees of the Maitland Mills had had a noticeable impact on business in Rose Valley, especially the more "discretionary income" based businesses like restaurants. We used some of my Phoenix salary to make sure all the restaurant's bills got paid, and with family benefits, Mom had company-paid health insurance. We even covered my cousin Zhen by declaring him a member of my "household," since he was related, lived upstairs from "his kitchen," and our restaurant, apartments and houses were all part of the same "family compound" (it's good to be one of the bosses).

A month after the party at which we announced profit sharing for Pathway employees, Paul called me about a "strangeness" Mom had experienced at Lee's Garden. Longtime customers who were still employed at Maitland were no longer coming in, but longtime customers who had been fired were, and they were buying a lot more takeout than they used to. It turned out that the fired employees were picking up food for their friends and relatives who were still working at the mills, because mill management had removed Lee's Garden from the company's list of approved vendors for catering and suggested to employees that there would be "repercussions" if they continued to patronize the restaurant. Rumor was this had happened in early January, and had resulted from an executive meeting in which a screaming, tantrum throwing Troy Tenneson reportedly shouted that he would "ruin those fucking chinks."

I relayed Mom's discovery to Arnau and Sofie, and Arnau in his role as the architect of Phoenix's Tenneson strategy called for a teleconference.

"I think we're getting to him," I observed.

"Yeah," Paul agreed.

"I would not want to unduly frighten anyone," Arnau said, "But if Tenneson has targeted your mother's business, perhaps it time to talk about security?"

Greybear Security had a knack for dispatching people with multiple skill sets, and unlike the obvious "Men in Black" types you typically see escorting heads of state or corporate CEOs, they fit right in with their surroundings and became invisible. They didn't just pose as what they appeared to be, they actually were what they appeared to be, with the added dimension of being trained to be very effective bodyguards if the need arose.

Lee's Garden "hired" a new waiter for the restaurant. He also started driving for Mom... so she wouldn't have to waste her time looking for parking. He was a polite fellow by the name of Duc (pronounced Duke) Li (no relation to us) who was actually several years older than he appeared to be and was a retired Navy Chief Petty Officer with experience running the galley on a nuclear attack submarine. According to Mom, Duc was a very good waiter and driver He moved into a spare room in Mom's house so he'd be there... if she "fell and couldn't get up."

Arnau made some phone calls, and a TV chef whose show traveled the country visiting eateries in small town America came to Rose Valley. He made stops at the local breakfast house, the craft brewery, the artisan baker whose praise of the stone ground flour he used led to a visit to its source, an historic grist mill across the Columbia River in Washington (the TV crew made a point of showing the chef driving past the Maitland Mills but not going there) and, of course, Lee's Garden. Mom and Zhen pulled out all the stops, and wowed their visitor with exotic selections from the "secret Chinese menu" that she and Zhen created just in time for the shoot. The show made Rose Garden a minor gourmet dining destination, and the out-of-towner traffic made up for a lot of the business lost due to the Maitland purge. Word soon came to us that Tenneson had started throwing things when it got back to him that Lee's Garden not only didn't appear to be suffering from his attempted embargo, but had actually expanded its staff.

Alex and Paul "hired" a new paralegal for their office, a deputy from another county who was laid off when its voters chose not to approve a bond and was working security while studying law part-time (the company had tuition benefits). She was "renting a room" in the home of Alex and his wife Chris, who were empty nesters, and she and Alex drove to and from work together, stopping along the way to pick up or drop off Paul... to save on gas.