[Don recently posted this explanation of the demise of Maya Computer on CompuServe, and others immediately flooded the message thread with condolences and regrets. I was sorry to hear of Maya's demise as well, and thought that Don's perspective on the experience might prove educational for those of us who deal with mail order firms on a regular basis. -Adam]
What Happened to Maya Computer? -- Maya Computer closed its doors on Thursday July 8, 1992. I want to thank all of the customers and vendors that have called and expressed their support for Maya's open and honest style of doing business. I think that for those that I have not been able to talk to personally a bit of explanation is in order for the untimely demise of Maya Computer.
Maya Computer's growth was spectacular during the first three years of operation. We grew from $750,000 to $3,000,000 to $10,000,000 in sales by 1991. We failed, however, to track and manage that growth properly and by the fourth year we began to experience significant losses due to out-of-control overhead and overstaffing. It was a natural reaction to increase our staff to meet the incredible volume of phone calls and orders that we were receiving. Our phone system was lit up like a Christmas tree and the phone company told us we were missing 10,000 calls a month. So we staffed up without the careful planning that such an expansion requires and without the operating capital to support the inventory required to meet the increased number of orders.
For the most part our employees and the owners of Maya reacted maturely and energetically to the problems created by the growth and losses. We cut everyone's pay, reduced overhead and laid-off almost 1/2 of our staff in an attempt to stabilize operations.
We were fortunate in July of 1991 to have received $1,000,000 of capital on what we believed were favorable terms. This capital came at a critical juncture in the company's development. The loan was to be a four year interest-only loan with conversion to equity at the option of the company. As a convenience to the lender we signed a demand note for the money with the clear notion that a comprehensive document would be signed 30 to 60 days later.
In late 1991 several disagreements developed with the lender relating to personnel and management of the company. Maya Computer's Board of Directors met to address these issues in February of 1992 and passed resolutions clarifying the management of the company.
Shortly thereafter, despite our understanding of the terms of the loan, we received a certified letter from an entity in New York by the name of Roper Enterprises claiming that they had been assigned our $1,000,000 note and that immediate payment was demanded. Upon investigation, it was later determined that the loan had not been assigned. Nevertheless, the demand changed our approach to the business. We began to search for replacement investors and in every case once we disclosed the called $1,000,000 note the banker or investor would race for the door. We were unable to extend our credit lines or make long term plans with this sword of Damocles hanging over our heads.
We were contacted by the lawyer for the lender and asked to prepare a "work-out" plan for the million dollar note. In late May, that plan was rejected and we received a second demand to pay the note, this time with the proper assignment of the loan. Several days later we were contacted by the lender and were told that he wanted to negotiate a settlement of the situation. We responded positively to that notion but were served 24 hours later with a lawsuit demanding possession of all of our assets.
We notified our bank, the Franklin Lamoille, of the lawsuit and prepared to go to court to defend ourselves. On the day of the scheduled court hearing the bank seized our bank account and demanded payment on their loans and offset our bank balances as partial payment of those loans. This effectively put us out of business. The bank was significantly over-collateralized and their action made little sense, especially since we had kept them informed of our financial condition on a frequent basis.
We never got to tell our story to the court but rather were pressured into signing an agreement to turn over our assets to Roper Enterprises. In July, 1992 we held a liquidation sale for one week, raising enough capital to pay the bank and later turned over the remaining inventory and assets to Roper Enterprises. Maya Computer is now a company with no assets and all liabilities and is out of business.
While this adversity brought out the worst in some people it also brought out the best in our team. Employees worked long hours for little pay to try to breathe life into Maya. We worked long and hard to ensure that no customers got caught in our problems, even though the lender refused to allow us to pay customers for equipment sent to us, make refunds or to honor checks that had been bounced by the bank's action.
Who are the winners and losers and where does Maya go from here? There are not many winners in this situation. All of the owners lost their investment in the company, which for most of us is all the money we had or could borrow. The lender may lose a considerable portion of his investment. Many of Maya's vendors lost money and a few customers got caught in this unfortunate situation. The lender got some stuff (inventory and desks) but the people at Maya have their integrity, friendship and pride intact. We have been encouraged by the large number of customers and vendors who have been so supportive during our troubles, many of whom have gone out of their way to thank us for the job we did.
We are discussing forming a new company with a number of potential investors. We have a dedicated, highly trained professional staff that works exceptionally well as a team. We have a group of very loyal customers and a business concept that prides itself on honesty and customer service. As I sat with our employees and it was clear that we would be closing our doors, we cried together and vowed that the lesson to be learned from this experience would NOT be to distrust everyone and act ruthlessly but rather that trust, honesty, friendship and hard work are too important to sacrifice for money. Whether we are back together in a new company or separately in other organizations, you will always be able to identify a Mayan by their enthusiasm for their work and that smile that comes from having done the right thing.
Maya Computer Company