In May of 1999, I went to work for Interpath, a “dot com” company owned by Carolina Power & Light. This local power utility formed Interpath in order to use its existing fiber optic network and its existing power line rights-of-way to build a powerful new web hosting and services company.
After joining the company I was quickly was promoted to middle management. The company was growing rapidly and within a year had expanded to 700 employees. I was at one point honored by the company for my success in hiring so much excellent talent in such a short period of time.
One year later, in May of 2000, Bain became majority owner of the company with an infusion of $50 million cash. On the surface this made sense because, while the company had a bright future, its “burn rate” (negative cash flow) was quite high.
The new CEO came in insisting on Bain’s commitment to integrity. This commitment was stressed repeatedly. The press release by the new CEO from Bain stated: "Interpath has an impressive mix of product, talent and customer base which will make it successful for many years to come. The combination of this asset base and the large commitment of Bain Capital positions Interpath as a current and future leader in the ASP market. Needless to say, I am excited to be on board and participate in Interpath's vast growth potential." Link
Meanwhile, behind closed doors, management immediately held a series of meetings to determine which employees where essential to continue the day-to-day operations in the short term and more importantly which were not.
In the open, new managers from an Australian Bain company were brought in. These new managers explained in meetings of employees how excited they were to be associated with this company and described its exciting future.
One morning shortly thereafter we came to work and found a letter on our work chairs. The letter instructed each employee to go to one of two assemblies.
My assembly consisted of the by-now familiar pep talk—starting with how the company had such a bright future and followed by an assurance that we had been “chosen” to be part of that future.
When we came out of that assembly the rest of the employees were gone. It was like they had vanished into thin air.
What followed were a series of events to boost the morale of the remaining employees. We were treated to parties with our families and taken out to a movie during the work day (Remember the Titans).
A few months later management initiated a second layoff. This time pairs of security personnel descended on individual employees who were instructed to gather their personal belongings and were escorted out of the building.
From then on the layoffs were individual. The “angels of death” would show up at a cubicle and an employee was removed.
When my turn finally came, I was invited to meet with the Vice President and was told my services were no longer required. Since I was a “manager” I was allowed to leave and then come back after working hours to retrieve my personal belongings. No “angels of death” were required.
Within a year, Interpath had become a 200-employee company. By 2002, a reporter wrote, “In a year and a half, ASP Interpath has dropped out of the ISP, CLEC and long-distance markets and slashed 500 of its 700 workers.” link
Yet the happy talk continued. In the same article, CEO Joel Schleicher told Dawn Bushaus, the reporter, “why the company is now positioned to prosper.”
Interpath was ultimately merged with USinternetworking Inc. of Annapolis, which had been purchased by Bain after an agreement to bankrupt the company in 2002.
The 110 remaining employees of Interpath were offered a choice—take a job in Maryland or find themselves out on the street.
The combined company was sold to AT&T for $300 million, which was a nice profit for Bain capital and Mitt Romney and a destruction of 700 jobs for North Carolina and the Triangle community.
An interesting definition of integrity.
Update:
The movie (ht Winston Sm1th):
Other sources:
Merger
Law Suit
Acquisition
Ownership Deal
Agreement on USinternetworking