The Red Flag

I wrote this story some years ago and recently decided to edit it a bit before adding it here. I debated for a long time about a proper pseudonym for the subject person.

I first thought of “Huck” because it rhymed with his real name, but that would have seriously impugned Mark Twain’s masterpiece.

I considered “Merlin”, who was able to make things disappear, or “Barach”, who was among the smoothest talkers of his time, and “Willie”, who violated every norm of human decency, yet left office with an approval rating even higher than Reagan’s.

But I settled on “Joe” in recognition of a guy who was never the sharpest tool in the shed, but who was able to skirt the law for decades, and finally rise to the top of the government, where he avoided apprehension for his past crimes by pardoning himself and his entire family of co-conspirators before leaving office.

I had been consulting for a small consumer electronics company in the early 1970s when it was acquired by a large Silicon Valley company. Soon afterward, I was named VP of Engineering of the newly formed subsidiary, and a young engineer, let’s say his name was “Joe,” who had been appointed earlier as Director of Quality, ended up reporting to me in the new organization.

He was a likable fellow with lots of energy who reportedly had been doing a good job in the acquiring company,[i]Of course, I knew next-to-nothing about Quality Control or Quality Assurance in those days, and I also didn’t think about the fact that inspecting the work of others to make sure it conformed to standards was not a particularly challenging task. so I quickly became his supporter, and he continued to do well in that position.

Two or three years later, the parent company abandoned the consumer electronics business, and I found myself in the position of matchmaker to consummate the marriage between the subsidiary and the newest acquiring parent company. That involved me commuting to the East Coast as an indentured servant for the next two years while Joe stayed behind and eventually evolved from his Quality Assurance job to various marketing and sales roles.

Some years passed, and I found myself heavily involved in integrating electronic circuitry with LEDs and photodetectors, managing a $25 million subsidiary of a huge, foreign-owned company. In the meantime, Joe had moved on to a small semiconductor company, where he had progressed through the sales/marketing ranks to become its CEO.

One day, my phone rang, and it was Joe, whom I had not seen for a couple of years, saying that he was going to be fired from the job and needed advice on his legal options. That didn’t make sense to me at the time – he had done a good job for me in the past, and I knew him to be very kind, thoughtful, gentle, caring, and an all-around nice guy.I quickly arranged a meeting between Joe and Cesar, who was my go-to guy for such matters. Cesar managed to get him into a better financial and negotiating position, but there was no way to prevent the Board of Directors from firing him.

Fast forward a few years, and I needed to replace my Marketing/Sales Vice President. Joe, of course, popped into my mind. He was out of a job, but how could that be when he is one of the most personable guys around? He serves on the Boards of non-profits, volunteers in his community, and is the fundraising guru for his church. Everyone likes him because he seems so empathetic, but he was between jobs again.

He was able to sell stuff to people who may or may not even need the stuff. In this case, I was putting him back in the salesman role, which served him well. He did a great job of selling, at least, the products that were in the catalog, while the custom-made products had to be sold by the engineers.

I left Joe behind while I started a new company built around an invention that had been in the back of my mind for several years prior. I then hired him back a third time to write and expedite proposals to raise Federal grant money. He failed again – this time being unable to grasp the complexity of technology and be able to explain it. 

A few more years went by, and my phone rang again – it was Joe. He knew that I had been investing in technology start-ups, and he asked me to invest in his idea to resurrect a business segment that we had worked on together previously. I agreed to join the management team and house the business in my “high-tech barn” on one of my Santa Cruz Mountains properties with Joe as CEO. After establishing a customer base for a handful of cutting-edge products, we launched an effort to raise equity financing. Bruce[ii]… his real name, venture financier. and I, following a couple of investor meetings, pushed Joe aside[iii]He would get lost in the middle of a technology discussion, wandering off with some “shaggy dog” story, and we would have to prop him up. and raised a few million dollars, even though Joe was unable to focus on the goal of the Company.
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A palace coup ensued, and the company went down the drain, but not before Joe packed up the hard assets to ship off to Asia, where it would be impractical for the investors to recover their liquidation proceeds. I am embarrassed that I failed to see any of the red flags along the way until the big one at the end, when he swindled the equity investors. [iv]… including me and a close friend whom I convinced to invest $100,000.

Joe was – and probably still is – one of the nicest guys you could meet. He was seemingly full of caring, empathy, and goodwill. Of all the characters I have known over the years, he remains the smoothest talker by far. He could sell anything to anyone, as long as it was well-defined and no creativity was required.

We might imagine it to be impossible for seven seasoned business professionals to agree on such an issue, but one of the guys on the Board who voted unanimously to fire him from the semiconductor company put it best when he said publicly,
“Joe is a really polished guy until you scratch the surface and realize there is nothing underneath”. 

So ends the story of Joe, but what does that three-decade-long experience say about me? Was I really oblivious to all those red flags, or did I see them and choose to ignore them for some reason? Was he such a nice guy that I wanted to help him be successful, in spite of his obvious failings? If the situation were to present itself again, would I make the same mistake?

The answer might be that the first five red flags were all about competency, or the lack thereof – things that could be remedied. But the last one revealed the character flaw for which there is no cure.

By: Jim
Written: 2021
Published: January 2021
Revised: February 2025
footnotes
footnotes
↑i Of course, I knew next-to-nothing about Quality Control or Quality Assurance in those days, and I also didn’t think about the fact that inspecting the work of others to make sure it conformed to standards was not a particularly challenging task.
↑ii … his real name, venture financier.
↑iii He would get lost in the middle of a technology discussion, wandering off with some “shaggy dog” story, and we would have to prop him up.
↑iv … including me and a close friend whom I convinced to invest $100,000.