To understand as much as possible about the inside perspective and mindset related to the first high-profile failure of a Lebanese startup, Executive sat down with Cyril Hadji-Thomas, the stakeholder at the heart of Bookwitty.
E We heard many things when investigating this case. Among them, allegations that a large number of subsidiaries had been set up in the group in order to facilitate operations in different geographies, with the intended or unintended effect that this complex structure left you as the only person who could control and oversee all these units and their audit departments.
There was a [chief financial officer], a financial manager for North America, a court comptroller, and five or six accountants. I did not manage all that. I was not even talking to the auditors. The CFO was talking to the auditors.
E Are you a person who needs to feel that he is the only one in control or are you better able to function as a chief executive in a team?
I like to build teams. I am not a solo player; I like to assemble talents and rely on them. Now, when things go wrong, you always ask yourself: Should I have delegated that much, or not? Or you ask yourself: Did I have the right people around me? That’s always the question, and everyone has a theory about that. But everyone knows that I am a team player. I love managing. And I’m also—it is difficult for me to talk about myself—a good soldier. This means if I am not the boss, I am not the boss. I’ve been collaborating with Leap for the past six months, and they ask me questions every few days, and I answer them. I am also collaborating with the new CFO. He’s actually asking me to do things, and I am doing them. I am a good soldier, [meaning] I do what needs to be done.
E Do you still get personal revenues out of the work you do with the cleanup, and your collaboration with the investigation into the books?
No.
E So are you living on your own reserves?
Yes. I started funding the company by paying the salaries and all that. I finished all my reserves at the beginning of the year and have not paid myself.
E Since beginning of 2018?
I stopped paying myself in 2017, and then I paid one month of [my own] salary in April [2018] and that’s been it.
E Have salaries been paid to employees?
They were paid up to May, but specifically in Lebanon, we [at that time] owed them the salaries for February and March. We paid April and May in full and then were supposed to start paying them month by month what they were owed, but had to stop.
E You said that many of the engineers found new and even higher paying jobs. Does this include the Lebanese engineers who were on your staff?
I am talking of the Lebanese engineers.
E So they ended up not being on the losing
end of this mess?
No, they obviously lost, but at least they found new jobs and not bad ones. I am trying to keep in touch as much as I can.
E What is, for you, the most painful aspect
of the whole thing?
That was my life. That [Keeward] group, it was my life. I put in everything that I had. I had a perfect alignment of what I really liked. I love literature. I love technology. What we were doing was for me exactly what the market needed, and what writers and publishers needed from the market. And we were doing great things on the technology side, which is very exciting for me. If you count what I have done just before Keeward, it has been 15 years of my life that went down the drain. It’s a horrible situation. I know that I will eventually start again, do something else, etcetera. But it has been a huge loss. I am mourning, and I am not sure if I will end mourning. I am less tense now, as I see that my teams are finding new jobs.
E Did you draw any personal lessons for yourself, in order to say, that is what I will do differently next time?
The CFO that we hired, he’s a great one. I think I’ll hire him before anything.
E How about allegations that you had a great, convincing narrative and were very knowledgeable in your business, but had a blind spot on the possibility of failure—and that a point of collapse would be inevitable unless you continued to fundraise and get more capital?
First, if you are an entrepreneur, you know that failure is a possibility, but you don’t think it’s a high probability. Second, Keeward was a 12-year old company, and you don’t think that a company that is growing and doing $14 to $15 million in revenue [annually], and that is regarded by everyone as a good company, will be failing. But [to say this] once again, we said at every meeting with [investment bank MedSecurities], with Leap, or with MEVP, that we need the money, [which we are looking to raise] by end of 2016, or we will be in big trouble. And no one cared except for [Leap managing partner] Henri Asseily. He fought like hell. This is what people say against him, now—that he shouldn’t have. It’s easy to say. Everyone has been dragging their feet. Actually, you know what I regret? I regret having agreed on merging before I had the money. We should have raised the money, secured everything, and then merged. The merger in itself was very difficult to handle. [Imagine a situation] where you do not have the money, are growing like hell, and you are expanding your business internationally, and everything [is happening] at the same time. This is a bit chaotic. When you add to that a conflict with shareholders, it’s over.
E Have you been traumatized?
No. I am a big guy. When you called for an interview in July, I was traumatized. I couldn’t talk. I was in shock.
E Thank you for giving your side of the story. Is there anything else that you want to say?
I just wish that people wouldn’t talk about things they don’t know. I heard so many completely stupid things. People were saying that Bookwitty is the “unicorn” of Lebanon, a year-and-a-half ago. Now they are saying, ‘this is vaporware.’ But we were not a unicorn, and [our software] is not vaporware. It is a business, and it is tough. I am the CEO of Bookwitty, and of course I hold some responsibility in what happened. I should have seen things coming before. There are obviously many things that I wish I would have done to save the company, but at one point, when you have too many things on your back, there is no way that you can travel any further. You are crushed.