UC Davis

The Clarinda Company is struggling and may go under. Its main customer has just pulled out, taking a quarter of the typesetting firm's revenues with it, and David, Clarinda's president, has had to lay off 20% of his workforce. What's more, he's also had to fire Dan, his longtime partner and mentor, for drunkenness. How much of this should David share with the others in his small customer base? He'd like to get their help in selling the firm - but will they all bail if they know just how leaky the ship has become? Four experts weigh in on this case study, based on the author's real-life entrepreneurial travails, recounted in his recent book, Typo: The Last American Typesetter or How I Made and Lost 4 Million Dollars. Tell all, says Jim Marsh, drawing from his own experience as CEO of a division of Cable & Wireless. By sharing both financial information and a turnaround plan, Marsh gained the trust and support of major customers, who gave his unit a second chance. Don't panic, says Rick Rickertsen, a principal at a private equity firm, and don't necessarily sell the business. Share only what will become common knowledge, ask no favors, and don't mention Dan. Instead, get back on your horse and try to save the company. Don't lie, says British publishing executive Richard Charkin, but don't tell the whole truth, either. Sell, by all means: Tell customers you're looking to refinance the company (selling is a form of refinancing) and invite them to take a stake. Don't tell customers everything, says professor Kimberly D. Elsbach, who has taught Silverman's book in her first-year MBA classes at the University of California, Davis. Elsbach suggests that David is misguidedly inclined to reveal all because he is confusing competency-based trust with interpersonal trust.