‘Trouble again’, Ed confides to his diary, ‘in order to cut down our admin costs, I started a dialogue with our biggest distributor about him taking on all our distribution business at a lower margin, while we cut out our other disties. Having to deal with only one distributor outlet means I can cut down on our HQ staff, while we retain a bigger percentage of the sales revenues.’
A little later Ed records: ‘Trouble. The news that I’m thinking of cutting back our distie network has reached the trade press and now I’m getting rung up by all our specialist disties asking what the hell’s going on. More to the point, the product managers are coming in to see me this afternoon. They won’t be happy.’
From the next diary entry, it appears Ed was right.
‘What the he’ll do you think you’re doing, Ed, going behind our backs to the distributors”, asked one of the product managers, “you’ve completely pissed off our disties. They won’t do a thing for us now.”‘
‘”What does it matter?” I replied’, writes Ed, ‘”when our biggest distributor brings in 80% of our revenues. The others can go screw themselves. We don’t need them.”‘
‘”Our biggest distie is responsible for 80% of our revenue, that’s true,” shouted the product manager, “but our specialist disties are responsible for initiating 80% of the new business.”‘
‘Oh dear. Not such a great idea,’ writes Ed, ‘well, only 195 days to go to the IPO and I’ll be away from here and wallowing in wonga.’