September 5th, 2016
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: email@example.com
This fellow Bhakta sounds like a lot of the wealthy people I’ve had as clients and as business partners. Immune to normal reality because of their wealth. They “fail” by doing something embarrassing, but they are incapable of failing in the Greek Tragedy sense: of falling out of their social class. Their family won’t let them fall.
Actually, I don’t know anything about Bhakta, but he does remind me of my ex-business partner:
1.) parties too much
2.) wants a glamorous life
3.) believes in buying expensive premium things
4.) sometimes gets lucky, if something expensive just happens to become fashionable
5.) a control freak, won’t let go of the company, even if doing so would maximize shareholder value
So, I am sympathetic to the investors who want to kick him out. It’s an interesting story:
With WhistlePig’s value so high and its sales growing at a steady clip, you might think Bhakta’s partners would be happy. But on May 6, six weeks after I visited the farm, Faessen and Evison moved to unseat Bhakta as operating manager. Bhakta says they sat him down and told him, “Listen, you’ve got two options here: One is easy, one is difficult. The easy option is you step aside and we put this company on the block, and you walk away with a lot of money. And the second option is we bankrupt you in the courts and engage in a character assassination campaign.” Faessen and Evison declined, through their attorneys, to comment on the record and referred me to their court filings.
In a phone interview, Bhakta describes the turmoil as “a blatant power play. … And I think it’s a rank and dirty gangster move.” He filed a suit in the Delaware Court of Chancery to block his removal and gained a status quo order allowing him to remain at least until the trial begins in the fall. Faessen and Evison retained the services of the high-profile law firm Boies, Schiller & Flexner and filed a response to Bhakta’s suit, in which they outlined to the court their reasons for wanting him out.
One reason Bhakta is unfit for the job, Faessen and Evison allege, is his history of driving under the influence, for which he was cited in 1997, 2004, and 2015. They also say in the filing that “Bhakta ignored the Board of Managers’ repeated warnings that he must use alcohol responsibly” and that he is “indifferent to his responsibilities and obligations as head of a liquor company.” They further allege that he has smoked marijuana on company property (though the farm is, after all, in Vermont).
They also say that Bhakta, without seeking the board’s permission, granted an equity stake in the company to Kim while she was working there and that he used company funds to enrich himself. (In his court filing, Bhakta describes the equity stake as “good faith oversight, not fraud,” and denies the latter allegation.) Faessen and Evison also argue that Bhakta misrepresented his plans to investors when he was raising funds. They claim that WhistlePig was presented to investors as a craft distiller and that, like most startups, it had an endgame in mind, whether it led to an initial public offering or a sale to a private equity or larger liquor company. “If potential investors had known Bhakta planned to maintain control of the company in his family in perpetuity,” Faessen and Evison state in their filing, “they either would not have invested in WhistlePig at the same price and on the same terms or would have declined to invest at all.”
This is almost identical to what my ex-business partner would say, when investors tried to force some kind of liquidity event:
Bhakta disagrees. “We have been talking about a long-term, farm-based business in WhistlePig from the beginning,” he says. Ever the politician, he tries to cast his plight in populist tones, invoking broader themes about small businesses and the American economy. “The current trend in this country is that large corporations get what they want and the little guy gets screwed,” he says. “If I just wanted to be rich, I would’ve taken their money and walked away, but I’m not. I’m trying to make a stand because this company is something I believe in.”
But for a guy like Bhakta, it’s all about being star of a show. The business is secondary. Maintaining control of the show is primary. I’ve dealt with this kind of narcissism.
I’ve also heard these kinds of insincere half excuses:
Turning WhistlePig into a prime target for acquisition was a spike of success for Bhakta after a series of disappointments. If he can convince a judge of his business acumen and his respectability—no small feat given his past—in the face of some deep-pocketed adversaries, he may yet be able to keep the company he built. “Look, I’m by no means perfect,” he says. “I’ve drunk too much. I’ve partied too much. I’ve been guilty of perhaps womanizing. There are a lot of things that I’ve done that I’m not proud of.” But he also claims those days are behind him: “I made a resolution six months ago to change in many respects. And one of the areas was removing alcohol as part of my daily life, and the results have been terrific.”