Morgan Friedman: Hey everyone, welcome to the latest episode of Client Horror Stories. I’m so excited for my early morning session with Paul Byrne today. How are you doing, Paul?

Paul Byrne: I’m doing great. How are you, Morgan?

Morgan Friedman: I’m great. And I love your last name.

Paul Byrne: Thanks.

Morgan Friedman: It’s up there with the last name that’s made for marketing. You know, my family, for whatever reason, they must have had a syllable budget because they named me Paul Byrne. I don’t think you could make it any shorter unless they just gave me one name. I feel like everybody deserves at least three, if not four syllables in their first and last names together, but I only got two. So I guess there were hard times back then.

Morgan Friedman: We save money on the syllables.

Paul Byrne: Yeah, they were paid by the syllable for the birth certificate probably.

Morgan Friedman: I’m so excited to hear your story. Tell us about your worst client horror story.

Paul Byrne: All right. Well, this one was quite a while ago, so I’m glad that it’s in the past. I’ll give a little context on the client before I get to the worst part of the horror story. This client, I feel, was somewhat cursed from the very start — and I mean on their side, not on our side. So we were approached by this client through their consultant, and their CEO, et cetera. It was a startup in the e-commerce space, and this startup sold very expensive products to designers. The designers would go to the website and make orders, so it was very much a B2B experience. They had decided to build their website on Magento, and they had actually hired a firm to do the build — a firm we were friendly with, which was common ten to twelve years ago when this happened. Even up until recently, the Magento space was, I would say, uncrowded, and we were all just kind of collaborating and figuring out how we could serve all these accounts. There wasn’t a lot of fierce, heated competition or rivalries between agencies. There was healthy competition, but we all knew each other, we were all friends. Not every industry is like that, but ours was at that time. I’d say it’s changed a little bit since then, but for the most part it’s still a pretty chummy group.

Paul Byrne: But the original firm had failed to even begin the project within the timeframe the client was expecting. So the client came to us, cancelled the contract with the other agency, and we started right away. We began creating their website and their e-commerce site, and there was a fair amount of customization to it. It was actually a lot of fun to work on because they were kind of an innovative group in terms of what they wanted to do. They knew their client extremely well — they really knew their customer. So right from the start it was fun, but it was a rescue. And rescues can be challenging. You never know whether the rescue was caused by something the client did or something the other agency did. But we soon found ourselves getting along with the client really well. We got to the point where we had launched their site, they were starting to take some orders, and they were really working on the next level of the website — adding some really unique user experiences, incorporating some tools that hadn’t been done before. We were very heavy into the development phase, with several people working on it, and we were just kind of heads down going forward.

Paul Byrne: Now, the client had always paid on time. I think we always had to remind them once, but they always paid within their payment terms. At a certain point, we were working really hard and accumulating a lot of hours. The client got behind, and I was like, “I’m sure we can work things out with them. I’m sure this is just an oversight.” I knew the CEO had been on vacation. So we continued to rack up our receivables with this client, assuming that because the relationship was good, everything would be fine. I don’t want to give the amount, but it was a big amount for us that they were on the hook for. And so I started having conversations with their CEO finally. And by the way, this only took about six to eight weeks to play out. It’s not like we let it go for a year or anything. And then I come to find out — and I guess I had known — that the company was sponsored by a very wealthy businessman in Texas, which is where we are as well, and it turned out he had passed away. When you’re a startup and your number one investor passes away, it’s obviously going to throw a wrench in the works.

Paul Byrne: I said, “Are we going to have any trouble collecting on the accounts receivable?” And he said, “Well, right now I’ve been told to stop payments until we get clarification from legal counsel as to what the next step is.”

Morgan Friedman: There’s so much here to talk about. Let’s analyze before we move on to the excitement of what happens next. The first observation I want to make is there’s a business risk factor that you hear about every once in a while but no one ever really thinks about or takes into account — which is sometimes called keyman risk, or in the modern world of 2025, probably key person risk. Which is: oh, this key person died. And everyone’s like, “Yeah, yeah, yeah, you thought about that when you’re 80 years old.” This is a powerful example of — dude, there are important people that are central to this thing working who might just die and mess everything up in what you’re doing.

Paul Byrne: Yeah. And I don’t know how old he was. I’d have to guess he was maybe in his late seventies or early eighties. Previously he had been in good health. I’d seen him appear in a video and so forth. I didn’t really have any reason to think that this could happen, but of course, you know, it comes for us all.

Morgan Friedman: And by the way, before we move on, a second comment I want to make on this situation is what also makes it interesting. It’s not just a human risk — it’s not just “there’s one key person who can die and that could mess everything up and you didn’t take that into account.” You didn’t even know about that. Like, it’s not one of your employees. It’s not the client you’re dealing with. It’s a few levels removed. It’s the guy funding the person who is paying you, which makes the fundamental nature of the keyman risk hidden from you, which makes it much harder to even think about.

Paul Byrne: Yeah. Absolutely. I guess I hadn’t thought about it that way. But the other thing I would say is there was a team on the other end — a CEO, a consultant they were working with, an operations guy — like three people on that team. If anybody in the team had passed away, it might have slowed things down, but I think they would probably have continued going on. There would have been no reason for them to stop that I know of. But when the investor dies — you can’t just battlefield-promote someone to be your benefactor, your investor. So when that stream dries up, it can be critical.

Morgan Friedman: Yeah. So this is another good lesson here of the risk of a company being dependent on one investor. And there’s a variation of that I’ve seen many times — companies dependent on one client, what’s sometimes called an anchor client. A professional services firm gets 70% of its work from one huge client. That client for whatever reason stops, and you’re in trouble.

Paul Byrne: Yeah. And we’d done our best early on — that was a key strategy for us. When we started, we really had one client, and I could tell we really needed to diversify that portfolio. And we did, and it spread out the risk. So when that one large client did go away, we were okay because they were no longer 80% of our revenue — they were 20%. And you can survive a 20% hit for quite some time. It’s recoverable for sure. But an 80% hit — I mean, we would not have been able to pay rent, much less payroll. So, exactly.

Morgan Friedman: Yeah. And I think any entrepreneur, myself included, whether it’s at the front of your mind or not, is always acutely aware that everything could fall apart.

Paul Byrne: Good point.

Morgan Friedman: We talk about, “Oh, you build a house of cards.” But no — every economic activity, every company is essentially a house of cards. You have to constantly shore things up in different areas because you’re building on sand. There is no bedrock to build a company on. The economy is very much in motion, and you just have to accept that as a reality if you’re going to start a company.

Paul Byrne: 100%. Yeah.

Morgan Friedman: Okay. So now back to the story.

Paul Byrne: It’s about to get interesting. So we found out what was going on, and I slowed down our development. When I had people with capacity I had them work on it, but I shifted people to other projects until things got clarified. But I had these pretty big looming accounts receivable out there. And I had spoken to the CEO who said, “Hey, there’s still money in the bank. We still have the money. The lawyers just don’t want me to spend it for now.” And I’m like, “Okay, I’ll probably get paid.” But I slowed everything down just to be risk-averse in this situation.

Morgan Friedman: And I want to make another observation on this. “We have money, but the lawyers don’t want us to pay it.” I just want to observe a role that professionals — especially lawyers — often play, which is being the excuse not to do things. “No, the lawyer said — but I’m the good guy. I want to give you all the money I owe you, but the bad lawyer said I can’t.”

Paul Byrne: Yeah. And I didn’t know this client as well back then as I know him now. The CEO was a very straightforward guy. He would not have tried to manipulate me into doing work and not getting paid for it. He was not that kind of person. And in any case, we owned the codebase. And we hosted their website. So we could have just ripped everything down if we wanted to, if it came to that. Which — maybe another learning is, don’t host your site with your developer. That’s learning for them, not for me.

Morgan Friedman: Not for you. I’m just advising.

Paul Byrne: So we’re in this situation. We find out that the reason things were slowed down was that the family was dealing with the death of really the patriarch of the family — the man who held all the purse strings, but also the father. There was a lot going on. So we decided to just be a little patient. And then the son had taken over responsibility for the company. He had taken over his father’s business when his father passed, and there were things that actually had to take place from a legal perspective so that he could even authorize a payment, so he would have access to all the bank accounts. They hadn’t set anything up that would enable a smooth transition. So nonetheless, we said okay, we’ll be a little patient. We started learning more and more. I’m talking to the CEO, we’re getting friendlier and friendlier, and I’m starting to find out a little bit about the son, because the CEO himself did not know the son very well either.

Paul Byrne: And come to find out he’s kind of a trust fund baby — never really an entrepreneur, not an innovator. He had a law degree possibly, or an MBA, something like that. He was educated but inexperienced. He was old enough — probably around forty — so he was a fully formed adult. It’s not like a sixteen-year-old son took over the company.

Morgan Friedman: That would be an even better client horror story.

Paul Byrne: Yeah, I know. I know. Hopefully I never have that experience. But I start learning about him and I find out he’s got a drug problem — or had one. He’d been in rehab numerous times. He was known as kind of a playboy in the local area. Yeah, and there were other red flags about his character.

Morgan Friedman: I feel like you’re using a euphemism there. He was a cokehead, effectively?

Paul Byrne: I don’t think it was crack. I think it was cocaine. Right.

Morgan Friedman: Okay. So the investor was a cokehead. That’s red flags up the gazoo.

Paul Byrne: Yeah. So usually in these episodes we like to analyze subtle red flags — you know, not subtle.

Morgan Friedman: Exactly. Oh, he used this word which implied this. No. This is as big a red flag as it comes. This is where in the horror story you hear the screeching violins in the background.

Paul Byrne: Yes. And I’m like, okay, maybe he’ll step up. Here’s his opportunity. He’s an unproven entity. And I’ve worked with people who were functioning alcoholics, drug users — there are more people in that group than you might suspect, and you probably know some but don’t know that you know them. But for a teetotaler like myself, I was trying not to be judgmental. I was trying to give him the benefit of the doubt. So he comes in and meets with us, and he brings in his so-called IT expert — and his IT expert is also, let’s say, very closely associated with him personally. And he offers him some equity or a cut of the revenue or whatever. And he’s like, “I don’t know — maybe we’re going to change strategy altogether. Let’s stop all development work.” He met us in our offices and I said, “Okay, that’s fine. I was going to stop anyway because we have this outstanding AR. When do you think we can expect that to be cleared up?” And he said, “Oh, well, he’s going to take care of it because he’s going to take over the company. Give him a couple of days to get back to you.” I’m starting to feel really bad. I’m not going to get my money.

Morgan Friedman: He’s going to take over the company?

Paul Byrne: Yes. He was going to be the new CEO, the new chairman. So the CEO I was working with was ousted at that point. I was still in contact with him, but he was ousted. And the son starts communicating with us. Over the course of a few days, I realized that this man knew absolutely nothing about the web. He knew nothing about e-commerce, nothing about technology as far as I could tell. He was basically a sales guy, a deal-maker — and I don’t even know if he was any good at that. He and the new “IT expert” had apparently known each other for a long time. And this new guy was going to fly out, because our original client was based in another state, to go visit and deal with things on a day-to-day basis. But the son — the investor — refused to reimburse his travel.

Morgan Friedman: Oh my gosh.

Paul Byrne: Like, you’ve got a new CEO, but you’re not going to let him get actually involved? And he knows nothing? I’m like, God, this is going south. This is really going south. And it did. What happened was, after a few more weeks, the son abandoned the company. I didn’t know this was an option. He didn’t put it into bankruptcy — because he had the money. He withdrew all of the money from the startup into his own account. So they couldn’t pay employees, they couldn’t pay their vendors, and the people in the startup — the ones who were still there — were like, “Hey, we’re getting traction in the marketplace. This is going well. We want to continue this.” So they were working for free, just trying to keep things going so they didn’t lose all the clients.

Paul Byrne: But eventually they started thinking, maybe we don’t need this investor. We can get somebody else. We can do something else. We’re going to move this company to our own and make it ours. And I even asked a lawyer about this. I’m like, what do they own? What do they not own? If he abandoned the company, then where does everything sit? And right now he owes me a bunch of money — where does that all sit?

Morgan Friedman: And so before we hear what the lawyer said — I want to understand the abandonment. Did he just literally withdraw all the money and vanish?

Paul Byrne: He said, “Close the company down.” He didn’t even have the nerve to fire the employees. He just said, “I’m closing the company,” sent out an email, and in his mind the company was closed. And the employees for a few days were hoping they were going to be able to prevail on him somehow — I don’t know, get him into rehab, whatever they needed to do — so that they could actually continue the company. They still had access to the email accounts, they still had access to the servers, they were still taking orders online at that point. So yeah, it was just beyond weird. It was so surreal. Every day there was some new bizarre fact coming out about this guy who now technically owned the company. And the people he’d worked with — I don’t think he even fired them. I think they knew him and they quit. And he brought in his own lawyer and a couple of other people and put them on the website of the company that owned the startup.

Paul Byrne: But when you take all the money away and you abandon the company — I guess “abandon” is even a legal term — he wasn’t taking it into bankruptcy, which meant we could have gone after his assets had filed. He just stopped operating the company. And I could have prevailed on him in court. The folks in the startup, though, who were very smart, very motivated people who knew their business well, they’re like, “We think we can do this on our own, but we need the software.” And I reviewed my contract and I own the software, because he didn’t pay me. And the company was shut down. So a company that doesn’t exist anymore can’t have assets, can’t claim any assets. So I’m like, you know what — I will sell you guys the software on the promise that you’ll pay me back over time, on terms. We put together an agreement — and I’ll keep the exact details vague — but we came to terms, and they started up the new company really quickly. Within a few days they had reached out to all the clients they’d had, because they already knew them personally before. They contacted everybody and said, “Hey, here’s what happened. Here’s the new website. We changed the name and all that.” And they even said, “Look, if you’ve placed an order with the old company, we’ll fulfill it” — as a way of buying goodwill. And so they were standup guys. I really appreciated the way they handled that situation.

Paul Byrne: And so I kind of thought we were in the clear. We slowed down on feature enhancement and new development, and were really just doing bug fixes and small enhancements, maintenance tasks — upgrading software, upgrading security once in a while. And then one day he says to me, “Hey, I’m being sued by the son.” And I’m like, “Okay.” And he says, “Are you willing to testify on our behalf? Be deposed?” And I said, “Okay, that’s fine.” And so there was me — I don’t know if anyone else in my company was deposed — but there were a couple of other people involved. I had them come to my office because I figured I’d save traffic time if I let them use our conference room. So the lawyers came in, all the recording equipment, all that. And of course the son could afford very expensive lawyers. The guys I was working with didn’t have a lot of money for lawyers, but they had good, competent ones.

Paul Byrne: And so they set up, and I was deposed for about two hours. One thing I didn’t know about a deposition is that lawyers can register an objection — which basically means you can still respond to the question, but they’re signaling that they’ll try to get the judge to strike that part of your testimony when they go to court. So about every five minutes: objection, grounds. Back and forth. And I will tell you that the lawyers for the son had a similar personality to him — extremely snooty, extremely self-important. They would constantly try to put words in my mouth, and I was having none of that. I would say, “Your question’s completely wrong. Let me tell you why.” And they’d object to me answering it, but I could still answer. So I felt good about that. They kept asking questions with embedded assumptions, so I was constantly pushing back. It was like the famous, “So, when was the last time you beat your wife?” type of questioning. But I must have done a decent job, because at the end they came to a settlement, and they offered the son some partial equity in the new company or something like that. Over time, I never got that original money back — the invoices that had gone unpaid. But we did have a new client in the new company, and they paid their bills. We continued to work with them, and there were some concessions made to us over time. I didn’t recover the whole thing, but we did recover part of it.

Paul Byrne: So going through it was an absolute horror story. It was enough money that there were times when I was concerned about making payroll, and our company was relatively small, a relatively new player in the space at that time.

Morgan Friedman: Wow. So many lessons. And I feel like a horror story of a company being taken over by a cokehead, and on top of that not just being threatened with a lawsuit — which happens all the time — but actually going to a deposition is just incredibly stressful and painful. And it was so frustrating from a human point of view, because here you have these guys who are working their butts off in a startup. It’s already difficult to do a startup. And then this wrench gets thrown in, and this jerk is trying to take part of a company he had already abandoned. Like, if you thought there was value in that company, why did you take all the money away? Why did you stiff me? Why did you do all of these things? That was just not good.

Paul Byrne: And I had to look at it and ask myself — should I have worked with the new company? Like technically those guys owed me a lot of money. But I’m very practical. I don’t feel there’s any value in playing the hurt person. Or in turning down an opportunity from somebody who, yes, technically is associated with the people that punched me in the face — but it wasn’t them. It was someone else associated with them. I figured I knew these guys well enough. I trusted them well enough. And I also put them on very short payment terms. When they were a day late on a payment, work stopped. And that was something I maybe should have done before. But I rarely let clients go without paying for a certain period of time, and this was such a weird situation — with the death, the transition, the chaos — that I decided to take the risk. And in the end, everything worked out okay. Our company thrived. Their company’s thriving today. We’re still good friends with them. We completed our work for them, got them moved to a SaaS platform so they no longer really needed any maintenance tasks, and yeah, once in a while they hit us up wanting some special feature developed and we continue to do business with them. So it ended up being a great relationship, but it was so frustrating to see this pretentious, spoiled child claim ownership of something he really had no claim to. He did nothing to build it and everything to destroy it, and then he wanted a part of it. How does that work?

Morgan Friedman: Unfortunately life isn’t fair. And one of the reasons we exist is to learn, understand, and then figure out how to deal with the fundamental unfairness. Some people deal with unfairness by being angry and bitter. Some people deal with it by doing the best they can to try to improve it. Some people deal with it by accepting it and surrounding themselves with something more aligned. Some people never learn and never take responsibility for their actions. This guy’s actions had earned him a divorce, a custody battle, all of that — prior to any of this. And he didn’t learn from any of those lessons and just continued. And I’m guessing he’s probably bankrupt by now, because the company his father gave him — it’s like lottery winners. They’re all bankrupt within a couple of years.

Paul Byrne: I haven’t followed him. He certainly hasn’t shown up on any headlines as a business leader. He fancied himself as one, but he’s just not a mover and shaker. He never was. And I did actually feel sorry for him. It was just so pathetic.

Morgan Friedman: You almost have to feel sorry for him. This also goes to one of the other key lessons of existence: the good comes with the bad. On the one hand, I would like to have as much money as this guy had. On the other hand, that clings, by the laws of the universe, to these sorts of problems. And you know what? I’d rather not have that amount of money and also not have those problems. I know a couple of billionaires and some very wealthy people, and I know enough about their lives to know that I would never trade their life for mine.

Paul Byrne: I would never do it. I’m happy to be who I am. I’ve had a certain amount of success with this company, but I’m not buying Bezos’s yacht anytime soon. It’s not all about money. Some people think, well, as an entrepreneur you’re just about making money. I don’t know — that’s a side benefit. That’s not why I got into it. That’s not how I got into it. I rage quit my job. I just didn’t want to be part of that world anymore. I wanted to work in a company that I liked working in, and the only way to do that was to start my own company. So that’s what I ended up doing.

Morgan Friedman: Two thoughts on that, and then we can wrap up. Entrepreneurs not being in it for the money — I would classify into two types. There’s the old startup Silicon Valley style, the 70s, 80s, 90s Unix nerds who built for the love of building. And building for the love of building is a god-given power. It’s amazing. And then in the last fifteen years, it’s been somewhat taken over by the MBAs and the finance types — much more of a “how do you make the most money as quickly as possible” style. You look at what’s happened to Google. When the salespeople and lawyers get deeply involved, the business starts failing and they’re just milking it. And then to tie it into the other point about not wanting to trade lives with billionaires — I’m a huge Jim Carrey fan. Two of the three best movies ever made, by my view, are Jim Carrey movies. Which ones do you like?

Paul Byrne: Oh, Eternal Sunshine of the Spotless Mind. Great movie. And also the Truman Show. And whenever people ask me — and I’ve done a lot of high-level digital marketing for politicians, I’ve run digital for some presidential campaigns, not in the US — when people ask me how the political system really works, I always tell them: the Truman Show is not a fictional movie. It’s a documentary.

Morgan Friedman: But the reason I mentioned Jim Carrey is I was just reading about him the other day, and I came across a quote of his on exactly this topic that I think he said very powerfully. He said — and I’ll paraphrase — “I wish everyone could be a millionaire so they would know that money isn’t the answer.” It’s the same point, but said very powerfully.

Paul Byrne: Which is really interesting coming from him, right? Because early on, before he was famous, he wrote himself a check for — I think it was five million or twenty million dollars — because he’d heard that’s what the biggest stars got paid for a movie. And before he’d go on stage or into an audition, he would take out that check, look at it, use it as motivation, and then go perform his heart out. And then he gets to that point, and he realizes it’s not what he was actually after. He was chasing the wrong thing for many years. And I think it’s interesting to see that evolution in him and his personality. I like him a lot. I love a lot of his movies, even ones I probably shouldn’t.

Morgan Friedman: By the way, something powerful about Jim Carrey is he is a lesson in the power of self-transformation — not just in the sense you’re talking about, where he first chased money and then realized that wasn’t the answer, but even just looking at the arc of his career. He built his early career doing silly, low-end comedy, but basically since around 2000, starting with Eternal Sunshine, he transformed himself into a serious, profound, amazing actor.

Paul Byrne: I think so. Yeah. And he seems to be interested in movies for what their message is, or what the character learns, more than whether he thinks it’s going to be a commercial success. He’s had a few flops that, in my mind, were actually quite good movies with profound messages. I would agree with that completely.

Morgan Friedman: What flop movies would you recommend I watch?

Paul Byrne: So there are a couple, but one — the name was the name of a movie theater, something like “The Imperial” or something like that — I’d have to look it up. I really liked that movie. Even though it was panned critically, I felt it was a pretty thoughtful piece of art. And then one that was kind of in an in-between period for him — and honestly the movie was a little cruder than I typically like — but Me, Myself and Irene was also about two sides of a person. I felt like he was going through that very battle of which one he was going to be when he made that movie, and that’s what made it interesting. I don’t think the movie’s that great on its own, but knowing where his head was at the time he made it, that was pretty cool.

Morgan Friedman: I’m adding these two movies to my list. And with that, it’s been a great episode. Great story. I hope that any investor of mine or any client of mine is never taken over by a cokehead.

Paul Byrne: Cokehead, probably. He could afford the good stuff, so there is that distinction.

Morgan Friedman: Makes all the difference. I appreciate that distinction. It’s been great getting to know you — a wonderful episode. And everyone who’s made it this far to the end, thank you for watching. We hope you’ve learned as much and enjoyed it as much as we have.

Paul Byrne: Yeah, absolutely. Thanks, Morgan.

Morgan Friedman: Thank you.