Business Lessons from the Case of Flagler vs. Wal-Mart

Yesterday, I blogged about Flagler Productions, the tiny little almost out of business company that got dumped as a vendor by Wal-Mart - and is getting their revenge by selling embarrassing (and possibly incriminating) videos of Wal-Mart company meetings.

It seems to me that there are a number of business lessons to be learned from this story, and here are a few that I came up with.

For Flagler:

• Don't rely on one company to provide 90%+ of your business. Sure, it probably felt pretty darned good to have a big old company like Wal-Mart as your prime source of revenue, but somewhere along the line, Flagler should have done a better job of leveraging their being "the little company that can work for the big guys" and gotten a few more customers for themselves. A little "what if" analysis - i.e., 'what if Wally dumped us' might have saved Flagler from having to get rid of their employees, move their digs, lose their line of credit - and have to resort to the not particularly savory practice of selling what might seem like kinda-sorta proprietary material.
  
• Get it in writing. Given that Flagler was relying so heavily on W-M, they should have gotten some consideration from Wal-Mart for devoting all that business to them, being ever-ready, or whatever. If they'd had a contract in place, they would have had more than 9 days notice (or whatever measly little notice they got) that the business would be drying up. An annual guarantee, a 3 - 6 month notice period - Flagler should have gotten some protection for themselves.
  
• Before you do something pissy, think it through. This selling of the Wal-Mart videos may well turn out to be a lucrative business for Flagler. They may, in fact, befriend clientele who count themselves among the legions of Wal-Mart haters. Maybe. But this just might backfire on them, giving companies pause before doing business with them. They may well be thinking, if this is how they treat a former customer - one that's big and powerful - how might they treat me? I'd sure be thinking that before I signed them up to video my company function. And it does sort of look like Flagler was trying to blackmail Wal-Mart. (Kinda/sorta.) So think it through. Then think it through again, and ask yourself whether, in the long run, what you're doing is worth it.

For Wal-Mart:

• If you're the big guy, it doesn't hurt you to be nice to the little guy. Surely someone at Wal-Mart must have known that withdrawing their business from Flagler was going to devastate them. Maybe they had good reasons - maybe this will all come out - but wouldn't you think that a company that's supposedly concerned with its reputation would be just a tad kinder and gentler. Of course, W-M didn't exactly get where they are by being nice to the little guy. Still, in this sort of situation, it doesn't seem that it would have hurt all that much.
  
• Get it in writing. It's truly hard to believe that, in this day and age, Wal-Mart was naive enough to trust things like joking skits about flaming gas cans - which can and will be used against them in a law suit involving one of their flaming gas cans - to outsiders, without getting it in writing that they owned the rights to any videos made about them. (Note that the skit about the flaming gas can pre-dated the incident in which a young boy was injured by one of them.)
  
• Before you do something stupid, think twice. In a somewhat blackmailish gesture, Flagler offered to sell the videos to Wal-Mart for several million dollars*. Wal-Mart decided they were only worth $500K. This may turn out to be a very costly, quite stupid decision on their part. I can understand if they didn't want to give in to something blackmailish, but that obviously wasn't the case: they offered something. Given that they were willing to "negotiate"', you'd think they might have just written off "several million" as chump change. (Maybe they weren't aware about the flaming gas can video. Surely that one "unfunniest home video" alone could end up costing them more than Flagler's asking price.)

I'm sure there are other lessons embedded in this story.

*I based this number on articles prior to the story that noted that the sum that Flagler was originally looking for was $145M-$150M - not "several million" as the WSJ had it. Here's the link to the post where I updated the story: http://pinkslipblog.blogspot.com/2008/04/for-few-dollars-more-update-on-flagler.html.