A DANCE THROUGH THE FIRES OF TIME
9510 COMPUTERLAND – 1980s part 2
As I slowly worked out the months remaining at IBM, I also worked out what I was going to do next. I really wanted to move on to more personally rewarding things, such as moving into academia. On the other hand this seemed very unlikely, as matters then stood. Accordingly, I was determined to find myself cash cow which would fund my entrance into such fields.
The obvious route was through a PC dealership. These were then licences to print money; or at least they had been. By then competition was becoming rife, and price cutting was the main means of obtaining business. However, from my time in corporate strategy, I knew that IBM was about to clamp down on these price cutters -- and regularise the whole industry. IBM had always been successful in manipulating the industry in this way, so I had no reason to expect otherwise. Regrettably, as events turned out, IBM never succeeded in its planned strategy. It's PC dealer managers, driven by a typical IBM sales plan, went after the biggest sales -- and these came from price cutters. Thus, if anything, in practice IBM encouraged the price war. This of course was a disaster for my plans!
In the first instance, though, I was convinced that the route to success was to provide the best possible support. This in itself was expensive. On the other hand, to become an accredited dealer to IBM -- which was the only route to success in those days -- you had to have 'glass on the street'. What this meant was that you had to have good location, with an excellent showroom open to the public. This was originally designed to keep the smaller dealers out. Typically it meant an investment of something over £100,000. In our case, which was designed to push this approach to the limit, it actually meant the investment of well over a quarter of a million.
I couldn't do it alone, so I persuaded Ian Donaldson -- who had come back from Saudi Arabia and was finding it difficult to get a reasonable job -- to join me. It was not difficult selling the idea to Ian, since he really didn't have much of an alternative; as neither did I! Accordingly, between us we were able to raise something like £160,000 (£80,000 each) without putting our houses on the line. We needed, for our business plan, something like another £240,000, to take it up to £400,000.
That's when I started my hunt for an extra quarter of a million pounds. I started out with the banks, and even the merchant banks. The one sticking point with all of them was presented by Ian. He positively refused to put his house on the line to back up funding. In the event this was the best decision he ever made -- and I was eventually eternally grateful to him that he stuck to his guns. However, at the time, it made it very difficult to pull together funding. All the banks wanted was that you put everything you owned, especially your house, up as guarantees for the money they were lending. Basically they wanted to take no risk whatsoever.
Ultimately we found ourselves at 3I (Investors In Industry) who, to my surprise, were willing to put up £200,000; and didn't want our houses as guarantees. We had some very exciting meetings with the 3I people. They were very bright indeed, and were soon as enthusiastic as us about the whole project.
This still left, though, £50,000 to find. The government then had a scheme which partially guaranteed investment in new business, as long as the bank invested £50,000. We eventually went to the Royal Bank of Scotland, and they agreed to put up the last part of the money. Having said that, perhaps wisely, they then withdrew the money. I was able to persuade them to put it back in, by pointing out that if we went bankrupt, which I was willing to do, their agreement meant that they would still be locked in and would lose far more money; since they then would also lose the government guarantee. Very grudgingly they put up £50,000.
I guess this was the best selling campaign that I ever undertook. I more or less walked on water, raising over £400,000 with no guarantees. Unfortunately, it took all my effort, and all my concentration, for the best part of a year. During this time I didn't notice that the market was changing against us.
The position was not helped by the fact that our financial model was based on one given to us by Computerland. We later found that that, in order to bring us in, the management in the UK had falsified the figures. In particular, they had literally doubled the net profit level we were to expect. The figures they quoted, as the average in the UK, were indeed twice as big as they really were.
When I went across to Luxembourg - where the European office was - to work through the plans with the people there, I got the impression that they were a little bit surprised at the figures; but even they didn't raise the alarm. They too were very keen to get us in when the rest of business was lagging behind targets.
Accordingly we went ahead with our business plan and did everything that was required. It was just four months later, when we were examining the first set of reliable financial figures on our trading position, that we realised we were in desperate trouble. It was also at this time that we were discreetly made aware that the Computerland figures were wrong; and the manager responsible wisely disappeared off to another job
As we will see later, I am litigious, and have taken other people to the cleaners in court, but this was the one-time I couldn’t. I genuinely lost a large amount of money due to falsification by the other party. However I couldn't recover it. Partly this was because the whole business was run under the laws of Luxembourg, not the United Kingdom, and this would have made it incredibly expensive, and difficult, to challenge the deal. More important however, Ian Donaldson still thought Computerland management were wonderful -- and I was rubbish -- and would never have backed me in court. My task then was to get out with the minimum loss. In the event I managed to get some of the money back and went out of the door with a loss of £65,000. By then the company was illiquid, illegally so, and the banks eventually lost something like half a million.
Of course at the time I didn’t know any of this. So, having, at long last, obtained the necessary funding for our franchise, we had to find suitable premises for our planned computer dealership. We eventually managed to find quite good premises in Feltham, near to Heathrow airport. The building was being vacated by the Japanese film manufacturing company, Fuji, who were moving their head office into a new building. It was an excellent building, though we later realised that the brickwork was spalling off - and, as this was our responsibility to maintain, we might eventually have had to spend £500,000 to repair this! It had something like 5,000 square feet of space on two floors. This meant that the lower floor provided the 'glass on the street' then demanded by IBM, with a large showroom full of computers; and also with sales office -- where the salesman had their desks -- at the back. Upstairs we had our offices and engineering facilities. Best of all, there was a very large conference room where we could run seminars
It really was a first-class building, air-conditioned throughout. It had a car park with space for something like 15 cars -- which unfortunately we soon filled with our own company cars!
Ian, of course, fitted out the building -- to a high standard indeed. Unfortunately, one of his design features, a polished plaster ceiling, recessed above parts of the showroom, was very difficult to achieve and set us back two months in our launch. That, in the event, turned out to be disastrous. We also had all the beautiful overhead cables tracks that I had used in IBM. Most expensive of all, we had to use the standard Computerland display desks, which were shipped in from Germany. Because we had about twice as many other computers on display as any other dealer, this furniture was expensive in the first place. By the time we filled them up with computers it was even more expensive. There was a certain logic, though, in that we were keeping our stock on display. But even so it was very expensive, since we set out to have the most sophisticated computer demonstrations possible. Thus we had all the current networking, from the industry-standard to the new IBM offering -- though we never managed to get the latter to work! We even had a Unix system set up, way ahead of other dealers. All in all we could demonstrate most items of equipment, initially IBM and later on Compaq and Toshiba, with most software offerings.
No expense was spared. It was beautiful design, but a very expensive one when we found ourselves ultimately competing against warehouse operators. In fact we very rarely used the showroom, and - as such - it represented a massive over-expenditure. The whole was set off with artificial plants, which by themselves cost something over a thousand pounds.
Setting it up was also a nightmare. We had to have the most elaborate security equipment. Indeed we had to have the same standard of security as a bank had: with contacts on all the doors and opening windows, infrared sensors and especially infrared curtains along the outside walls. It was something of a nightmare even in use, since if you got anything wrong the police raced to us -- usually getting there in less than ten minutes -- but the security company then had come out and reset it, usually taking a couple of hours to reach us while we were desperate to get home.
In the first instance, when the first computers arrived and were worth something like a quarter of a million pounds (which was why the very tight security was needed), we had no security systems at all for the first week or so. We happily agreed to put it into a warehouse, where it would be secure and insured. Fortunately I asked the warehouse owner how much the insurance was for, and he happily told me that it was for something like two pounds a square foot. Accordingly we might have got as much as a hundred pounds if it had been lost! Until the security systems were installed, and we were insured, Ian and I had to take turns sleeping on the floor of the new building next to the pile of computers.
The setting up our Computerland franchise in Feltham unfortunately demanded a move from Basingstoke. Moreover, I no longer had the IBM Guarantee. Accordingly it took us an inordinate length of time to sell the house. Moving house has always been a fraught time; having to keep the house clean and then even cleaner when people are expected. The worst irritations are the potential buyers who play games with you. In particular, there are those who really have no intention of buying a house, but just want to see it. I well remember one couple as they were leaving being effusive in their thanks and finishing up with the statement "...thank you so much. I've learned so much from coming round the house and will make all sorts of changes to my own house as a result" ; after we had cleaned the house from top to bottom for them!
Even worse were those who promised to buy and then didn't. We had one from overseas who dragged it out for three months before we gave up; and put the house back on the market. I don't know what he intended, but after the first visit when he made the offer we heard nothing more from him -- and it cost us a lot of money in the delay.
Anyway, we eventually managed to sell the house. In the meantime we lost a very nice house in Ashford. This was Ashford in Middlesex, incidentally, because that was the nearest location to our ComputerLand.
We did eventually manage to buy a very small Victorian cottage. We believe it was Victorian because it was dated 1901, the very year Victoria died. It was the sort of thing lots of people want, but it was not my favourite. It was always very damp and the roof leaked.
It had a tiny front garden and an almost as small a rear garden -- which I laid to roses and paving. Downstairs it had the narrowest hall possible. This caused major problems, because the biggest settee simply couldn't be fitted through, and we had to give it to Sarah. When we moved to Milton Keynes we had to buy it back from Sarah, for something like £500! On the ground floor, at the front, it had a small reception room which was just about filled with the rest of our suite. At the back it had a very dark dining room, off which was the kitchen. This was also minute; but it had everything we needed. Like most of these cottages which have been modernised, the bathroom was downstairs. As it was part of the modernisation it was actually quite the nice, but was somewhat away from the bedroom and the only one loo in the whole house was in it. The nicest feature was that there was a sort of conservatory leading to the bathroom, which had brick walls but a transparent roof.
Halfway up the stairs was the second bedroom which was quite small, but we actually used it as the main bedroom. All the way up stairs was the main bedroom, which was the largest room in the house. I used this as my office. The third bedroom was a reasonable size and that was used by Sarah. She insisted I put new shelves in, and then immediately left to set up on her own. There was also a loft which was nicely fitted out with cabinets and worktops, but I only ever used it to store things.
At the back there was a very large garage, albeit with a plastic roof and it was really rather ramshackle. We could get two cars into this. On the other hand, it required a lot of reversing to do this even though it had had a very large door. There was no outside parking, so I had to get the car into it every night. It obviously been used as a workshop at some time in the past, since it had an inspection pit.
All in all, it was what would have been described as charming Victorian cottage -- even despite the main road thundering past the front. But I never liked it and was glad to get away from it.
Incidentally, while we were waiting for this house we had rented a two bedroom holiday home on the Thames, by the bridge over to Walton. It would have been very nice in the summer, since the large gardens ran down to the Thames. In the depths of winter, though, it was incredibly cold. It was so cold that in the worst two weeks we actually slept at Computerland itself.
The key resource of any PC dealer was its sales force. Thus, in order to make our very optimistic sales targets, we had to recruit something like ten or a dozen salesperson. We were nothing if not ambitious. The problem was that there was a scarcity, indeed a complete famine, of reasonable salespeople.
Accordingly I found myself interviewing significant numbers of candidates. This was not helped by the fact that I had to do this sitting on the floor of my office, since our furniture had not yet arrived. Luckily this was seen as something of a gimmick by the candidates; and turned into a benefit rather than a problem.
We first of all needed a good sales manager, to run the sales team. At that time First Computers had just gone bust, so we immediately recruited their sales manager -- who we thought was, by the standards which held in the market, quite good. So, for a month or so he helped us recruit the new salesman. I must admit he was much more aware than me of how low the standards were, and I too rapidly dropped the standards I applied. He also was aware of our own shortcomings, and accordingly after the month found himself a better job! His legacy was persuading us to take his sidekick at First Computers as our new sales manager. Whether that was an intended sabotage, where he was going to competitor, or whether he just didn't know the guy, I don't know. In practice his place-man turned out to be something of a disaster.
None of the salespeople who came through would have been ones that I would have picked. Perhaps we should have stopped at that stage, but the launch of our new ComputerLand carried its own imperative. We were bleeding money at something like £10,000 a week; and we couldn't afford not to open.
Accordingly we got ourselves very mixed bag of salespeople. We lost the first of these within a couple of months. He was found to be an alcoholic. We had our suspicions when on most days he came in with his breath smelling of drink, most days that was when he came -- he was very irregular. We had even greater suspicions when he managed to crash his car, albeit with minor damage, twice. Eventually, though, our suspicions were confirmed and he had to go.
We took on board two totally new salespeople; ultimately we called them the terrible twins. They had no experience whatsoever, but a considerable degree of arrogance -- which got them through our interviews. In reality they turned out to be awful salesmen. In particular, one of the kept coming back and explaining at great length why it was impossible to make the sale he was involved in. It always came down to the fact that the price was too high. Eventually I decided to put him to the test, so when he came in and said that the prospect wanted a discount I gradually reduced the price. Each day he came back to say the prospect wanted a greater discount. Ultimately, believe it or not, I said that we would give the prospect a computer for free. At this he trotted off, only to come back to demand additional software - also of course for free, since his prospect was unhappy that it was only the PC that was free! At that point he, and his terrible twin, were fired.
The whole culture was, though, defeatist. Even when someone came in with a major sale -- which would have been the signal for joyous celebrations in a normal sales office -- he actually had to apologise to everyone else. They weren't supposed to make sales, and they had broken this rule!
I tried to teach the sales force how to sell their equipment, on the basis of the knowledge of equipment itself and in particular knowledge of the customer's business. However, the ingrained culture was such that they believed a salesman should be able to sell anything to anyone. Knowledge of the products or of the application was cheating. So, almost deliberately, they refused to learn anything.
The classic situation came one day when the receptionist told me that a prospect was looking at the computers and no one wanted to handle him. Even though there were salespeople in the sales office they wouldn't go out and talk to him. Accordingly I went down to help him. Perhaps the sales office were wrong, but they had every right to be apprehensive, since he was from a company that made its own PCs. He was a very unlikely prospect. However, I thought it would be useful to get my hand in again, so I took him under my wing.
Over the next two weeks I conducted what was one of my toughest sales campaigns. Not merely was he from an organisation which made its own PCs, and as such he was one of our competitors, but for the past year he had been running a trial of equipment from another competitor. This trial had just two weeks to go to the decision. Accordingly, I had somehow or other to negate that trial in order to sell our own of equipment. I used all the techniques I'd learned in IBM, especially that of really understanding the prospect’s business, and I finally managed to make the sale against all the odds.
You might have thought that the sales team would accept that this showed that my ideas of selling techniques were reasonable. None of that, they decided that I had given the equipment away. In fact I had given a discount at the end, but only 15% - which was very low by the standards of the industry at the time. The main reason I had won had been my skill in making sales in the marketplace. Even so, they refused to accept the discount was only 15%, even when my accounts clerk showed them the books which demonstrated that this really was the figure. So strong was that culture that they still wouldn't believe the figures.
Thus was our ultimate business demise predicated on such poor salespeople
We eventually did get in one reasonable salesperson, who worked with Ian selling CAD (Computer-Aided Design), which we were to specialise in. He came complete with pink rimmed classes. He was something of a character, but he did manage to move equipment. On the other hand, by then I had accepted we had to shift equipment on quite significant discounts; but this was only able to put off the evil day for a few weeks. Even so, my Computerland dealership had very quickly became one of the leading suppliers of computer aided design (CAD) systems, quite simply because the customers (who had very sophisticated requirements) recognised that we knew what we were talking about. Indeed, our customers were quite barbed in their criticism of our competitors, who did not understand the product. It was nice that they were flattering about our expertise; but more importantly than that, they bought from us – and, initially at least, at prices higher than our competitors were offering. However, our reputation rested only on the efforts of myself and my partner – and one member of our sales team. Even so, we had some key skills at our command.
An example from another part of the business illustrates the need for expertise that this highlights. We were quoting for a network of personal computers which would eventually be worth up to £100,000. We had, in line with our customary practice (and as demanded by myself), carried out a thorough survey and produced an effective system design. To our dismay, however, the local Tandy (Computer Shack) store quoted, using its own PC `clones', at a price that was one-third less. Their offering looked sound (even to us) and they were also the existing supplier. We had been outmanoeuvred and my sales team was about to throw in the towel. I, on the other hand, hated losing any sale; let alone one worth £100,000; and I was fortunately able to persuade them to research a bit deeper. For the additional investment of just £10 we bought a manual describing the software that Tandy was offering, and my technical people read it from cover to cover. What this showed was that there were only three significant differences, and then only in the fine detail. But all three of these differences were absolutely critical in terms of the way the prospect ran his business. Armed with this information we should have easily won the sale.
But we didn’t! The reason for this was that the rest of the sales team were – in common with most PC dealer salesmen at that time – rubbish. Most of the salesmen in my personal computer dealership were inexperienced, and were still operating in `showroom mode' (far removed from professional selling). As a result, I carefully explained (as I made calls with them) that I didn't want them to try to copy my style - for most of them such an attempt would have been a disaster. Even so, they naively registered my idiosyncratic selling style as that of a poor salesman, despite my undoubted sales successes. They eventually rationalised the problem by deciding that I must have been giving very large, hidden discounts. Needless to say, that was not the case, but their persistent disbelief illustrates the potential misunderstanding you may have to face.
Indeed, more typically, in the team there were the two salesmen, who eventually became known as the `terrible twins', whose adventures I have described above. They took the lead in all the sales meetings; explaining how the product range was impossible, how the marketing was bad, how the territories were wrong. When not in the sales meetings they spent their time advising their colleagues as to why they too wouldn't be able to make their sales, to the extent that eventually their colleagues felt that they even had to apologize when, despite the strictures of these two, they were successful in making sales. Finally I was forced to do a simple check (behind the sales manager's back) to find out how many calls these two were making. Believe it or not, between them these two had made just three calls in two weeks! It would be nice to report that I was able to teach them to be better sales professionals, but unfortunately that was not the case. As so often happens in such extreme situations, they had spent so long blaming everything and everyone else that they just couldn't see that an average of 30 minutes a week on calls must inevitably result in an efficiency around 1 per cent (which was, as it so happens, just about their performance).
Perhaps the most significant thing was that after they left, the performance of the rest of the team leapt by 150 per cent. Nobody had to apologize for making a sale any longer!
At the other end of the scale, when we came to spend close to £100,000 converting the building that was to contain our PC dealership we diligently searched the directories to discover the best possible selection of contractors. In fact the contract went to a company that was not even on our list; quite simply because their salesman walked in one evening (on his way home). Having seen our lights in the building, he had not wanted to pass up a possible sales opportunity. His sale showed that he was right!
Even potentially good salesmen can have fatal flaws. Thus, one of my salesmen had an excellent knowledge of business systems. The rest of the team were impressed with his knowledge, as were his prospects, and the start of his sales campaigns were a joy to watch. The sales team, who were relatively inexperienced, were even more impressed with his skill in manipulating the customers. He smoothly diverted the difficult objections, and persuaded the prospects to accept simply presented solutions. He addressed the problem of price brilliantly. He was always able to offer the highest discounts, quite simply because he artificially inflated the standard selling prices before he applied the discounts. The unfortunate result, however, was that, after this brilliant start, his campaigns abruptly disintegrated, and his eventual success rate was abysmal.
The reason was quite simple. At the beginning of the campaign the prospects trusted him completely. He was very believable. Unfortunately it was inevitable that, at some time during the sales campaign, he was caught out. His competitors only had, for example, to point out that his prices were inflated and he was lost. When this happened the prospects invariably reacted very badly. After all, who really likes to find out that they have been conned? He, of course, immediately had to put in a realistic proposal; and his final proposals almost always offered lower prices than anyone else, as he tried to live up to his original discount offers. But he still lost the business, because his prospects did not trust him. If you lose the trust of the prospect you have almost inevitably lost the sale, no matter how attractive you then make your offer.
This same salesman was due to run a series of computerised accounting seminars at quite a sophisticated level, for which his in-depth expertise was essential. Unfortunately, we discovered - only two days before the highly publicised seminars were due to start - that he had the worst case of stage fright I have ever come across. He simply could not stand up in front of an audience. Being in front of an audience, in any capacity, made him physically ill.
The solution turned out to be having him present from behind the audience. It emerged that he could happily present his material, just so long as the audience couldn't look at him all the time! So, with considerable trepidation, we built a presentation based on a disembodied voice floating from the rear of the conference room. Visuals were not a problem, since we were mainly using linked television monitor screens, and the few acetates were easily handled by myself at the front.
This latter aspect was eventually the key to success, for clearly there was no way that an effective presentation could be built where there was no interaction (and particularly no eye contact) with the audience, so I provided that contact by proxy. As the presentation rumbled on from the back of the room, I acted as the visual focus and the channel for audience participation, interjecting the further explanations that questions (and visual symptoms) demanded.
We gave a very flimsy excuse (related to the computer equipment) as to why the real presenter was at the back, but this was never challenged. And, I must admit, to my great surprise, and even greater relief, these 'double-headed' seminars went remarkably well, despite a handicap that at first seemed insuperable.
Another example of the importance of trust came when I was on the receiving end; buying equipment to fit out a number of conference rooms. Having done some basic research, including physically examining the alternatives at an exhibition, I had eventually made my choice. This was the supplier who was second in the market. His products were not quite as sound as those of the market leader, but the difference was not significant and the price was 40 per cent cheaper. However, when the salesman duly arrived (and did not immediately ask for the order - his first mistake) he proceeded to tell me that they were now concentrating on another range of products. Beneath his sales pitch I could just about discern that these new products were better, and even cheaper, so his initial mistake needn't have been fatal - why should I object to paying less for better quality? The problem was that instead of spending his time persuading me of the virtues of the new equipment, he explained at length just what rubbish were these previous products. This left me with a bad taste in my mouth. The products he was rubbishing were those that, until only recently, his company had been trying to persuade me to buy - and the ones that I had actually decided to buy. Thus, even though I had already made my decision, I reversed it and ended up paying the extra 40 per cent to his competitor. I could not trust a company who would happily sell me a product and, only a matter of days later, admit it was useless. There was surely every chance that the new range was just as defective.
With my sales professional's hat on I suspect that the simple reason was that they had switched supplier to one that offered them better terms . Even so, the salesman needn't have made such a mess of what still should have become an opportunity. The harsh reality was that he had managed to lose a guaranteed sale that I was merely waiting to hand to him.
As the final death knell, I came to realise just how badly organised, and badly performing, were my Computerland sales force when I arranged to receive copies of all leads when they came in. A couple of months later, I carried out an exercise to determine what had happened to these leads. I wanted to find out which was the more productive vehicle from the two magazines we had used. But I was shocked to discover that something like a third of the leads could not be accounted for. Nobody knew what had happened to them! Perhaps these had been poor leads, but maybe they were good ones that had simply gone missing among the atrocious records that these sales professionals kept. If that was the case, they might have increased their performance by up to 50 per cent for very little effort - just by keeping adequate records.
In addition to the sales team, at ComputerLand I took onboard a systems support team which was very large for a PC dealer. We had an engineer and two software support people.
These were, with one exception, much more productive and stable personalities than the sales people. The exception was the assistant on software, who our tame professional salesman, Geoff, brought with him as his protégé. This assistant, let's call him Max, was a total disaster. He was an unstable personality whose behaviour was totally unpredictable. Not least you could never work out what he would be doing with his work. He insisted on having a Cavalier sports model for his car and then thrashed it with 1,000 miles a week, going down to Cornwall every weekend. What was worse, he did stupid things, like putting obscene jokes in the customers' software. After a while, despite Geoff's protestations, I simply had to fire him. I found myself telling him to pack up and get out; and then desperately running out to the car park when it was obvious he was going to take our car with him!
Some of the others were reasonable, the replacement assistant I brought in, a guy called Pankesh, really was wonderful. He was so committed the organisation that he actually cried when I left it.
The problem was not of their making, but with the sales personnel not bringing in the necessary level of sales there was too little for them to do. Ultimately one had to go, and I chose the manager, since he had been quite ineffectual and the others had done all the work. It’s tough when you have to get rid of people, but the economics sometimes makes that necessary.
Our sales campaigns were predicated on running seminars to introduce customers to us and our products. This was very much in line with what I had offered in Biomedical. In this we were quite successful, since we managed to get significant numbers of people along to seminars. The problem was, of course, the sales force; who were totally incapable of closing these prospects after the seminars. We attracted people to seminars in the first instance by a significant mailing campaign. There were two problems with this. The first was that the list that we used from the leading list provider was poor in the extreme. Second was that our backup, which relied on inserts in an area edition of the leading computer magazine, failed because the magazine managed to send all the inserts to the other side of London. They magnanimously gave us our money back for their own charges, but nothing for all those wasted leaflets that we printed at a cost of thousands of pounds. The real disaster though was that we had no prospects coming from those inserts.
Ian compounded in matters by holding back the showroom, even after our the building was opened by the local mayor, since he wanted to put in a brightly mirrored plaster ceiling to it. This took specialist skills which were not available for a couple of months. During those months the sales force sat on their hands. They shouldn't have done so, of course, but it was the ideal excuse; in that they had nowhere to demonstrate. In this way we started with two months of expenses around our necks. Having said that, the seminars themselves went well and we did actually makes sales
Although we didn't know it, our fate was sealed before we ever opened the doors of our Computerland. It was sealed because we were misled twice.
As I have already suggested, the first of these came unintentionally from IBM which, by my insider knowledge, had led me to believe that IBM would regain control of the PC market. This turned out to be false. Even worse, although IBM ruthlessly forced on us the 'glass on street' policy, which cost us the best part of £200,000 for our wonderful new showroom, behind the scenes it was happily excepting warehouse dealers on the basis that they shifted large volumes of equipment. This latter group proved to be the way the industry was going, covertly encouraged by IBM’s PC dealer force, against the wishes of IBM central management. As well as killing our dealership, this ultimately nearly destroyed IBM itself.
The second was that made by the ComputerLand management in the UK. They allowed us, indeed encouraged us, to work to a net profit percentage which was twice as high as any other ComputerLand in the UK was actually achieving.
Put these two factors together and, despite my wonderful business plan, we were always doomed. When it took longer to open than was anticipated to open, so that Ian could have a beautiful polished ceiling for the showroom, we had no hope left.
At the point where our business plan still seemed viable we, indeed, had built it into the most wonderful spreadsheet. Frank, our new sales manager, was a wizard with such spreadsheets. Eventually it ran to something like 2 MB; an enormous size in those days. It took into account every factor imaginable. As, every month, we got our new sales figures Frank managed to incorporate all sorts of new factors. Even so, as the months progressed, we were clearly on line for our targets.
It was, thus, a terribly memorable Sunday afternoon in December when his spreadsheet no longer could explain the deviations. It was only then that I realised the spreadsheet had become, for him, a self-fulfilling prophecy. As the sales deviated from the plan he massaged the plan to follow the sales.
I remember that dark day in December, with Ian and myself standing and Frank on his knees in front of the computer -- for some reason he always preferred to kneel at the computer rather than sit in front of it -- as the figures rolled out in front of us. Frank, once more, wanted to make more changes so that the target matched the sales, but for once I didn't allow this. In an awful moment, when it felt like the bottom of my stomach dropped out, it became obvious that we would run out of money, and become bankrupt, within a couple of months. It was one of the most horrible moments of my life.
Thereafter we were engaged in a chase to postpone the inevitable day of reckoning. We actually ran out of money rather early, within six weeks so, but we managed to postpone the inevitable by manipulating our suppliers. Thus, we would pay IBM what we owed and they would release our outstanding orders; at which stage we would buy large amounts of kit from IBM. We would then go on buying until we were stopped by them. But by then we would have raised enough money from selling IBM units to buy ourselves off the Compaq stop-list. And thus the circle continued as we moved ever further into debt. Ultimately I realised we were almost illiquid, trading nearly illegally, and decided to get out before we were really illegal.
There was nothing to do about it. Keeping the business afloat became the responsibility of our accounts supervisor, Nishi, who spent all her time balancing of one creditor against another. She was wonderful at this. She was one of the greatest finds I have made. I, remember when she came to apply to us. She had been a law student at Sussex University when her father had heart attack and she had to leave to manage family business. The family were East African Asians. Her father had run very successful chain of cinemas in Idi Amin's Uganda. He was in fact a millionaire there. When he was forced out of the Uganda he'd come across to the UK and set up to another chain of cinemas over here, becoming a millionaire again, this time in the Uk. By the time I first knew Nishi, however, he had hit a new low, being hit by consumers switching from cinema to home video -- his audience were Indians watching films -- and this had once more destroyed his empire. He was starting yet again, with video shops. Nishi was a lovely girl, but she was caught between her own culture and British culture. She had a British boyfriend who she wanted to marry, but the family opposed this. I supported her wishes, and became almost a father figure to her in this respect, even though I thought the boyfriend was a wimp. Her family eventually sent her out to India, and we later heard she had married the new boy the family wanted her to.
Back to our bankruptcy, that Sunday had been terrible and over the next few weeks I began to realise just how wrong we had been. This resulted in a further terrible moment on the night when before we were attending a ComputerLand meeting in Manchester. To save money, Ian and I were sharing a hotel bedroom. I had decided at that stage Frank had to go, as a sales manager, since he was clearly failing to manage the sales force. Ian, on the other hand, did not believe this. He had been swayed by Frank's apparent air of professionalism. Even worse, he had begun to listen to ComputerLand who were backing Frank against me. We had a terrible row. We had been expecting, a few weeks before, to go into this meeting triumphant; as the leading British Computerland. Instead I went in to the horrible sinking feeling, well knowing that we were abject failures.
We then started hawking ComputerLand around to try and find extra capital. We met with a number of people who had personal capital and wanted to start small businesses. Even they rejected us. Then we got on the rounds of those asset strippers who wanted a cheap purchase.
It was at this stage that I put together what was one of my better con acts. It was a variation on loading a gold mine by firing gold into the rock from a shotgun. Thus, I deliberately made our position on the surface even worse than it really was. But I ensured that, once you removed the surface of the accounts, you suddenly came upon what seemed to be a layer of gold; which made the whole purchase very valuable indeed. In terms of personalities I sacrificed myself, by indicating that my business plan -- and myself -- were rubbish. Then, going down a bit, you found that the part run by Ian not myself was the true ‘gold’. This was in fact true, because the business was only prospering where we were selling CAD. Indeed, at one stage we became Compaq's largest outlet in the UK. It was a marvellous story – though, as it so happened, our sales of this equipment were being made at a loss!
The really terrible thing was that, even though I carefully explained to Ian exactly what I was doing, he came to believe it himself. Reinforced by ComputerLand management, who I had intended to buy the story, he forgot all I had taught him about it and fell in love with it and his own abilities.
I got out, having been bought out for the something like £25,000, and consequently having lost £65,000. Fortunately, thanks to Ian's insistence, my house had never been on the line and I still had that capital behind me. I also had earned money, £25,000, for the critical year in question. .
It felt terrible at the time. On the other hand, I learned more valuable lessons from the terrible experience at ComputerLand than I learnt in much of the rest of my business career.
Whilst I was working at ComputerLand I was so busy that I saw almost nothing of our new house in Ashford, and much the same was true when I later joined Mentor. However, in between the two, after ComputerLand fell apart and I was out of work for six months, the position was very different.
Paradoxically, the periods when I had been out of work have been happiest of my life -- I don't know what that says about work. I had always thought that I enjoyed my work but maybe that was an illusion.
It was a pleasure, therefore, to stroll out -- along Ashford High Street, which was just the other side of the roundabout by our house, to do our regular shopping. In particular there was an excellent greengrocer just a hundred yards away. It had all vegetables I might ever have wanted and they were of a very high quality. Further up there was a small supermarket, which was rather rundown and of much lower quality. But it was just pleasant strolling up the street in the sunshine, fortunately it was summertime, and enjoying the relaxing experience after all the previous traumas.
At the time our friends, John and Marie Louise, were still living in England. Soon after that they moved to Sweden. At the time, though, they had a house on the other side of Staines. A regular pattern developed, which was that I and Pat used to meet Marie Louise for lunch in ‘The Bakery’ in Staines. It wasn't too expensive, and it was again a nice day out.
Best of all was the fact that Windsor Great Park was not too far away. We took many trips up there. As it was spring when we started, the Valley Gardens were full of rhododendrons in bloom. We used to go there quite often and walk through this wonderful floral display. Later, when I was about to join the University, I used to go up there and take my work to do in these beautiful surroundings.
We also used to take a longer walks through the Great Park. It was on one of these that we had our second encounter with Diana. She was riding a horse, accompanying a visitor and with an equerry alongside. It was only years later that we realised the equerry was at that time her lover! She was very pleasant and said the hello to us, though not much more. She seemed very shy, turning her eyes down in exactly the same way she did when she was being interviewed on television; so it wasn't affectation, it was genuine. What was the surprising, fascinating, thing was that she was wearing heavy evening make up. It was beautiful, but was almost plastered on; which was very surprising when she was already so beautiful, and she was only taking a morning ride through countryside.
While we were in Ashford our other ‘contact’ with royalty was initiated by Marie Louise, who was Swedish and as such fascinated by Royals. Thus it was the time of Royal Ascot, and – according to her - all we had to do was to go down in this country road to be where the royal family changed from their cars into the open horse-drawn carriages. This turned out to be true and was interesting in as much as the royal family were just a few feet away from us and you could see and hear everything that they were doing. Some people would die for that, but I am a Republican. Even so, it was interesting to see them at such close quarters. It was, I suppose, also a perfect place for an assassination!
The only other time I saw the Queen at such close quarters was when she was going down the River Thames to celebrate P&O's 150th birthday. I just happened to be at the landing stage by the Festival Hall when she boarded the barge, and she passed just a few feet from me. She looked no different to when she appeared on television -- so in that respect it was no great experience. What was hilarious, though, was what happened as she got ready to depart on this barge, for her trip down the river party. It was a double-decker with the Queen sitting upstairs, in a drawing-room with glass sides. Thus, as the barge was ready to pull out, all the way down the river the various training ships brought their cadets to the salute; and all of them stood rigid in that position. Unfortunately, the first thing that had to happen was that the royal standard had to be displayed -- the Queen simply couldn't move without that. The boatswain pulled the rope to crack it open; except, unfortunately, he just pulled it off the mast.
For the next 20 minutes there was absolute chaos amongst the staff at the front of the boat, as they all tried to get this flag fast to the mast. The ‘barge’ simply couldn't leave the pier until this had happened. The chaos continued. It was worthy of any Keystone Cops movie, with people tripping over each other. They pulled time and time again to try and crack it open. But all attempts failed. It really was absolutely hilarious, until they eventually managed to tie it on with some string, and the barge departed downstream. All this time the Queen, sitting upstairs with her guests, was quietly sipping sherry; without giving any sign of noticing the chaos all around. But, eventually, after 20 minutes the barge departed and the cadets all down the river eventually could stand down. Their arms must have ached for weeks afterwards.
It had been a big shock having to leave ComputerLand. I think it was as much a shock to my staff, who tried to rally round me; but there was nothing they, or I, could do.
As I knew this was coming,though, I had spent a number of nights previously running off the names and addresses of all the local prospects; along with introductory letters to each of them -- almost 1,000 in total - offering my services in consultancy.
As there was a significant shortage of IT expertise in the small organisations on this list, I expected to get hundreds of responses. In practice I got barely one or two. Why this was I don't know. Possibly these organisations had already realized that the small independent consultants, such as I had just become, were cowboys and scam artists rather than experts. Unfortunately, I had relied on this consultancy to save my bacon after the failure at ComputerLand. Clearly it wasn't going to do this. In practice I literally had only two prospects. One of them turned into a short-term customer, but I only earned a few hundred pounds; and even this was very hard earned, and begrudged by the customer. The other one only went as far as my quoting a very reasonable price before it abandoned me.
Thus it was, for almost six months, I languished in unemployment. I maintained my IT contacts by going to various seminars run -- for free -- by local software suppliers. This may have temporarily raised my spirits but it brought in no money whatsoever. At the end of the day I had lost, on paper at least, £65,000; though my £25,000 income over the previous year I suppose could be offset against that.
Perhaps the worst thing was that it destroyed my friendship with lan for the best part of a decade.
As a result I started aggressively looking for a new job. This time it did not take just three months to find, but nearly six months. At that time, once more, I had a number of reasonable offers. One of these was as main board director of printing company located in North Yorkshire. It seemed attractive on paper, but I was nervous that the internal politics looked to be horrendous. By then I was allergic to any form of politics and there were a number of other similar jobs on offer.
The only interview which stuck in my mind was a morning interview with consultants for one of these posts. This stretched on for hours and I found myself going late to the afternoon matinee at the National, with Pat. This was bad enough, but we were in the front row and I found myself squeezing along the front row, within a matter of feet of Judy Dench who was acting heart out in the brilliant production of Antony and Cleopatra. Anthony Hopkins played opposite her. I had been let in late because the first act was very long, but I am not certain Judy Dench appreciated this. Even worse, a few weeks later I went with Sarah to see a production of Hamlet in which Judy Dench was playing Gertrude, the Queen. This time I made certain of getting in before the performance started -- except that I hadn't noticed that it was starting half an hour earlier than I had expected. Accordingly, once more, we had to pass in along a full row while Judi Dench was making her grand entrance. I regret to say that, as it was the first night, we were reported in the Guardian as being an unruly troop of businessman who entered late and destroyed her entrance. Still, it is not often that you get your performance as a member of the audience reviewed by the Guardian!
At the end of the day, though, I decided to take a job as account director with Mentor. This was a subsidiary of the Provident Financial Group, so it was well funded and hopefully stable. It was in a field which I thought had a future, that of CBT (Computer-Based Training).
Although the title was Account Director, it soon became obvious that the job was really senior salesperson. But, having been successful in this regard at IBM, I thought I should be skilled enough to handle this.
The route to this, the recruitment round, was interesting in itself. The first part of the screening was a half day at a hotel at Heathrow; where the recruitment consultants screened myself and three others in a group. As I liked the others, I thought this boded well. Moving to the second stage, this was an individual interview at the consultants' home office in Altringham. The context of this was quite positive personally. The previous night I and Pat had seen the London production of Stephen Sondheim's Follies. Stephen Sondheim is one of my all-time greats, and Follies was really marvellous. Buoyed up by this, we drove up the following morning, in the best of spirits. After a very positive interview, I get on well with recruitment consultants in general, we went to my parents for the weekend. It all boded well for the future.
Mentor was a new subsidiary started by the Provident Financial Group who wanted to expand their offerings. They were somewhat embarrassed by their history, since they supplied credit on the doorstep to poor housewives. At very high interest rates, which had to cover the work of their doorstep agents as well as a high default rate, this business was pretty close to usury; which the government was soon to clamp down on. But they made hundreds of millions out of it -- and Provident accordingly was one of the largest financial institutions in the country. With its parent having so much free cash, the Mentor organisation itself was well funded; and was in the process of recruiting large numbers of staff. It already had a significant number of programmers, people recruited largely from the teaching profession which was then having a bad time. It also had some of best technical experts, and the technical infrastructure was good. What it wanted was an expert salesforce: and this was where I and the dozen others recruited came into the picture.
They had hired themselves a new marketing director who was somewhat inexperienced, which didn't help. In addition there was a very low existing customer base -- except for a number of insurance companies who were going through the throes of meeting the requirements of the new financial services act (which demanded that their staff be trained trained -- and CBT was just about the only way they do this in the time).
Mentor was based at the Provident head office, in Bradford, and we all converged on this for training. The technical training was well done, and our appreciation of the quite powerful software that they had developed was accordingly sound.
The so-called sales training was a disaster on the other hand. There were a dozen of us, and between us we had senior sales experience amounting to around a century. Yet they used one of the recruits who had experience of sales training consultancy, to try and teach us to improve our effectiveness. Regrettably, this sales training started off with the memorable lines "If you going to take advantage of this sales training you have to forget everything you knew previously". That meant, in effect, 100 years of sales experience was to be thrown away. The sales training itself was the usual cliché ridden sales training -- and I don't believe any of us took any notice of it.
The salesman who delivered this was, unfortunately, a very ambitious one; though his history didn't justify this. I had actually met him before, since we met him at a party in North Waltham -- when he owned a miniature village in High Wycombe, which then effectively went bust. He was, like many such people, a politician. Accordingly his main aim was to devalue those of us -- especially myself – who were in competition with him for the potential job of sales manager. This produced an atmosphere which was less than agreeable. It was even worse where we were cloistered in a pub/bed and breakfast in Howarth. That the rooms were very basic was bad enough, but it meant we couldn't get away from each other. He used this to work on us. Paradoxically it was to become even worse after my book of IBM was launched and got a very good review in the Sunday Times. You might have thought that that would have impressed the others but, led by him, it was used to suggest that I had ideas above my station
Howarth itself is a nice little town. It is of course most notable for being the home of the Bronte sisters. It was, though, rather depressing place -- my bedroom overlooked the churchyard which dominated their Parsonage. I have always felt that their novels were rather dark, and now I could see why that might be.
Our sales territories were to be geographical; which was one reason I had chosen the job - since mine was London and the Southeast. This was a very promising territory. However, after a few months the whole thing was turned upside down and the prospects I had been working on were lost - as we were switched to an industry based approach. As CBT was totally new field, it was not easy to generate business. Rather like IBM it was obviously going to take something more than a year to build the foundations. However, as I had expected, management still expected us to bring in this business in just a few months. In fact nobody did
Having said that, I made some progress - getting into a number of organisations. Not least of these was BT, which was seriously considering our CBT for use in training the programmers - which would have been a massive market. I also, had a foot in the door of the RAF. However, I did not have time to close any of these. Accordingly, it was a stressful sales situation, which was not helped by having to drive 200 miles up the M1 to Bradford for the regular sales meetings
Combined with the politicking, which was now going on within the salesforce, this persuaded me to look outside. The net result was that I looked in particular at two situations. The first of these was the Civil Service. The second was the Open University (OU).
The Civil Service Selection Board, colloquially known as CISB (pronounced 'cisbee') was just about the most thorough recruitment procedure I've ever been through. It is used for all those who want to enter the administrative grade of the civil service in the UK; that is the senior professionals who run the civil service, and hence the country. My involvement was as part of a recruitment campaign for late entry, experienced, civil servants. The reason for this was that, by the late Eighties, the civil service was no longer the career of choice for the brightest coming out the British universities and - even worse - was losing its brightest people to the commercial world. Accordingly it had to start to fill the holes that were appearing in the upper levels. This particular job was for, I think, level 7. It was one that promised advancement to at least Assistant Secretary, maybe to Under-Secretary. As such it was taken very seriously by their recruiters.
The selection board took place over two days in the Cabinet Office on Whitehall. We were split into teams of 6 and each team had three recruiters attached. One of these was a psychologist, one was an up-and-coming civil servant and one was a senior civil servant; in my case he was an ex-ambassador.
The selection procedure was based on four main processes. The first of these was a series of very rigorous intelligence tests, along with some personality tests. The second was writing skills, revolving around producing a minute for submission to a minister. The third was a series of meetings, where each individual ultimately chaired one of these. Finally there were the individual interviews with each of the recruiters. As I have said, the intelligence tests were very rigorous and were very carefully tailored to the position. Indeed, so careful was their work on these that -- after asking our permission -- they set another test at the end of the second day. This was to enter into their database of results. It was not to count towards our Board but might some stage in the future be entered into the main body of questions. This particular test has already been on trial for five years. However, they felt it would probably take another ten years to normalize it against the other questions!
I found these relatively easy, as I did the personality tests -- but you never really know what they are really looking for.
Writing the minutes came very easily to me, since I've been doing such things all my working life.
The discussion groups, and chairing these, again was something of which I have a great deal of experience.
My individual interviews were notable for the one with their psychologist. He eventually asked me about why I had had so many jobs. I said, first of all, that “...I guessed I was a dilettante”. He was clearly not impressed. Then I changed, to say "...or perhaps it's more that I'm a generalist." His eyes lit up. The whole process of recruitment was, you see, intended to find people who were generalists. At that time, at least, the top level of the civil service was staffed by very powerful intellectuals who could turn their hand to anything.
Which of these tests I got right I don't know, but within a fortnight I was invited back for the final selection board. That was much faster than normal, since it normally took around two months for this to happen. I guess they were desperate.
The final selection board was just as impressive, not by its tests -- since here the procedure only consisted of an interview -- but the status of the people interviewing me. They were the permanent secretaries of three ministries; just about the highest powered group of people I have ever met in the United Kingdom. At the end of the interview I was offered a position in the civil service, with a bright future. Unfortunately, it was another five months before the position I wanted, in the DTI, was offered to me. By then I was already immersed in the Open University and loving every minute of it. Thus, are the best laid plans of recruitment undermined.
My interview at the Open University Business School (OUBS), then called the Open Business School (OBS), couldn't have been more different. It was true that some attempt had been made to test our intellectual ability -- in that we had been given one of the units of the marketing course to comment on -- but the main part consisted of two interviews. Each was with three of the academics at the University, with the most important one being the Dean of the OBS; Andrew Thomson. I always thought I was lucky, since the marketing material was rubbish and I was prepared to say so. Everyone else, who fortunately went ahead of me, said as much and I suspect offended the selection panels. By the time I got to my interview I suspect the panels were sick to death with the negative thoughts; and so they simply didn't ask any questions on it, which was very lucky indeed. Later, however, I found that my previous IBM boss, Mike (who had got me the Exceptional Achievement Award), was advising Andrew and gave me a good reference.
I suppose I was well-placed, because I had a good track record of industrial management experience -- which was one of the great things they were looking for -- whilst having some academic experience working with the London Business School (a reference you couldn't beat).
I liked Andrew as soon as I met him, and continued to like him throughout my career at the OUBS. On the other hand, on the other panel was a senior lecturer, David Asch, who I immediately distrusted. I remember going home and saying to Pat "I hope I do not have to work for that David Asch , he's a bastard". Of course that was exactly what eventually happened, and he was my downfall.
Andrew phoned me that night and said I had got the job, which was totally unexpected. Accordingly, it was with a very light heart that I left Mentor. In recent years, my one objective had been to get into the academic world. Even my project at Computerland was intended to be the cash cow which would buy my way into academia. Now I had achieved this.
As we have seen with my departure from IBM, in recent years I have on occasion been litigious – or at least a very tough negotiator. In the main this was because I really hate being illegally treated. Sometimes I win, sometimes -- spectacularly -- I lose. My first major litigation through the courts was though against a certain Mr Bodger – a very suitable name - who was at one stage my solicitor in Ashford. We were moving to Milton Keynes, for my new job at the OU, and he was responsible for the transactions involved. We had found, after much searching, a house which looked just what we wanted -- not far away from the university. It was a detached four-bedroom house with two bathrooms and study. It was being built and was on the market for a hundred and twenty five thousand pounds. We put down a deposit, which was due to be rolled over after a month or so. Regrettably, Mr Bodger didn't roll over the transactions. The net result was that the builders came back and said the price had escalated by £16,000. Of course we couldn't afford that and so moved on, ultimately to buy the three-storey townhouse at Peartree Bridge. In the meantime, though, I started litigation against the solicitor.
After months searching I found a solicitor, Keith, who was willing to take on our suing another solicitor -- something that is not often accepted by ordinary solicitors. I should point out that, in the meantime, I had a meeting with Mr Bodger -- that really was his name -- where he had in effect admitted liability; and I discreetly recorded this on a dictating machine hidden in my pocket.
With this evidence it was very clear open and shut case. Even so, it took almost three years before the insurance company, who underwrote his liability, accepted that they were going to lose the case. On the way it got to be front page news in the solicitors' own newspaper, alongside the divorce of the Kashoggis. The insurance company, I am sure, worked on the principle of 'pour discouragés les autres'. They knew they were never going to win the case, but hoped that I would run out of money -- which I didn't -and in any case would use it as an example to discourage others who might be persuaded to follow suit.
Eventually they had to cave in, for £16,000 plus costs. On the other hand I should point out, for those of you want to go the law, that the costs typically only cover about 80 percent of what you actually spend. The other side, I suspect, parted company with £30,000 in total; but no doubt they considered worthwhile in terms of 'pour discouragés les autres'.
On a different level, I also took on the Inland Revenue. When I left IBM the arrangement -- which their experts worked out -- was that I would have my money paid over two years so that I wouldn't have to pay higher rate tax on it; which in those days was more than 60 percent. The Inland Revenue did not live up to this. They charged me with a full 60 percent on the second year. So, over the next five years or so, I argued with them, proving -- to my satisfaction -- that their experts were wrong in their interpretation of the law. Ultimately I had to go to one of their tribunal's, but I lost this. It was stuffed with stuffed shirts, who didn't know what they were talking about -- relying entirely on the clerk, who was just a local solicitor. I am glad to say that, as result of my complaints, this clerk was formerly reprimanded by the Lord Chancellor. Ultimately, I took the matter to the Parliamentary Commissioner, the House of Commons ombudsman. After extensive investigation she supported my case, but I was only able to get compensation to the amount of one thousand pounds rather than the tens of thousands I should actually have got.
The problem was that the odds were stacked against me for any other route. I would have had to go to the High Court where Inland Revenue would have been able to claim costs, should I lost, but I wouldn't have been able to claim costs had I won.
As you will see elsewhere, in much more detail, my later case against the Open University was even more tragic! On the other hand, once more, I sued my solicitors who had made a number of serious errors which undermined my legal position if not my moral stand. In this case, however, though the tens of thousands of pounds involved dramatically reduced my costs, I still did not receive the many times as much – the £130,000 for banked leave - that was morally my right.
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