Almost Perfect
W. E. Pete Peterson
Published by Word Place Inc. at Smashwords
© 1993, 2001 by W. E. Peterson
Note from author:
The book, Almost Perfect, was originally published by Prima Publishing in 1994. It is the story of the rise and fall of WordPerfect Corporation from my point of view. The book sold a little less than 10,000 copies and is now out of print. The copy published here is almost identical to my original manuscript and does not contain Prima's edits. In this version, I have corrected two factual errors, fixed five typos, deleted a few pages at the end, and added a final paragraph.
Table of Contents
Chapter 2: The Battle for Custody
Chapter 3: Children Masquerading as Adults
Chapter 7: Awkward Adolescence
Acknowledgments
I would like to thank my first editor, Wendy, for reminding me that writing should be fun, and my subsequent editors, Anne, Andi, Jennifer, Jennifer, and Melanie for not letting me look like I deserved all of those Bs and Cs in English. I want to thank Will, Carol, André, Pam, Sam, Clive, Norm, Debbie, Devin, Julie, and Marieta for reading the unfinished manuscript and offering their suggestions. I am grateful to Bill for finding me a publisher, to Ben for taking a chance on the book, and to David Coursey for suggesting a great title. Finally, I want to thank my wife and children for putting up with me while I struggled to put the words down on paper.
Introduction
On Monday, March 23, 1992 at 10:30 a.m. I walked into what I thought was a routine meeting of the Board of Directors of WordPerfect Corporation. Bruce Bastian, the Chairman of the Board, invited me to sit down in his office. Alan Ashton, the President of the company, entered the room and took a seat. The three of us had been the only members of the Board of Directors for the past ten years. We owned all the stock in the company.
Alan made it a point to tell me we were having a shareholders' meeting, not a Board meeting. This seemingly small clarification was no minor detail. As with most companies, the shareholders of WordPerfect Corporation rarely met in an official capacity. When we did, it was usually to meet legal requirements rather than to address any serious business issues. The important decisions were made by the Board of Directors, even though it consisted of the same three individuals. A special meeting of the shareholders meant a change to the Board. Duff Thompson, our attorney, also joined the meeting. He repeated Alan's warning that we were having a shareholders' meeting, and gave us each a paper to sign to make sure the meeting was absolutely official. This did not look good for me.
Alan looked down at the conference table and recited from memory what sounded like a carefully worded speech. He and Bruce believed it was time for a change. They wanted to add three new members to the Board of Directors, so more people could have a voice in the important corporate decisions. Twice I interrupted to try to understand what was happening. After each interruption, Alan repeated his speech from the beginning word for word.
Bruce then explained that some of my responsibilities had to go to other employees, so more people could have an opportunity to make important contributions. Specifically, my marketing and sales duties were to go to someone else. He made it clear I was still wanted on the Board and in the company, but I would have to accept a different role. He said my influence in the company was too great.
I felt numb.
When I started working with Alan and Bruce in 1980, their company had only six employees and sales of about $20,000 a month. By 1991, my last full year with the company, we had more than 4,000 employees and annual sales of more than half a billion dollars. More than 10 million people used WordPerfect worldwide. The company had no debt, more than one hundred fifty million dollars in the bank, more than one hundred million dollars of real estate, and millions of dollars worth of computers, cars, and furnishings. Our reputation was as impressive as our bank balance. Our customers loved our products. Our employees never wanted to leave. We had built a company worth perhaps two billion dollars, without the help of experienced business professionals, and without losing even a small part of the company to outside investors.
We discussed the proposed changes for almost three hours, but the final vote was never in doubt. I owned one percent of the stock and Bruce and Alan each owned half of the rest. Sales were down a little for the current quarter and they had made up their minds. They no longer wanted me running their company.
I told them I did not want to stay if my marketing and sales duties were taken away. That would take all the fun out of my job. They argued that my other duties were important and that my contribution would still be significant. I would have an opportunity to express my opinions and cast a vote on all important decisions.
Although I believed they were sincere in what they said, I could not stay. I did not believe a committee of six people could effectively run a company, nor did I have enough energy left to try to make it work. If Bruce and Alan did not want me running their company, I was ready to leave. The past year had been a struggle, and twice I had written unsubmitted letters of resignation. They had paid me generously over the years, so I did not need the job for the money. I felt relieved. I was ready to let them find out what it was I did for them.
When they insisted I stay, I suggested a six month trial separation, to give them time to determine whether or not they needed me. I naively expected them to ask me to come back within a few months. They asked me to stay one last time, but I insisted on a separation. They decided to sleep on it.
Two days later Bruce and Alan came into my office to accept my offer to leave for six months. Although their decision hurt much more than I expected, I promised myself they would not see me cry. I hugged them both, wished them well, grabbed a few of my things, and left. When the six months were up, no one called to ask me back.
WordPerfect Corporation had been my life and my identity for twelve years. It was difficult facing up to the fact that I was not a part of that company anymore. I could not wear my WordPerfect hat and my WordPerfect shirt on vacation and have people come up and tell me how much they liked our word processor. I was no longer an important executive asked to make difficult decisions that affected millions of people. I was no longer in a battle to the death with Bill Gates and Microsoft, spending almost every waking moment figuring out how to beat them.
I am proud of the small role I played in the early years of the personal computer industry. I was fortunate to have had the opportunity to be a part of WordPerfect Corporation's incredible success story, and except for the ending, my time there was perfect.
Chapter 1: Innocent at Birth
While driving back to the drapery shop one afternoon in the summer of 1980, I had a strong feeling that one day I would be rich. I laughed to myself at this premonition. I did not care about being rich, I just wanted to pay the bills. My wife, Marieta, and I had four little children, a mortgage, an empty savings account, and a failing business. We were worried enough to wonder if it was time to disconnect the telephone and cancel the life insurance.
Our financial troubles resulted from the recession of 1980, when new home building in Utah County had stopped. I worked at Julie's Draperies, which I owned and ran with my brother, André, and my sister's husband, Lynn. During the week my job was to visit crazy housewives who called for appointments, giving them estimates for custom draperies and attempting to play the part of the talented interior designer. I called the housewives "crazy," because most of them went temporarily insane when they learned the cost of their window treatments. On Saturdays I kept the books and wrote up the work orders from my sales. Sales for the year were down to one third of normal levels, and my partners and I were going weeks at a time without pay to keep the company afloat. Instead of the normal five appointments per day, I had only five or six per week.
With time on my hands and bills to pay, I took a job weekday mornings at a local supermarket stocking the dairy case and bagging groceries. This helped keep me away from the drapery shop, where I often received sad and sympathetic looks from the women who sewed for us. The grocery store paid four dollars an hour, which almost covered our house payment, but I hated the job. I was supposed to stock the dairy case and bag groceries, but it seemed I spent most of my time running back and forth between the two duties.
If I did not have a drapery appointment in the afternoon, I worked in our large garden with three of my little children at my feet. Sam was almost five, Wendy was three, and Ellen was almost two. Joe was only a few months old, not quite old enough to know the fun he was missing. The garden was beautiful and weed free and provided us with lots of food that summer.
Perhaps all the dirt in our clothes was the reason our washing machine died. When it broke down and the repairman told us a new machine would be cheaper than fixing the dead one, my wife broke down too. When her father learned we did not have the money to buy a new machine, he offered to pay for a new washer, and we gratefully accepted his gift. Six months earlier we would have been too proud to take his help.
I spent a lot of my time that summer wondering what I would do if the drapery business failed. I had grown up expecting to earn a doctorate and do something important with my life, but after getting a bachelor's degree in psychology at BYU in 1972, I never made it back to school. After a year working as a bookkeeper for an employment agency back East, I returned to Utah and took a job in my mom's custom drapery business, thinking I would save a little money and then go back to school. When I met Marieta in 1974, getting married was more important to me than going to school. Once the children started coming, I gave up some of my dreams and decided to concentrate on making a living.
After my mom passed away in 1979, a lot of the fun went out of the business. She had a talent for creating new designs and running the shop. In her will, she left one third of the business to me, one third to my brother, and one third to my sister. I do not think any of us enjoyed owning or running a drapery business, but we were resigned to our fate. If not for the recession, we would probably all still be there, wishing we could find a way out.
As I considered my premonition on that afternoon in 1980, I tried to figure out how it might come true. It occurred to me that some of our relatives had money, and if they all died at once, we might inherit as much as one hundred thousand dollars. Considering our circumstances, that was an enormous amount of money, but my feeling did not seem to be about one hundred thousand dollars. The money involved would be more than I could count. Although I had no idea how such a thing could happen, I was impressed enough to tell my wife about the premonition later that evening.
I would not have imagined that one of our poorest relatives, my wife's brother Bruce Bastian, would be the person to help set the fulfillment of the premonition in motion. I met Bruce in 1974, just a few weeks before marrying his sister. When we met, he was the director of the Brigham Young University Marching Band, and he was counting on his sister performing in his band. Once Marieta and I were engaged, she decided to hang up her tambourine for good, so it took some time for Bruce and me to become friends.
Bruce earned his bachelor's degree from BYU in music education and planned on spending his life directing a high school or college band. After graduation he stayed at BYU to work on a master's degree in music and to work part-time as a teaching assistant to the director of the Incomparable Cougar Marching Band. When the director left to work at a college in the Northwest, Bruce became acting director of the band. The position was not permanent and his pay remained at the level of a teaching assistant. He did not mind the low wages or lack of benefits, however--the band was his life.
Bruce was an interesting figure on the football field at 6' 2", 140 pounds, in his dark suit atop a ladder at the fifty yard line. Rarely one to smile, and with enough nervous energy to power the lights in the stadium, he was serious about his band and his music. He spent his summers writing the pre-game and halftime shows his band performed, and he spent his spare time during school counseling and helping band members. He had a great ensemble, which sounded more like a very large rock and roll group than a university marching band.
For his master's thesis, Bruce was writing a computer program to display the band's step-by-step formations during a half-time show. The 3-D graphics program displayed the band from anywhere in the stadium--from high up in the press box, from the end zones, even from underground. His thesis work was amazing for the time, especially since he needed to tie three computers together to get enough processing power to run his program. Given the demands of arranging the band's music, directing the band, and helping his students, his thesis progressed slowly.
At the end of the 1976-77 school year, the dean of the music department met with Bruce to tell him the school was hiring a new band leader, someone with a PhD. Bruce was extremely disappointed and was unimpressed by the dean's assurance that he was doing Bruce a favor. Fittingly, after Bruce left, the BYU band dropped the word incomparable from its name.
Bruce's thesis project caught the attention of a BYU computer science professor, Alan Ashton. With Alan's help, Bruce was able to get out of the music department and finish his master's degree in the computer science department. After making the switch, he was ready to graduate in the spring of 1978. That spring Bruce had interviews with many computer companies, including IBM, EDS (then owned by Ross Perot), and Hewlett-Packard. He leaned towards taking a job with HP until Alan talked to him about a new company he was forming to write word processing software. Bruce liked the idea of working in a small company, so he took a chance, deciding to work for Alan.
Alan had begun work on a word processor in the summer of 1977. Normally Dr. Ashton spent his summers consulting or teaching, but for some reason nothing had turned up in 1977. Rather than do nothing, he decided to spend his vacation designing a word processor. His effort was more of a mental exercise than a conscious effort to start a software company. In the back of his mind, he hoped to one day find a way to bring his word processor to life and make, perhaps, an extra two or three hundred dollars per month from the effort.
At 35 Alan looked the part of a college professor, with graying hair that was usually a little too long, because he had trouble finding time to get a haircut. He and his wife Karen lived in a modest three bedroom house with seven or eight children. They would eventually have twelve children, including a foster daughter.
Alan's word processing design drew on his earlier PhD work at the University of Utah. The U of U computer science doctoral program was one of the first established in the country and attracted a number of now famous computer pioneers such as David Evans of Evans and Sutherland; Alan Kay, who would work at Xerox PARC and later become an Apple Fellow; and John Warnock, founder of Adobe. For his doctoral thesis, Alan used a computer to create music on a Hammond organ. Although taken for granted today, computers were not making a lot of music in the early 1970s. For music to sound right, the notes have to be played at the right time, and computers back then were too slow and had too many delays to be very good at playing them promptly. Like music, word processing works best when things happen at the right time. When you type a letter on the keyboard, you want to see it immediately, and you do not want to wait around for the computer to fit your letter into a processing schedule. The techniques Alan used to make good music also helped him to make a great word processor.
In 1977 word processing was still fairly new, so Alan didn't have to spend much time on research. After seeing a demonstration of a Wang word processor and reading an early word processing study, he was ready to start. He already had some experience, because most of his consulting work and a lot of the research he did with his students was in the text processing area. Text processing, or text editing, was a primitive form of word processing used mostly for writing computer programs. Alan set out to design a product which was not a run-off word processor. In the early run-off word processors, the screen did not look like the printed page. If you changed your margins, for example, you did not see the margins change on the screen, but you would see the change when the document was printed. Worse still, a run-off system used ugly codes, like .LM12 or @HD@B, in the middle of the text for changing how the document looked on the page. Alan wanted the screen to look like the printed page, with the correct line endings and page breaks and without any ugly codes. This design eliminated the repagination step used by the run-off systems. Because Alan's document was always formatted correctly on the screen, there was no need to reformat it for printing.
Alan's design included a number of innovative ideas. Instead of forcing the user to look at only one page of a document at a time, Alan wanted the user to be able to scroll through the document, as if it were on rollers at the top and bottom of the screen. He used function keys for the different features, so he could give the screen an uncluttered look without a lot of menus. He designed in an automatic insert, so if the user typed text in the middle of a line, the new text would push the old text out of the way, instead of erasing it as was the standard for the time.
He also eliminated the different typing modes which plagued the early word processors. With other products, if you were typing new text at the end of a document, you had to be in a Create mode. If you typed in the middle, you had to be in an Edit mode. In an Edit mode, your typing would erase existing text, so to insert text, you had to change to an Insert mode. Alan allowed the user to type anywhere in the document without a mode change.
By the end of the summer of 1977 Alan had a design specification of about fifty pages in length. His clean screen, automatic on-screen formatting, absence of modes, and auto-insert were great improvements over previous word processors. This design was, however, barely more than an outline. If he had been writing a symphony instead of a program, you would have said he had a collection of melodies, short phrases, and ideas. Most of the work, including the arranging and orchestration, remained to be done. His design was more a list of objectives than a comprehensive set of specifications. He gave his hoped-for product the unassuming name of WP and stored it away when school started in the fall.
The next spring, at the same time Bruce was about to graduate, Alan received a call from Don Owens. Don, who at that time worked for Itel, a leasing company in Northern California, had dreams of starting his own software company. His background was in marketing, and he was a prototypical entrepreneur, with lots of ideas and plans, but not a lot of money. Don had a forceful personality--the type of guy who would always have his sales quota booked well in advance of any deadline, so his employer would not dare to bother him if he took Friday off without permission.
Don heard of Alan because of some text processing consulting work Alan had done for Hill Air Force base. He asked Alan to write a word processor for Data General computers on behalf of a company to be founded, funded, and owned by Don and a friend of his named Bob Johnson. Alan was not sure of his position in the company, although he was under the impression he would own a part of it. In spite of the fuzzy ownership details, he was excited about the chance to bring his design to life.
Don named the new company Satellite Systems, Inc. because he liked the acronym SSI, which he had seen on the side of a railroad car. "Systems" was part of the name because he intended to sell computer systems as well as software. "Satellite" fit the acronym, but was a poor choice, because not everyone could spell it, and the word gave the impression the company sold television antennas.
It was based on Don's promise to finance the company that Alan offered Bruce a job as a programmer. Together they signed a lease for office space and ordered a computer. Bruce at the time was married, and his wife, Melanie, was expecting their second child. (Melanie worked parttime in the drapery business quilting bedspreads for us.) As soon as Bruce accepted the new job, he and his wife signed a mortgage on a home. The day after the mortgage papers were signed, Don broke the news over lunch that the funding had fallen through. Don could come up with his share of the money, but his partner could not. Don felt sorry for Bruce and gave him a $100 bill to ease his pain.
Alan felt terrible for Bruce and called a few of his business acquaintances in hopes of helping Bruce find work. He learned that Eyring Research of Provo, Utah was looking for a programmer, and soon Bruce was offered a job. Once there, Bruce learned that Eyring was under contract to provide a Data General computer to Orem City, then a small city of about 50,000 people just north of Provo, where Bruce and Alan lived. As part of the computer system, Eyring had agreed to provide a word processor.
Eyring's word processing commitment was for exactly the type of software Bruce and Alan had been planning to write for SSI. Knowing that Eyring would be hard pressed to provide a good word processor in time to fulfill its contract, Bruce talked to Alan, and together they went to Eyring with a proposal. If Eyring would be willing to pay Bruce's salary during the project, and if Alan and Bruce could retain ownership of the finished product, Alan would bring his design and his time to the project without charge. Eyring agreed to the arrangement, which gave it a much better chance of fulfilling the contract with Orem City. Eyring retained rights to sell the word processor if it sold similar computer systems to other cities, but Bruce and Alan owned the resulting product outright.
Eyring's contribution amounted to only a few thousand dollars in salary paid to Bruce, but it was enough for Bruce and Alan to get started. Alan worked practically every moment he was not teaching, including nights, holidays, and Saturdays. Bruce worked almost every hour he was awake, even though most of his friends and relatives told him he was crazy. Alan worked primarily on the part of the program which did the printing, and Bruce wrote the screen portion. Together they improved and expanded upon Alan's original design. Bruce made many contributions not only to the code of the finished product, but also to much of the design.
By the spring of 1979, Eyring felt the program was ready to deliver to Orem City. When Bruce and Alan let Orem City know they intended to improve the program, Orem City agreed to let them continue to use the Orem machine without charge in return for the right to use any of the new versions without an additional fee. Bruce borrowed a little money from his father so he could continue full-time work on the project, and Alan continued to contribute his nights, Saturdays, and holidays without pay. Together they worked in the basement of the city offices for another year to make a version of WP they could sell commercially.
To raise enough money to keep Bruce up to date on his bills, Alan and Bruce decided to release a simplified version of WP. The abbreviated version, which was designed for program editing, was called P-Edit. Because neither had any experience selling software, they decided to go back to Don Owens for help. They traveled to California to show Don the product, and he quickly sold a few copies of P-Edit to his employer, Itel. Soon the three agreed to start a business to sell P-Edit and WP. They decided that each would own one third of the new company.
Satellite Software International was incorporated in the State of Utah in September of 1979. The new name was very similar to the old one, since SSI was still the acronym of choice. (Back then acronyms were even more popular in the computer industry than they are today, and some people thought it was more important to find a good acronym than a good name. Everyone wanted to be the next IBM, NCR, DEC, CDC, or HP.) "Software" replaced the word "systems" in the company name, because the new company intended to concentrate on selling software instead of computer systems. International was added probably because it gave the company a more impressive sounding name, and perhaps, because the founders eventually hoped to sell software all over the world.
In March of 1980, the finished software, renamed SSI*WP, was offered for sale. SSI*WP did not have nearly as many features back then, but the original product was very much like the DOS versions of WordPerfect. A lot of the features were missing, but, with a little thought and creativity, the features that were there could do almost anything. The software came with a manual written by Alan and Bruce using their new word processor. The retail price of the software was $5,500, while the company's cost to manufacture a complete package, which included a computer tape, a manual, and a paper template, was about $25.
By today's standards, SSI's first word processor occupied a very small niche in the software market. The software worked only on a Data General computer, only on DG's AOS operating system, and only with Data General terminals. To print a nice looking document, the printer had to be a Diablo 1650 or work just like a Diablo 1650. While the niche was small, SSI had little competition and its product was very good. Bruce and Alan had paid close attention to the comments from secretaries and others who tested the product at Orem City before it was released. SSI*WP was fast and easy to use.
By the summer of 1980, SSI was selling two or three copies of SSI*WP each month. Although the first sales were encouraging, Bruce was still not making much money. Two or three times that summer he brought his wife and children over to our house for dinner. Each time they came, we sent them home with a trash can size garbage bag full of vegetables from our garden. During those dinners, Bruce tried his best to explain to me what it was he was doing. I knew almost nothing about computers, and his word processing software seemed like a strange product to me. My only experience with computers had been during a summer job in 1965, when computer time was very expensive and programs were written on punch cards. I had no idea how much computers had changed in the 15 years since I had touched one.
Late in the summer, Bruce talked about the long hours he was working. During the day he was answering phones, putting together information packets, and mailing them out. At night he was writing software. I suggested he hire a part-time office manager to handle the phones and the mailings. When he asked how much it would cost to hire someone, I told him I thought he could fill the position for about $5 an hour.
Bruce called a couple of days after our conversation to ask me if I wanted to apply for the newly created job of office manager. When he told me the pay was $5 an hour, a dollar more than I was earning at the supermarket, I quickly agreed to come to an interview, as long as he understood I could only work part-time. I still had hopes the economy would improve and the drapery business would recover.
I met Don Owens in early September, when he interviewed me for the SSI office manager job. He spent more than an hour talking to me, showing me the help wanted section in ComputerWorld and explaining the great opportunities available in the computer industry. He encouraged me to keep looking into computers if I did not get a job at SSI. He sent me home with a few computer magazines and the promise that if I would read them, the stories would eventually start to make sense. About three weeks later Don called, offering me the job. I agreed to start on October 1, on the condition I could quit as soon as the drapery business improved.
Although I did not know it at the time, that $5 an hour part-time job would turn into a great opportunity. Somehow I had arrived at exactly the right place at exactly the right time. If Alan had found work in the summer of 1977 or if Bruce had kept his job as band leader or if Don had decided not to start a business or if Orem City had purchased an IBM computer instead of a Data General computer or if there had not been a recession in 1980, then I would probably still be driving up and down State Street every weekday with drapery samples in my trunk. Like some rare astrological phenomenon when all the planets are perfectly aligned, all the necessary events came together at just the right time, and a new and soon to be successful company was born.
Chapter 2: The Battle for Custody
Starting a software company in the 1980s usually involved four rounds of financing. In round one, the founders used their own money, and money begged and borrowed from friends and relatives, to do market research and write a business plan. In round two, the business plan was shown to private investors to raise money to finance development of the product. Once a product was developed, the founders went back to their investors, and perhaps to a few new investors, for more money to pay for round three, the product roll-out. If the roll-out was successful and customers actually bought the product, round four was the big pay off. The IPO, or Initial Public Offering, was when everyone who contributed money in rounds one through three sold some of their stock to the public to make a bundle. By the end of the four rounds, the founders normally owned less than one fourth of their company, but that was the price they paid for the chance to make a few million dollars right away.
SSI was not financed in the usual manner. Bruce and Alan skipped round one altogether--they went ahead with product development, having no idea of the size of their market or their chances of success. They financed round two, the product development, with their own work and some help from Orem City and Eyring Research. Don Owens was responsible for the product roll-out, and as with rounds one and two, he did it without asking investors for money.
Don Owens was a forceful salesman. He was about 6'1" and had a large barrel-shaped chest. He did not give the impression of being overweight, but looked like a guy who had played football in high school. He was gruff, stern, and not necessarily one to smile. Unlike Alan Ashton, who always flashed a big grin whenever you saw him, Don Owens was all business. He dressed well, drove nice cars, and had a beautiful wife and two good-looking children. He looked the part of the shrewd and successful businessman. He loved to wheel and deal, and he knew how to close a sale.
Although an amount of $1,000 was carried on the books as the money the owners originally contributed to start the business, not one of the three actually invested any of his own money in the company. The thousand dollar figure was pulled out of the air, because the real number was too hard to explain. As I understood it, the SSI bank account was opened with a check of $7,000 made out to Don from Levi Strauss; the money was a headhunting fee Don had earned for helping the jeans maker find a new employee. The $7,000 did not stay in the company for long, however. Within only a few weeks of the loan, Don was selling enough software from his home in California to pay himself back.
Don's first customer was Itel, his employer. Itel was in the leasing business, and one of the things they leased was Data General computers. They happened to use DG computers as well. In November of 1979 Don sold them a couple of copies of P-Edit, and later in March of 1980 he sold them SSI*WP. One customer was all Don needed to get going. Using Itel as his reference account, he began talking to companies with Data General computers, some of which were leasing clients of Itel. When one of them showed interest in the product, he would jump on a plane to close the sale. Each time he made a sale, he asked for a letter of recommendation.
Once he had a few of these letters, Don used them repeatedly to promote SSI*WP. He sent them to computer trade publications along with his press releases. As the publications began mentioning the new product, he sent the letters and a one page brochure to companies responding to the news stories. If a company expressed more interest after reading the letters, he had Bruce send them a demonstration copy of the software.
Don always tried to sell the product for list price, but he was not afraid to make a deal to close the sale. He was tenacious when it came to collecting the money, always extracting a promise of when the check would be in the mail as he made the sale. By June of 1980, Don had enough confidence in the new venture to quit his Itel job and move his family to Utah.
A few of the inquiries SSI received came from Data General's dealers. Data General sold some of its computers direct to customers and some through OEM's. The term OEM stood for Original Equipment Manufacturer, and it described a dealer that purchased DG computers, added some software of its own, and then resold the computer/software system. The added software, or added value, theoretically made the DG computer into something new and original. At the time DG did not want to sign resellers unless they added value to the DG product. I am not exactly sure why they formulated this policy, but back then the successful computer manufacturers were in control, and they tended to have a lot of dumb rules.
If a DG OEM showed interest in our products, Don asked them to pay full price for one copy and offered to sell them additional copies at a discount. The first copy had to be used in-house (in-house meant inside the company). The additional discounted copies could be marked up and resold to the OEM's customers. The amount of the discount ranged from 10-80%, depending on how the negotiations went with each reseller. The discounted copies sold through resellers soon accounted for about half of SSI's sales.
Late in the summer of 1980 Don put together what was truly a big deal for SSI at the time. DCC, a communications company with offices in Memphis and London, was interested in writing its own word processor. DCC sold Data General computers, but instead of using DG's operating systems, it used an operating system of its own creation. Although SSI*WP would not run "as is" on DCC's operating system, Don convinced the company to take SSI's source code and use it as the basis for its word processor. His asking price was $100,000, and DCC agreed.
By the time I came in October, Don had enough reference letters and sales leads to insure a reliable cash flow. He had pulled off the impossible. Without raising any money and without spending a dime on advertising, he had successfully introduced SSI's products and established a reasonably good dealer network. The company was making enough money to pay decent salaries to its owners; to get them company cars; and to hire another programmer, a part-time bookkeeper, and a part-time office manager. (Alan chose a white Chevy truck with very few extras as his company car, which was very much in keeping with the 29 cent hot dogs he bought for lunch on his way from BYU to SSI most workdays.)
Bruce and Alan should have been elated with the success, but they were too tired to get excited. Bruce was still working fifteen hour days, six days a week, and teaching one or two computer science classes at BYU. Alan now had enough money to fulfill his goal of finishing his basement, but he was teaching a full class load at BYU and spending at least 40 hours a week programming for SSI. The new programmer, Dan Fritch, was hired not to lighten their load, but to write a new version of SSI*WP for another DG operating system called RDOS.
I was the sixth person to work in the business, and the first person to quit. On my first day there, the owners told me SSI did not withhold payroll taxes for any of its employees. Right then I decided to return to the dairy case. My first rule of business was to have a healthy respect for the IRS.
Bruce, Alan, and Don asked me why I was quitting. I tried my best to explain the differences between an employee and a subcontractor, as well as the problems they faced by treating everyone as a subcontractor. They listened closely to my explanation and asked a few questions about basic bookkeeping and accounting. These questions turned into a job interview for the position of financial manager. Later that day they offered me a full-time job for $24,000 a year starting November 1, with the promise they would withhold taxes from my paycheck.
I immediately abandoned the drapery business for the regular paycheck SSI offered. In theory, the drapery business paid each partner $1500 per month, but that happened only when we could afford it. To keep the business going, we had to keep our expenses in line with sales. The only way we could do that was to pay ourselves only if we had the money. To stay in the black, some months we paid ourselves only $750, and one month that summer we received nothing at all. $2000 every month was more than enough incentive for me to move to SSI. My brother and brother-in-law tried to keep the drapery business going for another two years, but they could not make any money, even with one less paycheck to worry about.
Although my business knowledge was limited to what I had learned at my previous jobs, I was still an expert compared to the owners of SSI. The situation reminded me of a saying I had heard in South America while on a mission for the Mormon Church, "In the land of the blind, the one-eyed man is king." Although the owners were very good at writing and selling software, none of them had much experience with running a business. Besides not withholding taxes, they had not held organizational meetings for incorporation and had no corporate books. While they each claimed to own one third of the company, they had nothing in writing and had not issued stock certificates. They had no business license (something Bruce discovered), and they had a bad habit of calling their expenses "miscellaneous," rather than keeping careful track of how their money was spent.
Until I came Bruce would spend twenty minutes or so every afternoon in line at the post office to mail out the information packets. Too impatient to follow his example, I bought a little food scale and some postage stamps, and with a postal chart from the post office, I set up my own little postal center in a closet at the office. This was a fairly remarkable thing in their eyes--to be able to mail small packages without standing in line.
Most of the things I did were very basic and easy to do. I found an attorney to write the by-laws and the minutes of the organizational meetings. I had stock certificates printed. I arranged for the owners to have wills written for themselves and their wives. I put together a monthly budget. I saw to it that a new phone system with a real hold button was installed.
It was not easy, however, to get the owners to withhold payroll taxes. Don had a friend who was an ex-IRS agent, and SSI paid him to give tax advice to the company. He disagreed with me about the owners needing to withhold taxes from their pay, since Alan and Bruce were teaching at BYU and Don always seemed to have something else going. The ex-IRS agent changed his mind, however, just one week before the end of the year, when he heard a rumor than all subcontractors whose last name began with an O, like Owens, would be audited. We paid the FICA taxes in a lump sum at the close of the year, and luckily, the IRS levied no penalty.
My most enjoyable assignment during my early days at SSI was learning SSI*WP. Computers had changed a lot in the fifteen years since I had last touched them. Word processing had not been invented when I was a kid. A few seconds at the keyboard was all it took to convince me that word processing was magical. Writing was at least ten times easier with the computer. A year or so later, I would hear a Data General vice president say that a computer was at least as seductive as a beautiful woman, and I would understand what he meant. I was captivated by the computer.
The only hard part about learning SSI*WP was getting time on the computer. The company still used the Orem City computer for most of its programming. We had only a small DG computer (small in power, but large in size) in the office, and Dan Fritch, the programmer for the RDOS project, needed it to do his work. Unlike AOS, which allowed many users to run many different programs at the same time, RDOS allowed you to do only two things at once. Since Dan liked having P-Edit and the assembler running at the same time, running SSI*WP was an inconvenience. It slowed him down, but for a couple of hours each day he would use only P-Edit and let me use SSI*WP so I could get the letters and information packets out.
In January of 1981 I made what may have been my biggest contribution to the eventual success of WordPerfect Corporation. When the rough draft of the by-laws came back from the attorney, I noticed a three-fourths majority vote was required to elect or remove members of the Board or officers in the corporation. Given the distribution of the shares, this was the same as requiring a unanimous vote to make any significant change in the organization. On my own I asked the attorney to change the by-laws to require only a two-thirds majority, giving any two of the shareholders the ability to control the corporation. Don agreed to the by-laws without question. He cared little for small details.
I suggested the change because the owners did not seem very happy working together, and I was hoping to give the company a chance to survive if the three ever split. It was not in my mind to get rid of Don, but I wanted Bruce and Alan to have some leverage if a battle for control of the company were to take place.
The differences between the owners was substantial. Bruce and Alan did not like Don's habit of calling himself CEO of SSI, since the three had agreed to run the company as equals. They also did not like Don's tendency to oversell the product. I remember a time when a potential customer called asking Don if we would support footnoting in the near future. Don put down the phone (this was before we had a hold button), and asked Alan when footnoting would be ready. Alan thought it would take six to nine months. Don told the caller footnotes would be in the product in three months. Alan heard the response and was very angry--one of only three times I saw him angry in twelve years. Don defended himself by saying he knew the customer would like our product enough to wait patiently for footnotes, an assumption which turned out to be true.
Alan and Bruce were also a little discouraged with Don's frequent habit of declaring bonuses for the owners. There seemed to be a bonus for every occasion: a Christmas bonus, a spring landscaping bonus, a back-to-school clothes bonus. The most expensive bonus was the DCC bonus. When the first check from DCC came in for $40,000, Don declared a $10,000 bonus for each owner and a $6,000 bonus for Dan Fritch for helping with the project. After the bonuses were approved, Don remembered a $15,000 finder's fee owed to Verdugo Computers, one of our dealers, for introducing Don to DCC. After we received the big check, Don went ahead with the entire amount of the bonuses, even though that left us $11,000 in the hole on the transaction. Bruce and Alan were happy to take their share of the bonus monies, but they would have preferred to keep more of the money in the company.
The biggest disagreement between the three owners had to do with raising money. Don was impatient to get to round four and make a lot of money, but Bruce and Alan were not ready to sell stock to outsiders. Don seemed to be very discouraged to find himself stuck with partners who cared more about controlling their company and their products than they did about making money.
By the end of January I had done everything I could think of to make us financially legal and proper, and I was running out of things to do. Since I had time on my hands, Don made me a sales manager, even though I knew very little about selling software. I had never even heard of the word "schmooze," a process very important to the job. When you schmooze, you make friends and build relationships in the hopes of convincing people to purchase your product or influencing them to encourage others to purchase it.
After only four months on the job, I was beginning to feel comfortable around the computer. As Don suggested in my first interview, I was reading the trade publications for a few hours every night, and the acronyms, like RDOS, AOS, VM/CMS, and MVS, were starting to make sense. In my spare time around the office I was learning how to mount tapes, initialize drives, and install software. The hardest part was understanding all the new jargon. Years later I would understand that most of the terms were generally descriptive and very unimaginative, but back then I was afraid of misunderstanding something. "Mount a tape" meant to stick a tape on the tape drive. "Initialize a drive" was a command to wake up a disk drive so it would be ready to do some work. What seems simple and straightforward now was very confusing at first.
Despite my inexperience, I became a traveling salesman for SSI, because we had more companies interested in our product than we had people to travel. For my first trip I was handed an airplane ticket and a reservation at the Hyatt and told to visit a law firm in Phoenix to answer a few questions and pick up a check. I made it to the law firm, answered the questions, and picked up the check without a hitch. When I later made it to the hotel, I was elated. I was not sure before I left home if I could figure out how to rent a car or check into a fine hotel, but I did it. I was awed by the adventure and especially by the beauty of the Hyatt Regency. I had a lot to learn.
In February Don asked me to go to Europe to train a new dealer in Holland and to meet with potential dealers in Switzerland. This was truly an adventure for me. In the seven years I had been married, I had spent only one night away from my family. Unfortunately, the trip was not all excitement and fun. I arrived in Europe in the middle of winter, and the dealer in Holland worked me sixteen hours a day. I did not see any sunshine for one whole week, because they picked me up at the hotel at 7:00 a.m., in the dark, and delivered me back at 11:00 p.m. Staying in the hotel was lonely and boring. I lay awake for hours each night staring at the ceiling, because the TV programs were all in Dutch and I had not brought enough books to read.
The trip on the train through Germany and on to Switzerland was beautiful, however, and somehow I found my way to the right hotels and eventually to the DG office in Zurich. I would have felt good just getting to all the right places at all the right times, but, luckily, I was also able to sign up a dealer from Bern and return home with a check in my pocket for $5,500. That was quite an accomplishment for someone who had never traveled abroad or read a train timetable before.
Although SSI*WP was available only in English at first, we had plans to create many international language versions. As we found dealers in various countries, we asked them to translate the program menus and help files into their native languages so we could develop versions in those languages. We sold the translated programs with English documentation, and in some cases we worked with our dealers to publish a translated manual. The fact that DG customers had few word processing choices made our job fairly easy in Europe.
We were rapidly becoming a big fish in the little DG pond. Businesses with DG computers had few choices if they wanted to do any word processing. They could purchase SSI*WP or they could purchase another computer. The other computers were called dedicated word processors (because the computers were dedicated to doing only word processing). Since the cheapest dedicated word processor sold for about $15,000 per station, our software, which could be used by anyone on the DG computer, was a bargain at $5,500. Our problem was not price. Our software was obviously much cheaper than the cost of another computer. Our problem was convincing customers that SSI*WP could fit on their DG computer without greatly affecting its performance. At the time, most of the computers used in business were purchased for accounting purposes, and the accounting departments were very jealous about giving others in the company any time on them. If SSI*WP slowed a computer down or, worse, if it ever crashed a system, we lost a sale. We were much like a guest, allowed to stay only as long as we were quiet and did not cause any trouble.
The profit margins in the software business were very different than those in the drapery business. With many competitors in the drapery business, we had to price our draperies within 20% of our cost to win half our bids. If even one customer did not pay us, we lost a lot of sleep. With almost no competition in our small software niche, we had no trouble collecting thousands of dollars for a product whose materials cost so little. Although there were other costs for development, marketing, and overhead, we were still working on much better margins than most businesses, including many which are illegal.
As the year progressed, revenues grew and so did the number of people in the company. Dan Lunt, who had done some contract programming for the company in 1980, came to work full-time at the start of the year. By summer we had a receptionist and a part-time person to make tapes. We also started hiring a few BYU computer science students to work part-time. Our small offices behind the donut shop had filled up.
By the summer of 1981 we were starting to get a little competition. Our most aggressive competitor was a company in northern California which sold a product called TIPS, an acronym for Text Information Processing System. By coincidence, the founder of the company was a classmate of Alan's from the University of Utah PhD program. Our other competitor was Data General, which was marketing a product called AZText. Although both were inferior, run-off products, we worried about TIPS because the company's salespeople seemed to stop at nothing to make a sale, and about AZText because it had the support of Data General behind it. Once DG had a product of its own, we were considered a renegade and no longer officially sanctioned.
As the summer wore on, Don did not come into the office more than a few days a month. He spent a lot of his time traveling in search of investors, even though Bruce and Alan told him repeatedly they did not want to sell additional shares. When he was in the office, he pushed hard for new features, so we could stay ahead of the competition. He was also very negative about the future. Don told me he thought we were headed for hard times, because of our limited resources. More than once he talked of the need to raise money, hoping Bruce and Alan would change their minds. Don thought we might be able to sell part of the company for $3 million so each owner could walk away a millionaire. I wondered if he actually believed that our business would slow down, or if it was an excuse to sell enough shares to outsiders so that Bruce and Alan would end up owning less than half the company. I think Don expected any new investors to vote with him and let him to control the company.
Don also started a new company with his wife and a friend from Washington, DC to sell terminals and printers to the federal government. When he did show up at the office, we wondered if he was selling software for us or selling terminals for himself. When he traveled, we wondered if we were paying for our expenses or his expenses.