Money Making Rules By A

Money Making Rules By A
Money Making Rules
By
A
Public Company CEO
Bob Fitting
Smashwords Edition
Copyright 2012 Robert Fitting
Also by Bob Fitting
Singapore Sting
This book is dedicated to my wife Lorraine who always makes my life interesting
and frequently exciting. Thanks for thirty-three great years.
CHAPTER 1
In business and in life, there are sets of rules that make sense to follow, but the
primary ones the First Rule of many of these sets are ignored because it's assumed you
already know them because they make so much sense, in fact most of us don’t think
about them, so I have tried to write them down as I went through my work biography. For
example the set of rules we learn in driving are: Stay right, pass left, stay in your lane,
don't speed, etc. The First Rule, the most important rule of driving is assumed. The First
Rule of Driving; Never put your car in a space occupied by something else! Some other
First Rules I have learned.
First Rule of Life
First Rule of Survival
First Rule of Flying
First Rule of Magazine Advertising
First Rule of The Obvious
First Rule of Negotiation
First Rule of Trade Shows
First Rule of Customer Handouts
First Rule of Mailings
First Rule of Profit Making
First Rule of Stand-Up Comedy (For Me)
We all know why they don't send donkeys to college; no; one likes a smart-ass!
Except, I do. I am a professional smart-ass and proud of it. Humor in the forms of
sarcasm, cynicism, jokes, and pranks has followed me most of my life, or perhaps I'm a
carrier? Unknown to me at the time, humor started in my first months of life when I
became my own uncle! I was born in 1935, my mother was Dorothy Freeman, nee Fitting
and my father was Clarence Larry Freeman (They had to get married!). Apparently
Dorothy violated the First Rule of Life (I like calling it the Maiden Rule). If you don't
learn to say no, you will probably be screwed! I was named Robert Clarence Freeman. At
the age of four months, as a result of a breakup I was told, I was adopted by Dorothy's
mother; my grandmother and her father; my grandfather making Dorothy my legal sister
and blood mother and my grandmother my legal mother, my blood aunt was my legal
sister , well you get the idea. I was adopted into a family gaining two legal brothers and
four sisters and losing six legal aunts and uncles. My name was changed to Robert
Clarence Fitting. I was taught all my youth that my blood father was not a nice person
and I should avoid him. But more of that in fifty some years.
We all grew up in a small duplex on Canal Street in Lebanon
Pennsylvania; population around 10 thousand. Lebanon was fifteen miles from Hershey
where a lot of my mother's relatives worked in the chocolate factory. I would guess the
duplex was around 2500 square feet. The first floor had a living room, sitting room, and
eat-in kitchen. We had an outhouse and took baths in a tub in front of the coal stove in the
kitchen on Saturdays. The second floor had three bedrooms, mom and pop had the
bedroom at the back of the house, a bath was added sometime around my seventh year of
life. At the Canal Street end of the second floor was a closet that became my bedroom
until I was around ten years old. The attic had been converted into a bedroom with two
beds for my brothers. Around 1945 or so, brother Marlin went into the military and I was
promoted to the attic. The other occupant of the attic was Brother Donald, who at the
time was in his twenties, had a job, had a car, and was rarely home, meaning that I had
the luxury of a virtually private bedroom. My sister Mary had married and was gone
before I can remember and Sister Marion had the bedroom facing Canal Street. My sister
Mildred had the middle bedroom. The house also had a basement that became my hobby
shop; making crystal radios and model planes. In my teens, the basement was also my
repair shop where I fixed neighbor's radios and small appliances.
I suppose you would call mom plump. I cannot remember her without wearing an
apron. And as was the practice then, most foods were prepared each day. Also, I am not
certain, but I would bet mom and pop never ate in a restaurant. Mom was known in the
neighborhood as an excellent cook and helped the neighbors with her recipes. She was
always preserving foods, canning vegetables, drying fruits, and making jelly and jams.
There were no freezers in those days. Mom was famous in the neighborhood for her
doughnuts that she made about twice a year. She would take orders and make hundreds of
doughnuts each time. I was happy when she was making doughnuts because I got to eat
the holes. Mom was the disciplinarian in the family. Whenever punishment was merited,
she would go out to the yard and cut a switch from what I called the switch-bush and
freely use it on my backside. Over the years, I tried to poison the switch-bush by pouring
salt and gas on it and also peeing on it to no avail.
We had no family car so mom and pop depended on Donald to take them to the
store or the doctor. There were quite a few vendors that came to the house. We had a
butcher that came by weekly in a van; stocked with beef, pork, chicken, and all kinds of
sausages, complete with a grinder and chopping block. The butcher also sold cheeses.
There was a coffee man, milk man, bread man, and before we got a refrigerator, an ice
man. The farmers cruised the neighborhood with apples and peaches, potatoes, and lard.
One farmer only sold celery; specialization was beginning. Before the war was rolling,
we also had drifters, hobos, and all sorts of men trying to make a buck. There was a
fellow who fixed umbrellas, one who sharpened knives, and another guy who repaired
bicycles. Mom always gave them a sandwich whether we needed the services they were
offering or not. During the war, mom would collect the used lard and another vendor
would pick up the lard and sell us laundry soap made with the lard. There was a rag man
who would buy old rags and clothing as well as a scrap man who would buy junk metal.
Lebanon had a bus service, conveniently the bus stopped in front of our house. By
the time I was twelve, I could take the bus into and go to one of the three movie theaters,
as I recall, for seventeen cents. On Sunday, Donald usually drove dad (I called him Pop)
and me to see pop's father (George Washington Fitting) in Harrisburg. Then after a two
hour visit we would return home. At the end of WWII, there was a big surge in
purchasing of items that could not be bought during the war and that people could not
afford before the war because of the depression. Radios, washers, electric stoves,
refrigerators, vacuum cleaners, lighting fixtures and all kinds of kitchen appliances were
in demand. TVs showed up a couple of years later. Solders were coming home with
money in their pockets, marriages were flourishing, and the people who stayed home and
worked in the war industry had lots of money to spend. However, most houses had been
originally wired with only one ceiling light in each room and typically one outlet in each
room. There was a great demand for increasing the wiring in the houses and Pop would
spend weekends upgrading houses. He had a captive workforce; me, age twelve, I was
the only male left at home because by this time my brothers were on their own. Marlin
was in the service and Donald was a machinist at Bethlehem steel. Donald still slept at
home, I suppose he paid board, but he rarely ate with us. He came in late and left before I
woke up in the morning. In weekends he would wash the car in the alley next to our
house and occasionally take me to see the Hershey Bears Hockey games.
In a typical upgrade to add an outlet in a room, Pop would cut a hole in the wall
for the outlet, I would drill a hole from the attic into the inside of the wall and drop a
small chain down the wall until he could capture it. Pop was not tall or fat, but he was
chunky and not suited for crawling around attics. My size made it ideal for the work in
small attics. I would connect a wire on the chain and pop would pull the wire down the
wall to connect up the outlet. By the time I was age fourteen, I had become a qualified
electrician's helper, at least in my mind; having wired close to 100 houses. We would get
paid each weekend in cash and Pop would give me three to five dollars for my efforts, a
significant amount in those days.
Pop was a serious guy and rarely laughed. He was quite talented though and took
on all kinds of projects including plumbing and carpentry. Now that the war was over and
he had additional income from the weekend electrical jobs, he tackled home
improvement jobs. We upgraded the kitchen, removed the coal stove and installed an
electric range. I helped him dig out the basement and put in a concrete floor. He and I
installed new sewer lines when we changed from septic tank to the city sewer system. We
built a new front porch and put on a new roof. We built a forty foot tower for the TV
antenna to receive Philadelphia stations. At the time I often wished I could be playing
baseball instead of working. Looking back, I now realize what a great opportunity it was
for me, and I regret that pop never knew how much this would eventually mean to me.
I don't recall my mother, father or any member of my family telling a joke, ever!
Although, there was one time when I thought Pop may have displayed some amusement.
Pop was often asked to do odd jobs for the neighbors, particularly if it was electrical in
nature. I knew that he despised one of the neighbors (I think his name was Ralph)
because he was an alcoholic, had sometime employment, and was abusive towards his
wife. I remember when Ralph showed up at the back door, neighbors always came to the
back door and never the front, and asked to see pop. He told Pop that he had been trying
to install a new ceiling lighting fixture and didn't know how to hook up the wires. Could
pop please help him. Pop got this unusual smile on his face and told him that he was busy
but that “My twelve year old son will do it for you.” I went down the street with Ralph
and connected the light fixture in under a half an hour.
I guess we were poor, but I never remember being hungry. My dad worked for
Bethlehem Steel all during the depression as an electrician. First memories are around the
beginning of World War II. Here's a piece of dark humor; around 1941, Sister Mildred
wanted to marry Elmer (or had to, I never knew what the story was), and it was assumed
that Elmer would be drafted into the service very shortly since everyone his age was
being drafted. It made no sense to buy a house because Mildred would be alone, so after
the marriage Mildred and Elmer moved into the middle bedroom on the second floor
awaiting the draft. Elmer was never drafted because of some physical defect and, Mildred
and Elmer never moved out! They had three children who were raised in the middle
bedroom and later in the closet and attic. Apparently not a big deal, since I know they all
turned out alright.
Legal sister Dorothy (and blood mother) worked in a textile factory sewing
clothing and married Glenn Lansberry a few years after the divorce from the not-so-nice
person and blood father. She would stop by frequently for lunch; the factory was only a
mile away. I learned to be manipulative and preyed on her guilt resulting in many
presents, allowances, and trips to Hershey Park. This may have been my first training for
a CEO position. She bought a complete set of Hardy Boy books, an Erector set, and a
wood burning set that I wanted because there was an incentive system to buy ice cream
popsicles. Every once in a while one of the Popsicles had the word “FREE” burned on
the stick and you could return it for a free Popsicle. I had planned to counterfeit the free
sticks with the wood burning set, but I never could make the word look good enough.
Dorothy bought model airplanes, a Christmas train and a lot of toys that my adopted
family couldn’t afford. When I turned sixteen and got my driver’s license, I could find
ways to permit me to drive her car. Her new husband detested me for taking advantage of
Dorothy. Can't blame him for that.
The Canal Street house had an alley along side it that was very steep, almost a
block long and was used for propulsion of virtually any thing with wheels in the summer
and that would slide in the winter. It was dangerous in the winter because if you couldn’t
stop a sled, you would slide into Canal Street. It was before my time, but I was told
Brother Marlin broke his arm sliding under a car. In the summer, I saw virtually
everything go down Fitting’s Hill including wagons, scooters, bicycles, and one time a
baby carriage with my twelve year old friend Roger in it. Another kid was standing on his
little brother’s tricycle, probably going twenty five miles an hour, with no brakes of
course when he arrived at Canal Street at the same time the bus pulled up, stopped, and
the back door opened. He landed inside the bus and broke his collar bone. Fitting’s hill
was fun when it rained; it became a river and we floated all kinds of stuff down the hill.
Sunday lunch was the big meal of the week with all the kids (and spouses after
they married), except for Mary and her husband Dave who went to his mother’s house for
a similar Sunday lunch. There would often be more than a dozen and mom would prepare
a huge pork roast. Sunday dinner, we called it supper, was always waffles and some fruit.
I don't remember many memorable humorous moments in my school days. Up
until high school, I was always an honor roll student, but became lazy in high school
graduating in the lower third of my class. Of course there were childish pranks but very
few are worth repeating. One perhaps worth mentioning had to do with an illegal
transmitter when I was thirteen years old. I had learned from a friend, that you could
convert an ordinary radio into a transmitter by connecting a telephone mouth piece from
an old telephone to a certain part of the radio. Then by hanging a long wire out my attic
window for an antenna, I could broadcast. I tested the radio transmitter by having a friend
who lived three houses away listen to my transmission. Most housewives in those days
had a radio in the kitchen and listened to the local radio station WLBR, “The voice of
Lebanon Valley”. When I transmitted, the signal was strong enough to over power the
local station for about a block. I would start transmitting by saying “This is an emergency
broadcast”, and then follow with some silly announcement like “The Japanese have
invaded Philadelphia and are marching towards Lebanon” or “The damn has broken, run
for your life” I don't know if anyone actually heard my radio, but a few weeks later I saw
a van with all kinds of antennas driving around my neighborhood. That was the end of
my radio announcer days.
I remember when we had a telephone installed, around the time I was eight years
old. It took a while to realize that could be a useful tool for practical jokes. Unlike today,
it was rare for the house to be empty of occupants, so the opportunity to use the phone for
pranks was limited. Down the street a block was a small gas station/convenience store
run and owned by Ralph Albert. We would buy soft drinks, ice cream, and candy. My
recollection was that Ralph was an old curmudgeon who never smiled and hated to be
bothered by customers. One day with my friend Roger Plasterer encouraging me, I called
Ralph and asked “Do you have Prince Albert in a can?” Prince Albert was a popular pipe
tobacco, When Ralph replied “Yes.”, I said “Why don't you let him out?”, then laughed
and hung up. We thought we were very clever.
In those days, the telephone connection was made by an operator, so Ralph called
the operator and found out who placed the call, within ten minutes, my mom had the
switch out, end of phone tricks.
After high school when I bought my first car, financed by pop, I inherited the duty
from Donald of driving mom and pop to the store, doctor, and to Harrisburg. My first car
was a 1940 Desoto Coupe. Pop walked two miles to and from work for many years. But,
after I got the car I would frequently drive him to and from work. I found out later he was
experiencing pain of angina from coronary heart disease which would ultimately kill him.
I figured out, at that time, what I called the First Rule of Driving: Never put your car into
the space occupied by something else. And a corollary: Never put your car into the empty
space that will be occupied by something else at the same time. The reason I could state
this first rule was because I violated it once and the consequence was clear and
immediate.
The 1940 Desoto business coupe was a wonderful car for sneaking kids into the
drive-in movie because there was a door behind the front passenger seat that opened into
a huge trunk. We would put four in the trunk and two up front. Another car would pay to
get in and would park next to me. Then the kids in the trunk would come out through the
trunk door into the front seat one at a time and leave the car through the front door..
After high school, I worked in a hosiery factory repairing the machinery and
doing general maintenance. This job lasted about three months until a job opened up in
Lancaster Pennsylvania making and testing TV black and white picture tubes, no color
yet. In December 1953, I was laid off, the beginning of a recession that was one reason
for enlisting in the Air Force. Probably the biggest reason was to get out of the Canal
Street house and seek exotic travel and excitement.
CHAPTER 2
During the first six months of 1954, there was a major recession and many of my
friends from high school were unemployed and collecting unemployment benefits. It was
probably the best of times because we had a group of around twenty guys and gals who
would hang out together; we would sleep late, and stay out late having dates, playing
cards, and having a lot of fun at a small teenager snack bar/dance-floor/card room in an
entrepreneur's basement called Bill's. One night in July, a bunch of us had left Bill's at
midnight and ended up at one of the guy's house to drink beer and play cards. That was
when six of us decided to join the Air force. That was the end of the only time I can
remember when I had no responsibilities.
I did a lot of maturing in the three years eight months and twenty-one days spent
in the Air Force. My basic training was at Sampson Air Force Base in New York, near
Watkins Glen on Lake Seneca. During basic training, I was subjected to aptitude tests; I
scored highest in Electronics and hoped to work in that field, and lowest in
administration. I was assigned to personnel, and as I would learn, the military could have
a cruel sense of humor. After Sampson, I was shipped to Web Air Force Base in Big
Spring, Texas for the duration of my service days. So much for exotic travel and
excitement.
I had a mentor in the Air Force-a Staff Sergeant by the name of Jack Lord who
was my boss, he showed me around the base, invited me to his home (he was married and
lived off base), helped me in many ways that made my Air Force stay easier.
It is clear to me that the more free time I had the more likely I would think up
practical jokes. I had a lot of free time in the Air force-ergo more jokes. One of my first
practical jokes also taught me that the jokes could have serious consequences. There is a
document issued every day in the military called the morning report. The morning report,
typed in seven carbon copies, listed all personnel that were not on the base, that were on
leave, in the hospital, in the brig, on temporary duty somewhere else, away at school, etc.
The report was typically around ten pages and could have absolutely no erasures. It had
to be submitted up the chain of command by ten o’clock every morning. The morning
report clerk, Glen Chambers, got up every morning at five o’clock to prepare the report.
He would have it on Captain Raeburn's desk by nine o’clock. Captain Raeburn was the
head of personnel and usually arrived shortly after nine o’clock. So get the
picture; pristine, no errors or erasures, must be signed by the captain and forwarded by
ten o’clock, a short period of time before the Captain showed up and no time to redo if
anything happened to it. Perfect! It had seemed to me that the captain had a good sense of
humor. About this, I was wrong. I had taken an ink blotter and soaked it in ink. Then after
drying, I cut out the shape of an ink blob about two inches in diameter. After Glen put the
morning report on the Captains desk, and before he arrived, I carefully placed the blob on
the report and laid his ink well (bottle) on it's side next to the ink blob so it looked as if
the bottle had been knocked over and leaked on the report. The Captain arrived; he took
only a glance at the report (with blob), stormed out of his office and had the head
sergeant (who really ran personnel) call everybody; about twenty personnel into a
formation at the front of the building. He was furious and wanted to know who had been
in his office. Of course, I confessed and he dismissed everyone else so he could “talk” to
me. And when he found out it was a joke, he was even madder than before. He scared me
enough that I was on my best behavior for a long time. He didn't hold a grudge though,
and I was permitted to fly with him in his B-25 a few months later.
Glen Chambers the morning report clerk was also my room mate. He would get
up at five o’clock and walk about a quarter mile to the personnel building. He was off
work around two o’clock in the afternoon and would frequently take a nap from three to
six o’clock. One evening about six o’clock I noticed that the sky and degree of darkness
was similar to the sky and darkness at six o’clock in the morning. So I shook Glen and
said “Aren't you going to work this morning?”
Glen jumped up, put on his uniform and ran down the street to the personnel
building. I think he figured out that he had been “had” when he came to the Airman's
club and it was lit up and going strong.
New Second Lieutenants were considered easy and probably legal prey. Web Air
Force Base is located in West Texas and there are frequent dust storms, so severe at times
you can't see across the street. There were about six offices in the personnel department
and a large open space for those of us in “Officer Personnel”. On the other side of the
building was a similar space for “Enlisted Personnel”. Don Wilson and I had come up
with this idea. Typically, all seven of us enlisted personnel would go for coffee around
ten in the morning. Since the Lieutenant would not associate with the enlisted, he would
usually tend to the phones for the thirty minutes we would be gone. Now the night before,
there had been one of the worst dust storms that anyone had ever seen and was a subject
of discussion in the morning. When we went out for coffee as usual, we actually went to
the enlisted personnel side of the building. First, Don who had a great bass voice, called
the Lieutenants phone and said, ”This is Major Smith of Base Operations; because of the
dust storm last night we are having to blow the dust out of the lines. I want you to put
each phone in a waste basket on the desk and let them ring for fifteen minutes. Whatever
you do, do not answer them or the clean-out will fail.” Then we proceeded to call all of
the phones in the Officer Personnel space and the Lieutenant dutifully put each phone in
a wastebasket on top of each desk. After about five minutes, the head sergeant tried to
explain to the Lieutenant that this was a joke. The Lieutenant ordered the sergeant to not
touch the phones. During the time that the “clean-out” was taking place, a colonel that I
knew came into personnel and asked why the phones were ringing and in wastebaskets.
After the Lieutenants explanation, the colonel left the building laughing and said he
would return later. It was six months later when the Lieutenant was promoted that he
finally realized he had been the brunt of our joke.
Web Air Force Base was a training facility for aviation cadets who were in pilot
training. At Web, the pilots transitioned into the T-33 training jet and upon graduating,
would be commissioned as second lieutenants. They were assigned to the same squadron
as the personnel people; a squadron is similar to an army platoon. Most of the time there
were a couple of hundred cadets who were restricted to the base, had guard duty, and
other unpleasant chores. The Air Force, though, allocated two dollars apiece to the
squadron for the cadet’s recreation. Since the cadets could not use this allocation, we
arranged parties about every six months with the squadron, squadron officers, wives and
girlfriends. Captain would crank up his old B-25 and fly us to the border to buy the
booze; Web was in a dry county. When the cadets graduated, some of us would wait
outside the building where they were commissioned to salute them. It was a tradition for
the cadet to fold a dollar bill into a pair of wings and give it to the first person saluting
them. After being at Web for six months, they knew it was prudent to be nice to the
personnel people.
I remember a First Lieutenant; I’ll call him Lt. Quince who was very difficult,
gave everyone in personnel a hard time, and was generally unpleasant to the enlisted
men. That was not the norm. Eventually he received orders to be transferred to another
base and we had our opportunity for revenge. When being transferred, the enlisted or
officer personnel must have a checklist signed off by about ten people and only then
could he receive his orders and payroll documents. The checklist signers certify that you
have turned in anything that you may have checked out such as pilot’s gear, any special
gear, weapons, recreational material, and that you have no outstanding traffic tickets,
debts, that your personnel file is up to date and you hve picked it up. At the base hospital
they certify you have all your shots and you must pick up your medical and dental
records. There were probably more things that I can’t remember. When Lt. Quince
showed up in personnel, he was told he had to go to finance first on the other side of the
base; finance told him that he had to get the Provost Marshall’s signature first and the
Provost Marshall sent him back to me in personnel. I told him I had sent his file to
headquarters, and would he please stop there, get it signed, and return it. When he got to
the headquarters office, everyone had gone to lunch. Finally around two o’clock, Captain
Raeburn suggested that we had had enough fun, so I managed to Find Lt. Quinces
personnel file in Sergeant Lord’s desk. When he showed up an hour later, he was polite
and reticent; I’m sure he reverted back to asshole after he left Web, but it was fun.
I met my first wife during the last year in the service. She became pregnant two
months after marriage in September 1957. I received an early discharge in April 1958 and
son Robert was born two months later. During my Air Force time I had taken a number of
correspondence courses and attended Howard County Community College in Big Spring
at night time. After two years in the military I knew I wanted to get a college degree and
do more with my life.
As an aside for my grandchildren, in the 1950’s Coca Cola came in bottles instead
of cans. The coke bottles had the name of one of the hundred or so city’s where they were
made on the bottom, and over time the bottles were distributed all over the country, so it
was a natural source of gambling. Every afternoon during our break, five or six of us
would buy a coke from the machine, and wager a quarter to see whose coke bottle had
traveled the farthest. Winning a dollar when your pay was fifteen dollars a week was a
big deal.
CHAPTER 3
I applied for enrollment in the school of engineering at Penn State in early 1958. I
was rejected because I was lacking two tenths of a unit of solid geometry. My laziness in
high school had come back to bite me. After my discharge in April 1958, I went back to
my old high school to see what could be done about the deficiency. The assistant
principal allowed me to attend geometry class with my old high school teacher Mr.
Dexler. The first day I sat in class, Mr. Dexler handed out a test; it was a sheet of paper
with ten yes/no answers on each side labeled A and B. The next day Mr. Dexler
announced that I had the highest grade in the class and of course Mr. Dexler took that
opportunity to berate his class. I was not popular with the other students. While he was
telling the other students that they should be ashamed because this old person who had
not studied in four years had the best grade, I noticed that I had mistakenly put the “A”
answers on the “B” side and vice-verse. I never admitted to my mistake; I sat quietly in
class and was awarded the required solid geometry credits. Was this another CEO
lesson; don't admit your mistakes when every thing works out?
Penn State required me to take a version of the current SAT test and as a result I
was finally accepted as a freshman. From the time of my discharge and up until school
started, I worked second shift again for RCA in Lancaster, this time manufacturing and
testing color TV picture tubes. Thanks to the Air Force, I was eligible for the GI Bill
financing, it was around $160 a month in 1958.
Our financial situation was not very good, and it was doubtful that we could
survive on the GI Bill money alone, tuition and books would eat up most of the money. I
spent much of the summer visiting relatives and scrounging furniture so we could rent an
unfurnished (cheaper) apartment at Penn State. In September, with a rental trailer full of
the scrounged furniture, we were off to college. At the end of my first semester, my
grades were high enough that I was invited into a number of honorary societies, Tau Beta
Pi, Sigma Tau, and Eta Kappa Nu. By the end of the first semester it became clear that
we were just about out of money and that I was actually a pretty good student. I went
looking for a job. I had heard from another student that a new lab, called the Automation
Lab whose charter was to help small Pennsylvania companies automate for cost
reduction, was looking for someone with Boolean algebra knowledge to design a digital
tic-tac-toe machine using electromechanical relays to construct a computer; it was funded
by a grant from the relay company. I had no idea what Boolean algebra was all about, so I
spent a weekend at the Library becoming, what I hoped, more proficient than the
professor doing the hiring. They say “Necessity is the mother of invention”, substitute the
word “desperation” and it would probably be more accurate. Once again I would learn
something new, that I had some salesmanship and bullshit skills.
Monday afternoon I met with the professor and convinced him that I was the
right student for the job. I completed the tic-tac-toe machine about seven months later. By
that time I had been promoted to the lab manager with three other students working for
me. Again I was learning that not only was I a good student, had salesmanship abilities,
but that I also had management skills. This was more valuable experience that would be
of great help later. I worked in the Automation Lab up until the beginning of my senior
year and in summers taught mechanical technician classes; machine shop, gear design,
and iron and aluminum foundry methods. Then I was offered a job at the Naval Research
Lab on campus working on submarine torpedo analysis, at a substantial increase in pay.
As a needy student, the increase in pay trumped all other considerations. The summer
after my sophomore year, daughter Brennda was born.
My senior year was a blur with the new job and interviewing for jobs after
graduation and helping to raise two kids. In those days, there were a lot of jobs to be had,
and I had interviews in Massachusetts, New York, and New Jersey. I picked Bell
Telephone Laboratories in New Jersey because of both the prestige and because they
would pay for a graduate degree at NYU. Also at Bell Labs, I only worked one day a
week the second year, none the first year and went to school the rest of the time. I knew
that if I went to work full time I would probably never get to grad school. Because I took
classes in the summers, I graduated in March of 1962 (with distinction). Then I was off to
Bell Labs in Whippany, New Jersey.
CHAPTER 4
When I arrived at Bell Labs in Whippany, New Jersey, my list of college Math
credits was declared inadequate along with some of my colleagues. So, that summer
about twenty of us went to math class for four hours a day, five days a week for about ten
weeks. Each week we would start a new text book and have an exam on Fridays. We
went through calculus, differential equations, partial differential equations, vector
analysis, tensor analysis, probability analysis, statistics, and functions of complex
variables to name a few of the text books. The first year at Bell Labs, I spent three days
going to New York University and two days off to do homework. The second year was
two days of school, two days for homework and one day of work each week. Again, I had
a lot of free time on my hands. Thank goodness for my interest in Contract Bridge or I
would have gotten into more trouble.
More than one hundred students, all in the top 10 percent in their respective
schools, went to NYU classes held at Bell Labs in Murray Hill, New Jersey. At Murray
Hill, there was a public demonstration area where the latest telephone technology could
be tried out. One of the pranks that another student and I came up with had to do with an
automatic dialer. To dial a number, a small punch card was inserted in the phone and then
it automatically dialed the number. This was a working phone and the punch card called
an answering machine that said “You have just used the AT&T automatic dialer; blah
blah blah” We substituted the demo card for one that would dial the Office of the
President of Bell Labs. Of course the next day it was back to normal; so we substituted it
again. After a few days of that it lost our interest. I then noticed that all the elevators had
phones that actually had a number that could be called, after all this was Bell Telephone
Labs. So my friend and I had the card dialers calling the elevators. It was amusing to see
what happened when the phone in the elevator rang.
Bell Labs was more academic than suited me. Although I tried to fit in, I wrote
papers, presented papers at conferences, and applied for patents-I didn't like that most
projects were run by committees. I liked to be in charge and make decisions without
lengthy meetings. I began slowly to realize that I would have to move somewhere else to
be satisfied. I was fortunate though to have worked on some interesting projects, for
example I helped build President Lyndon Johnson's communication system used in Air
Force One. He had been returning from Hawaii when a ham radio operator in Arizona
recorded one of his conversations. There was a push to build an encrypted system for
Air-Force One that I and a few others designed at Bell Labs.
The Vietnam War was just beginning and I worked on communications systems
for the Military. Before satellite communications, the communication system used for a
few hundred mile range and for high communications rates such as TV was called
troposcatter; a system that depended on scattering radio signals in the troposphere (the
first five miles of the atmosphere). The transmitting and receive antennas are usually
sixty to one hundred foot dishes pointed at the horizon. Transmitter power is from ten to
fifty kilowatts. It was then and is now the most difficult communications system to
design and make work. Perhaps because of it's difficulty, I was involved in troposcatter
much of my career. I designed and built a simulation system so troposcatter radios could
be checked out in the lab. The company supplying troposcatter radios to AT&T and
Western Electric was Radio Engineering Labs; in the process of testing their radios, I met
the chief engineer Fred Kornberg. As you will see through this book our paths will cross
a number of times.
Another system I designed with George Travis was the troposcatter anglediversity test system that stretched from Iceland to Greenland. There was a funny story
much to the chagrin of Dr. Howard Blank who was the software engineer working on the
project, incidentally a very nice guy. The Bell Labs computer was a main frame in the
basement and was fed either by punch cards or on big reels of magnetic tape. The
magnetic tape was stored in the computer room with your last name on it. Howard turned
in three months of work with his last name on the tape. “Blank”, get it?
George Travis was a mentor and I looked up to him. I admired his ability to build
or repair anything. I realized I also got a lot of satisfaction in building or repairing.
George and I traveled together a number of times on business, and we often would go to
Golderi's Scrap & Junk Yard in Morristown, near Bell Labs, at lunch time to pick through
the scrap for items we would want for our inventions, such as motors, pulleys, switches,
and pumps. The owner was Mario (I think) Golderi, we would take our discoveries to his
office where we would negotiate a price. I built a table saw, a lathe, and a garage door
opener before they were common with Mario's stuff. One Friday at lunch time, George
and I were at Gulderi's and we noticed that there was very little going on; the crusher was
not operating, the shear that could cut a four inch piece of steel in half was shut down,
and the workmen were mostly standing around. We asked Mario what was going on. He
said the huge magnet (that could lift an entire car) was broken and they couldn't move
scrap around the yard. Furthermore it would take two or three weeks to get a magnet
repairman out to fix it. George and I said we would come by the next day and believed
we could fix. Mario said “Whadda I got to lose?”.
The next morning, George and I took the magnet apart and found a corroded
copper electrode, the reason the magnet didn't work. We went to my house and made a
new electrode on my lathe, returned after lunch, and had the magnet operating by about
two o’clock. Every Saturday at three o’clock, the end of the workweek, Mario would fill
a cooler with gin or vodka for the twenty or so workmen and they would have a small
end-of-the-week get together When Mario found out we were not charging him for fixing
the magnet, he asked us to stay for the get-together and announced that we would have
free scrap picking for the rest of his life! It was a kick for us to socialize with the junk
yard workers and created a story we told for years.
Most engineers are not into jokes, much less computer jokes. In the 60’s,
computer programs were written on punch cards. Each simple command required one
punch card so a complete program could easily require hundreds of cards, and if any
single card were out of place, the program would not work. I would substitute a stack of
cards the same height as the actual program that the engineer had left on his desk. Then
when passing his desk, I would bump into the stack and scatter them all over the floor.
Fortunately, all the programmers were young and there were no heart attacks.
At one point, I shared a large office with Dick Rea, our desks were both along one
wall. I noticed a hole in the wall along the side of Dick’s desk, and I realized that the
phone line to my phone could be seen through the hole. Whenever I had a visitor, and
particularly when it was an outsider who didn’t know how the phone system worked,
Dick would surreptitiously ring my phone; I would say excuse me, I’m expecting a call
from my wife, and then I would answer the phone and act irritated because the phone line
would get tangled with a drawer or something. After hanging up, I would excuse myself
again, pick up the phone, and act as though I were calling the operator. I would say,
“Operator, would you please pull about three feet of phone line in? Thank you.”
Magically the phone line would disappear into the wall as Dick pulled it from the hole in
the wall next to his desk. I would act as though it were a normal thing to do, and get back
to the visitor, “Now what were we talking about?” Most of the visitors usually said
something like, “I didn’t know you could do that!”
Playing contract bridge at lunch time became an obsession with our group, I think
lunch times exceeded an hour frequently, and we would set up a table in the office shared
by Eric Linger and me. Most of us smoked during the bridge game including a couple of
kibitzers. Eric didn't play bridge and didn't smoke so I am sure it was an irritation. At the
end of the office and above Eric’s chair was a three-speed fan mounted on the wall; the
type that would move back and forth. When the smoke built up too much for Eric, he
would reach above his head and pull the chain that turned the fan on. You pull the chain
once and it was high speed, pull it again and it would slow, until the 4 th pull and it would
turn off. Frequently, the fan would blow the cards off the table. After a few weeks of us
irritating Eric and Eric irritating the bridge players, I decided to have some fun with the
fan. In the evening I connected the rotating part of the fan so that when it was turned on,
the first rotation would slow the fan by pulling on the fan switch, on the second rotation,
it would slow down, and on the 4th rotation it would turn off. The next day we had a good
laugh; even Eric admitted it was funny.
Living near New York City provided a great opportunity to explore; almost every
weekend was spent in the city which was only a forty minute drive. We rode the subway
everywhere, saw Broadway plays, enjoyed shows in Greenwich Village, rode the Staten
Island Ferry, and walked around Times Square. Christmas at Radio City Music Hall was
special and then dinner in China Town, Mott Street in Little Italy, on Sunday afternoon
for lunch as well as visiting Coney Island for Nathan’s Hot Dogs.
By the way, an engineering joke about NYC, do you know why the lights are
dimmer in Central Park than Times Square? They are farther from the battery. For nonNew Yorkers, the southern tip of Manhattan is called the battery because it once had
cannons to protect the city.
The Jersey shore was another attraction because of wonderful beaches and great
fishing. In the spring and summer we fished for fluke (a type of flounder) and in the fall
there were blue fish. Getting to the shore was a thirty mile trip down the Garden State
Parkway. I always claimed the Garden State Parkway was the safest freeway in the
country. Why? Because there are not a lot of people killed at ten miles per hour. If you
don't know it, there is a hell of a lot people in New Jersey.
Bell Labs, though was a wonderful experience for me, an inexperienced kid who
grew up in a small town in Pennsylvania, There were scientists and engineers who had
theorems and inventions named after them, some who published books, and many who
were professors. To my knowledge I had never known a Jew before Bell Labs and
suddenly half my colleagues were Jews. So I learned about Passover Seders, Bris
ceremonies, Rosh Hashanah, Yom Kippur, and Jewish foods like matzo balls and potato
latkes. After four years at Bell Labs in Whippany, my group was transferred to the new
Bell Labs building near Holmdel, New Jersey.
Bell Labs attracted some of the best and recruited the top students. There were
many brilliant and in some cases, a little peculiar, people that worked there. For example,
one of the scientists rode a unicycle down the hall to his office every day. The people I
worked with left such an impression that I still remember them today and could write
chapters about them, George Travis, Peter Monsen, Ron Goff, Bill Strong, Dick Rea,
Sam D'Ambra, John Boyhan, Dave Stott, Eric Linger, Mark Tidd, Vic Cutler, and Doug
Brady.
I was tired of New Jersey weather and not happy with the environment at Bell
Labs. I had loved the Southwest after living in Texas for almost four years, so I started to
look for a job in that area. There was an annual electronics trade show in New York and I
arranged for an interview with companies located in Denver, Phoenix, and Dallas. I flew
to Phoenix in April 1967 to visit Motorola. Motorola should be sued for entrapment, I left
JFK in a blinding snowstorm and four hours later landed in Phoenix where the weather
was seventy-five degrees, sunny, and smelled of orange blossoms. I was hooked on
Arizona.
CHAPTER 5
In August 1967, the moving van loaded up our household goods and we loaded up
the car for the drive to Phoenix. When we arrived in Phoenix, it was late afternoon and
the temperature was 118 degrees. What in the world happened to the orange blossom
smell?
Motorola Government Division had only a few hundred employees and designed
communications systems, bomb fuses, and radar systems. I really learned a lot about
business, marketing and management during the eleven years I spent at Motorola, the
education was invaluable for managing companies later on.
At first, my communications systems skills learned at Bell Labs were used to
design and support NASA programs. For example, I helped design the communication
system that was used to send the Television pictures back to earth of Neil Armstrong
walking on the moon. It is rare to be able to make up new jokes, but this event triggered
one. When Neil Armstrong stepped on the moon, he had been given a prepared statement,
but he added a little bit to the statement. Contrary to what you heard him say, what he
really said was “One small step for man, one giant step for mankind, and this last step for
you, Stanley.” At Houston, they edited out the last part, and when Neil returned, they
asked him what that was all about. He told them that he use to live above Stanley's
butcher shop. Stanley was always trying to get his wife to perform oral sex, and she
always said “Stanley, when man walks on the moon!”.
One of the favorite places for customers was the Pinnacle Peak Patio steak house
in northern Scottsdale. At Pinnacle Peak, the waitresses wore a holster with a scissors,
and when anyone walked in the door with a necktie, it was immediately cut off and later
stapled to the ceiling. If you ordered your steak well done, you would be served a
smoking cowboy boot.
One time a customer of mine from the CIA (who had apparently been there
before) announced that he wanted to go to Pinnacle Peak for dinner. When we walked in
the door, a waitress tried to cut off his tie. But he had made a metal insert for the tie so
she was unsuccessful. Later, when we were sitting at a table waiting for our steaks, a big
bruiser of a guy showed up with a two foot long bolt cutter and snipped the tie off.
In high school I met Dan Fuhrman. And we hung out together. Dan was one of the
most frugal people I knew. When I had decided to go into the Air force, Dan also went
into the Air force a few weeks later and we saw each other at Sampson AFB. After basic
training, I went to Texas and Dan went to Japan. After the Air force, we both went to
Penn State. On occasion, when I could, I hired him to work for me in the Automation
Lab. Again we parted ways with me going to Bell Labs and then Motorola and Dan going
to an Aerospace company in LA. One weekend Dan and his wife Haruko, who he met in
Japan, came to Scottsdale for a visit. I asked him if he had a necktie to wear to Pinnacle
Peak that night. He didn't, so I took him shopping to buy one. I don't think I have ever
seen anyone more shocked than when the waitress cut off his brand new tie. The next
morning they got up early and returned to LA. Even though they later-on moved to
Phoenix, Dan never talked to me again. Practical jokes can certainly have consequences.
One of the engineers that worked for me at Motorola was Karl Gohlke, a typical
engineer, Karl was extremely frugal, Texas Instruments, and had just come out with a
scientific calculator and it was being sold for $169. A lot of the engineers in my group,
including Karl and me ordered one of the calculators from Texas Instruments. Everyone
that ordered one received it in the mail except for Karl. Karl called Texas instruments to
find out what happened to his calculator. They said they would research this and get back
to him. Weeks later, they got back to him and said that somehow the calculator had ended
up in some dead letter office in San Francisco and they were working to get it returned
and then would then ship it to him. In the meantime, the price of the calculator had
dropped to $139. Another month went by and he still had not received his calculator.
Once again, Karl was on the phone with Texas Instruments to find out the status of his
missing calculator. Texas Instruments told him that they would send him a new
calculator, but it never arrived either. By this time the price had dropped to $119. At this
point, I think the God of Pranks was looking out for me because my secretary found an
identical Texas Instrument calculator in the parking lot that looked as though it had been
run over by a truck. Its keys were sticking out hanging on springs similar to what you
would see in a cartoon. I couldn't believe my good fortune, the parking lot calculator was
in a leather case, just as it came from the factory. For some reason I had kept my old
shipping box that my calculator came in from Texas instruments, I went to the tech pubs
department and asked them to make a shipping label that looked just like the one that
came from Texas Instruments. Then I took the calculator that had been run over by a
truck, put it in the leather case, and in the box that I had kept and shipped it to Karl. I can
only imagine how excited Karl must have been when he got a slip from the post office to
pick up the package from Texas Instruments and I can only imagine the language Carl
used when he opened the box and found the calculator that had been run over by a truck.
As the days went by, I expected Carl to say something, but he never did, that is until the
Christmas party when Carl was drinking heavily. I casually asked "Carl, did you ever get
your calculator?" His reply cannot be included in this book. He never knew, but
suspected that I was the prankster, by the way he eventually received his calculator, and
by then it was selling for $99.
I had three engineers working in the same office. One was a black guy named
Napoleon Hornbuckle III. Napoleon, we called Nate, was a bright guy who went on to
become a senior executive at Motorola. Nate came in to my office with Bob, one of the
other engineers in his office, and said “You have to do something about a problem.”
“What is it?” He said “Charlie (Name Changed) farts all the time!”. I was a fairly new
manager and wanted to find out the facts, so I asked “What do you mean all the time?
Once a minute, every ten minutes?” He said “About every half hour. “What “I asked “Do
you find troublesome?” Bob Said “I can smell it!” and Nate said” I am on the other side
of the office, so I don't smell it; but I anticipate that I will!” I asked if they had talked to
Charlie and they hadn't. So I suggested that the next time Charlie farted, Nate should say
in a loud voice “What Was That?” which would hopefully lead to a resolution. I found
out later that it did work, Charlie had some digestive problem and didn't realize he was
farting that much. A couple of weeks later I was in the restroom when the door flew open
and Charlie ran into a booth , I heard a loud fart; and anticipating the smell, I ran out.
After about five years at Motorola, a Navy requirement-document landed on my
desk describing the need for a satellite broadcast system for the fleet. On Navy ships, the
upper parts of the ship are reserved for defense and there is no room for communications.
It occurred to me that we could put four antennas around the ship at close to deck level,
and by electronically combining the four signals, produce a robust system. I believed that
each antenna would receive direct satellite signals as well as reflections from the ship and
from the sea. This was such an unusual concept that a demonstration would be needed so
I built a combining circuit for the multiple antennas and we showed it to the Navy
personnel at San Diego. The Navy gave us a small contract to build a demo system to put
on board a ship to see if it would work. A few months later, we installed the system on
board the USS Jouett, a guided missile cruiser, and Jim Pohl, a navy engineer, Jim Tyner
a navy lieutenant and I sailed from San Diego.
Our Captain was Samuel L. Gravely, he was the first black captain that later
would be promoted to become the first black Rear Admiral in the US Navy, and this was
his first sea command. The first test for the Fleet Broadcast System was that it had to
work while the ship was passing under the Coronado Island Bridge; the system worked
beautifully passing under the bridge and for the next four days at sea. Admiral Gravely
was not so lucky initially. First a Sailor was missing (overboard?), then the missile that
was supposed to fire at a target drone failed, and then the high speed test run shut down
prematurely. Our Fleet Broadcast System was a big success, so I wrote a wire to Admiral
Zumwalt, the Chief of Naval Operations, with Captain Gravely's signature, describing the
successful completion of the testing of the Satellite Fleet Broadcast System; and to my
surprise, Captain Gravely sent it without any changes. Finally over the next few days, the
missing sailor was found back in port, the errant missile fired, and the power run worked.
Soon after, Sam Gravely was promoted to admiral.
We had one more test to conduct for the navy. We installed the system on the
aircraft carrier, the USS Ranger. Again, I was on board with Jim Tyner and Jim Pohl. The
navy wanted proof that the aircraft taking off and landing would not interfere with the
communications system. Once again, the system worked flawlessly. After five days on
the Ranger and successful completion of the tests, I had an opportunity to leave the ship
early. An eight passenger plane called a COD for Carrier Onboard Delivery was leaving
for San Diego and there was an open seat available. It was really exciting to be catapulted
off the Ranger. In the COD you sit facing the rear of the plane; the catapult accelerates
the plane to around 120 miles an hour in three seconds, and from the acceleration, if you
are not prepared for it, as I was not, your feet fly out and your ankles hit the seat in front
of you, ouch!
The Satellite Fleet Broadcast System (Nomenclatured by the navy as the
AN/SSR-1) was being procured through a Naval Group called NAVELEX (Naval
Electronics System Command) in the Washington DC area. The head of NAVELEX
communications was Captain Harry Feit, a crusty, tough, and smart no-nonsense guy. He
and I became friendly through five years or so of interaction during the development,
manufacture, and installation. I would conduct quarterly meetings at Motorola,
Scottsdale, and with familiarity, my smart-ass nature begins to appear. I think when it
became clear that the program would be successful, Harry began to relax and he
appreciated my sense of humor. For example, the equipment had modules with handles
shaped like large Lifesavers to pull the modules out of the equipment with your finger.
When asked how we selected the hole-size, I cracked that we had surveyed one hundred
sailors to determine the average finger size. Captain Feit immediately commented, “You
wasted your time; there was a hooker outside every navy base that could have told you
that.” NAVELEX was where I met a Navy Commander who would become a life-long
friend, Jerry Waylan. During the manufacturing of the AN/SSR-1, I submitted an
unsolicited (Tongue in Cheek) proposal to Captain Feit for twenty test sets to be used
during installation; I called it the FEIT Set (Full Evaluation Installation Test Set). I don't
think Captain Feit could resist having a piece of equipment named after him; at any rate
Motorola was awarded a contract for the FEIT Set.
I called him Commander Doctor Waylan when I first met him in NAVELEX
during one of my visits to Captain Feit. Jerry had a PhD and was the key designer of
many of the Navy's communications systems including the UHF DAMA System. For the
rest of my career, Jerry and I would cross paths frequently, both socially, visiting each
others homes, and golfing, and professionally. After the navy, Jerry worked for SAIC,
then became the VP of GTE Spacenet and managed all GTE satellites and satellite
systems. Jerry was a customer of mine after my Motorola days. Later, he was on my
board of directors at Radyne.
There was radar on Shemya, the second last island of the Aleutian chain that was
constantly monitoring Russian aircraft and missile activity. The information was
transmitted through troposcatter communications. The first link from Shemya to Adak
(the next island in the chain) was very long and worked marginally well. Motorola had a
group in Chicago that designed a Digital Troposcatter System for Rome Air Development
Center (RADC) in New York that was expected to improve the performance. The system
was installed on Shemya and Adak and had poor performance. In the mean time
Motorola (a typical big company move) decided to shut down the Chicago operation and
transfer the Troposcatter responsibility to Scottsdale. Troposcatter is a very esoteric
technology with very few experts in the country, and none of the Chicago experts would
move to Scottsdale.
Picture this, Motorola has a contract with RADC, the system that was installed in
the far west Aleutian islands doesn't work right, the only remaining Motorola person is a
technician on Adak, all the expertise is gone from the company. I happened to be
working in the same area in Scottsdale where the troposcatter responsibility was moved
to and could overhear the manager Sam Romero spend hours each day on the phone to
the technician in Shemya advising him to try various fixes. After a couple of weeks of
phone calls and no progress, I approached Sam and explained my troposcatter experience.
I told Sam I may be able to help and asked Sam if I could study the system drawings. In a
couple of days I found a two major design flaws, either would prevent the system from
working properly. Both required some hardware changes that I accomplished in a few
days. I offered to take the new hardware to Adak and then Shemya and help the tech
install it. It was expensive to fly out to the Aleutians' and Sam wanted me to stay a
month. I said I would stay until the system was working. If I could do it in two days, then
I would return in two days. If it took a week, then I would return in a week. This was a
sticking point with Sam, so he would not approve the trip. About a week later, he was so
desperate for a solution that he agreed with my terms and I took off for the Aleutian
Islands.
The airline that flew from Anchorage to the Aleutian Islands was Reeve's
Aleutian Airways, owned by Bob Reeves who had been a bush pilot in Alaska since
1936. The aircraft was a big four-engine Electra bought, from American Airlines; which I
deduced because in the cabin, the American Name had been crudely spray painted over
but you could still see the name. The plane had been configured for mostly freight and
had about twelve seats. The stewardess, it turned out was Bob Reeves daughter, was
dressed in a fur parka and mukluks. I had been forewarned that alcoholic drinks were not
allowed on the flight so I brought a couple of those tiny bottles of Scotch. The stewardess
saw me pouring one into a cup of water and scolded me; not because I had the Scotch,
but that I was not careful enough in concealing it from her.
At Adak, the winds constantly blow and it takes tremendous pilot skills to land
there. The primary occupants of the island were naval personnel since this was a
submarine base. Some enterprising sailor had planted three pine trees that were getting
smaller every year along with a sign declaring Adak National Forest. Next to the runway
is a windsock made up of three inch iron chain. There is probably an axiom of human
behavior that says “The more isolated a location, the more certain there will humor. The
return plane would go to Shemya, then Attu; the last island of the chain, before turning
around and heading back to Anchorage. At Attu, the very small terminal; not much
bigger than an outhouse had a huge sign “Attu International Airport, Gate 1”
It took me four days to make the system work; two days at Adak and two more
days at Shemya. Shemya was primarily an Air Force base where the winds make Adak's
seem like a breeze in comparison. At Shemya I found another design problem and had to
redesign a circuit with out having a stockroom of parts. I raided a very small Air Force
repair shop for parts. After implementing the last fix, the system start working as
originally envisioned, and the technician and an Air Force representative from RADC set
about taking data for about a month. This troposcatter radio system was the longest and
fastest communications system in the world after the fixes were implemented. I used the
data collected and wrote some technical papers that I presented about eight times and was
also published in the prestigious Institute of Electrical Engineers.
Rome Air Development Center had invited the military top brass and the key
civilian personnel who had information to share about Troposcatter systems. The
auditorium had around 300 attendees; I was scheduled to speak near the end of the
program. Most of the presenters were very serious PhD’s who would show esoteric
equations to explain the Troposcatter behavior. I need to explain a little more about
troposcatter communications; very large antennas and high power blast the troposphere
and other antennas, say 300 miles away are receiving signals that are reflected from the
troposphere. Thus the signals change from minute to minute, hour to hour, day to night,
and month to month.
Most of the presentations would show dots all over a graph called a scatter plot
that might show signal levels versus time or versus distance or some other variable.
Invariable the presenter would overlay a transparent sheet having a line drawn that would
show the average of the dots or more esoterically, least-mean-square-blah-blah estimate
using Euler s equation, Very Boring, and I am sure that most of the audience was totally
lost.
My presentation was about the Aleutian Island System that I mentioned earlier. I
started with the same kind of Scatter Plot, a graph with dots all over it; and explained
some rationale for the data sounding very erudite to all but perhaps the PhD’s, and then
when I overlaid a transparency connecting the dots, it formed the Motorola logo. The
audience appreciated the joke, except for the PhD’s who were not absolutely certain, but
suspected I might be making fun of them. Thirty years later, I ran into an attendee of that
conference, Paul Mahoney, who told me the only thing he remembered was my
humorous graph.
My engineering group at Motorola had designed a troposcatter radio, we sold
some to Reginald Would at Bell of Canada for a telecommunications system used to
carry the radar information from, the Distant Early Warning (DEW) line and the Ballistic
Missile Early Warning System (BMEWS) that were installed to alert the United States of
approaching Soviet bombers and ICBM launches, back to the US from the Arctic Circle.
There were four locations in Canada in which we had to install our equipment and the
transportation between locations was by a de Havilland Beaver, a single-engine, highwing, prop plane known as a bush plane. The Beaver was the work horse of the north
because it carried a big load and could take off on a very short runway. Unfortunately, the
plane was so noisy that communications within the plane was only by hand signals. One
day during travel from one site to another, the weather was not very good, and the Beaver
ride was extremely rough. I was in the back, and the tech who was riding in the frontright seat was apparently nauseous. The pilot had sandwiches for lunch in a brown bag
sitting between the seats, so when the tech poked the pilot and pointed at the bag, the
pilot thought he was asking “ May I have a sandwich?”, what the tech was saying was
“I'm sick, is that a barf bag?”. So after the pilot pointed and shook his head yes, the tech
grabbed the bag and threw up into it. Needless to say, the rest of the flight and the rest of
the day were tense.
In Canada, people make fun of Newfoundlanders by telling “Newfie” jokes which
are similar to every other ethnic joke. One day the pilot was putting a twenty foot long
electrical wave guide (similar to a piece of pipe) in a cardboard box two inch by two inch
by twenty feet, into the plane, and some one asked him what was in the box, he said
“Some Newfie is shipping his clothesline home!”
Around 1970 I started to take flying lessons in a single engine Cessna and
qualified for a license a few months later. Just like driving, I devised the First Rule of
Flying: Never put your plane into the space occupied by something else and most
importantly this includes the earth. And the Second Rule Of Flying: Keep the pointy end
front and the dirty side down. I loved the excitement, the camaraderie with other pilots,
and the prestige of owning a plane. The humor surrounding flying was usually dark
which I also loved. For example, if flying at night over unlit terrain in the mountains in a
single engine plane and the engine stops, what do you do? First you slow as much as
possible without stalling, and then as you approach the earth, you extend the flaps and
slow even more. When you sense you are around ten to twenty-feet above the ground you
turn on the landing lights. If you don’t like what you see, turn the lights off!
After also getting my Instrument Rating, I became qualified in twin engine
airplanes. A lot of general aviation twin engine planes are considered light twins. For
example the Beechcraft Duchess, a light twin, can fly at 18,000 feet with two engines, but
can only fly at 3800 feet with one engine running. At Flagstaff Arizona where the ground
is at 7000 feet, the Duchess has a problem if one engine stops running. Hence the joke;
what’s the purpose of the second engine in a light twin when the first engine has stopped?
Answer: To fly you to the scene of the crash!
I made two trips to Kuching, Sarawak, Malaysia on the Island of Borneo. The
first was with Bill O’Conner, the sales guy for international marketing, and John
Knudsen, another sales guy for the troposcatter product, to check out an existing
troposcatter site for upgrading. We flew to Tokyo, and then Kuala Lumpur (KL) where
we met up with the Motorola Rep for Malaysia, Sam Muey Long. Sam was very well
connected in Malaysia, counting as his friend, one of the rajah’s that run the country.
From KL, we flew to Singapore, then Kuching arriving around midnight. The only
western hotel was a Holiday Inn, and in the lobby was their current sales promotion “The
best surprise is no surprise!”
Of course, there was a surprise about every three hours
when the electricity went off. Meetings with the customer, Malaysian Telecom, went
well, and we had time to look around. Kuching was part of Brunei until the mid 1800’s
when a riot against Brunei ensued, and was brought under control by a British
Adventurer who became the first white rajah of Sarawak and Sarawak became part of
Malaysia. I mention it because, when the British take over a country, they bring their
culture with them; so we found ourselves on the veranda of the Cricket Club, being
cooled by a huge fan that was operated by a rope being pulled by a local native.
The next morning we went to the Museum which was the only place to buy
souvenirs. Borneo had a lot of head-hunter tribes in the past and most souvenirs were
spears, knives, or shields. There were also shrunken heads; the real thing! John bought a
spear; complete with blood stains. The Kuching airport terminal building is tiny and it
was comical to see John sitting on one bench with his spear, while another passenger had
bought a shield and was sitting across from him.
We flew Singapore air lines (SQ) from Singapore to Tokyo. At that time SQ had
the most gorgeous women flight attendants I had ever seen; probably a mix of Malay,
Chinese, and British. The flight attendants could not be married and had to retire at age
twenty-seven. Things have since changed a lot; now they are still gorgeous, but may be
married, and only have to retire at age thirty-seven. The world is going to hell.
A month later, the international marketing manager deemed it imperative for me
to visit the customer in Kuching again to finalize the agreement that would lead to a
contract. I wasn’t too pleased about going, but I got on the JAL plane to Tokyo the next
day, Wednesday, for a meeting on Friday. From Tokyo we flew to KL arriving an hour
and a half late, and I figure missing our next flight to Singapore.
It was quite a surprise to find that Sam had held the plane for me, and he had
greased my way through immigration and customs. Within fifteen minutes of landing, we
were on our way to Singapore. Sam was bragging about holding the plane and asked if he
could do anything else for me. I told him I was a pilot and would like to be in the cockpit
on the way to Singapore. He said “Wait a minute.”, and then went to the cockpit of the
plane, a Fokker F-27, fifty passenger turboprop twin. A moment later he came back to my
seat and said “com’on” and led me into the cockpit. The copilot had given up his seat for
me and I sat as the copilot into Singapore at night relinquishing my seat on final
approach. Can’t do that today!
The last leg of the trip was into Kuching, again arriving around midnight at the
Holiday Inn, where the lobby sign now was correct “The best surprise is no surprise!”
There was a surprise the next morning when we went to the Malaysian Telecom
office and found it was closed for a holiday. Sam called the customer and we were
invited to his home. Not only was it a holiday, but the customer was going on a two week
holiday, leaving on Saturday, the next day. He said we could not talk any business until
he returned in two weeks. He and his uncle were going to a pottery factory and then tour
the Coca Cola plant and we were welcome to tag along. At the pottery factory, I bought a
beautiful hand carved urn for six dollars. They wrapped it in brown paper, making it look
like an urn wrapped in brown paper. The coca cola plant was interesting because it was a
1930 model plant that had come out of Louisville, Kentucky when they upgraded.
The next morning I started the trek home; more than a little angry. I decided, that
since the international department that put me on the wild goose chase would be paying
for my travel, that I would upgrade to first class. When I boarded in Singapore carrying
my urn, one of the beautiful flight attendants asked me, “Mr. Fitting, what is that you are
carrying?” I told her “My poor departed wife always wanted a trip around the world, and
now I take her ashes when I travel.” Probably an Asian thing, she never acted like this
was strange. But a couple of hours later five of the other flight attendants came to my seat
wanted to know more about the story and I finally confessed that it was a joke.
Motorola had an executive Institute that was used for evaluating their executives
for future promotion. The Executive Institute was located north of Tucson on a large
ranch consisting of three buildings. The first building was the dining room. The second
building was the classroom and the third building contained rooms similar to an upscale
hotel and included a lounge where we played cards, shuffle board, and drank booze.
Motorola did not provide the booze, the students pooled some money and a staff member
went to the liquor store for the booze, including wine with dinner. The three buildings
were about a quarter mile apart from each other. Motorola would bring in outstanding
speakers and instructors such as from the Brookings Institute, the Harvard Business
School, and famous individuals like the famous longshoreman philosopher, Chauncey
Leake. The staff consisted of a president, a vice president, a couple of instructors, a chef
and two shrinks that were observing all time. Each class had sixteen students who came
from all over the Motorola divisions; and were restricted to the Institute for the thirty day
period. At the end of thirty days, each student evaluated all other students and the shrinks
got together and evaluated the students.
Each guest speaker or group was introduced by one of the students. One evening
after dinner we were to have a speaker discussing the 1969, Tax Reform Act. It was my
job to introduce the speaker that evening. At dinner we had drunk a large amount of wine
so that by the time class was starting, most of the class was intoxicated. When I got up to
make the introduction, I said that our speaker was going to discuss the sixty-nine Reform
Act (giggle), and that I had no idea why anyone would want to reform the sixty-nine act
(giggle some more), at which point the speaker got up, recognizing that we were all
plastered and decided he would not try to lecture a bunch of drunks that evening and we
were dismissed. Needless to say, the president of the Institute was not very pleased with
how we behaved, and wine was no longer allowed at dinner when there was an evening
class.
The Institute had three or four golf carts that were used for students who had
some disability or heart problem and couldn't walk from one building to the other. One
weekend we decided, since we were bored, that we would hotwire the golf carts and have
races. The races went very nicely until two of the golf carts collided with each other
causing a serious amount of damage. Once again Monday morning, the president of the
Institute was not very happy and from that time on the golf carts were locked up during
the weekends. Although the president of the Institute told us how displeased he was, I
was convinced the shrinks were very happy seeing executives showing some initiative
and I believe we all received high grades because of the antics that we pulled while we
were there.
After ten years at Motorola, I was part of a business team and head of an
engineering department with over one hundred employees. I was somewhat happy, but
then a series of events at Motorola caused me to rethink my future.
I had invented a new communication system for the US Navy that is on every
Navy ship today called Satellite Fleet Broadcast. I designed and built a demonstration
system, helped install it on a ship, and demonstrated it to the Navy. I wrote the
specification and won a competitive bid for about six hundred thousand dollars to build a
few prototypes and test them. My department won the manufacturing contract for about
twenty million dollars and we realized a profit of over seven million dollars, the most
profitable contract of the Motorola Government Electronics Division that year. The same
year I helped Motorola win a contract for another naval communication system called
UHF DAMA that ultimately brought in over three hundred million dollars partly I believe
as a result of my relationship with Jerry Waylan. My boss received his annual bonus of
more than fifteen thousand dollars. My bonus was six hundred fifty dollars. When the
bosses look out for themselves first, be careful. Strike one!
Motorola decided to bring in a number of senior managers from Magnavox, and
TRW rather than promote from within. Program managers, marketing managers, and staff
people were hired to take positions that I had thought would be possible stepping stones
for me. My chances for promotion suddenly were reduced to near zero. Strike two!
The Air Force (A group called SAMSO, I think it stands for Satellite and Missile
Strategic Operations) was planning to launch a series of twenty-four satellites that would
enable planes and missiles to strike any target on the earth within a couple of feet. There
would be a degraded mode of accuracy for commercial users. The system was called
Global Positioning System (GPS). Jimmy Jones, a sales manager, and I went to visit the
Commanding General of SAMSO in LA.
SAMSO wanted to give Motorola an exclusive contract for over six million
dollars on a fixed price basis to build the first GPS receiver, we would then have the
technology to build and sell GPS receivers to the world. They had picked us because of
the combination of communications technology and chip technology. The general
manager of the Government Division and one of my bosses took a trip to Washington and
tried to convince the SAMSO General's boss, who was another General with an
additional star that the program should be a Cost Plus contract instead of fixed price
because of the risk involved. The Commanding General of SAMSO was infuriated. He
called Magnavox, our competitor the next week and gave them the contract. Motorola
Government Division was lacking in imagination. Strike three! Time to leave.
Milt Deever had been a staff guy at Motorola and had left to work for Fred
Kornberg,
(remember
him
from
earlier;
he
was
then
CEO
of
Comtech
Telecommunications.) I called Milt and asked if Fred would be interested in a start-up in
the satellite data communications field that I had been trying to get Motorola interested
in, I had the expertise the marketing contacts in the military, and believed I could attract
the necessary talent in the Phoenix area.
Comtech Telecommunications was making low noise amplifiers and high power
transmitters for the satellite industry. Fred was very interested in what I was proposing
because it was a natural expansion of his business and I was a known technical person to
him. He made me an offer as an employee with the idea that I would produce a business
plan in the next couple of months and he would finance the start-up.
CHAPTER 6
Six months after starting Comtech Data Corp, my wife of 21 years said, “I don’t
want to live with you anymore.” I moved out, Son Bob was in the army, and Daughter
Brennda was going to high school and living at home. After a year, I had concluded that
I liked being married and decided to start looking for a mate. Being a typical engineer, I
thought about a specification for the next wife.
1. She had to be sexually attractive
2. She had to be intelligent
3. She had to have a good sense of humor
4. She had to be clean
When I thought about it, I realized that the first wife specification would have
been;
1. She had to be sexually attractive
2. She had to be sexually attractive
3. She had to be sexually attractive
4. She had to be sexually attractive
Where did the “clean” come from?
In the Phoenix area there were a half dozen single clubs, which I realized
provided pre-screening. For example, there was an East Valley, Catholic, Parents
Without Partners Club, and there was a Non-smoking, Christian, West Valley Club. The
first six or so questions that you would ask in a bar were already answered; where do you
live? Do you have children? Etc. There was a club called Graduate Singles that had a
dance and get-together every Saturday night that I started to attend. Attendees were
supposed to have a graduate degree, but I soon realized that if you actually knew
someone with a college degree, it was acceptable.
On the fourth of July, there was a pool party at someone’s home in Scottsdale
where I met Lorraine. We started dating regularly and were married the following year
on June 20th at our best friend’s house in Fountain Hills. Brennda was my “best man”.
Lorraine had two kids, Stephanie, age 11, and Bryan, age 9. At age 41, I changed wives,
kids, dogs, houses, bank accounts, and jobs.
Divorces are not fun, but there is some dark humor based on divorce. For
example, I have lived in Arizona for more than forty years. And when people find this
out, they frequently ask, “Don't you wish you had bought land when you moved here?” I
always answer, “No, I am very happy that I didn't.” After they look at me strangely. I say
“Because my first wife would have it!” Lorraine and I have been happily married more
than thirty-three years, we love to travel and have been to sixty-four countries.
One of the skills I developed over the years was taking vacations, I have become
very good at planning, taking, and enjoying vacations. Many of the best vacations were
sailing trips to the Caribbean with friends. I had graduated from a blue water sailing
course at the Moorings Sailboat Company in Tortola, British Virgin Islands (BVI), but It
was difficult to find friends who could also sail, have time off, and could afford the costs.
And, the women always said, “We don’t cook.” So, we would usually charter a large
catamaran sailboat having four staterooms and four baths with a captain and a cook in the
British Virgin Islands or other parts of the Caribbean. We made eight of these trip’s that
were uneventful, but we did take one that was very strange.
We had taken several trips with certain friends, let’s call them Bill and Shirley,
that were very pleasant. I had planned a new trip to the BVI, and we invited Jim and
Sharon who had never sailed before. The first night out, we anchored off Cooper Island.
Lorraine and I played a card game with Shirley and Bill called UNO. Around ten o’clock
we retired and in the middle of the night were awakened by loud noises and the captain
hollering for us to get up; we had gone aground because the anchor slipped. The captain
was transmitting may-day, may-day, and the BVI coastguard answered. After
determining where we were, the said they would be there in thirteen minutes. In exactly
thirteen minutes, the BVI coastguard showed up and pulled us off the rocks. The boat
hull was intact, a new anchor was dropped, and we returned to bed.
In the morning, the captain and I took turns diving down to repair one of the
rudders; it had been jammed up against the hull. The rudder was fiber-glass that we
repaired by hack-sawing the top off, and by noon we were back under way. This was not
the strange part. That night Lorraine and I played cards with Sharon and Jim. Shirley,
who had been drinking heavily, starting making abusive comments to Sharon, calling her
a slut, a mother#@#@#, and worse names. I assumed that she was intoxicated because I
had never seen this behavior before. The next morning Bill approached me and said he
and Shirley were leaving. They called for a water taxi and they were gone. End of story.
As we grew older, sailing became too difficult, requiring more muscles than we
had. Lorraine and I went to Fort Meyers, Florida for a week-long Power Yachting Course
and were certified as power boat captains, and since then have taken boats around the
Bahamas, South Florida, and the San Juan Islands. The only time I ever had boating
trouble was when I chartered a forty-six foot, three stateroom, three bath Bayliner motor
yacht out of Anacortes, Washington. It is customary, for the first time rental, to
demonstrate your boating skills by taking the boat out of the slip and out of the harbor
and then return it to her slip. The owner would like some understanding that you know
something about their $500 thousand dollar yacht. The slips were close together in
Anacortes, and it was necessary to maneuver through a snail passage; the trial run went
perfectly. A half hour later when we were ready to leave, the navigation system stopped
working, and a repairman was summoned to repair it. After another hour, we started on
our way again, but this time the boat would not turn in the directions that I expected when
I used the motors to steer and I hit another boat breaking the rail on our boat. After
managing to dock the boat again, and calling the rental company, I found out why. The
repairman had turned the wheel completely to one side, not his fault; I should have
checked the rudder location before leaving the dock. Another half hour and we were on
our way again for a memorable trip in the San Juan Islands and Canada.
The Bahamas trip was with our good friends, Walt and Nancy Franklin, and C.J.
Aunger and Beth Ealy. We rented a forty-six foot catamaran with twin diesel engines that
had four bedrooms and four baths from the Moorings in Marsh Harbor. During the ten
day trip, we stopped in Hopetown, Green Turtle Cay, Great Guano Cay, No Name Cay,
and Spanish Cay. Typical of C.J., he immediately made a friend with a boat captain
tending some movie star’s boat on Green Turtle Cay who provided us with entertainment
and transportation around the island.
We still loved sailing and the women still didn’t want to cook, so we also
chartered a fifty foot catamaran complete with a captain and cook for our sixth voyage
around the British Virgin Islands. The same friends went along, Franklins, C.J., and Beth.
The yacht we chartered was the Viking Dream, owned and operated by a British couple.
One of the many highlights of the trip was the sail to the island of Anegada; the northern
most island of the BVI. A number of things make it special, it is very small, and it is a
little difficult to get to because the navigation aids are not the best, and there is a reef to
worry about. There is a small pristine, white sand bay in which to anchor and after taking
the dinghy ashore, the only hotel has a bar on the beach where you help your self, write
down what you take, and pay in the hotel before you sail away. The hotel has the only
taxi, a pickup truck with benches in the back which we took across the island to one of
the two pink sand beaches with some of the best snorkeling in the BVI. While snorkeling
at either Cow Wreck Beach or Loblolly Bay, the bar owners are retrieving either lobster
or fish from their traps for your lunch.
The food was outstanding, the snorkeling unbelievable, the weather remarkable,
and the friends fantastic.
CHAPTER 7
Talk about a naive forty year old engineer! I agreed to start and build Comtech
Data based on a contractual agreement. Equity (ownership) was not something I knew
anything about. The contract was probably thirty pages of lawyer BS that I didn’t really
understand; but I was excited and anxious to try something new and it seemed that if the
company performed well, I would receive bonuses and stock options. (My naive belief
that Good deeds are rewarded) I also received a title of vice president and Milt, asked if
he could return to Arizona to join me at Comtech Data which sounded good since he
would bring the business experience. In order to staff the company over the next three or
four years, I hired about twenty-five engineers and technicians from Motorola; many that
had worked for me when I was there. One of the hires was an engineer by the name of
Steve Eymann, the most important person I have ever hired because he became my
partner until the end of my career. After about four years, the company was doing quite
well.
A couple of years after starting Comtech Data, Milt and I were asked by Fred
Kornberg to accompany him and his president, John Rosenblum, to France. The large
electronics company, Alcatel, was interested in buying or investing in Comtech
Telecommunications. We arrived in Paris the day before our meeting with Alcatel and the
four of us had dinner together. I told the following off-color joke.
A French architect named Pierre was telling his friend while walking down the
street, “You see that bridge? I Pierre build that bridge; but do they call me Pierre the
bridge builder? No!” As they walked further, he said “You see that building? I, Pierre
build that building; but do they call me Pierre the architect? No!” After a while he said
“You see that monument? I Pierre build that monument; but do they call me Pierre the
monument builder? No! Why? You suck one little cock...!” This joke by itself is amusing
but not special. It's what happened the next morning that made the joke worth repeating.
We arrived at Alcatel and were shown into a conference room, an Alcatel
executive entered the conference room and identified himself, “Good morning, very nice
to meet you, my name is Pierre Lebow!” It was almost impossible to not laugh, but we
managed it. We were guests of Alcatel for about four days while they wined and dined us
while showing us the Alcatel Facilities. One evening we were entertained by the Alcatel
President and his wife at a restaurant noted for the Nouvelle cuisine française “New
French Cuisine”. This means that there are about twelve small courses served, each with
its own wine. By the time the dinner was over, I was plastered, and though I don't recall
it, my dinner partners claimed I kissed Mrs. Alcatel on each cheek and between her
breasts. Perhaps the reason they never bought or invested in Comtech.
As part of our entourage, Alcatel's New York Representative (Call him Joe)
joined us and was expected to take care of us our last evening in Paris. He suggested that
we might be tired and should just eat in the hotel. We said,” No Way in Paris”, so we
started to walk towards the Champs Élysées. As we approached the famous boulevard
around half past eight, we noticed an interesting restaurant; The Le Jardin at the Hotel
Royal Monceaue; and said we wanted to eat there. Joe said that it was impossible, that
that was one of the most exclusive restaurants in Paris and took months to get a
reservation. Of course, we gave him a tough time implying that Alcatel was not important
enough, etc, and Joe said he would try to get us in. Joe went up to the matre'd and said,
“I'm Joe Smith of Alcatel, Monsieur Lebow's secretary made a reservation for five at half
past eight. The matre'd said “wee, Mssr, I have a reservation made by Madame Russo”
and Joe replied, “Yes, I’m sure that's the one. The restaurant was a luxurious dining room
with a glass veranda facing a garden. The glass had been opened to give the illusion of
sitting outside. We were seated at the best table in the restaurant, and we were being
served cocktails when the authentic party of five showed up. The matre'd and two of the
waiters surrounded our table and started asking questions of Joe,” Are you sure this is the
right restaurant? Right time? Do you really have reservations?”. Joe acted dumb and
repeated that the reservation was made by Alcatel. Finally, they gave up, gave us menus,
and took our orders. The authentic diners were seated in a good but not quite the best
table. In good restaurants, the Matre'd is always able to solve reservation problems. Half
way through our dinner, one of the waiters stopped at our table and said
“Congratulations, monsieur, you have managed to get a table!”. Service was excellent
and the food was terrific; there were no hard feelings about our figuring out how to get a
table without a reservation. I think the Parisianers respect eccentricity and stubbornness.
After dinner, we were served a forty year old cognac at no charge. When dinner was
finished, Joe got the check for around $13 hundred and then asked the rest of us if we
have any cash since the restaurant didn’t take credit cards, and he didn't have enough
cash. Of course, we all said “No,” After pondering his dilemma for a while, Joe took the
check and signed it “Bill to Pierre Lebow, Alcatel.” and then we left.
Here is a sort of funny story about learning the hard way. One of the products we
made was a satellite TV receiver (before DirecTV) that was used with large ten to fifteen
foot backyard dishes. Small companies would buy the system components including our
receiver and sell the package along with installation. We typically sold the receivers to
these small companies on cash on delivery (COD) basis; requiring a letter of credit or
cash in advance. There was a company in Fort Smith, Arkansas that had been buying our
receivers, four or five a month, then would package them with their dish antenna and sell
to home users. I don't remember the company name, so let me call it Arkansas Satellite
Systems and Home Object Limited (ASSHOL) (I know it's a stretch!). The president of
ASSHOL wanted a line of credit because he said his business was expanding rapidly and
they didn't want to have to get a letter of credit for each purchase. He invited me to Ft.
Smith for dinner and to check out his factory. I arrived in Ft. Smith around five o’clock
and went to dinner with the ASSHOL president. After dinner, we went to the satellite
dish factory. They were manufacturing ten foot fiberglass dishes, ten at a time being
made in molds; about twenty a shift. The foreman showed me around and said they were
working three shifts and could not keep up with demand. My calculations were like this:
twenty per shift; times three shifts; times six days a week; times fifty two weeks in a
year; times $1000; the price of a dish, equaled a whole lot of money! The next day back
in the office, I approved a $50 thousand line of credit and shipped the ASSHOL president
thirteen receivers. There was only one small problem, we never got paid and it turned out
that the ASSHOL president did not now nor ever own the dish factory. I suppose he paid
the second shift foreman $100 to show me around; a great investment for the ASSHOL
guy! I have heard that when you ass-u-me, you make an ASS out of U and ME. I had
assumed that the ASSHOL president owned the factory because he was familiar with it
and knew his way around.
First Rule Of Survival, Never turn over your business (or money) to an
incompetent or a stranger. Seems straight forward, but we seem to do it all the time; your
broker is probably a good example. In business, when it is often not our money, we do it
more often. An example; The Company was growing very rapidly and our stockroom of
electronic parts was out of control. There was no system of taking parts in and out. I
advertised for a stockroom manager with experience. Of course with each passing day the
situation in the stockroom was degrading. If you don’t know what parts you have and
don’t know what you don’t have, it is impossible to manufacture products efficiently. So
when Joanne showed up and presented herself as having stockroom experience, or
perhaps she said she actually knew someone with experience, or perhaps she had once
seen a stockroom, and I was so anxious to solve the problem, I hired her immediately.
Problem solved; wasn’t I clever. I had just turned a critical part of the business over to a
stranger and as it turned out, an incompetent.
Joanne stored things as she would in her garage or basement. Square things on
one wall, round on the other, long parts who knew where; you get the idea. In
manufacturing the parts are identified by alphanumeric codes so it was very difficult to
find anything. Not Joanne’s fault; I violated the First Rule Of Survival and turned over
the business to an incompetent.
Another time, we were expanding rapidly in Europe and I needed a sales guy that
could converse in more than English. I myself was raised in the typical parochial
American manner and the only language I learned was English. So when Jerry Ruffner
showed up and said things like “Ich spreche fließend Deutsch” and “Ich nehme Ihr Geld,
Reisen nach Europa, und verursachen eine denn sie sind eine dumme Scheisse”, I should
have been more careful. The first translates to “I speak German fluently” and the second
could have been “I will take your money, travel to Europe, and cause a lot of trouble
because you are a dumb shit!” because that's how it turned out. Once again I turned a
critical part of the business over to a stranger.
As time passed, I had a number of arguments with Milt and was finding out that
he had been a staff guy at Motorola and had no real business experience, but knew the
jargon and sounded as though he knew more than he did. I my opinion, he was more of a
roadblock to success rather than a help. I had my nose in the engineering, manufacturing,
and sales not realizing that his idea of bringing business experience to Comtech Data was
spending a lot of his time at Comtech in New York smoozing with the boss. A typical
problem; for example, when we needed a piece of test equipment required to ship
products, I would put a requisition in his inbox and two weeks later dig it back out of his
inbox, sign it and order the equipment. I finally told Fred that I was not willing to
continue to work under Milt any longer, so Fred moved Milt back to Comtech, NY and I
became the president.
Comtech Telecommunications had gotten into serious financial trouble by taking
on a major military contract that was costing a lot more than they bid. Cash was so scarce
that Comtech was dangerously close to bankruptcy. By the way, many people, when
asked, might say that bankruptcy is when the liabilities exceed the assets, or losses
exceed profits; not true, and in fact you can usually go a long time without paying your
vendors, and without going bankrupt. But, stop paying the employees for a week, and
they can put you in bankruptcy with a phone call. I’m sure times were tough for Fred, and
Milt convinced him that I was paying company bills without prior approval. And I was
fired. Wow was I stupid, I make an enemy in Milt and he is then sitting in the office next
to my boss with the boss’s ear. I was not paid any of my bonuses and I left with some
Comtech restricted stock (referred to as type 144 stock, based on an SEC Reulation) that
had a legend on the back requiring approval by Fred for me to sell. Over the next twentyfive years, I tried to sell the stock a number of times with no success. All those years, I
guess Fred chose to believe that I was disloyal, whereas in my opinion the truth was that
Milt had stabbed both me and Fred in the back by his wanting revenge. The story about
Fred and the stock will be continued twenty-five years later towards the back of the book.
By the way, after I was fired, Milt returned to Arizona to run Comtech Data, I had gone
down the street to found EFData with Steve Eymann (the E and F in EFData). A few
months after I left, Comtech Data was sold to Fairchild helping to solve the Comtech
cash problem. Milt continued to run the Company for Fairchild. At EFData, we hired
more than thirty employees from the old company, Comtech Data and/or Fairchild Data,
made competing products, and helped drive Fairchild Data out of business. With our
taking most of the business, along with Milt’s lack of business skills, the company closed
its doors a few years later.
CHAPTER 8
I was fired on a Friday and by Monday I had a presentation ready and two
appointments to present my idea for a new start-up, competing with Comtech Data. On
Wednesday I made a presentation to Fairchild Industries in Washington, DC and on
Friday to California Microwave (CMI) in Sunnyvale, California. Both companies were
willing to finance my new start-up. The following week, Steve Eymann quit Comtech
Data to help me plan the new company. He was offended by the actions of Milt and
Comtech. We became partners in the new venture.
In the deal with Fairchild, they would advance us around $2.5 million for which
they would have 25 percent of the stock (equity ownership). If we required more cash,
they would receive more stock. It was their belief that eventually we would need more
and more cash and they would eventually have 51 percent of the stock.
In the deal with California Microwave, California Microwave would advance us
about $3.5million and have no stock ownership, but would have the right to buy the
company after five years based on a formula that took into consideration profitability and
cash flow. I was also impressed with Dave Leeson, the CEO and founder of California
Microwave. He had been through the start-up business and would have a better
understanding of what was needed. Also my experience with Comtech, not understanding
equity, probably helped influence the decision. We decided to work with California
Microwave. We started the business in October 1984. Fairchild did not take our decision
kindly, and within a month after we started up, Fairchild bought Comtech Data and
named it Fairchild Data.
During the first few weeks of the new venture, we spent a lot of time trying to
find a name. Names are hard to come up with because millions have already been used or
registered. We made lists of names and then would have to check them with each state.
We wanted a name that could be used and trademarked in the entire country. Out of
frustration, we finally used our initials, Eymann and Fitting-EFData. A year later, I woke
up one morning and realized that EF could stand for Error Free; a data communications
term. We began to put Error Free tags on our products. We also had more important
things to worry about than a name, and as it eventually turned out, every satellite user in
the world would know our name.
For the first month, Steve and I were the only employees, having to do everything
from building or buying work benches to negotiating the lease. When we started product
development, Steve was both designer and purchasing agent. One day Steve ordered acid
brushes, acid brushes are stiff bristled brushes used to clean the flux off circuit boards
after soldering parts. Steve ordered a gross of the brushes, or so he thought; he actually
ordered a gross of boxes of acid brushes, each box holding a gross. That was enough
brushes that lasted us more than ten years. It was clearly time to hire our first employee, a
purchasing specialist, Marla Evangelista who had worked for us at Comtech Data. Marla
stayed with us for the next twenty years; at one time head of purchasing and later a sales
manager.
Soon after, we had hired a few engineers and techs and we needed a receptionist
and all around typist/phone clerk/helper. We hired Sandy Lepper who, over the next
twenty some years would work for me and become a good friend and confidante. Sandy
was promoted along the way and ended up as the Vice President of Human Resources at
our next company. She was a caring empathetic person which made her successful in
dealing with the employees. Unfortunately, her good nature and protected upbringing
made her easy prey for Garry Kline’s (our eventual CFO) and my jokes. Initially she
could not swear at all, then after five years around Garry, she could swear but would
blush, and finally after ten years, she could swear without blushing. Garry considered it a
big success story.
Jill Lee who became known as either Betty Boop by me or Jiller by some was an
early employee that worked for Garry. For the first few years working for Garry, she
never laughed at his off; color jokes, but eventually came to appreciate them.
We were concerned about a law suit by Fairchild if we immediately produced
satellite equipment, so our first product was a cable modem. I also called my Navy
friends from Fleet Broadcast days and was able to get a contract for an AN/SSR-1
upgrade as well as a repair contract for FEIT sets.
After about six months, there were three significant events occurred that were big
factors in EFData’s success. A new product came on the market, a semiconductor chip
called Field Programmable Gate Array (FPGA) that Steve recognized would allow us to
build better satellite equipment that would be smaller, faster, cheaper, and would allow
changes in the field or factory through software rather than having to change hardware
and circuit boards. The second event was the publication of a world wide specification
for International Satellite equipment (Intelsat). The third event was a phone call from a
sales guy (Bob Petrucelli) who had just been fired from Radyne (a company you will hear
more about later). And he wanted to join with EFData, bringing with him tremendous
market knowledge. In a few months, Steve had developed a satellite modem that we
called the SDM-308. It was the perfect product for the Intelsat Market, every phone
company in the world was a potential customer. Also, we could make it for $5 thousand
and sell it for $12 thousand; a lower price than any on the market at the time. Bob
Petrucelli had started a sales company on the east coast and knew most of the potential
customers. We had found a goldmine! A Trifecta! The perfect storm! Or the proverbial
golden goose, choose one or all.
The SDM-308 modem was about five inches high, nineteen inches wide and
fourteen inches deep. It fit into a medium size suitcase that I could use for traveling to
customers and giving demonstrations. The first customer on my list was British Telecom
International (BTI) in London; and while in London, I could see another customer,
Mercury Communications. Since I was going to be in London, I called an old friend
Brian Litchfield who had a company called L-Teq. I had signed up L-Teq to represent
Comtech Data earlier, but Brian was very unhappy with Fairchild Data. Fairchild had
failed to field a new Intelsat modem, and he was interested in changing to EFData. I was
worried about his relationship with Fairchild and asked him to fax me his current
agreement. Upon reading the agreement, my attorney and I could find no problem with
pursuing a relationship with L-Teq. I agreed to meet with L-Teq when I was in London
and Brian decided to accompany me in a visit to BTI and Mercury. BTI and Mercury
were very impressed with our product and were comfortable with L-Teq. Fairchild heard
of the meeting and shortly thereafter, we were served with a lawsuit claiming tortuous
interference with a contract. Milt Deever was at it again, trying to slow us down.
Fortunately, CMI had a really good San Francisco law firm on retainer that we used for
our defense-and an outstanding lawyer, Matt Moore, that handled our defense.
Ultimately, the lawsuit was dropped, I found out that Brian was going to be in Arizona,
and we served him with a subpoena at his hotel room which forced him to appear for a
deposition. Two things happened at the deposition Matt conducted that made the law suit
disappear. First, it was determined that the agreement that was faxed to me had been
altered and the offending part of the agreement over which we were being sued had been
removed by Brian. Second, Brian said a number of times during the deposition that the
visits to BTI and Mercury caused no damage to Fairchild's business.
In the early days of EFData, Steve, in addition to purchasing acid brushes, also
made up the payroll using an Excel program that he devised. Again, we had grown and
needed a financial person to handle all the financial requirements. I advertised for a
bookkeeper and had three or four applicants; I liked to ask the applicants to tell me a joke
as a way of telling if they might be compatible with our culture and my sense of humor. I
remember Garry telling a raunchy joke that made me laugh, and he was certainly
qualified so I hired him.
We still needed a rep for Europe and England. I made a trip to visit and interview
a sales company and talked to a few companies. My final interview was with John
Rodgers and Tony Payne of Multipoint, they were my selection.
Our advertising usually included an animal because the First Rule of Advertising
is, no matter what, get attention! When people page through magazines, they don't look at
ads unless it gets their attention, which makes them stop and look longer. There is an
acronym for magazine ads, AID. Attention, Information, Direction. If you don't do the
first, forget the others. Most of our customers were male engineers. We would have used
hot chicks except it is not socially correct anymore and we would have offended our few
female customers. The second most likely thing to get people to stop and look further is
an animal. Perhaps it from our caveman days, an animal is either threat or food! If you
can tie the animal to a feature, it is even better. In one ad we showed a Cheetah, the
world’s fastest animal and connected it to our world’s fastest modem. At any rate, what is
required is for someone to look at the ad and immediately say “Whoa! What’s that?” If
you want an interesting experiment, page through any trade magazine, or the next time on
a plane look at the airline magazine and see how many ads violate the first rule. I have
found that it is usually over 75 percent. If there were a second rule of advertising, it
would be “get attention”, and particularly in magazine ads where you have about a
second to get people to stop and look further.
The only other Intelsat competitor in the marketplace was Hughes Networks
Systems; they had started designing and marketing Intelsat products earlier than we did.
The Hughes equipment was four times larger and cost twice as much as ours and as it
turned out, were frequently late in delivery. Our east coast representative was Bob
Petrucelli who I mentioned earlier. His company was Petrex, and he had a good
relationship with MCI and AT&T; both heavy users of Intelsat equipment for
international telephone calls by satellite. Unfortunately, MCI had already placed orders
with our competitor Hughes. We found out that the MCI application was critical, it to be
in service in ninety days by June 30th of that year. We also were pretty sure that the
Hughes’s equipment design was not yet finished and would very likely be late.
Bob Petrucelli convinced MCI to accept a rack of our equipment, a cabinet that
held eight modems and a controlling switch as a backup for Hughes. This one hundred
thousand dollar rack would be sitting idle, and if Hughes didn't deliver on time, could be
connected into the MCI system. As anticipated, Hughes didn't deliver, MCI used our
equipment, Hughes was canceled, and MCI bought EFData equipment for years after.
The same strategy worked with AT&T with their first application in Puerto Rico,
with the exception, that AT&T had accepted some Hughes equipment already. AT&T
never turned the Hughes equipment on, Bob and I suggested it could be used as artificial
reefs.
We also needed some Asian Reps. On my way to Australia, I first stopped in
Hong Kong to interview Datacom, the primary owner was Theodore Tsui. We met at my
hotel, The World Hotel for breakfast. I was very impressed with his connections with
Hong Kong Telecom, and his partner's connection with Beijing Telecom. I decided to go
back to Theodore's office to meet his partner and had already decided to make an
agreement with them. Even though I slammed the taxi door on Theodore's finger, he
agreed to rep us in Hong Kong and China. Datacom (Theodore Tsui) became a huge
producer for EFData and for years got most of the satellite business in China.
On the same trip I visited Singapore also looking for a rep. YK Ng had emailed
me and claimed he was well connected. All the reps claimed to be connected, know all
the players, etc. The difficulty is verifying the sales rep claims. In Singapore, there was
only one customer Singapore Telecom, so when I got to YK's office, I said “Let's go see
the customer.” He picked up the phone and fifteen minutes later we were in the Assistant
Managing Directors office of Singapore Telecom. YK and the Assistant Directors were
telling stories and giggling over their time in college. I hired YK and we never lost a job
in Singapore after that.
A few years later, Beijing Telecom was planning to issue a major multimillion
dollar contract to one of five companies in the US. Beijing Telecom sent a group of seven
representatives to the US to visit the potential suppliers starting with the three NY and
Washington suppliers on the east coast. While they were visiting on the east coast, our
competitors took them to Broadway plays, to the Tavern on the Green restaurant in NY,
to a Major League Baseball game, to the New York sights, and to the Washington
monuments. Fairchild in Arizona took them to a famous steakhouse, and the Grand
Canyon. Finally, after about ten days in the US, they were going to visit us at EFData. I
wondered what in the world we could do to top the past visits with our competitors. I
decided to invite them to my house. I had a wonderful patio and my house was on the
east side of Camelback Mountain in Phoenix with an outstanding view of the valley. The
weather was perfect for sitting outside. I had dinner catered from an authentic Chinese
restaurant with dishes our visitors would be homesick for, jellyfish, for example.
Once again, I was blessed with an unusual opportunity. My house was next door
to the Phoenician Resort, and when the Phoenician Resort was planning to have fireworks
for their guests, they would send the neighbors a letter giving them a heads-up. I had
received their notice the day before, that there would be a fireworks display at half past
eight the night I was entertaining the Beijing folks. So at about twenty after eight, I told
my guests that I had arranged a fireworks display for them at half past eight. Right on
schedule the fireworks began and lasted twenty minutes. They were very impressed. We
were awarded the contract.
Having two of the world’s biggest phone systems as customers exclusive to us for
satellite modems made marketing much easier, every foreign customer wanted to know
what AT&T and MCI were doing with satellite phone service. Selling internationally can
be difficult though; many countries have immigration and customs laws that are aimed at
preventing or discouraging foreign vendors from competing by making it difficult to
bring demonstration equipment into the country. Australia was particularly difficult to
get your equipment in. It can easily take more than six months or more to get approval.
The biggest customer in Australia was Overseas Telephone Corporation (OTC). I had an
appointment with OTC, but without the demo equipment, a sale would be virtually
impossible. I decided to take the modem in the suitcase and not claim it as demo
equipment. Without checking inside, it looked like my normal clothing suitcase. If
discovered, I thought the worst case penalty was the loss of the modem ($5,000).
I was pretty nervous when I arrived at the Sydney airport and walked through
customs after claiming on the entry form that I had nothing to declare, but the customs
inspection was non-existent, and the customs agent waved me right through as I smiled at
him. At OTC, the response was typical, “Hey mate, where were you six months ago?”,
“Your modem is so much better than the Hughes that we already ordered”, and
“Unfortunately with the contract we already have with Hughes, we don’t know what we
can do, thanks for coming, goodbye.” Once again, we got an agreement with OTC, to
place an order at no cost for a rack of our equipment, and if Hughes failed to deliver, then
to plug it in and start using the EFData equipment, and if it works, purchase it. If Hughes
does deliver, ship the equipment back to us, we would pay for shipping. Once again,
Hughes failed to deliver, and OTC bought mostly EFData equipment for many years.
Our Intelsat equipment was in great demand. We didn't have to do much
selling; just take orders. International orders were done with Letters of Credit, so we
would get paid within a few days of shipping, but we often had thirty days to pay our
vendors, the result was great cash flow and increased profitability. Of course, California
Microwave noticed our good fortune and wanted to start discussions with me for an early
buyout of the company.
I became interested in making neon signs and neon logos one year. I found out
that glass tube bending is incredibly difficult. After work, I would practice for an hour
each day; it took about a month of practice before I could make an acceptable letter “L”.
After that first success, tube bending became easier. Among other things, I made a ten
foot Christmas tree and an EFData logo, and a sign for a Jewish friend “Drek Azoy” for
his recreation room, meaning “Shit Happens”. Neon fabrication can be hazardous to your
health. First are the high temperatures to melt the glass and the potential for burns.
Second, I used a power line transformer that I bought from Arizona Power Services, the
Arizona Power Company that put out 150 thousand volts and was used for bombarding
the completed neon sign prior to introducing the neon gas. That could easily kill you. I
used a tank of propane combined with the air from an old ShopVac vacuum cleaner to
provide a high temperature flame to heat the glass. One day, I was bending glass, and
turned off the ShopVac, but forgot to turn off the propane tank. The propane filled the
ShopVac tank and a few minutes later, when I turned on the ShopVac, the gas exploded,
making a loud bang, sending the ShopVac motor up instantly hitting the ceiling of the
garage, scaring the crap out of me. Fortunately I was not hurt, but scared enough to be
more careful.
We attended a trade show in Las Vegas the following year. Since the show was in
Las Vegas, I thought it would be clever to fill our booth with neon signs for our products,
and it would attract potential buyers. Most of our customers are male engineers, our
major competitor; (Comstream) hired a good looking blonde to be in their booth. Guess
which one was the bigger attraction, Neon or beautiful blonde gal? Another dumb idea of
mine! Comstream had a better, lower cost product for awhile, but for most of their
products, they would seem to lose interest very rapidly and would go on to something
else. More about Comstream later.
Jerry and I went golfing one of the days we were in Las Vegas and I took that
opportunity to talk to him about a bid I had submitted to GTE for around one million
dollars. He promised me that he would give me the last bid opportunity. A couple of days
before Christmas, Jerry called me and said he was sorry, but according to his project
manager, we were 10 percent higher, and wouldn't lower our price and the project
manager was recommending that the award be given to Comstream. I knew the project
manager favored Comstream, and had a special relationship with the Comstream sales
guy. I told Jerry that we had never been asked for a lower price, that we had 15 percent in
the price for negotiation, and that we would drop our price by 15 percent right now. Jerry
said that based on what I just said that we were the winner!
My First Rule of The Obvious! The boss’s decision trumps the subordinates.
Thanks Jerry.
We used a tiger in a lot of our advertising. For handouts we bought tiger golf club
head covers and tiger tails. I sent a tiger tail to Tiger Woods to hang on his bag; thought it
would be a nice addition, but I never heard back from him. I guess he was busy with one
of his girl friends. At trade shows, we usually had three sales ladies, and as mentioned
before, most of our customers were male engineers. The sales ladies would ask the male
engineers if they want some head or some tail and watch them blush. The First rule of
Trade Shows Is “Get potential customers into your booth.” If there is a second rule it
would be “Get potential customers into your booth!” You can't sell without a customer.
That’s why, of course, Comstream had a hot blonde in their booth. One of our ways to
attract customers was to have an annual handout of a toy or gimmick that would spread
through the show so that everyone would want one. During the year before the trade
show, we would scour catalogs and stores looking for clever handouts. One year, for
example,
we handed
out in
the booth
a combination
compass/magnifying
glass/binoculars. One handout that was successful was a Nerd Kit-it was a plastic pocket
protector with pens, pencils, and ruler, along with black heavy rimed glasses. The glasses
had a Band-Aid around the nose bridge. Rattle Snake eggs were a big hit; they came in a
small brown envelope and when opened, a washer with a rubber-band inside the envelope
would buzz like a rattler.
Let me tell you about the greatest negotiation of my career. The First Rule of
Negotiation, Never give anything without getting something in return. Here is a case
where the customer didn't understand the rule. Having gained a reputation as the Primo
Intelsat equipment provider in the world, it was no surprise that we were then asked to
bid on a new much higher speed Intelsat modem needed by AT&T, British Telecom and
France Telecom. The only other bidder for the job was the French company, Alcatel.
However, our bid was lower and our reputation of on time delivery was such that we
were invited into a negotiation with these three companies. The negotiation would take
place in Paris, so I went with my East Coast representative Bob Petrucelli since AT&T
was his customer. We met with the three companies' purchasing agents on a Tuesday
morning in Paris; our opening bid was $58 thousand each for twenty units over the next
year. By Wednesday evening, Bob and I were convinced that we were the only possible
supplier that could meet their schedule that Alcatel was not a serious competitor, and
most importantly we found out that the British Telecom guys had a four o’clock flight
Thursday afternoon back to London that they couldn't miss. So Thursday morning, Bob
and I wasted time and then after lunch, had a private caucus and at half past one we went
back to the meeting and made a new proposal. We suggested that it would be a better deal
for them if we gave them a guaranteed price for units of any quantity for the next three
years and in order to do that our price was now going to be $62 thousand dollars a unit.
Both British Telecom and France Telecom thought that was a wonderful deal,
particularly the British Telecom guys, who had a flight at four o'clock. The British and
French guys strong-armed the AT&T purchasing agent, John Kist, into accepting the
deal. Later, after the AT&T agent thought about it, he was furious at the idea of paying
more money than the original proposal. In actuality it turned out to be a good deal for the
companies because they continue to buy this product for many years after that. To soothe
the AT&T purchasing agent's bruised ego, Bob and I took him to the Crazy Horse that
night. Le Crazy Horse Saloon is a Parisian cabaret known for its stage shows performed
by twenty-three identical beautiful nude female dancers. And I mean identical, precisely
five foot ten inches, dimensions of 24-28-24, c-cup bust size, and brown hair. We were
shocked that John was not as enamored with the show as we were until we found out the
next day that he was married to an ex-nun. Our cost for the product after development
was $13 thousand each, $51 thousand margin on each one. Another golden goose.
Another example of The First Rule of Negotiation; Frequently our customers
wanted to have a longer warranty period than our standard two year warranty, and in
most cases actually did not cost anything because electronics failures happen mostly in
the first year of operation. If it was believed we could not charge more money, I would at
least try to get a promise of favorable treatment on the next bid or at least a promise that
we will be given something that may have no current definable value; such as the last
look at a price on the next procurement.
Son Robert was in the Army in Maryland, on one of my trips to Washington, I
drove up to see him. We went north to Lebanon so he could see where I grew up. In
Lebanon, we were driving on East Lehman Street and passed the Shuey’s Pretzel Factory
where I worked as a kid, hand twisting pretzels. The objective was less than a second for
each pretzel. On Saturdays, we made soft pretzels and then I sold them in the business
district from a sidewalk stand. It was Saturday, and I wondered if they still made the soft
pretzels so I parked the car and we went into the building. Surprise, surprise, not only
were they still making pretzels, but old Mr. Shuey was still there running the place and he
recognized me. We bought some of the soft pretzels, still hot from the oven; then Mr.
Shuey said, “There was a guy in here a few months ago and said he was your father, and
he was trying to find you.” Mr. Shuey didn't know any more about him that he could
remember except he thought he was a Cadillac dealer near Philadelphia. The other thing
he told me was that his son was living in Phoenix.
When I got home, I started calling all the Cadillac Dealers in and around
Philadelphia with no success. Then I called all the Freeman names in the same areas,
again with no luck. The operator was also helpful by calling unlisted numbers and
inquiring if that Mr. Freeman could be looking for a lost son. Finally, I called Mr.
Shuey's son and asked him for his father's phone number. I called and asked if there was
any other information that he knew about my father. He said I should hold while he went
through his desk. When he got back on the phone he had the phone number for the car
dealership. It wasn't a Cadillac Dealer, but was a used car dealer. I called the number and
was told he no longer owned the dealership-but someone there knew his home phone
number.
Before I called him, I wanted to think about what obligation I thought I might
have regarding him. Suppose he needed brain surgery, or a kidney transplant? I decided
that he only had been a sperm donor and I had no obligation at all. In the evening, I made
the call and my blood father answered; I bit my smart-ass tongue and did not say “Hi
Daddy!”, but said “Is this Clarence Freeman?” And when he answered in the affirmative,
I said, “This is Bob Fitting, I believe I am your son and heard you were trying to find
me.” We had a pleasant half hour discussion. I found out where he lived which was only
twenty miles from where I grew up.
I was planning to be on the east coast in a few weeks so I made an appointment to
visit with him. He had a nice home, lived alone, had never remarried, and was making a
small income by buying cars, fixing them up, and reselling them. I asked him if he would
be interested in flying to Phoenix for Christmas, if I sent him a ticket. He was delighted.
The next year I called him to see if he wanted to come out for Christmas again, he
asked if I could send two tickets so he could bring my half sister along! My family was
suddenly bigger. A few years later, Clarence died, and at his funeral I met another half
sister. I wonder if there are a few more out there.
Around 1990, an application for Entrepreneur of the Year for the Southwest area
was submitted by my loving employees. There are six categories and my application was
for Technology and Manufacturing. The Entrepreneur of the Year program is supported
by Inc, Magazine, KPMG Audit Firm, and Snell & Wilmer Law Firm. The top fifty
applicants are interviewed and a video is made to show at the annual banquet. At the
banquet, the winners are announced at the end of the evening after everyone else has been
mentioned. I became suspicious, then convinced, and finally confirmed through Steve
Atkins’s network at KPMG, that I would be announced as the winner. The program is
held in the Hyatt Regency holding over five hundred people. Companies must pay for the
tables for the evening. Being certain that I would win, I reserved four tables of ten. After
all, I wanted my own cheering section. The Emcee was a local TV personality. Dave
Koblinski was sitting next to me with Jeshelle, his wife. Dave was not in his element
dressed to the nines and sitting with the executives. As time went on, I would say to him
after the first twenty-five were introduced “Wow, Dave, I must have made the top twenty
five!”, then “Wow Dave, I must be in the top ten”. As time went on, Dave got more and
more excited,” Wow, Dave, I can't believe I made the top five”. Then top three, and
finally when the second place was announced and it wasn't me, Dave said “You're going
to win!” Then I said to Dave “Didn't you wonder why I reserved four tables? I knew all
along.”
The winners of the regional selections were invited to Palm Springs to select the
US winner of Entrepreneur of the Year. One of the regional winners was Jerry Jones,
owner of the Dallas Cowboys. It was no surprise that the overall winner, who would
appear on the cover of INC Magazine with his gorgeous wife, was Jerry Jones.
We found a South Korean customer who wanted a troposcatter radio. I tracked
down my old friend, Dr. Peter Monsen of Bell Labs and hired him as a consultant. Peter
had become one of the foremost experts in the country on troposcatter technology. I
assigned Eric Upton to be the project leader and a young engineer Bill Strick to be his
assistant. We were about a month from shipping and we wanted to test the radio on a
simulator, the only one available was in Florida. Eric, Bill and the technician packed up
the radio and headed for Florida. A few days later they returned and were waiting at the
luggage carousel for the equipment when Bill's recent wife, and army reserve sergeant
walked up to them and snapped Eric's suspender. Eric immediately took a swing at her
and she swung back. Both were swinging when the technician stepped between them and
broke up the fight. The next day, Eric did not show up for work. I was anxious to talk to
him and see what happened. I called him at home. First, he explained why he hit her. Eric
always wore suspender and often when he was returning from the roach coach with a
coffee in one hand and a jelly doughnut in the other, it was not uncommon for someone
to snap his suspenders. He had gotten so angry, that he decided the next person that
snapped his suspenders would be the recipient of his punch. Eric showed no remorse and
I was stuck with a problem. Obviously, Bill did not want to work with him anymore and I
was uncomfortable with having Eric around. Eric was the savviest guy on the tropo
system and he had a lot of his software on his computer at home. Steve Eymann decided
to call him to get the software returned to the company. Eric told Steve, “ My fingers are
on Control, Alt. Delete, and if you don't quit bothering me I will push the keys and delete
all the software.” Eric finally came to his senses and returned the software. I finally had
to fire him anyway. I claimed that “Any employee who could not deck a female in one
punch could not work for me.” A joke of course.
Unisys in Salt Lake City wanted to bid on the Air Force TRC-170 troposcatter
radio manufacturing program. It was worth about $100 million, but they had no
credibility in the area of troposcatter; so they contacted us and they also contacted Peter
Monsen to help in the proposal analysis. The original TRC-170 had been built by
Raytheon in the past; Raytheon is in the backyard of Hanscomb Field and has a lot of
long standing relationships with the Air Force personnel who would be doing the
procuring. In order to win, Unisys would have to have a qualified manufacturing facility
which they had, had to have a lower price than Raytheon, and had to demonstrate the
understanding of troposcatter technology. There could be no mistakes if they were to take
this job away from Raytheon, and the only place that Unisys could err was in the area of
troposcatter where they had no credibility. Raytheon told us we were a team member, not
a supplier. A team member usually has a teaming agreement outlining the role of each
team member and is written by the prime bidder, in this case, Unisys.
Big company employees frequently are arrogant when dealing with smaller
companies. I think there was a lot of arrogance and resentment because; the success of
the Unisys procurement was dependent on a little company with only about four million
of the hundred million dollars, at any rate, Unisys dragged their feet in preparing the
teaming agreement. Each time that Unisys would ask for some part of the proposal or a
write-up to be used in the proposal, such as the analysis of the digital modem (a critical
part), I would write a cover letter that stated: “EFData is providing this (whatever they
asked for) for no charge because of our understanding that we are a team member of
Unisys. If this is not correct, please let us know immediately.” This happened three times.
Each time our letter was sent to the Unisys legal department and we never received a
response (also arrogance I guess).
One day we got a call from Unisys that they had won the contract and they
wanted to come to Arizona to finalize their contract with us. The next day they showed
up after lunch with six Unisysians (or whatever they are called). Typical big company,
the people who showed up were the purchasing people who had nothing to do with
winning the job. The Unisysians occupied our conference room and asked to be left
alone. At four o’clock they stopped by my office and said they had put their suggested
price for the job on the blackboard for us to study. They would be back in the morning. I
looked in the conference room and saw that they wanted to drop our part of the contract
from around $3.8 million to $3.1 million.
The next morning, they went directly to the conference room, and said they were
ready to negotiate. I sent the President, Brian Duggan, into the conference room to tell
them “Mr. Fitting wants you to please leave the building and for you to go back to Salt
Lake City, EFData is a team member and there is no negotiation.” The Unisysians were
in shock! They had a meeting immediately upon returning to Salt Lake and kept saying
that “They couldn't believe that they were told to go home. And how Unisys could be
treated like that! Etc., Etc” I assume they talked to their legal department who probably
said “Oops!” Shortly afterward, I received a call from Del Freeze, the overall project
manager. “Would I have dinner with him in Phoenix the next evening?” The next
evening, at dinner, he explained that they had to drop their price by about 10 percent, and
that included our part. My argument was that we were team members, and they were
obligated to ask us to agree. Time for The First Rule Of Negotiation, Never give anything
without getting something in return. I told him that we would drop the price $150
thousand, but that I wanted Unisys to guarantee the prices of certain parts that we
couldn't get firm pricing on. There was around $500 thousand in parts risk to us that Del
didn't know, but he knew the parts-risk-price would never show up as a number anywhere
to embarrass him and agreed to the deal.
Acquisitions for me were the most exciting transactions I had ever made,
Particularly acquisitions of companies that were failing. Since I liked to fix things, an
acquisition of a failing company represented the ultimate challenge. I had made one
acquisition of a small company in Phoenix (MSE) that was being managed by Bob
McCollum; the acquisition had met with moderate success. McCollum was co-founder
and vice president of Microwave Systems Engineering, and later in the book you will see
that Bob will become a major player in the satellite business. In doing this acquisition, I
had learned some lessons. One of the most important lessons was to get involved earlier
and more deeply. One way to acquire a company is to only buy the assets which include
the technology and trade secrets (called intellectual property by the lawyers), equipment,
and inventory. When you engage in an asset purchase, you do not get the liabilities such
as payables (moneys owed), pensions, and law suits or employee obligations. The way it
is done in Arizona and is similar in other states is as follows: The owners of the company
agree to sell the assets for a price (in this case it was around one million dollars). The
creditors are then sent a notice of the asset purchase giving ten days to respond. If the
creditors do not respond within ten days, they have lost their rights. In this case, the
creditors were owed around $2.5 million. Most of the companies that were owed money
were large companies and either can't respond in ten days because it takes too long for the
notice to get to their legal department, or they don't bother, perhaps because they don't
understand the notice. In any case, of the twenty companies that were sent notices, only a
single small company responded. After a negotiation with the small company, they
dropped their objection and the deal closed at the end of the ten days. After more than
thirty days, we had a few of the creditors send demand letters or try to file suit, but since
MSE no longer existed, we would forward the info to the State Corporation Commission.
The First Rule Of Profit Making; Every 1 percent of profit is worth fighting for.
Over the years I have seen the best negotiators, when you think negotiations were
complete, ask for one more percent, and if you are tired or have lost your focus, will often
give it away without anything in return. The effect is significant, if a $100 million a year
company can get one percent more profit, that’s $1 million dollars more profit. The worst
examples I have experience with, are satellite and other system companies where the one
percent increase would be dramatic. One satellite company I knew would usually have a
profit of $2 million on sales of $100 million every year. A 1 percent increase in profit on
every job would increase their profit from $2 million to $3 million, a 50 percent increase!
Fear of rejection or fear of losing the order frequently suppresses the profitability. Many
salesmen are too timid to try and their managers don’t understand The First Rule Of
Profit Making.
Companies fail of course for a number of reasons, MSE was struggling because
of a lack of capital which also resulted in under-pricing their products (usually because of
a fear of losing sales). MSE had been selling a particular product to Scientific Atlanta
(SA) for $215, the cost was $185. MSE was afraid of increasing the price because SA had
threatened to go to some other supplier. MSE did not believe that they could afford to
lose this customer and continued to sell at a too low a price. After the asset purchase and
the fear of losing the order had abated, Bob and I went to SA and told them that the price
we were charging did not allow us to make an honest profit. We said that the price would
go up to $285 in ninety days, allowing them time to find another supplier. Three years
later. SA was still buying the product for $285. The First Rule Of Profit Making at work
again. Companies under financial pressure often make decisions that are hard to
understand and frequently worsen the problem. For example, MSE had spent cash that
they couldn't afford to purchase a time management system (A modern time clock) so
they could try to produce the SA product cheaper.
On more than one occasion, I had given a sales person the authority to negotiate,
usually with dismal results. I told one sales person who was talking to the customer,
trying to sell him a $100 thousand order, that my minimum price was $90 thousand, and I
would split every dollar with him that he could negotiate above $90 thousand. The sales
person almost immediately drops the price to $90 thousand because the commission is
not as important as the rejection or the fear of losing the job.
I have always thought that successful car dealers are the epitome of ideal
negotiators. They understand and apply both The First Rule of Profit Making, and The
First Rule of Negotiation. Anyone who has purchased a car can probably remember that
the final negotiations get down to a few dollars that most of us give up. The sales guy you
first see on the lot doesn’t understand the first laws, and is not permitted to negotiate.
Satellite Transmission Systems (STS) was a Long Island company run by Dave
Hershberg, and they held a golf tournament for the key people in the industry every year.
Hershberg was easy prey for me because he was hyper, always talking, and always in a
hurry. On my way to the airport to fly to Long Island for the Golf Tournament, I
happened to drive by a magic-trick store and I decided to drop in and buy some rubber
dog-poop for a trick I was planning to play on Hershberg. I threw the dog-poop into my
briefcase. In those days when you got on an airplane, you did not have seat assignments
and the professional travelers would take either window or aisle seats or hope that no one
sat in the middle seats. When I got on the plane I took an aisle seat, another business man
was in the window seat and the middle seat was empty. The passenger in the window seat
turned to me and said “I hope no one takes this middle seat.” I reached into my briefcase
and pulled out the rubber dog-poop and placed it on the middle seat. I said to him," I
think this rubber dog-poop will do the trick." He did a double take: "Do you always carry
rubber dog-poop"." No," said I," I usually carry plastic vomit! It's much more effective."
A lawyer friend of mine by the name of B. K. Boothe told me that he always sat
in an aisle seat and carried a piece of dental floss that he would hang out of his mouth.
And when passengers who were looking for a seat saw this dental floss, they usually
moved on. They did not want to sit in the middle seat next to him. BK told me that one
time a woman sat next to him and asked why he had dental floss hanging out of his
mouth. He told her that he had a stomach disorder, that on the end of the dental floss was
a piece of meat, and that he had to pull it up every hour to see if it was digesting. “Don't
worry”, he told her, “I'll go to the lavatory to do the inspection.”
At the STS golf banquet, I had arranged with the waitress to put the rubber dogpoop on a plate along with mashed potatoes and peas. She also added a bit of gravy; her
idea, a nice touch. The plate was served with one of those silver domes over it to
Hershberg, who was talking as usual, and when the dome was pulled off and he saw what
was on the plate, he stopped talking in mid-sentence. The waitress never returned my
rubber dog-poop and I think she probably used it a number of more times after that.
At the end of the dinner, I had prepared a stand-up comedy routine that was pretty
raunchy, I thought this audience would appreciate the off color humor, and they laughed
and roared at every joke. I don't remember most of what I said, except for a crack about
Hershberg, Hershberg was a Jew, and I said he had not been circumcised until he was
thirty-five years old because they had to wait until the invention of microsurgery. Laugh,
clap, roar!
I was asked to return the following year; this time I had prepared another set of
raunchy jokes. However, for some reason, I was asked to entertain directly after the golf,
during the cocktails and before dinner. It was a disaster, not only did the audience not
laugh, many were offended by the language and jokes, the same language used the year
before. The First Rule of Stand Up Comedy (For Me): Never entertain a sober audience.
This is just a fun first rule with no financial benefit.
One of the worries of practical jokes is the element of potential retribution. I don't
remember what the joke (or probably jokes) was that I played on Dave Koblinski, but the
one he played on me was great! Dave had worked for me at Comtech Data and came to
EFData shortly after EFData was founded. In a lot of ways, Dave was more like a son
than an employee. Dave knew that I hated cricket sounds, I had recently moved into a
new house that was infested with those noisy devils and it took months to get rid of them
all. He made an electronic circuit that made a cricket sound and hid it in a hollowed out
book in my bookcase. After about three days, it was driving me crazy. I called the janitor/
maintenance man and asked him to go to the store and buy a can of Raid. I found out later
that most of the executives were in on the joke.
I sprayed the back of the bookcase in the afternoon and by the next morning the
cricket sound was gone. I thought I killed the cricket, but of course Dave had only
removed the electronic cricket. Three or four days later, my cricket was back, but this
time was in the ceiling. After a couple of days of the cricket, I asked the Janitor to get a
ladder so I could spray the cricket in the ceiling. I think at that point, Dave and his
cohorts were worried they might be overdoing the joke and came into my office and
confessed. I thought it was a great practical joke and they could have extended it for
another week or so. Of course, Dave was also worried about potential retribution.
We lost a job to Comtech Data before they were sold to Fairchild for a Shanghai
Chinese customer. Part of the contract included training at Comtech Data in Scottsdale;
EFData was only a mile away. Customers from China and other foreign places expect to
be taken care of in the US because they don't usually have very much money. Typically
we would pick up meal costs, transportation, and weekend excursions. Around noon, on
Friday our representative in China called and said the Chinese customers at Comtech
Data had called him and told him they were very unhappy because they were having to
pay for meals that they couldn't afford and they wanted to visit the Grand Canyon the
next weekend and Comtech Data had arranged for a limo that they would have to pay for.
I told him to call the Chinese and tell them there would be a white stretch Limo at
Comtech Data's door at three o’clock to pick them up and we would arrange to take them
to the Grand Canyon at no cost. At three o’clock, the Chinese left Comtech Data and
climbed into our limo; we brought them to our facility and had them for the whole
weekend, a great sales opportunity. To get that much time with the customer would take
two days of travel time and ten times the cost of entertaining them in Arizona. The
money we spent was well worth it, and the irritation we caused the competitor was an
added bonus. When the Chinese returned to Comtech Data Monday morning, Milt read
them the riot act and called them unprofessional! Another call and we picked them up
again in the limo. Livid is not a strong enough word to describe the Comtech Data execs,
but they finally realized how much damage they were doing to themselves. Of course,
this is the communications industry, and did we communicate! Within a week the
industry knew about the way the Chinese were treated.
Jerry Waylan called me one day and asked if we were interested in joining he and
Karen on a barge trip down the Loire Valley in France for his 50th birthday. At that time,
Jerry was running GTE Spacenet and was one of our customers. So of course I said yes,
we would like to go with him for his fiftieth birthday. Jerry's wife, Karen, liked the finer
things in life. I don't know that I would call her prissy, but she certainly liked things neat
and tidy and clean and new and expensive. Lorraine and I flew to Paris to meet them.
Jerry had prearranged hotel reservations at the Bristol Hotel in Paris. The three best
hotels in Paris are the George Cinc, the Bristol and the De Creon. At that time, 1992, the
Bristol cost over $700 a night, though I would say one thing about the Bristol. It has the
most fantastic shower I've ever been in. It was the size of my garage with showers on
three walls.
That night we were entertained by the French Company Arianespace. Arianespace
has a spaceport in French Guiana, on the east coast of South America nearly on the
equator from which they launch rockets to put satellites into orbit for companies around
the world. As an aside for engineers, the reason to launch from French Guiana is that it is
on the equator and requires less fuel to put a satellite into orbit. It takes about two years
and $120 million to build a communications satellite. Arianespace had launched dummy
satellites to try out their rockets and were looking for the first real satellite launch. They
owed Jerry big time because Jerry allowed them to launch his GTE satellite on their very
first rocket launch. You can imagine the difficulty in convincing someone to allow them,
on your very first rocket, to launch your hundred-plus million dollar satellite. So,
repeating my self, they owed Jerry big time. They took us to the most exclusive
restaurant in Paris, and at the end of the evening, they gave Jerry a 1942 bottle of cognac,
the year of Jerry's birth.
We were picked up the next morning in a limousine to take us to the starting point
in the Loire Valley for the barge. The barge was a twenty passenger boat that went about
three miles an hour down the canals in the Loire Valley. It was a very nice trip with one
exception. Towards the end of the week, Karen started complaining about getting bites
during the middle of the night and we believe it was bedbugs. Imagine that, the most
prissy person on our trip is the one getting bitten by bedbugs. Do you think the bedbugs
knew that? It's not like this was some cheap barge trip either the travel agent for the trip
was a well-known British travel office Abercrombie and Kent.
After we left the barge we rented a car to travel through central France. The first
night we had no reservations, and ended up in a small town that had only one hotel. The
hotel only had two rooms available. One room had the bathroom down the hall the other
room had the bath in the room. We chose to take the room with the bath down the hall,
leaving Jerry and Karen with the upgraded room. The next night was in Chamborg, and
the following night was in Lyon. We ended up back in Paris, dropped the car off and
headed off once more to one of the top hotels in Paris this time, the Hotel De Creon.
Karen and Jerry had been to Paris many times, but they didn’t go to the places that
Lorraine and I like. The next two days were spent showing Karen and Jerry around Paris
to the places that we like to go to. Places that they had never been. For example, they had
never ridden on the Metro. They had never been up the Eiffel Tower. We took them to
the top of Notre Dame, and we went to the artist colony up behind the Sacré Coeur. I
thought the whole trip was great; of course I wasn’t the one who was bitten by bed bugs.
After three and a half years, California Microwave made an early buy-out offer
that had a large down payment with additional payments over the next three years that
were based on profitability. Steve and I had retained around 60 percent equity, and the
remaining had been distributed to the engineers and executives as incentives. Not too bad
considering we had made less than $100 thousand investment in the company. I went to
Sunnyvale to sign the papers and pick up the money. I arrived home at about eight
o’clock and called Steve and Debbie to come to my house to celebrate. The day before, I
had gone to the bank and picked up one thousand dollars in one dollar bills, so when
Steve and Debbie showed up, I was sitting in a pile of money and throwing it into the air.
Lorraine took a picture and I used that photo for years when I was asked to make a
presentation as a successful entrepreneur. I would start the speech by saying, here is the
objective of entrepreneurship. Steve and I signed a five year no-compete agreement.
Steve and I taped the dollar bills end-to-end to use to decorate the factory
lunchroom the next day. The employees did not know that we sold the company and were
very curious why we were decorating with the dollar bills. At two o’clock we held a
meeting to explain what had happened. We also handed out checks from five hundred
dollars to over four thousand dollars to all the non-share holders based on their time of
service and salary. There were a lot of happy faces that day, including Steve's and mine.
What a kick it was to hand out money, particularly the factory employees who, in many
cases, never had so much money at one time. I believe that about twelve of our
executives had become millionaires working for us.
After being acquired by California Microwave, we would go to company outings
at Quail Lodge near Carmel, California. At that time the subsidiaries included EFData,
STS managed by Dave Hershberg, and three or four others. Each subsidiary would bring
two to four people, so including the staff people, there were around twenty-five attendees.
Each division would make a presentation with a forecast for the coming year. This one
particular year, the outing coincided with the NIT Basketball Tournament. Dave
Hershberg had booked a cottage and fifteen to twenty of the attendees were cramped
together in Hershberg's cottage watching the game. Hershberg had previously ordered
pizza, but it had not yet arrived. At the game halftime most of us started harassing
Hershberg about his incompetence in ordering pizza, did he give the right address, did he
use a company credit card, etc. Hershberg, who I mentioned is pretty hyper, happened to
be standing next to the bathroom door, so he reached for the closest phone that happened
to be the hair dryer. He picked it up and expecting to be talking to an operator, started
talking into the hair dryer. All of us found it very funny except for the three or four guys
who worked for him, making it even funnier for the rest of us. The following week, I
bought a hair dryer and glued an ear piece, a microphone, and a dial on it. It had a
telephone wire and was labeled “HAIRPHONE”. Sent by FedEx for the following day
delivery, I never heard a sound from him, ever.
When we acquired MSC by purchasing the assets, we hired all the employees.
Carolyn McCorkle was one of the office staff. She was single, though dating one of the
technicians, and had at one time been married to a Phoenix Physician. I believe they had
two sons. One day Carolyn came to work and told her boss Sandy Cassel, the HR
manager, that she had cancer and would be missing some work in the future, but she
would attempt to work as much as she could while she was taking chemotherapy. She
also said that fortunately, Dr. McCorkle's insurance would cover the cancer treatment. A
week or two later, Carolyn came to work with a bandanna on her head where her hair had
fallen out as a result of the chemotherapy. As time went on, Carolyn would bravely come
to work, even though she was getting treatment for their cancer. After a few months,
Carolyn had run out of sick time and vacation time, so a number of the employees
donated their own sick and vacation time to help her out. About every two weeks, our
CFO at the time , Steve Atkins, would drive to Carolyn's home, then drive her to the
hospital for chemotherapy and go back two hours later and take her home. Sandy and Jill
set up a support network of the secretaries and would arrange it so that Carolyn would get
a card and a phone call virtually every day. Carolyn on a number of occasions late at
night called Sandy and told her she thought this could be the last day of her life. Would
she come over hold her hand for a while and of course Sandy would do that.
Carolyn was a great sports fan of football and would arrange to go to the Arizona
Cardinals football games in her wheelchair. There was an area right on the field for
disabled persons where she could sit in her wheelchair to watch the game. After more
than a year of treatment for her cancer, she seemed to be declining. Her face was white.
Her hair seemed to be falling out more and more and she needed more attention from
Sandy and Jill. Carolyn told Sandy one day that before she died she would like to meet
Joe Montana, the quarterback for the Kansas City Chiefs football team. Sandy called the
Arizona Cardinals and they arranged for Carolyn to fly to Kansas City and meet Joe
Montana. We bought her a camera so she could record the meeting with Joe.
Finally after about a year and a half, when it seemed things could not get any
worse for Carolyn, she called Sandy from home, and told her that her son had been
accidentally shot in a hunting accident in Ohio, and he was on life support system. A few
days later, Carolyn called again and told Sandy that the son was brain-dead, and that they
were removing the life-support system. Of course, we were planning to send flowers to
the funeral from the company. However, Sandy was having trouble finding out where in
Ohio the funeral was to be held. So Sandy decided to call Dr. McCorkle's receptionist,
and asked where the funeral was to be held so we could send flowers from the company.
The receptionist told Sandy to wait a minute, and then Dr. McCorkle came on the line
Sandy said once again that she wanted to find out where the funeral was for the son. Dr.
McCorkle told her his son was in his office right there, he had not been shot and that he
was alive and well and that he knew nothing about Carolyn McCorkle having cancer. As
it turned out it was all a big lie that went on for almost two years. She had conned us all
with the white face; it was probably talcum, the bandanna, and the stories.
Garry Kline, who was the controller at the time, decided to call the Phoenix Police
Department and see what he could find out about Carolyn. He talked to a person at the
Phoenix Police Department and asked him if you could tell us if someone had a police
record or not. The police officer said, “I can't tell you if they have a record, but I can tell
you if they do not have a record, what's the name of the individual?” Garry said “Carolyn
McCorkle”, at which point the officer said to him, “You mean The Carolyn McCorkle?”
The police officer said to Garry, “Why don't you call this phone number that I'll give you
and the person at that phone number will be able to answer your questions.” Garry called
the phone number and it turned out to be the Florence State Prison of Arizona. When
Garry asked about Carolyn McCorkle, the officer at the prison said, “Oh yeah, I know
Carolyn McCorkle, she was a guest of ours for two years!” As it turned out Carolyn had
been convicted of embezzling from her sons’ trust funds as well as writing bad checks for
which she was convicted and sent to prison. Both Sandy and Jill were extremely upset
because of all the time and emotion that they had put in to helping Carolyn, just to find
out that this was a big giant hoax.
As time goes on, and we work together a lot, we learn to respect the other's
opinions, and tolerate their foibles, particularly if we like them. Garry was a decorated
ex-Marine (he always said “Once a Marine, always a Marine.”), of the Vietnam era, three
purple hearts, the bronze star, hated Jane Fonda. After he left the Marine Corp, he had
been a biker for awhile, when he met his second wife, Rita. I asked him how that
happened, he said. “I was in a biker bar and saw Rita. I walked up to her and asked her if
she would like a ride on a shiny Harley, and when she said, “Yes!”, I told her to get her
ass outside and clean it.” With Garry, that was probably a little exaggerated.
Garry and Rita had a son BJ, who, at around twelve years old contracted
leukemia. Garry really loved the kid, very smart like his dad, and tons of personality. I
always thought BJ was a lot like the kid in the Grisham movie “The Client”. When it
looked like his last chance was a marrow transplant, I twisted every vendor's arm that I
could to be tested, but we never found a suitable match, and BJ died.
A few years later during the Carolyn fiasco, Rita died. At the funeral at the
church, Carolyn showed up in her wheel chair looking pale and white (powder I
suppose). There may have been dry eyes before that, I doubt there were afterward. Most
of us were thinking there will be another funeral soon.
As an example of Garry's black humor that I loved; the day after Carolyn was
found out, and we found out that her son had not died, Sandy and Jill (who had put the
most effort into the Carolyn event over the past almost two years), were talking in the
hallway as Garry came past them. Garry stopped and with a hangdog expression said to
Sandy, “Sandy, I have a confession to make,” they stopped talking and looked at Garry,
who after a pause said,” Rita is still alive,” and after awhile said “so is BJ who is living in
Colorado.” They both started hitting him with their fists and calling him names complete
with cursing. Looking back, Garry's joke which appeared to be in poor taste, may have
actually helped them deal with the Carolyn's betrayal. For the sake of humor, Garry never
spared any one, any race, any religion, any sex, yet there was never any complaints, I'm
sure because he was well liked.
I had retired my first time shortly before Carolyn had been found out, and I don't
know why, but she was never prosecuted. About a year later, I read an article in the
newspaper about a cancer society convention coming to Phoenix for five-year cancer
survivors. As soon as I read the article, I could see that the God of Pranks was at work
again and had sent me a message. I cut out the article and scanned it into my computer.
Then I changed the keynote speaker from whoever it was to Carolyn McCorkle. After
modifying the article, I printed it and faxed it to Sandy. I was not in the office when
Sandy received the fax but I understand that she was extremely furious and went around
the office ranting. She could not understand how an organization like The American
Cancer Society could let somebody like Carolyn McCorkle be the keynote speaker. It
took a while, but she was finally convinced that it had to be a practical joke.
About a year later, Marla came in my office to tell me that she had seen Carolyn
at some restaurant in Tempe, which prompted to play another practical joke on Sandy. I
wrote a letter to Sandy from Carolyn that said;
“Dear Sandy, I wanted to tell you how sorry I am for my behavior and for what I
did to you in the past. Please pass on to everyone how much I regret my causing any pain.
I have been in counseling since I left EFData, and I have learned through counseling, that
my behavior may have stemmed from what my father did to me when I was a child. All
that is behind me now, I have turned over a new leaf. I really want to beg your
forgiveness. I also want you to know that I have had a baby girl since I saw you last, and
that I named her after you, Sandy McCorkle.
Sandy is a beautiful little girl in all aspects, except for one problem. She has a
brain tumor and needs to have brain surgery that I can’t afford, and I was hoping you and
Jill would make a contribution towards her surgery so Sandy can live a normal life.
Thank you very much, Carolyn.”
Once again, when Sandy received the letter, she took it around the office in a rage
talking to people about how that they should have prosecuted Carolyn and once again,
people in the office convinced Sandy that it was another practical joke.
The Carolyn McCorkle story was not over. Six months later I received a letter in
the mail from Carolyn McCorkle with a photograph of her baby boy that she named Bob
McCorkle, after me. Clearly someone had taken a photograph of a baby and photo
shopped my nose on it which made it look a lot like me. This time, it was I who went
around the office showing the letter and photo, not ranting, but proud of the effort.
Our first EFData building was small and had only two bathrooms, both were
unisex, both had a single commode. One day the janitor came into my office and showed
me a sound-activated tape recorder that he found behind the commode. I thought that this
was really weird, why would anyone want to record peeing sounds and grunts? I decided
to have the recorder returned to the bathroom and someone would watch to see who the
culprit was. I don't think there is any Arizona law under which we could have had him
arrested, so when we found out who it was, he was terminated and told “Your services
are no longer needed.” Funny thing, he asked “Is this about the recorder?” About two
years later, I read in the paper that he had been arrested for recording both sound and
pictures in a supermarket bathroom. He drew a female judge and she threw the book at
him, four years in prison.
Most companies have a lot of crap they hand out with their name on it, called
advertising specialties. I realized that most of the pens, rulers, and junk that I had in my
desk had been supplied by companies for advertising purposes, and I realized that I could
not name one of the companies on any of the items. Clearly, they were ineffective, a
waste of money! That’s when I devised the First Rule of Handouts, when a customer gets
your handout; he should first say “Wow!” and second want to show it to a coworker, very
tough requirements. Of course, our wine labels that I’ll describe later fit the requirement.
The nerd kit also met the requirement. It's easier to find examples of handouts that are not
imaginative, pens, desk clocks, coffee cups, and Christmas cards for example, all a waste
of marketing money. How, for example, does a Christmas holiday card help the business?
It's received at the same time as the customer receives a hundred cards from a hundred
other vendors. I suggest it would be a lot smarter and much more effective to send a
Ground-Hog Day card; it would be unusual and would attract attention. And if clever
enough, would be shown to other employees. Yet, it was difficult to get the marketing
department to stop sending Christmas cards. It is so ingrained into their behavior.
I think mailing of product material is still one of the most cost-effective sales
tools if done correctly, if not done correctly the mailings go from the mailman directly
into the waste basket. I devised what I called the “Lump Strategy”. The idea is that the
secretary or the customer would notice the lump and out of curiosity would open the
envelope to investigate. It would be even better if the lump followed the First Rule of
Handouts, and the recipient said “wow!” and went down the hall to show it to someone
else. That's the First Rule of Mailings. We used nerd kits as lumps and the tiger tails, as
well as magnifying glasses, and toys (because most our customers were males.).
EFData was making the majority of the profit for California Microwave; typically
CMI had $300 million in sales and $25 million in profit. EFData had $100 million in
sales and $25 million in profit. You could look at it as the other divisions paid for
corporate overhead. I was a shareholder and had become somewhat critical of
unnecessary corporate expenses causing some tension between the corporate staff and
me. For example, a consultant was hired on a $100 thousand contract to design a
Corporate Font. I asked questions like, “Do you really think customers notice the font?”
The directors were starting to be concerned that the goose that lays the golden
eggs could go away, so I was asked to accept a board seat. This was at a time when it was
not uncommon to have insiders on the board. The board consisted of Dave Leeson the
CEO, Gil Johnson the President, Dave Hershberg the President of STS, Art Hausman the
former CEO of Ampex, Tom Seggie the former CEO of Varian, a Professor from
Stanford, and me. This move probably caused more problems than it solved because I
was another dissenting voice when it came to spending money unnecessarily and might
have ultimately led to Dave Leeson stepping down as CEO. A search was started for a
new CEO. The board considered three candidates, Hershberg, Phil Otto, and Me. The
board also hired a psychiatrist to interview all of us. The psychiatrist came to Phoenix,
spent the day with me, and had dinner with Lorraine and me. Phil Otto was selected, I'm
sure the psychiatrist did not like what he saw in me. Too much of a maverick.
The new CEO was Phil Otto, a nice guy with a Harvard MBA. But, Phil decided
that he didn't want entrepreneurs in the company and started making changes that he
knew I would not agree with. In a couple of weeks I gave him my notice. I was the guy
responsible for most the profits, so the board was very upset with Phil, and I found out
later that they had given him marching orders when they selected him as CEO; “no major
changes until he proved himself.” After I resigned, Phil was told-“fix the problem and
keep Fitting.” Another opportunity for the First Rule of Negotiation, I agreed to stay, Phil
agreed to not make certain changes, and I received a higher bonus. Of course, I knew that
some day Phil would get even if he could. But in companies, you live for the moment.
I hired an ex-Motorola guy by the name of Arnie Sabel, on a two year contract
and after six Months, realized I had made a mistake; he fit into a big company more than
a small company. He brought politics with him and spent a lot of time being critical of
the management. So, when Steve and I walked out one day, Arnie didn't understand that
we were taking a negotiating position and virtually was doing cartwheels in the hallway.
About five days later, after resolving a major issue, we returned, went to the conference
room, called the staff together, and announced “We are back!” When I looked at Arnie, I
understood the definition of “crestfallen”. Later that day, I called Arnie into my office,
terminated his contract, and paid him off. Not one of my rules, but if it were: The First
Rule Of Disloyalty: Hide it or pay the consequences.
Four years after selling the company to California Microwave, I retired. I was fed
up with not being my own boss and having to deal with the bureaucracy. For example,
Phil had hired an army of bean counters, so when we would provide a five year financial
plan, the bean counters would ask irrational questions, “Why is the margin (for a product
that we had not finished designing) in the fourth year 3 percent higher than in the fifth
year?”, and stuff like that. We were still making most of the profit for the company along
with Paul Jacobs of Microwave Data Systems, another entrepreneur and Phil was still
trying to get rid of the entrepreneurs and founders. You win Phil, I quit! Two years after I
left, Phil was replaced by the board. After I left EFData in January, Steve became the
president. About six months later, Steve called me and said, “I can’t take it any more, if
you promise that we will do something together, I'll quit tomorrow.” I said “Do it!”
After he left, we set up a new company and started thinking about what business
we wanted to pursue.
CHAPTER 9
A start-up in the satellite business was not possible for Steve and me, because we
were told by California Microwave that they would sue us. They called it killing the baby
in the highchair! And frankly, it scared me; I didn't want Matt Moore coming after me.
Once again, an opportunity appeared like magic. I had heard that Radyne Corporation in
New York, another competitor of EFData, had gone bankrupt and was being taken over
by Engineering Technology Services (ETS) in Melbourne, Florida. ETS was run by an
old customer of mine, Tony Grimes. I knew Tony had no manufacturing experience, so I
called to convince him that Steve and I could take over Radyne and make it successful.
We had the design and marketing expertise and could attract talented engineers from
EFData and Motorola if we moved it to Phoenix. By taking over an existing company, we
would be reducing the law suit threat from CMI; usually the law suits would be about the
employees taking intellectual property when they leave, Radyne would have their own.
Steve and I were willing to take minimal salaries, with the expectation of sharing in the
success through stock options.
I moved into the Radyne facility on Long Island in February 1995 and
immediately could see some of the reasons why they went bankrupt. The products were
pretty good, the profit margin on the satellite modems was good, but the management
was atrociously incompetent. A couple of examples; a year earlier Radyne raised over
one million dollars from investors and used it to pay executive's bonuses instead of for
product design and manufacturing processes improvements. Another reason was the
unfair culture that dis-incentivized most the employees. The executives would come in to
the office somewhere between nine o’clock and eleven o’clock. But a time clock was
installed in the factory and anyone else that was a few minutes late had their pay docked.
Neither of these “brilliant” ideas helped morale.
Another unbelievable Radyne story, there were five computers and five printers in
the sales and management offices, but only one printer cartridge, so when someone
wanted to print a document, they had to go find the cartridge, turn off the printer, remove
the cartridge, and put it in the printer where they wanted to print. It was really stupid and
greedy; many of the executives had salaries over $100 thousand and could have bought
some fifty dollar cartridges.
Over half the company sales were international, and quotes and purchase orders
were sent by fax. Radyne had an old fax machine that had to be fed by hand, and if the
receiving fax was busy, you had to go back to the machine and try again. With the time
difference for foreign countries, sales people had to stand by the fax and keep trying,
sometimes at odd hours. The first thing I did was to buy a new modern fax machine and
four more print cartridges, and then I removed the time clock. (The time-clock actually
turned up later bolted to the wall in my office after we moved to Phoenix.) The cost for
the cartridges and the fax was less than a thousand dollars. The profit margin on a single
satellite modem was five thousand dollars.
A couple of months later I moved the
company to Phoenix with four employees.
The Radyne products, although working quite well in most instances, had a
nagging problem for years of being sensitive to vibration. If for example, someone would
tap on the front of the products with their finger or if someone would bump it, data errors
would occur. The Radyne engineers, not having been able to solve the problem, had
shock mounted the sensitive electronic circuits on foam rubber which reduced, but didn't
completely solve, the problem. After moving the people and the product responsibility to
Phoenix, Steve Eymann took a look at the design, and within a few hours had made a
couple of design changes solving the many years-old problem; no more sensitivity to
vibration! The guy's a genius!
Immediately after we moved Radyne to Phoenix, I ran an ad in the newspaper and
we received at least sixty resumes and applications from EFData employees and we
ultimately ended up hiring more than forty.
After Steve and I left EFData, Don Anderson was made the new president (known
as Teflon Don I was told because if his lack of interaction with the employees). Don's
management style also helped our recruiting efforts by passively encouraging many
employees to move in our direction. After we had hired many of the best engineering and
sales people, the remaining EFData executives became very paranoid, making them
easier prey for my humor. For example, EFData issued new employee badges and it was
mandatory for employees to wear them. The female employees hated them because they
were attached to their blouses by clips that caused a lot of wrinkles. The EFData
management bought lanyards for the employees to hang the badges around their necks
instead of clipping to their blouses. The executives got free lanyards while the other
employees were charged five dollars each for them. Having heard about this “terrible
injustice” to the EFData employees, I ordered two hundred lanyards at one dollar apiece
with the Radyne name and phone number and had someone drop them in the EFData
employee lunchroom. This caused quite a stir, with the EFData employees now wearing
Radyne lanyards and resulted in high level executive meetings. Our objective was to have
fun and have them waste time.
Of course after a few days, (it should have taken a few minutes) the EFData
management told their employees they would exchange the Radyne lanyards with
EFData lanyards. Then the people, who paid for the EFData lanyards before the free
Radyne ones, wanted their five dollars back which took even more meetings. Obviously,
those who received their five dollars back ended up with free EFData lanyards, so those
who did not get a Radyne lanyard to trade wanted their free EFData lanyard. Then the
ones who never did get a Radyne lanyard to trade wanted a free EFData lanyard. More
meetings and lots of fun.. Total cost to Radyne was two hundred dollars and we received
more resumes.
After we had hired a large number of the EFData employees, the president of
EFData had our phone number blocked from their phone system so the employees could
not call us. It didn’t make a lot of sense since had a public pay phone in their lobby. I had
our execs carry quarters around so when we saw an EFData employee at lunch (our
buildings were only a mile apart) or at a trade-show, we would say “Call me some time.”
and give them a quarter. Blocking our phone number was counter-productive, there were
mutual friends at both companies and the result was more resumes.
The vending machine guy who filled the machines also serviced the EFData
vending machines. One time I gave him fifty dollars to drop Radyne Employment
Application Forms in the lunch room at EFData. This caused a stir I was told because
they were convinced that one of their employees was disloyal; more meetings. Lee Krise
was a very creative Tech/Jr. Engineer and came up with another brilliant idea to devil
them. We would buy a microphone listening bug and have it planted in their conference
room where it would be found with a dead battery in it. It would make them wonder how
long it was operating before the battery died. But I think by the time that idea surfaced,
we had tired with playing tricks on them because it was just too easy.
Singapore Technologies (ST), a multibillion dollar company in Singapore, had
been talking to Tony Grimes about buying ETS and Radyne. About a year and a half after
we moved to Phoenix, the sale was consummated with ST owning 91 percent of Radyne.
Steve and I had a significant amount of Radyne stock options.
Singapore Technologies had three directors on the board; Lim Ming Seong, Lee
Yip Loi, and Chan Wee Piak. All the Singaporeans that I knew were smart and respectful
and only wanted what was best for the company. Along with the Singaporeans, we had
Jerry Waylan, Dennis Elliot, and me. I had met Dennis when I was on the board of
Satellite Technology Management, Inc., another public company. ST provided other
benefits beside money, corporate advice and more importantly they could provide other
sources of financing. Drawing on their Chinese culture, they also brought a Feng Shui
master to study the directions that our buildings and offices were facing, and to
recommend changes that would improve our chance of success.
CHAPTER 10
The Comstream acquisition was the most interesting of my career. Comstream
was a competitor owned by Spar Aerospace of Canada and had been losing money for
years, I guess about a million dollars a month. The company had cutting edge technology,
but couldn't seem to make money. Among other reasons, they always wanted to design or
invent better products rather than sell their current products. Spar had become tired of the
losses and first divested the chip design part of the company. The remaining part, about
seventy-five million dollars in annual sales, was put up for sale. At the time we looked at
it, our impression was that it would be worth around eighty million dollars. The company
had forecasts that projected profitability and growth and based on the forecasts were
building two new buildings. One was one hundred twenty thousand square feet and the
other sixty thousand square feet. After spending a week doing due diligence, our team
decided to make the first offer at seventy million dollars. But first, I had to go to
Singapore to see Madam Ho Ching, the managing director of Singapore Technologies
and get the money.
It was an interesting trip. Madam Ho Ching had been pre-briefed by our Director
Lim Ming Seong who worked for her. Madam Ho is probably not known by most
Americans. At that time, she was the wife of the Singapore Deputy Prime Minister, Lee
Hsien Loong. Today he is the prime minister. She had earned a Masters Degree in
Electrical Engineering with honors at Stanford University. When I met her, she was the
CEO of Singapore Technologies, a six billion dollar company. Later, she would become
the CEO of Temasek, a hundred billion dollar Company. A very impressive lady.
I made a forty-five minute presentation. She asked how much, and I said I would
need eighty million dollars. Without a moment’s hesitation, she said that it would be
approved. After returning, we gave our offer to Spar, they threw us out of the bidding
because they believed the company was worth $125 million. They did not get a suitable
offer so the company was not bought. The CFO of Spar moved to San Diego to turn
Comstream around. Another 25 percent of the company was sold off for ten million
dollars, but Comstream continued to lose over five hundred thousand dollars a month.
About twenty months later, I called the CEO of Spar and said we were still
interested and could we come visit him. Lim Ming Seong and I went to his office and he
asked how much we would pay for Comstream. He was a sort of grump; perhaps because
of the losses. He had a vintage 1940 Indian Motorcycle sitting in his office, and I asked
him if the crime in Toronto was that bad. After he scowled at me, we went through a
litany of the old and the new problems caused by building unnecessary and expensive
buildings concluding that we might pay as much as twenty-eight million dollars. He said
he would be interested. We wanted to perform a new due diligence. He said the deal
would have to be kept secret and we could not go into the company because he did not
want the company to be subject to any more turmoil. He would agree to have the
management giving us a business presentation at an off-site location. The meeting took
place in Newport Beach, at the Comstream attorney's office. In addition to the Radyne
team, I invited Lee Yip Loi, Lim Ming Seong from the board of directors and Goh Boon
Seong of ST. The management presentation was so disappointing that we lowered our
offer to eighteen million dollars. Ultimately we would pay only fifteen million dollars for
the company, and included was about eight million dollars in excess, but good inventory.
A pretty good deal I thought, and SPAR was also delighted.
Once again, a trip to Singapore to see Madam Ho Ching was necessary to borrow
the money for the acquisition. This time, the circumstances were different, the Asian
currency crisis had peaked, ST wanted to invest in a new Singapore communications
system that required cash, and they had just made a costly investment to buy a disk drive
company. When I said I wanted to borrow twenty million dollars, she said, “No, I will
loan you ten million dollars, but you will have to find the rest yourself, and I want my ten
million dollars back!” However, ST made a call to Bank of America, the bank they did
billions of dollars in business with, and asked them to give Radyne a credit line of ten
million dollars. The combination gave us more than enough money to complete the
acquisition.
While waiting for the Hart-Scott-Rodino filing and the national security filing to
be approved, the national security review of foreign acquisitions of U.S. businesses is
conducted by the Committee on Foreign Investment in the United States (CFIUS), Spar
allowed me to occupy an office at Comstream so I could do some planning and move fast
upon closing. During the month that I sat there, I could begin to understand the
Comstream problems. For starters, the company culture encouraged spending, they had
just occupied the 120 thousand square foot building with 140 employees. The new
building had nineteen conference rooms, thirteen microwave/vending machine service
areas, a lobby that would do a Hyatt Regency proud including real $5 thousand palm
trees that had been embalmed, a sleep room (I guess you got tired walking around the
huge building), and a board room with $1 thousand cow-hide chairs just to name a few
excesses.
My office was near a mainframe computer printer. The operator during the day
would print reports and stack them on a cart about 3 feet tall. When the janitor came in on
the second shift, he would wheel the reports to the trash. No one ever read them! The 140
employees were distributed all over the building, sales in one corner, execs in another
corner, engineering in the third corner, and accounting in the fourth corner. When
meetings were necessary, you couldn't walk to adjoining offices, you had to arrange
meetings in one of the nineteen conference rooms. They had a legal department (not
needed), a contracts department (not needed), and an IT department with enough servers
(twenty-three) to launch an intercontinental ballistic missile.
On the one hand, there was out of control spending, on the other hand the decision
making was both strange and constipated. One of the products under development was a
higher frequency band (Called Ku Band) small satellite terminal used by companies’
world wide. I had gone through the status in a design review and noticed that it had been
98 percent complete for the past year and would satisfy about 90 percent of the market in
its current state. The engineering department did not want to release the product for sale
without meeting a single specification that was proving difficult. Crazy! After closing, I
reviewed the design again and approved it for manufacture. The project engineer for the
product left the company shortly thereafter because of my decision, and we sold hundreds
of the product without anymore changes.
The sales commission structure was so screwed up that some sales people could
have stayed in bed and would have received hundreds of thousands of dollars in
commissions and others, no matter how hard they worked, would have received very
little. But, I was grateful to find out all this stuff because, first it created an opportunity
and second, it was easily fixable. It was management's view, that to boost the value of the
company, the monthly sales had to increase. In order for the monthly sales to increase,
they had to be ready to ship each month. That meant they had to build product to
inventory, and finally the sales department was called upon to make outrageous forecasts
to justify the inventory. The result was an excess of inventory, again an opportunity.
There were only about three hundred customers in the world at that time, so the
sales model of direct sales was the right thing to do. Apparently Comstream didn’t
understand the market, because they had set up both distribution and direct sales
channels. An analysis of the distribution channels showed that all the profit went to both
a middleman and to salesman commissions, there was not much left for Comstream.
Obviously there should be no company salesman commission when there is a distributor
who sells the product.
Lorraine and I moved to San Diego for six months for the turnaround. Prior to
closing, I had made the ideal organizational chart for the business. With the aid of Brian
Duggan, the VP of marketing and Jamie Palmer, Executive secretary, who knew who the
performers were better than anyone else, I filled in the chart with names. When I was
done with the chart, there were about forty people left over.
Upon closing on the acquisition, I implemented the chart; meaning that the forty
who had no place on the chart were terminated. I moved the remaining employees into
one corner of the building while the sixty thousand square foot building was being
modified for the business. Then I moved everyone into the sixty thousand square foot
building moving sales, engineering, and other executives close together. The 120
thousand square foot building was a huge burden costing about $160 thousand a month
with five years still remaining on the lease, or around a $10 million obligation. I paid
Pacific Bell a million dollars to take the lease off my hands. Then I changed the sales
commission structure to reward orders that came from sales-people's efforts. After
making these few simple changes the business turned profitable in three months. Brian
was a good administrator, and I promoted him to President of Comstream when Lorraine
and I returned to Phoenix. Comstream in San Diego was almost half of the business,
Radyne Corporation was renamed Radyne Comstream Corporation.
Chapter 11
The internet boom was going strong and it seemed that it was a good time to take
the company public. We were growing rapidly and had had a couple of profitable years.
To have a company go “Public” is a dramatic change in operations and entails a great
deal of work. First, you have to be able to qualify for the exchange that your stock will be
traded on. In our case NASDAQ which required more capital than we had or required
two years of profitability along with some other requirements. Then you find and
negotiate a deal with an Investment Banker who has fund manager clients that will buy a
majority of the stock. You must file a major document with the Securities & Exchange
Commission which is created by a corporate law firm. After all the filings are approved,
the Investment banker escorts, usually the CEO and the CFO around the country to sell
the stock. In this case I would make forty-three presentations in six cities in seven days.
The evening after the first day and six presentations, I decided that the employees would
appreciate a daily log of the activity and each night I would email the daily log. It seemed
like a good idea, but became very tiring after all day meetings and usually night time
travel. The following is a copy of the log:
“The Road to the Public Offering”,
I had never done a road show before, so I approached the trip like it would be a
great adventure. It turned out to be a great adventure. During the first flight, to
Minneapolis, I decided to keep a diary of this adventure. Since none of the employees
had ever been on a road show, most probably had no idea what a road show was all
about, an Initial Public Offering (IPO) was also new to them, and with the wonders of the
internet making it possible, I decided to email my scribbling to them whenever I could. In
reality it turned out to be a much greater idea than when I first thought about it. The
employees loved the stories the education, and the two hundred ended up buying over
one million dollars of our stock. In addition to building a company and performing well,
if you want any public market support, you have to go on the road and sell the stock.
This story started about six months before when we engaged HD Brous &
Company, the underwriters, to sell about six million dollars of our stock. At that time the
stock was selling for $3.50 and the “float”, the amount of shares that are on the market to
be traded, was only six hundred thousand shares. Any shareholders with 10 percent or
more of the stock fall under special rules and are not included in the float. We wanted to
be able to be listed on the NASDAQ stock exchange. The requirements for listing are six
million dollars in tangible net worth, a four dollar share price, and a float of five million
dollars (that amounts to about 1.2 million shares at the four dollar price). Since the stock
price was so low, we wanted to sell the minimum amount necessary to meet the
requirements with the idea to sell more stock when the price was higher. In order to make
the offering attractive, we planned to sell a unit consisting of a common share and a
warrant. The warrant is like a stock option and gives the owner an option to buy an
additional share later on at a fixed price. If the warrant were at, say $6, and later the stock
price climbed to twelve dollars, the warrant holder could still buy the stock at $6.
Debra Fiakas, our assigned representative of HD Brous, suggested we attend the
Regional Investor Bankers Association with our presentation in November. An
interesting concept for presentations, you have no more than ten minutes to tell your story
to about one hundred fifty Investment Bankers who are reading the Newspaper, typing on
their laptops, or talking on their cell phones. We seemed to be well received, and the
stock moved up to the five dollar range.
The next step was writing the prospectus that I will explain later. The offering is
known as the “deal” by the lawyers, because they make a great “deal” I suppose.
Hundreds of lawyer hours were spent writing up the prospectus. They like to argue
endlessly over meaningless and useless phrases. One that comes to mind was an
argument over using “consists of” in stead of “comprises”. Of course, they mean the
same thing. That argument probably cost two thousand dollars. Lawyers didn’t get their
bad reputation without a lot of hard work.
As most of you know, the past few months have been spent trying to get approval
from the SEC, approval from NASDAQ, and approval from about thirty states to sell
securities in those states (called Blue Sky). Last Friday we received the approvals which
have allowed us to print the prospectus (Called red herring shortened to “reds”). These
are called red herrings because a red herring is a term used to describe a false sense of
direction, not that we would ever do that. According to the dictionary, red herring comes
from the practice of dragging a herring across the path to distract the hounds.
We started the two week road show on Monday night, two days ago. We expect to
cover about eight cities and make about thirty presentations during the next two weeks.
The we, meaning Garry Kline, Debra Fiakas the HD Brous underwriter hereinafter
known as Deb, and me. The point of the road show is to present the company to
underwriters, investment bankers, brokers, and dealers so they can pre-sell the stock. The
investment banker and underwriter for the offering is HD Brous and Co. We had a
meeting in Phoenix on Monday with a representative of another underwriter, Miller,
Johnson, and Kuhn (MJK) from Minneapolis.
At a quarter to seven Monday night we headed for Minneapolis on America West,
on time for a pleasant change. We agreed that we would not check any bags considering
the tight schedule we had for the week. Besides, you don’t sweat much in cold weather.
On the flight, I was sitting with Garry and told him that the last time I was in Minneapolis
was twenty-five years ago for a convention, and I had dinner and went to the Brass Rail
Bar with Fred Kornberg, the guy who fired me from Comtech Data and is now our
competitor. When we arrived in Minneapolis, a limo was waiting to whisk us away to the
hotel. In this log, limo means a town car, not one of those stretch things with a bar and
bowling alley. A half hour later we arrived at the Double tree Hotel. In the twenty foot
walk to the hotel entrance, I found out what is meant by a minus thirty degree chill factor.
There was a lovely lady behind the counter who appeared to have a terminal case of flue
and badly in need of a personality transplant. She told us she couldn’t find our
reservations until we found a confirmation number. Then, after another fifteen minutes,
she found the reservations. With that problem solved, I went off to bed at eleven-thirty. I
found out the next day that Garry was not so lucky. He was sent off to room 1417 to find
out that his key card didn’t seem to work. After making some noise with the key card at
the door, he apparently awakened the occupant of the room who hollered at him. (I
understand the occupant was a former Green Bay Packer linebacker who was in the room
with someone who was not his wife.) Garry went back to the lovely lady at the desk to
ask for an unoccupied room. We thought it was good fortune for Garry that his key did
not work, when you considered what may have happened upon his entering the room
with the linebacker and friend. On the other hand, it would have made a better story if his
key would have worked.
Wednesday, I was up early for a seven o’clock meeting with MJK managers and
then a nine-thirty presentation with about forty brokers/dealers/investment bankers
including some in other cities through the use of video teleconferencing. We rushed out
the door to catch a cab to the airport for our flight to Chicago Midway Airport. We
thought this was the grossest and dirtiest cab we had ever seen. Grabbed a snack at the
airport and away we went on a Northwest flight. At Midway, our limo driver never
showed and we were running late, so we hopped in another cab. This cab was clearly
grosser than the one in Minneapolis, and in fact could have been one of the grossest in the
country. We had to put our bags in the trunk which we were sharing with a bag of dog
food (Cabbie Snacks?) and a VCR (probably stolen). There is no way any other cab could
be worse. We zoomed into downtown Chicago for a meeting with another broker/dealer
whose name escapes me at this moment. I made a twenty minute presentation to about
forty brokers in five different states from Albany to Denver by telephone.
We headed to the airport to find out that our flight to New York was canceled and
we had to stay overnight in Chicago. We managed to get reservations at the Marriott and
a flight reservation for the following day at noon to NY. We had to change appointments
and move the Wednesday ones into Thursday, and start earlier Thursday and stay in NY
until eight o’clock Thursday night. Lou at Bowers Travel did a great job in helping out.
Since we were stuck in Chicago, we managed to have a nice dinner and casual breakfast.
Late Wednesday morning, we took a cab to the airport. Guess what? This cab
made the last one look like it was as clean as an ambulance. There was a bulletproof
shield between the driver and us. On the shield about where your knees would touch was
this brownish red goop. This entertained us on the forty minute drive trying to figure the
source of this goop. My view was that he had used his car for deer hunting and had put
the deer he shot in the back. Garry was his usual couth self, and suggested that Deb
should taste it to give us more clues. Our flight was about thirty minutes late arriving in
La Guardia, NY. But our driver was waiting to take us to Great Neck where forty Brokers
and Dealers of HD Brous are waiting.
Wednesday evening, we made a presentation to a room full of brokers and
analysts who work for HD Brous. Analysts are a pain in the butt because they ask serious
questions for which I have to make up answers. Of course, Garry’s job is to swear that
whatever I say is the God’s truth. On occasion they ask questions that we would rather
not answer, and at that time I refer the question to Deb. Deb is a petite dark haired
beauty; some would say striking! Since most the analysts are guys, this seems to take
their mind off the questions. In fact, we have a great story to tell of our past success and
the future of satellite communications for internet connectivity to foreign countries; and
we seem to be well received.
After the meeting, we had dinner with Howard Brous, his head sales guy, and his
super analyst. It would have been a perfect dinner except the analyst (please note the first
four letters of analyst) who wanted to know more info about the company financial
information than I know. However, I finally got him to talk about basketball. Go Knicks!
I was busy checking email, changing reservations again, and working on travel
plans for next week. Off to bed about eleven o’clock. Our rooms are next to the Long
Island Railroad so that every hour I am awakened by the passing train. We have to get up
at five o’clock in the morning (three o’clock Phoenix time) to head for New York City
Thursday morning, I went to the lobby to find some coffee and nothing was open.
The guy behind the hotel counter, who by the way, was better looking and had slightly
better personality than the lovely lady in Minneapolis said that I could get coffee at the
train station that was only a five minute walk. He meant five minutes for a marathon
walker. Ten minutes later in thirty degree wind chill (and uphill) I found some coffee.
Our limo was there on time to get us into the “Big Apple”.
This limo was a stretch; still no bowling alley but it did have a bar. We are
keeping the limo all day until we get dropped off at the airport. First stop was breakfast at
the Hotel “W” with Marc Clee at eight o’clock. Marc is with American Funds that
manage some $3 billion. Interesting thing about Marc, he was once on the board of
directors of Radyne when it was still in NY. I made my twenty minute presentation
between mouthfuls of food. I think he is planning to buy some of the stock. The
presentation includes a constant barrage of questions while Marc is reading our “red” at
the same time. During this time, the limo is circling the block or finding a place to park
while waiting. After Marc was through with us, Deb calls the Limo on her cell phone so
that by the time we get to the street, the limo will be there.
Next appointment is at nine-thirty with Fred Knoll of Knoll Capital management
about five blocks away; which takes about twenty minutes to get there. Up to the thirtyninth floor. We arrived a little late so we were behind schedule already. Fred manages
about $40 million of other people’s money. The presentation took longer than usual
because Fred kept interrupting with questions; I hate that. Now we are behind schedule a
little more. I can’t tell if he is interested. Oh well, back to the limo.
We are running about twenty minutes late to our next meeting with EGS and
Jonas Gerstal, a money manager. Jonas is a very polite and pleasant guy who has no idea
what we do. However, he is a believer in Howard Brous and will be an investor. Back to
the limo again.
We are very late for our eleven-thirty appointment with the American Heritage
fund to meet with a couple of young guys from Germany and Switzerland. We managed
to eat a little food at this stop. A little fruit and a cup of soup, then back to the limo.
Deb’s on her cell phone constantly setting up more appointments and apologizing for our
being late.
Next is our twelve-thirty appointment with PJ Socit of Potomac Capital
Management, another large money manager. This guy was very sharp and asked some
tough questions. However between Garry and me, he came to believe we knew what we
were doing. Usually after the presentation, Deb outlines the deal and explains things like
the number of shares along with forecasts of our future performance. She does a great job
of not only the presentations, but also finding the limo, and keeping us on schedule as
much as possible. This is a client of HD Brous, so Fred Hoch from HD Brous showed up.
Fred is meeting us in Boston tomorrow also. Potomac was only on the fourteenth floor so
I imagine they are not as big as the firms on the fortieth floor. Nice guy and I think he
will buy. We have been handing out our new mouse pad giveaways and they are really
well received. We managed to pick up about fifteen minutes on our schedule. And away
we go again to the limo. Thank goodness for the door to door service since it is bitter cold
and the sidewalks are icy.
The next two money manager and fund manager are clients of Miller, Johnson,
Kuhn of Minneapolis so we will meet up with Steve Austin of MJK. We are only a few
minutes late for William Witter Company. We have an audience of three this time. Their
conference room is on the 5fiftieth floor of a building overlooking Central Park with the
George Washington Bridge in the distance. A breathtaking view! We did an eighteen
minute presentation this time and are about back on schedule.
Our next meeting is in the same building with the Special Situations Fund, a $3
billion fund manager. We met with Steven Shapiro, President of a subsidiary called
Intrepid Capital Management. I think we made a hit with him, also.
We have a few problems with some legal issues, so our last stop is with Dorsey &
Whitney, our law firm for this deal. We met with Barry Wade and his assistant that we
had been working with for the past three months. Garry was on the phone checking on
the audit, Deb and Barry were conferenced with the HD Brous lawyer in Phoenix, and I
was changing airplane reservations. I have been also working on reservations for a
similar trip next week. Tell you about that later. By about half past five we were through
for the day and called for the limo for the last time. “Take us to La Guardia!” we all said.
This took about an hour during which time we decided to check out the bar. We arrived at
the airport at half past six and rushed to the gate to catch the earlier 7:00 flight instead of
the 8:00 that we were originally scheduled on.
We did manage to get on the 7:00 that finally left the gate a half hour late. We
finally took off for Boston, a thirty-eight minute flight. At Boston, there were traffic
control problems, so at this time we are in a holding pattern. The plane is completely full
and we were given cheese and crackers (our dinner). We may never get to Boston! What
a long day so far!
January 27, 2000, a dark Thursday night about nine o’clock somewhere over the
Atlantic, I am in an absolutely, completely filled USAir 727. I am sitting between an
accountant and this cute chick. I think she was hitting on me, but not sure since I am out
of practice. I had to tell her I was happily married. She seemed disappointed. Well we
have been holding for about an hour and have been finally cleared for an approach into
Logan International, Boston. The landing was uneventful so we went off to recover our
luggage that they made us check because the flight was packed. After getting the luggage,
we went outside to get a cab. Temperature is about five degrees with a twenty mile an
hour wind. Fortunately we found a cab right away or we would have frozen to death.
Another cab report, this cab had the back floor full of old newspapers and some kind of
gray crud. Not quite as dirty as Chicago cabs, but Deb pointed out that it was definitely a
contender for the most gross cab award. By this time, we are pretty slaphappy and start
chuckling over the condition of the cab. We arrived at the Wyndham Boston in about
twenty minutes. The hotel turns out to be very nice and we each had a suite by some
minor miracle. Garry and Deb met up with Steve Austin, (remember, the guy from MJK
in Minnesota) who was staying in the Omni Hotel, and they went somewhere for a
hamburger. After checking my email and writing a little, I went to bed and slept like a
rock until six o’clock in the morning. Then back at it again. No coffeepot in the room,
must be some stupid Boston law. Great shower for a hotel!
I had put one of those breakfast cards outside my door for delivery at half past
six. The breakfast showed up right on time, along with well-needed coffee. Oh, I forgot,
but our appointment was earlier than the schedule so I had to reschedule the limo before I
went to bed. The Limo was on time when we went out the door; the cold wind hit us like
a slap in the face with a cold mackerel. Another stretch limo like those the high school
graduates take to the prom. Still no bowling alley, but there was a bar. The limo was a
lifesaver with the chill factor something like sixty degrees below zero. Also, ice and snow
everywhere. Our driver Jim, drove off for the first appointment at Putnam. Putnam is a
money and fund manager handling like zillions of dollars. The VP we met with was at
least twenty-three years old and was managing billions of dollars. Putnam does not allow
the investment banker in the meeting, so Garry and I did our duty alone.
It was the same routine, call the limo to pick us up outside the door and travel to
the next appointment. Along the way we picked up Fred from HD Brous again. Inside the
limo was like a circus with the five passengers and four cell phones continuously
operating. Deb is on the phone with the lawyers and setting up appointments for next
week. Fred is juggling appointments since we had two appointments for the same time.
Steve is on the phone with his office checking on appointments. Then I am rescheduling
the flights and limos for next week. Typically after reaching our destination, three cell
phones are still in use while we are walking to the elevators. For engineering reasons that
escape me, we find the cell phones do not work well when you are forty floors up.
Next Company is John Hancock, a very large fund manager. We have an
extremely bright analyst at this meeting so we can zip through the presentation in about
fifteen minutes. Wham bam, thank you maam, and we are out of there in twenty-five
minutes. Some of these guys are frighteningly bright. Back to the limo. The chill factor
has improved to about minus twenty-nine degrees.
Jim, our driver, has been doing road shows for five years and is a great asset since
he knows what we are doing and he knows where to go. Another cell phone circus went
on in the limo while going to the next place, Boston Partners. There were two guys this
time, and again, very bright and knowledgeable, so the presentation is reduced because
explanations are not necessary. At the beginning, we were told that they usually do not
invest in small cap. (this means the size of the company calculated by multiplying the
stock price by the number of shares is less than about $250 million), however, they used
up forty-five minutes of our time with questions, that we took to mean they became
interested after hearing our story.
Back to the limo, etc, etc. We actually have an hour until the next appointment.
We told Jim to drop us at a Good Italian restaurant. We ended up at Maggiorri’s, a
famous 100-year old Boston landmark. We had a real meal for a change. Next stop is
Hori Capital with Calvin Hori, President. This is a small investor, only a measly thirty
million dollars under management. He was an arrogant guy who didn’t seem interested. I
guess you can’t win them all.
Longwood Partners is next, up to the forty-sixth floor. What a view! I was told
Bob Davidson is a big hitter, meaning he invests large sums of money. He said his
approach was to ask “penetrating” questions to make a “gut” decision. We got along well
and he seemed to be impressed by the company. Deb has disappeared to be on the phone
to solve some of the lingering NASDAQ problems and prod the lawyers into working a
little faster.
Let me explain what is going on, all these visits serve multiple purposes. First,
this is like a debutante in a coming out party; that is, name recognition for Radyne
Comstream. Second, we are trying to understand how much interest there is in the stock
in order to decide on a price. Price determination will take place about the fifth of
February by the company and the underwriter, HD Brous. Third, this is a sales call with
the hope of getting commitments from the institutions. Fourth, we want to create a
demand for the stock in the after-market to increase interest in the stock after the closing
of this offering. Fifth, we hope to interest analysts in following the stock and writing
favorable reports to interest other investors and increase the stock price.
At half past three we headed for our last appointment at Constitution Research. I
kept calling it constipation research, but no one seems to have a sense of humor this late
in the day. We have to get out by half past four to get to the airport in time to get our
flight back to Phoenix that we cannot miss! We had moved this guy twice and couldn’t
get connected to confirm the appointment. As we approached his office, he came running
out and said he had another appointment. He ran into the restroom with his briefcase. We
decided to wait and ride down in the elevator with him so we could talk to him. After
fifteen minutes, Fred decided to check up on him, but the restroom was empty. It turned
out there was a back door in the bathroom that he had taken! I guess that would be a
good exit if the SEC were on your ass.
While taking the elevator back down from the thirty-eighth floor, I calculated that
we had covered more than a mile in vertical travel in elevators on this day. At least we
will be certain of making the Airport on time. Jim dropped us off at the terminal and I
paid the limo bill. In case you wondered, the limo cost about seventy dollars per hour
(including Jim and tip). There is no way to do a road show without a limo. We went to
the Admiral’s club (the American Airlines Club) while waiting. Everyone is back on the
phones again, shoring up appointments, making airplane reservations, hotel reservations
and limo reservations for next week, beating on the lawyers again, checking emails,
talking to Sandy, getting Melissa to get more presentation material ready for next week,
calling our honeys, etc. It feels great to be heading back to Phoenix. We get in almost at
midnight and head home. I have a golf tee-time at eight o’clock in the morning. I wonder
what shape I’ll be in to play golf.
I headed back to the airport on Superbowl Sunday at two o’clock. I feel like
Willie Nelson. “On the road again” Is this dedication, or what! Missing the Superbowl.
At the airport, I meet Debra and Garry for our flight to Minneapolis. The flight was
uneventful unless you consider trying to eat the airline non-meal. I know you are
wondering about my golf game. I had one of the best rounds of my golf life. We are
staying at the Hilton Marquette in downtown Minneapolis. The hotel arranged a car and
the driver Norman was standing there as we got off the plane. Most guys in Minnesota
are named Norman. The weather is about twenty degrees warmer than last week and no
wind. Nice gal behind the counter who talks just like those people in the movie “Fargo”.
We were checked in and I hurried to my room to watch the last minute of the super bowl’
apretty exciting finish. You have to love it, a big-busted peroxide blonde inherits the
Rams from her 6th husband when he dies and wins the super bowl. Only in America!
The IPO is a colorful experience. I explained about the “red” Herrings. The states
each have different sets of securities laws called “Blue” sky laws. I don’t know why.
Then the underwriter can sell an additional fifteen percent of the stock called the “green
shoe”. This name is derived from the first time this was done when the Green Shoe
Company sold public stock.
Up at six o’clock for our half past seven meeting. I did the thing with the card on
the door for breakfast again. We had a meeting at the hotel with Knappenberger/Bayer.
Steve Austin joined us. Gayle Knappenberger had visited us in Phoenix in early January.
Gayle had his analyst with him, Jill somebody. We did our twenty minute presentation,
Jill never cracked a smile. In fact she told Deb that the comment about the call girls did
not add any thing to the presentation. Debra pointed out to her that no one else had any
problem with the call girl comment. (Meaning, “why don’t you get a life?”) She was
referring to one of my slides where I point out the similarity between the internet and the
California gold rush. I use that to point out that the only ones who made money in the
gold rush were the infrastructure providers like Levi’s and the service providers like call
girls (This is when most people chuckle.). I also point out that we provide the
infrastructure. We will come to find out later that they are going to buy some stock
despite the call girl comment.
We are off for our next meeting about five blocks away. In downtown
Minneapolis, they have built sky bridges on the second floors across the streets between
buildings. These sky bridges are all over the downtown areas and are glass enclosed so
you don’t have to go out into the cold. I guess they couldn’t build them underground
because the ground is frozen year round. To get to the next appointment, we went across
about seven sky bridges and through six buildings. I felt a lot like a gerbil in heat must
feel going through all those tubes. A nice meeting with David Hivebrook of IA Investors.
He was very interested and kept us there too long. So, we are running late again.
Steve Austin, who lives in Minneapolis, had his car parked in the AIA building,
so he dropped us off at the Kinnard building. He waited outside since Kinnard is a
competitor of MJK. When we entered the conference room, there were about seventeen
brokers/dealers/investment bankers eating box lunches that we had provided for them.
Since we were late, I did the thirteen minute version of the presentation. Kinnard invited
us in because a golfing friend of mine is the ex-president of Kinnard and his son is a VP
there. There were good questions from this group. The negotiation with HD Brous will be
interesting. Kinnard wants some stock, but they will only get some if they agree to
provide analyst coverage and write analyst reports. By now, it is half past one, so we
grabbed box lunches and ran for the car.
Next stop is Perkins Capital. We meet in the conference room with Richard
Perkins, son Daniel, and big black dog Bo. Another presentation. Richard is an
interesting guy. The conference has about thirty antique carved wood duck decoys and
ten paintings on the walls of ducks, geese and swans in flight. As we were leaving, I
suggested, quite wittily I might add, that perhaps he should add a few more ducks to the
conference room. In case you don’t know what decoys are, they are carved and painted
ducks that are put on ponds to attract real ducks so you can shoot them, which is probably
illegal today. He proudly took us to a back room where he had about five hundred carved
duck decoys displayed. It was very interesting. As we were leaving, he told Steve that he
would take some stock.
Then we headed for the airport for our flight to San Francisco. We should get
there about half past seven o’clock. I am writing this stuff on the plane and my laptop is
blinking to tell me the battery is almost on empty. I will let you know how things turned
out after I get my battery charged. As Sandy would say “Bye Bye.”
We landed in San Francisco around eight o’clock, our driver was waiting at the
gate. We headed off to the Hyatt Embarcadero. The Hyatt Embarcadero is an impressive
hotel. The inside of the hotel looks like you are inside a hollow ten-story pyramid. The
rooms all open onto balconies on the inside. There was a movie filmed here about twenty
years ago. “High Anxiety” starring Mel brooks. Yip Loi Lee, one of the company
directors who live in the bay area, met us at the hotel. The five of us headed off for
fisherman’s wharf for a seafood dinner. We have to include Yip Loi in our pricing
discussions since he is representing Singapore Technology. We made it to bed by
midnight.
Our first appointment is at seven o’clock. Another breakfast in the room for me,
then check out and check the bags at the hotel to be picked up later. We went out and
jumped into a cab. We told the driver to take us to One Market Street. He turned around
in his seat and stared at us in a strange manner. Then he pointed across the street and said,
“It’s right there!” Oops! Well, he had been waiting in line for a while and lost his place,
so I said “Take us over there and I’ll give you a big tip. Across the street for five dollars!
The day was a blur of meetings again. First Capital Research, then at eight-thirty,
Sterling Johnson. Dresdner RC million at ten o’clock, if you think it is boring giving the
same presentation over and over, think about how boring it must be for Garry and Deb to
listen to them. They are a little different each time because each person you present to is
different. Some want to hear about the markets, some want to look at the financials, and
some are more interested in evaluating the management. Deb and Steve Austin have been
on the phones most of the morning. In addition to setting up appointments, they are
talking to everyone that has listened to our presentation to get a commitment or indication
of how much they want to buy and at what price. We will price the stock about Friday.
The plan is to be “effective” on Monday, February seventh. This means that we have
filed all the documents with the SEC and NASDAQ, and have been approved. All this
time the lawyers are still billing us for problems that are still cropping up in the Blue-Sky
issues. The new stock will begin trading on Tuesday. Another decision to be finalized
along with the price is whether or not we are going to separate the warrant from the stock.
If we decide to split those, then we will have trading symbols of RADN and another of
RADNW. We argue frequently about pricing. There are a number of issues. The
company wants the highest price. The underwriter likes a lower price so their investors
are taking less risk. Then there is the current market price and activity to consider. If the
price is too high, the amount of trading activity could be curtailed in the future, so the
long-term behavior of the stock is important.
And so we are off to our half past eleven meeting with Jim Callinan of RS
Investment Management. We took a cab to the Fornou's Oven Restaurant. The cabs in
San Francisco are pretty clean and don’t qualify for the “most gross” award. At the
restaurant, I told the matre’d that I thought Fornou in Italian is “Oven”, he said that was
correct-just like shrimp scampi which means shrimp-shrimp, so we ate in the Oven Oven
Restaurant. Thank goodness we got to eat a real lunch for a change. Even though between
bites I made our usual presentation, it was great. Then we were off to the next meeting.
Steve Austin left to return to Minneapolis. At one o’clock we had a meeting with
Proximity Funds with Geof Crosby, two o’clock with Botti Brown Asset Management
with John Botti, then at three o’clock Columbus Capital with Matt Ockner. We got to talk
a little golf for a while. That was a treat.
By this time, we thought we had about two million dollars in stock committed for
the day. Our last appointment is at five o’clock at the Ritz Carlton. We decided to go the
Ritz early and use the time to make some more phone calls before the meeting. We saw a
cab and asked him to take us to the Ritz. He said that it was only 2two blocks away so we
decided to walk. As it turns out, it was about eight blocks and almost all uphill. The Ritz
sits on top of one of those big hills in San Francisco. The last block was a killer.
I made the presentation in the hotel bar along with harp music, nice ambiance.
Then we tried to find a cab at rush hour. We walked three blocks downhill this time,
found a cab, went back to the Hyatt for our bags, and headed to the airport.
At the airport, we checked in and went to the Admiral’s Club, the club of
American Airlines. Dinner consisted of snacks in the club while we are all connected up
with laptops to read our email. No complaints since we had had a nice lunch. Our flight is
a redeye at ten o’clock to New York, JFK. We are supposed to arrive at half past six in
the morning. We are all settled in our seats and the flight is underway. Trying to sleep in
airplane seats is like sleeping while lying on a bunch of big rocks. The morning will be
arriving fast. Good night everyone. We cheated death again and landed safely at JFK.
Our driver found us and went off to get the car. We are grateful for this little
service because it is very cold and the wind is blowing. After an hour drive into midtown
Manhattan, New York City, we arrive at the Intercontinental to check in. At check-in I
find out the hotel rate is thirty dollars higher than the reservation. Is this a NY rip-off of
an unsuspecting country boy from Arizona or a simple mistake? I will have to check with
Lou at Bowers travel. We have a few hours before lunch and our first appointment. A
couple of hours of sleep sound wonderful. The wake-up call arrived too soon. I checked
my email to find out that Lou had called the hotel and had the rate taken care of. We ate a
quick lunch in the hotel and went to get a cab. The reservation for another limo had
gotten screwed up. Our first appointment is downtown.
New York City is made up of five Boroughs; Bronx, Brooklyn, Queens, Staten
Island, and Manhattan. Manhattan is the borough people think of when they hear New
York City. Manhattan is about eight miles long north to south and only two miles wide.
The southern part is referred as downtown where you find the financial center; near Wall
Street, the southern tip is known as the battery because of the guns that were placed there
in the revolutionary war to shoot the hell out of the British. Thus, that leads to the
engineering riddle, why are the lights in Central Park (Uptown) dimmer than the lights in
Times Square ( Midtown)? Our hotel is in midtown, and the northern part is the uptown.
Although the distance from midtown to downtown is only four miles, because of the
traffic, the trip can take thirty minutes.
Let me tell you about the cabs in NYC. First of all they are a lot cleaner than
Chicago and are not in the “most gross” running. A few years ago, NYC got on this
safety kick so all cabs have seat belts that are supposed to work. After getting in the cab,
a tape plays a slightly amusing celebrity recording telling you to “belt up”. In this cab, the
opera star Beverly Sills says “Lets keep tragedy on the opera stage, belt up!” Another cab
had the voice of David Letterman, while another had Buddy Hacket. Before I forget, the
answer to the engineering puzzle is “It is further from the battery.” Engineering humor is
hard to find.
The last meeting of the day is about thirty-ninth street and Broadway. It is bitter
cold, wind is blowing about twenty miles an hour, and we can’t find a cab that is empty.
We started walking north and had to duck into a department store to keep from freezing.
We are at forty-second street, the start of Times Square and see a restaurant across the
street. Deb is cold and running on empty so we headed to the Times Square Brewery.
During dinner, it was determined that Garry had never seen Times Square, country boy,
etc.. After dinner we wanted to show Garry Times Square, went a block north into Times
Square, still bitterly cold, found an empty cab, and told Garry to take a good look because
we were heading to the hotel.
What a treat this evening, to get our calls, email, and other chores completed so
we could get to sleep before midnight. I had an email from Lou; she called the hotel and
straightened out the room rate. I don’t know about the others, but I slept like a rock once
more and only woke up when the wake-up call arrived at six o’clock.
I will skip the details of breakfast, except to point out that I had ordered from the
card again. Hotels have preset menus on the cards with names like “Quick Start
Breakfast” and “Light and Healthy”. These are names designed by English major
graduates from Columbia University so they can charge $15.95 for a roll, coffee and a
glass of orange juice. I must still be in their computer as a country bumpkin, because they
forgot my orange juice. Is this a NY rip-off of an unsuspecting country boy from Arizona
or a simple mistake? I called the room service and asked that they remove the note that I
was an unsuspecting boob, so they sent up my orange juice. We met our limo and driver
Steve in front of the hotel. Steve is the same driver as the one we had last week in New
York. Same limo, too; no bowling alley.
It is cold as the devil with the temperature around twelve degrees. We reached our
appointment twenty minutes early, and right next door was the Cosmos Coffee Shop so
we stopped there to get warm. Apparently this is a favorite of the New York police
because there are about a dozen of “New York’s Finest” having coffee and getting warm.
We are all getting a little grumpy and irritable by now, so we are starting to sound a lot
like New Yorkers. We went next door for our eight o’clock meeting. Just like show
people (which I guess we are), the show must go on. The meeting goes well, although I
confess that all I can think about anymore is making the flight this evening and going
home.
This presentation is about number thirty-six since Monday a week ago. There is a
great temptation to stray from the truth and tell the investors what I know they really
want to hear, but I resist, usually anyhow. There is no doubt that what we are doing is
selling the merits of the company. I have a great deal of admiration for our sales people.
The best sales people always put themselves on the line. that is, selling yourself. The
downside of selling yourself is the rejection you feel when you fail.
We have a little time before the next appointment, and Deb is getting frantic about
all the details that have to be taken care of. We went back to Cosmos; still twelve cops in
the restaurant, but I think they are different ones, though. Deb is on the phone for the next
thirty minutes in the restaurant. Garry is on the phone to John Botti, one of the investors
we presented to in San Francisco. He wants more details on our financials. After Garry is
through, John says he will place a large order for our stock. Good work, Garry. Garry and
I are trying to understand the lingo of New York. People here are in a hurry and abrupt,
so there is an abbreviated sort of language. For example, instead of saying “Excuse me,
but I didn’t understand the reason you said that or I didn’t understand the look you gave
me.” They say “What! What!” There are a few more shortcuts that we never figured out.
Back to the limo. We have to scamper over black ice and black snow to get into
the limo. Now we have to head to midtown for the next meeting. This one started out
with the investor, John Callaghan of Deutsche Asset Management (I think he manages
Nazi Money). Deb has gotten so busy collecting information about orders from investors
and trying to get the lawyers to do their jobs that Garry and I are left with the task of
making her presentation also. Usually, Deb introduces the company and follows the
presentation with information on the offering. By now she could do our presentation
word for word, and we can do hers. As a matter of fact, since she talks first, she
frequently gives part of the company presentation. I get even by presenting some of her
finishing-up statements.
The presentation went well and after awhile John (He really doesn’t manage Nazi
money-that was a bad joke!) became interested. I am sure the Bob and Garry charm got
through to him. We left there feeling pretty good that he had an interest in our company.
There was another meeting either before or after the Nazi one but I can’t remember
which or when or who, but I am sure we did a great job. Then we had to head to the hotel
for a luncheon meeting. Good news on the way, one of the investors we had wowed in
San Francisco doubled his order, and another wants to buy a large amount.
Fortunately, I had not checked out so Deb could get back on the email and
coordinate all the closing effort in my room. Garry and I went to the luncheon meeting
with about twelve investors and a few brokers. I would like to say we had a pleasant
lunch, but not so. They had a pleasant lunch while I was presenting. I figured that a lunch
presentation should have a bit of humor. I start the presentation, called “the story” by
pointing out that we are a low risk Internet-play in the market, because our major growth
in the future is in providing satellite connectivity to the US for internet service providers
in other countries. One bit I had used successfully before, particularly with older
investors, which these were, was that some people did not think of us as an internet
company because, 1. We had revenue, 2. We were profitable, and, 3. The CEO (me) is
older than twenty-one years. No one laughed except for Garry; of course he has to laugh.
Many of these investors have a limited sense of humor. Maybe I wasn’t funny? Naw!
Run to the room. Get the luggage. Pry Deb off the phone and back to the limo. More
black snow and black ice. And off to out very last appointment. We have to head back
downtown with the traffic picking up. Our next appointment is in One Financial Center
across from the World Trade Center where the terrorists set off the big bomb. We didn’t
notice any terrorists with bombs when we got there. This appointment was with Lior
Bregman of Oppenheimer, a $300 billion company. We were on the thirty-ninth floor
with a fantastic view overlooking New York Bay. The view included the Statue of
Liberty, Ellis Island where Most immigrants arrived at the turn of the century, the Staten
Island Ferries which connect Manhattan to Staten Island, the Verrazano Narrows Bridge
which is the largest single suspension in the world and connects Staten Island to
Brooklyn, across Brooklyn is Kennedy Airport, and directly below us was the Battery
Park (please refer to engineering riddle!).
Lior is in the middle of a $350 million deal and he has a cell phone with a
microphone and earphone attached. He apologizes for the three interruptions during our
meeting. Why would he see a little company like us? Lior has been an acquaintance of
mine and the company for a number of years. He has a group that does an analyst report
on satellite companies, and we are hoping he will give us some mention in his report
which would be very worthwhile in creating interest in our stock. We have to cut the
meeting short to fly off to the airport.
Back to the Limo. It is always a relief to find our limo that has become our refuge
from the cold and the scary big city. We all hollered “Home James”. Not too original, but
the intent was pretty clear. It takes about an hour to travel to Kennedy Airport, about five
miles as the crow flies, in New York it is more correct to say as the Pigeon flies.
Manhattan is the home of two million people and 300 million pigeons.
We had an interesting “Small World Story” turn up. During our drive to the
airport, Steve asked if we were related to the original Radyne on Long Island. We replied
in the affirmative. He asked if we knew his friend Bob Petrucelli. Bob Petrucelli was at
one time the VP of operations at Radyne. When we started EFData, Bob was our first
sales rep and went on to build the most successful sales office that EFData ever had. Bob
has recently parted company with EFData and is in talks with us for him to provide his
services. In fact, Bob is scheduled to visit the company next week. We had a good laugh
at this coincidence, as we are arriving at the terminal. The airplane is on time, and we are
heading home. Some more meetings tomorrow that I will fill you in on later, oops, the
computer is blinking again that the battery is empty. Conclusion will follow.
Nothing like sleeping in your own bed. We had two investor meetings today.
Debra has arrived at work about the same time as I get there. Our first meeting is at ten
o’clock with a Phoenix investor. The presentation goes well. Dave Koblinski is giving the
tour of the building. There is still a lot of work to be done. The lawyers are cleaning up
the last blue-sky details. There is a lot of phone work. Debra is collecting all of the orders
and putting on a spreadsheet to analyze.
Today, we have to decide on the pricing. The institution orders usually have a
price associated with it. For example, one of the investors might place an order for 100
thousand shares with the proviso that the price is below eight dollars. We also have to
look at the volume of trading and collect the comments received by the HD Brous sales
people. The other underwriters like Miller Johnson also have inputs. Overlaying this
information is the calculations of a stock price based on comparable companies.
By lunch time, it is clear that the offering has been over subscribed, meaning that
we have more orders than there are shares, meaning the road show was a great success,
meaning Garry and I did a great job, was there ever any doubt? We decide to investigate
increasing the size of the offering. This requires checking with the underwriters, checking
with the lawyers to verify the legality with the SEC, NASDAQ, and blue sky. I need to
talk to Singapore Technologies (ST) since they are the majority shareholder.
Another presentation is scheduled for half past two. The KPMG auditors have
been invited. The auditors have been around the building for the past three weeks or so
doing our annual audit. Since Radyne Comstream is a public company, we have an audit
every year by a public audit firm. Our audit firm is KPMG. KPMG is also a partner in
everything we do, a well-paid partner of course. They have the public obligation to check
that we are not hosing the investors, that we are operating with integrity, and are
conducting our business in a proper manner. KPMG gets involved with the audit
committee of the Board of Directors. With every filing with the SEC and NASDAQ,
KPMG has to write letters saying that they believe we are behaving in a civilized manner
and the financial reports are reasonably accurate. These letters are called “Comfort
Letters”. They are called this because they are providing “Comfort”, but not guaranteeing
that everything is the up-and-up at the company.
Usually we pay about $10 thousand for a comfort letter that says in general that
“KPMG believes the financial reports are reasonably accurate, but if they are not correct,
it must be the company management that did bad things because obviously KPMG did
their job, and what the heck KPMG is really only human, at least most of us are human,
so go sue the company, and what do you want for $10 thousand anyway”. Seriously
before you get the wrong idea, we have a very good relationship with the auditors who
are very nice people. On the accounting side, we work very closely with them, and if they
read this, I want them to know that “We respect you!” We also have a Piper Jeffrey
broker and a couple of Money managers at the meeting.. Debra has been on the phone
and/or the computer so Garry and I conduct the meeting. Again, David does his duty with
the building tour.
We have to set the price by four o’clock since there is a lot of work to be done.
After a final look at the data, a call to Yip Loi Lee who is representing ST, and a final
input by Howard Brous, we decide on a seven dollar price with a 20 percent increase in
the number of shares to 2.4 million. With the green shoe, the total offering will be $2.76
million. We will be raising about $19 million. When we first started this offering, the
number was expected to be about $6 million. Since I plan to take complete credit for
everything, I think I have earned my salary this month.
We send emails to everyone that is involved. The auditors start their calculations,
Garry is doing his changes, and the lawyers and Debra are working on all the paper work.
We have decided the effective date will be Monday and the new shares will begin trading
on Tuesday when the market opens. This means the lawyers, auditors and Garry will be
working this weekend. We have to file the revisions early Monday morning. Debra has to
coordinate everything-perhaps orchestrate is a better word-plus she knows that a personal
touch (whip?) is needed so she will be traveling on Sunday to be in New York on
Monday. I, on the other hand, who have earned my pay this month as I do every month,
clean up my desk and email and head home to my wife who I have neglected for the past
two weeks.
Saturday, I received a copy of the press notice to be released Monday after the
market closes. The Phoenix Radyne Comstream five-year-party Saturday night at the Top
of the Rock in Tempe was a great success. It is fun to see the factory workers all dressed
up for a change. And even more fun to have a lot of positive comments about the emails
from the road show.
Back to the grind on Monday morning. The stock should start trading tomorrow
on the NASDAQ small cap market. This brings an end to the Road Show Story. In ten
days, we had traveled sixteen thousand miles in nine flights with four airlines. We hired
ten taxis, six limos (none with bowling alleys) rode 2.6 miles vertically in elevators, saw
the Golden Gate Bridge, Fisherman’s Wharf, Statue of Liberty, Empire State Building,
Times Square, Boston Harbor, Chicago Sears Tower, and of course the famous Foshea
tower in Minneapolis (Twice). We had made forty presentations to seventy-two investors,
brokers, underwriters, fund managers, money managers, and dealers, and sold nearly
twenty million dollars of stock.
Tuesday morning, we can’t wait to see what happens. The stock starts trading
very actively and before no time it is up above nine dollars. By the end of the week, the
stock is over fifteen dollars.
Closing is scheduled for Friday morning. Garry and I have to go down town to the
Underwriter’s lawyer’s office at seven o’clock. In the conference room are Debra, Jere
Friedman, lawyer, Jill, legal aide, Theresa Mulder, our legal aide from NY, Garry and
me. A conference call is placed with Barry our NY lawyer, Howard Brous, American
Depository trust who has the stock, and American something, the clearing house for HD
Brous. The clearing house has all the money. Also on line was Continental, our transfer
agent. After checking with everyone that everything was in order, the clearinghouse
announced they were transferring to Radyne Comstream the sum of $17,301,400. At that,
we hung up and waited about fifteen minutes. Then we checked with Citibank and they
confirmed the money was in our account. Another call was placed to the same people.
Once we verified the money was in our account, the American Depository Trust released
the stock to Continental. At that point, the offering was closed. Of course we all
congratulated each other. It was only half past eight-too early for any champagne.
It was a great adventure for me, and I know that Garry found it exciting. This is
the end of the story, but is the rebirth of the company. We are now trading on the
NASDAQ, we have money in the bank, our balance sheet is sound, and the company has
renewed respect. Quite a trip!
CHAPTER 13
My partner Steve Eymann, the Chief Technical Officer and VP of engineering
was a University of Nebraska graduate, and me being from Penn State, meant there was a
competitiveness, particularly when the teams met on the football field. One day I got the
idea to make Steve a business card showing him as CNO, which stood for Chief
Knowledge Officer, because at Nebraska, the N stood for more than football, it stood for
nowledge. He loved it and handed out the cards whenever he could.
Lou Dubin was one of the best practical jokers I have ever known. He joined
Radyne from ETS where he worked for Tony Grimes as a system engineer, but his true
calling was sales and marketing. When he moved to Phoenix, he was single. In the sales
group that he joined, were a mother, Valerie Kane, and her Daughter, Stacey Kane who
had worked for Radyne in New York. One evening, the Kane’s invited Lou to their home
for dinner. The Kane’s had just bought a dog and while playing with the dog, Lou got
scratched. A half an hour after Lou left, the Kane’s received a call from the hospital, “Is
this Mrs. Kane?” “Yes.” “This is Doctor Sangi in the emergency room of the Good
Samaritan Hospital. I Have a Mr. Dubin here and he is having a severe allergic reactionhe thinks from a dog scratch! I need you to bring the dog to the emergency room,
immediately!” “OK, we will be there.” About fifteen minutes later, Lou called the Kanes
on their cell phone when they were half way to the hospital and told them it was a joke.
Lou could put on great India-Indian accent for occasions like this.
Another time, Valerie was going to visit a customer in New Jersey-traveling by
rental car for an hour from Newark Airport. When she arrived at her hotel, she had to pee
very badly and rushed up to her room only to find the commode was clogged. She called
the front desk and asked for another room. She was told there were no available rooms
and a maintenance man was already on his way up to her room. Val then called Stacy and
told her what happened. Stacy mentioned it to Lou who then called her room and said in
his Indian accent, “Mrs. Kane, this is the manager, Mr. Sangi. I hope the maintenance
man is working on your toilet- is that right?” Valerie “Yes, he just arrived” “Wonderful.
Now how do you want to pay for the repair-on your bill or credit card?” Valerie, who can
have a foul mouth replied, “What the *#@% do you mean pay for ii? It's your *#@$ing
commode! And it was fucking broken when I got here!” The manager (Lou) said, “I'm
sorry Mrs. Kane, but it is hotel policy that when you break something in the room the
guest pays for it.” Valerie's response was so vulgar it is not appropriate to repeat it here
and it went on until Lou started laughing.
Of course, what sometimes comes around goes around. Lou had been doing a lot
of international travel and didn't like to leave his new car at the airport. One morning he
showed up at work with a ten year old white pickup truck. The white paint was chalky
from age. I gave Audrey, the executive assistant, some money and she went out and
bought four cans of water based paint-red, blue, green, and yellow along with seven or
eight brushes.
While someone took Lou to lunch, the employees who had been his victims
including me, proceeded to paint the truck from top to bottom. The tires were painted as
well as all the chrome. After lunch, Lou returned through the front door, his truck was on
the side, so he didn't see it. Someone emailed a picture of the painted truck which Lou got
a big laugh out of because he thought someone had photo-shopped the colors on the
truck. After another hour, someone told him that he had better check out the truck. When
he came out to the parking lot, there were about fifty employees on their break to laugh at
him. What happened that evening was funnier than the prank. Lou was going to the
airport in the morning and was too embarrassed to take the truck the way it looked. After
work he went to one of those hand car washes with the sprayers that you put two quarters
in for five minutes. After one dollar, he had only cleaned one fender. A couple of doors
away was a mini-mart where he tried to get five dollars in quarters. The clerk said their
policy was to give change for only one dollar at a time. Lou had to make fifteen trips
back to the mini-mart.
Lou and I went to Rio de Janeiro to sign our first million dollar contract with
Embratel, the Brazilian Telephone Company. Lorraine went along as a tourist-our hotel
was on the Copacabana beach. Lou and I went to Embratel with our Brazil Rep. and
signed the contract. That night, Lorraine and I went to dinner with the rep-Lou wanted to
be on his own. I found out the next morning that Lou had found a night club with the
name Club Help. He said the women were extremely attractive and very attentive. And
after an hour he figured out that it was a whore house! The next day Lou headed home
and Lorraine and I were walking along the Copacabana when I noticed the Club Help.
The sidewalks in Rio are made of black and white stones about two inches square that
form designs. I noticed a loose stone in the sidewalk so I took it-after mounting on a
plaque, I presented it to Lou and told him that He would keep this forever, but if I gave
him money, it would be gone quickly. Lou still has the plaque-and I did give him a bonus
later.
CHAPTER 14
Another acquisition showed up one day. It was a company in San Diego close to
Comstream and it would allow us to expand into another business area and consolidate in
one building. Again, it seemed to me that the employees would appreciate an insider’s
view of what took place over the following week or so, so I wrote the following and it
was sent to the employees on Monday April 9th, 2001.
Saga of The Tiernan Acquisition Or The Fastest Deal In The West
This all started by a call from George Mancuso, an executive at Tiernan
Communications Inc. I had just returned from another trip on Wednesday the 4th of April
and the call from George was on my voice recording. George had once worked for STS,
and we had known each other for quite a long time. I called George in the afternoon to
find out that Tiernan was looking for a buyer.
Tiernan Communications, Inc. located in San Diego was founded about eight
years ago by Dr. Jim Tiernan. Jim was a technical expert in the digital TV area, and he
correctly forecast a need for video compression equipment to convert analog TV to
digital TV. The video compression equipment allows for a much larger number of TV
channels on cable or DirecTV satellite than is possible with analog TV. The company
captured a large part of the market initially, and I think sales were around twenty-five
million dollars at its peak. The company kind of floundered and began developing
internet related equipment with not much success. They forgot about the business that
made the company successful in the first place, lost a lot of money, and ran out of cash.
Enter a venture firm-Westar Capital with an investment of $18 million. Jim Tiernan was
pushed out of the company and The Scotland Group, a turnaround company, was hired to
fix the company. In the mean time, the company received a loan from the Cupertino Bank
for $4.6 million with a guarantee of $3 million from Westar. Last year Tiernan sold $13
million in products and lost about $9 million. All in all, this is a story not too different
from the Comstream one.
One major difference was that the company was out of money, they were behind
payments to the bank, and the employees were told that the doors were closing on Friday
the 13th. After receiving the documents from the company that we asked for including
financials, org. charts, and employee information, and after some discussions over the
weekend with the company, we planned a trip to visit Tiernan.
Garry Kline, and I caught the America West 7:48 flight to San Diego Monday
morning. Brian Duggan and Alex Mikhalkin met us at Tiernan. Over the weekend, I had
made up a due-diligence list so we could spread out and gather as much information as
we could in a short time. Steve Lagotta the CFO from Comstream was sick on Monday
but showed up on Tuesday. We spent most of our time interviewing employees to try to
understand if the products were still viable and whether the necessary people to build and
test were all gone as well as looking at the books, the facility, test equipment, etc.
What we found was a reasonably sound core business making good margins. It
was especially important to find so many loyal employees that were still there. We also
met with Michel from Westar. Since Westar had guaranteed $3 million of the bank loan
and the assets of the company were worth at lease $3 million, it was clear that we would
be negotiating with Westar since the bank would get their $4.6 million no matter what.
We found out that an Israeli company had been visiting the company for the past two
months, but had not made a firm offer. The Israeli company was returning on Thursday to
take another look.
There are two ways to buy a company. One is to buy all the stock of a company
and then you own the corporation, and unfortunately, all the liabilities that go along with
the corporation. In the case of Tiernan, the liabilities include two to four million dollars
owed to creditors, plus perhaps some liabilities that we may not know about. The other
way to buy a company is to purchase only the assets of the company. There are a number
of ways to do this, but it has to be done carefully so you do not incur the liabilities
anyway.
In the mean time, in parallel with everything else, we are communicating with our
directors, keeping them informed, so that we can get their informed consent to go ahead.
We returned to Phoenix late Tuesday night. Wednesday morning we met with our lawyer
Steve Pidgeon at Snell and Wilmer and talked to our auditors at KPMG. We decided to
make an offer for the company of $3.5 million dollars. We arrived at this price by trying
to bound the value of the assets to the seller and to us. On the low end, the company
could close the doors and sell the assets getting at least three million dollars. For the high
end, we thought that after a little cleanup, the company would be worth at least six
million dollars on a stand-alone basis. If they could do ten million dollars in sales this
year and make a little money, it should increase the market value of Radyne by ten
million dollars or more. The assets of the company are actually worth about five million
dollars. But, there are lots of problems to solve yet. We find out that because of our
public status, we need to have audited numbers for Tiernan for three years, and have it
completed in sixty days. There was no audit the past year, so Garry is on the phone with
the Tiernan auditors at Ernst and Young to get them to agree and to get an estimate of
cost. Steve Pidgeon has lined us up with Martin Tayor, the Snell and Wilmer bankruptcy
attorney- a specialist in this type of transaction. Steve also wrote up a consent agreement
to be signed by the Directors and Garry emailed that night.
The major concern is to figure out how to buy the assets of the company without
picking up any liabilities of the company. We discussed a prepackaged bankruptcy and a
foreclosure. Because of the time frame facing us of having to get something done by
Friday, we opted for purchasing the note from the bank, which would make us the only
secured creditor, and then foreclosing on the note, thus forcing the company into
insolvency, and the assets would become ours. We formed a new corporation called
Tiernan Radyne Comstream, Inc. that would be the holding company that we would
move the assets into. For operating purposes, the company will be referred to as
“Tiernan”. By Wednesday night, after many phone calls, a meeting is set up with all the
necessary parties in Westar’s lawyer’s office in Irvine, Ca. for Thursday morning. This
would be very convenient because Martin Taylor, our bankruptcy lawyer is in Irvine also.
Marty had to work late on Wednesday night to prepare all the documents. It was also
convenient because we could fly into Orange County airport, which is only five minutes
from the meeting.
Thursday morning, Garry and I arrive at the airport and find our flight was
cancelled. After a little scurrying around, we found a flight to Long Beach and arranged
for a car and driver to get us to the meeting only an hour late. Upon arrival at the
attorney’s offices, we are told by Michel of Westar that we would negotiate first, and
then they wanted to see what the Israeli company was offering.
The stage is set, the testosterone level is high. On our side, we have Garry,
Martin, and me. On the other side, they have Michel the negotiator, an insolvency
attorney.
The Westar attorney and another Westar partner are across the hall in another
conference room with the two bank attorneys. That’s necessary because there has to be an
agreement with us and the bank, with us and Westar, and with the Bank and Westar.
The negotiating game begins with a long oration by Michel about what they are
going to need and why. I give him a broadside by accusing him of a breach in integrity
since he told me we had a deal the night before. I also used brinkmanship by telling him
that we were not willing to wait for them to see what the Israeli’s had to say. I told him
we would either have a deal by 1:30, or I was heading to the airport and our offer would
be withdrawn. Negotiations like this are very intense. First you have two guys going at it
with their pride and ego interfering, and we have an audience of five other guys that are
adding pressure. Michel’s approach is to bring up a lot of detail, such that, if I accept and
agree with his information, I will be in a corner. My approach is more emotional and I am
not going to listen to any of his claims. Of course there has to be some give and take or
the other party might do something foolish, like in our case, I would walk out, and for
Michel, he would try to cut a deal with the Israelis because I offended him. After about
an hour of arguing-they wanted us to pay the interest on the note, we pointed out the risk
of needing the audit, etc, we arrived at a deal in principle at $3.9 million. Westar called
the Israelis in San Diego and told them they would have to leave the building and wait
because we were close to a deal.
Really crappy sandwiches were brought in for lunch. Westar went off to negotiate
with the bank while the attorneys started negotiating about what the legal agreements
would say. After a couple of more hours of the lawyers arguing about what each
paragraph of the agreement meant, we seemed to be pretty close to signing. Garry and I
changed our reservation from three o’clock to the America West 6:15 out of Orange
County airport.
Everyone agreed on the necessity of informing the employees as soon as possible
since the next day was when the doors were going to be closed. We arranged for a half
past nine meeting the next morning with the Tiernan employees in San Diego. I called
Sandy Cassel and she arranged for a team to go into Tiernan to rehire the Tiernan
employees. Since the banks were already closed, we could not wire the money until the
next day. At quarter of six, I signed our part of the agreements and Martin ran us to the
airport. The lawyers would have to clean up the little details yet. The America West flight
was late of course, so we arrived home late.
Sandy, Garry, and I catch the America West 7:48 to San Diego on the morning of
Good Friday, April 13th. We were met at Tiernan by Brian Duggan, Jamie Palmer, the HR
director in San Diego, Alex Mikhalkin, Steve Lagotta, and Tom Pavilonis, the Operations
director in San Diego. Of course, I am told there are still a couple of problems, including
the expected late arrival by the Tiernan President, Dave Aucherbach, who wants to tell
the employees the news. I have an appointment in Phoenix at three o’clock so this is not
good news. I sat down with Bruce Thacher, the CFO and we resolved the problems, and
he agrees to assemble the employees at ten o’clock for a meeting.
By this time of, course, the employees have figured out what has taken place.
After Bruce’s introduction, I talked to the employees and went down a list of items to
cover. They were very excited and upbeat and had numerous questions. Then Sandy and
Jamie presented the employees with information on the benefits and answered more
questions. Employment applications were handed out and the job of creating a new
company was begun. There were still some small details on the agreements to be ironed
out, so we won’t be wiring our money until Monday.
This deal took eight days from the first telephone call until we took possession of
the assets. Usually, these deals take from one to three months. I have to give a lot of
credit to our attorneys, Steve Pidgeon and Martin Taylor. These guys were phenomenal
in their understanding of the issues, their ability to get agreements cranked out rapidly,
and their pushing on the Westar lawyers to get this deal finished. I was also impressed
with our employees who put in an extraordinary effort to get this accomplished-including
working on a holiday. Now the real effort begins, building a new company, integrating
Tiernan into our company, and making our new acquisition successful.
We had also acquired a small company called Armer Communications. Now that
we had within the company, Radyne Corp, Comstream, MSE, Tiernan, and Armer, and
we planned to do further acquisitions, we decide to simplify the company name and
change it to Radyne Inc.
One of the companies I had looked at for an acquisition was Wegener who made
satellite equipment used by radio broadcasters. Wagener, based near Atlanta was a public
company with sales around twenty five million dollars and operating around or a little
below breakeven. I believed we could reduce overhead costs by selling their products
through our sales channel. We could eliminate about five hundred thousand dollars of the
cost of being a public company as well as the top executive salaries. The company also
owned land that was undervalued on their books. I met with the sixty-five year old CEO a
couple of times-it was rumored that he was interested in retirement. He said he had no
interest in selling the company and further more would not even mention it to his
directors.
The company had been in business for over twenty years with dismal results. I
had decided that the price we would offer should be of interest to their shareholders, so I
pursued a hostile takeover. First Radyne bought one hundred shares of Wegener stock-it's
required to own some stock in the company you are trying to acquire by making a tender
offer. I then sent a letter to each of the directors, and followed it up with a filing with the
SEC. In a hostile takeover, after filing your intent with the SEC you make a tender offer
and communicate directly with the shareholders-and force a vote to accept your offer.
The Wegener board decided to fight and hired an investment banker to value the
company at a cost to the company of eight hundred thousand dollars and gave the
executives change of control agreements creating contingent liabilities of well over one
million dollars. All too frequently, the board and management wastes shareholder money
to keep their jobs, and I believe this was one of these cases. The Wagener stock was
around a dollar ten with little trading (no liquidity) happening and shareholders could not
sell their shares-so I thought a rational shareholder would jump at a price of one dollar
fifty five. Unfortunately, combined with Wagener’s Banker’s valuation, the thinking was
more like, “If Radyne is willing to pay 50 percent more than the market price, it must be
worth much a great deal more than that.” We couldn't get enough votes to force the board
to sell the company. I was not willing to increase our offer and the takeover never
happened. Unfortunately for the irrational shareholders Wegener continue to decline-the
current share price (2011) is four cents.
CHAPTER 15
Those of you, who golf, know that there is no such thing as a Golf Cart Drivers
license. We had an annual company golf outing for the golfing employees. After one of
the outings, where after returning to work the next day and expressing how much fun we
had, an executive (that will remain nameless to protect his embarrassment) and who did
not golf, said he wanted to play in the golf outing the following year. I told him he would
have to take lessons first. He took lessons and worked out on the driving range. As the
golf outing date approached, the executive had taken lessons, but had never really played
on a golf course. The week before the golf outing, I asked him if he had gotten a Golf
Cart Drivers license. He said he had not, I told him not to worry, that I would arrange it. I
called a pro I knew at one of the local golf courses and he arranged to have a cart
available for the executive's test drive. I took the executive to the golf course along with
some of the other guys to observe. The pro had the executive drive down the cart path
with the golf cart, make u turns, and parallel-park. Then we presented him with a
certificate at which time he knew he had been the brunt of a joke. I'm not so sure he
appreciated it, but the rest of us had a good laugh.
Did you know that Casio makes a wrist watch that has a TV remote control built
in? You can point it at the TV and change channel, volume, or on-off. When my good
friend CJ gave it to me, I immediately thought about an application. Marty Howe was an
acquaintance from Gainey Ranch Country Club who likes to sit at the bar in the members
grill and watch sports. The members grill had three TVs and there were three remotes
around the room. Marty could not tolerate anyone changing the channels or messing with
the TV behind the bar in any way. So one summer afternoon when Marty was watching a
Diamondback’s game, and after I alerted everyone else in the bar including the bar
tender, I sat next to Marty at the bar. My left wrist was in full view of the TV. I started
randomly changing the channels-after which each time Marty would change the channel
back and look around the grill to see who was doing it. Of course he never suspected me
since I had no remote (or so he thought). After tiring of channel changing, I would
occasionally turn the TV off or the volume down. Marty, of course, was becoming more
and more irritated. After about an hour, he went around the room and collected every
remote. When that didn't help, he accused the six or so women who were sitting at a table
of having a vibrator in their purse that was somehow changing the channels. After about
two hours, I finally confessed to Marty that I was the one changing the channels-the
incredulous look on his face made the joke worthwhile. That prank became part of the
lore of Gainey Ranch and Bob Fitting.
A couple of years before, Bob McCollum, the former CEO of MSE had resigned
from EFData and founded Comtech Communications in Phoenix, financed by, guess
who, Fred Kornberg, again. There is probably a rule that says “Never hire an
entrepreneur because once they get a taste of entrepreneurship, they always go back to
it.” A couple of years after Bob founded Comtech Communications, CMI changed their
name to Adaptive Broadband Corporation and decided to sell off the EFData division, the
result being that Comtech Telecommunications purchased my old company EFData
around mid 2000 and merged it with Comtech Communications and named it Comtech
EFData Corporation. Bob McCollum was named the president of the combined entity.
After the IPO in 2000, Singapore Technologies ended up with about 65 percent
ownership of Radyne Stock. Frequently, public stock prices are suppressed (called a
shelf) if you have a single large owner such as ST. Investors worry that one day the major
shareholder might dump his shares causing the price to drop. ST understood that their
large holding could be suppressing the stock and lm 2004 agreed to sell their stock in a
transaction called a PIPE. PIPE stands for Private Investment in Public Equity. Usually
there are two ways to sell the company stock. The most common method is to file with
the Securities and Exchange Commission (SEC) and have it approved thus allowing the
stock to be sold to anyone. Typically, the approval takes a couple of months. Or the other
method is to pre-sell the stock to qualified investors, usually hedge funds or mutual funds
and then file with the SEC. Since there is some risk, usually time, the buyers expect a
discount to the price.
In a similar manner to an IPO, an investment Banker is hired to sell the stock, and
the CEO travels with the banker to his clients and makes the presentations. In this case it
will be eight cities in seven days making fifty seven presentations with forty-three clients
buying. I had decided to use Roth Capital of Newport Beach Roth was the largest PIPE
firm in the country. Since Roth would be selling ST's stock, the deal was negotiated
between Roth and ST. ST would be paying Roth's fee. I would be selling about $90
million of stock.
Investment bankers are the quintessential well dressed bankers wearing pinstripe
suits, Italian leather shoes, and one hundred dollar neck ties. Byron Roth, the CEO, and
two of his top bankers came to Phoenix, after signing an agreement with ST, to meet me
and tour the factory. I met them in the lobby wearing one of those redneck baseball caps
turned backwards with the stringy hair hanging down to my shoulders. Byron was
essentially speechless and said very little during the forty-five minute tour. At the end of
the tour, we went to my office where I then removed the hat/hair to the shock of Byron.
He confessed that all he had thought of since seeing me in the lobby was “How in the
world are we going to sell $90 million of stock with a CEO who looked like this?”
Although his colleagues got a good laugh, I don't think Byron liked the joke at his
expense. Many of his employees, though, enjoyed the joke and it was talked about at
Roth Capital for years afterward.
The road show for the PIPE was more tiring than the IPO road show, I guess
partly because I was sixty-nine years old. The first day was a Friday and I flew to Dallas
where I met Byron and we saw three of his most important clients, all hedge fund
managers. I made three presentations; we got three commitments to buy stock, and then
returned to Phoenix. Sunday was off to Chicago, Chicago presentations Monday morning
and then off to Minneapolis for Monday night presentations.
Monday night I had a late flight to San Francisco and took a taxi to the Omni
Hotel, one of the finest hotels in San Fran. I had a meeting scheduled at six o’clock in the
morning and arrived at the Hotel around two o’clock in the morning. I was only going to
be in the hotel for less than four hours, so when the reservations clerk wanted to explain
all the services and features “Pool on the 8 th floor, Business office on 2nd floor, Spa on 3rd
floor, blah blah blah”, I was not very interested. One of Byron’s sales guys met me at the
first presentation, and after six presentations in the morning, we headed to the famous
Tadich Grill, the oldest restaurant in San Francisco. The food was outstanding, but
unfortunately I could only finish half of it and then we were on the move again. Three
more presentations and then we headed for the airport.
Next stop was New York City for seventeen presentations on Wednesday and
Thursday; the first at six o’clock in the morning on Wednesday. Then a car ride to
Connecticut where many hedge funds had set up office. We took Amtrack to Boston
Thursday night, and since we had barely eaten since San Francisco the stew served on the
train was delicious. Boston is the last stop, six presentations then I get to go home. It was
snowing in Boston. Around five o’clock I headed to Logan Airport for my America West
Flight to Phoenix. At the gate, I could see my airplane was being worked on; the engine
cowl was open, and you could see the agents were nervous. I was sure my flight would be
canceled; I noticed an American Airlines Flight was leaving for Las Vegas. There were
usually hourly flights from Las Vegas to Phoenix, and if I could get on the American
flight, I might be able to get home that night and at least I would be away from the snowy
east coast. Of course, as it turned out, the American flight had to be deiced and we
arrived in Las Vegas around a quarter past one in the morning, fifteen minutes after the
last flight to Phoenix. The next flight was at six o’clock in the morning. By the time I
could get to a hotel, it would be after two o’clock so I decided to sleep in the airport. I
finally got home about eight o’clock in the morning from one of the longest weeks of my
life.
Monday, we priced the offering based on commitments, Roth's advice, and
agreement from STS. I had sold all the ST stock for more than ninety-four million
dollars. After expenses and the Roth Capital fee, ST would get around ninety million
dollars. ST had invested around twenty-five million dollars in Radyne and we returned 90
million dollars after an average time of seven years. ST was very pleased and Madam Ho
Ching sent me a beautiful letter of thanks.
One big advantage of having relationships with investment bankers is they put on
investor conferences that you get invited to in order to sell the company stock. I think
Roth Capital does an especially good job of it. His clients tend to be hedge funds and
smaller mutual funds that are generally run by young managers. He holds two investor
conferences a year, a typical one I remember at the Fairmount Hotel in Newport,
California where he had the Black Eyed Peas for evening entertainment one year and
Snoop Dogg and The Pussycat Dolls another year, entertainment that appeals to the
younger managers. During the day there are scheduled meetings with the institutional
investors every thirty minutes, in three days you could have more than forty meetings
with investors.
I had been making my own humorous wine labels for a few years for Christmas
presents. I would buy wine and scrape off the original labels, then replace them with ones
I printed from the computer. The label would say at the top “FITTING VINEYARDS”,
followed by the type of wine, for example “Shiraz 2007”. The body would say “The
grapes for this wine were grown on the backside of Camelback Mountain in Phoenix
where an enema would be inserted. They were tended by Bob and picked at the peak of
perfection. The grapes were crushed under Lorraine’s gentle feet. The wine has a subtle
hint of cactus and bullshit. The perfect accompaniment with Mac and Cheese.” The
bottom line said “The best fucking wine in Arizona!” They were a great hit and I also
made labels for special occasions such as birthdays. When one of the members retired
from the country club, his label said “These grapes were grown up on the hill by the #4
tee box where the guys urinate. A subtle hint of cactus and ammonia.”
They were so popular I decided they might make a good sales tool. There was a
company in Virginia called RSI, with about $500 million in sales, that made big satellite
antennas and bought products that Radyne made to include with their antennas,
unfortunately they bought the competitor's products. I had been unable to penetrate the
company to even give a sales pitch. After some research, I knew the CEO was Dick
Thomas, his wife was Marie, and Dick was noted for his use of coarse language. I made
some labels that said “Thomas Vineyards”, the text on the label said “The grapes for this
wine were grown next to the parking lot at RSI. They were tended by Dick, and picked at
the peak of perfection. The grapes were crushed under Marie's gentle feet. The perfect
accompaniment with spaghetti and meatballs.” At the bottom it said in fine print “The
best fucking wine in Virginia!” I bought three bottles of wine, scraped off the labels and
glued Dick’s labels on. Then I sent the three bottles by FedEx overnight; that was the
time when it was exciting to get a FedEx package. The next day, I waited for a call I
knew would be coming after he received such an interesting gift. I was really crushed and
disappointed when the call didn't come. But then at about nine-thirty-after midnight in
Virginia, I got a call from Dick. He apologized for not calling earlier and said he had a
board meeting and dinner that lasted until after midnight. He said that the wine was the
best gift he ever received and he invited me for lunch the following week. Dick and I
became friends and Radyne became his preferred supplier until he retired. Since that first
label for Dick, the sales people and I made over one hundred labels for the customers that
we believed would appreciate them.
At Gainey Ranch Country Club, there is a morning golf group run by Marty
Howe and an afternoon group called the Miller group. One of the guys (I'll call him
Adam Henry, (AH) in the Miller group was ousted, I heard because of some
disagreement. Adam Henry decided he wanted to play with the morning group. In the
morning group, there was a guy, (I'll call him Oscar Kimmel, OK). OK did not like AH
and when he found out that AH would be playing in the morning, he was visibly upset, he
told me at lunch time “I don't know what I'll do if he is put in my four-som, I don't like
him and can't stand him!” Usually the pro-shop made up the golf groups. Another
wonderful opportunity suddenly appeared! I hurried home and made up a screen name on
my AOL account, AdamHenry@aol.com, from which I sent OK the following: “Dear
Oscar, you may have heard that I am joining the morning group. I have always admired
you, and have asked the pro-shop to team us together whenever possible. Yours Truly,
Adam.” I heard the next morning that Oscar, at dinner with some friends, was extremely
upset. He told them, “I don't know what I'm going to do, yada, yada”
I also knew that OK was leaving town on Saturday, so I fired off another email
from Adam Henry, “Dear Oscar, I want to invite you and Joan to dinner with Shirley and
me on Wednesday next week so we can discuss playing together in the couple’s
tournament. Sincerely, Adam Henry” Oscar sent an email back that said “Am going out
of town, perhaps we can talk when I get back.” That evening Lorraine thought the joke
had gone far enough. So I called Oscar and said “I heard you have been getting emails
from Adam Henry.” He started to explain and said “ I don't know what I'm going to do,
yada, yada........................” and suddenly stopped and said, “Hey how did you know about
that?” at which point I began laughing. Then he knew he had been had! He said it was the
best joke that anyone had ever played on him.
Garry Kline was the acting CFO when this happened. Garry hired an accountant
(let’s call him Bill) for the payables accounts; his job was to manage the money that we
owed others. The accounts receivable clerk, Jill Lee, managed the moneys people owed
us; hence the ethnic joke, “Did you hear about the Polish accountant that absconded with
the accounts payable?” She acted as Bills supervisor for training. At any rate, Bill started
work on a Monday morning, left for lunch and never came back. Garry was out of town
on Monday and when he came to work on Tuesday, he was very upset and was afraid that
something had happened to Bill. All Tuesday morning, Garry called Bill and left
messages. Finally Bill called Garry (Only thing, it was Lou) who said that the reason he
never came back was that Jill was hitting on him.” Garry was astonished and went on for
three days about the incident. Finally on the 4th day, Steve and I took Garry to lunch and
explained that it was a joke. He was so convinced that it took all lunch hour to convince
him.
CHAPTER 16
I had been looking at Xicom for another acquisition. Xicom was a company in
Santa Clara, California that had been founded by Walt Wood, a Microwave Engineer. He
had done a phenomenal job of growing the company and becoming one of the top
companies providing high power amplifiers in the satellite industry; both commercial and
military markets. It took a number of phone calls and emails before Walt agreed to talk to
me, I know there were other interested parties but he probably chose to talk to me
because he could relate to another entrepreneur.
I went to Xicom for a visit and was very impressed with the operation. Xicom was
selling around forty-five million dollars per year of products. Walt and I shared a belief in
similar cultures for the companies. It was clear to me that, although Walt barely made a
profit, the potential for improvement was similar to MSE. Like MSE, there was the
pressure to under-price because of cash concerns. One of the things I frequently noticed
with private companies was that the accounting methods they used did not clearly show
the costs of the company or comply with the requirements of a public company. In the
case of Xicom, it appeared the product profit margin was too low, something that is hard
to fix. Actually the profit margin was much higher than it appeared, because the repairs
of units under warranty were charged to the cost of the product, and the warranty costs
were excessive. Fixing the warranty costs is usually much easier than reducing product
cost. I convinced Walt that he should sell the company to Radyne, and I would not
interfere with the operation except to ask him to increase the prices of his products, and
later I asked him to do more testing to lower the return rates. I think we offered around
forty-five million dollars in cash and Walt accepted. Over the next year, the prices were
increased, the returns from failures dropped, and the profit margin grew from twenty to
thirty percent. Xicom sales also increased by more than 30 percent. It is a successful
acquisition when it takes no money to improve it and takes no work of the acquirer to
manage it. The sales for Radyne had increased to more than $160 million and the market
cap was now around $300 million.
Comtech Telecommunications, had a stock split, and since I had the stock that I
had received more than twenty years earlier and couldn't sell, I was sent more stock by
mail with the same statement on the back. I looked up the price and saw the stock was
now worth more than $200 thousand. I conferred with my attorney, and we decided to
sue to force Comtech to buy the stock or allow me to sell it. Since the original contract
under which I received the stock was more than twenty years old, the statute of
limitations was well past, and the attorney found some obscure law in order to sue; so
obscure I don't remember it any more. We decided on Federal court because it would be
quicker and because if we lost, Comtech could not collect legal fees. On the court date,
Fred Kornberg himself flew to Phoenix to go to court. I wondered why the CEO of a
billion dollar company and with a reputation of not liking to travel would come to
Phoenix. I concluded that Fred wanted to find a way to keep from paying me.
The Federal judge, probably not wanting to deal with our obscure law idea,
decided to arbitrate the disagreement. We were in separate rooms and the judge would go
from one to the other. As I recall, the first offer Fred made was around $60 thousand, and
I countered with around $200 thousand. After returning with Fred's latest offer of around
$70 thousand, the judge pointed out to me that if I rejected this offer, Fred could walk
away and I would have to go to trial. I was convinced that that was exactly what Fred
would do so I accepted the last offer believing that Fred would have walked. It was $70
thousand more than I thought I would ever get.
I had been having angina pains from my heart off and on for the past ten years
and knew I would have to have heart surgery soon so I retired from the CEO job. The
board hired Myron Wagner to take over as CEO, he had been an engineering manager at
General Dynamics in Scottsdale.
I had a quadruple bypass at Mayo Hospital in Phoenix in May 2007. In June when
I went to the Cardiologist's office at the Mayo Clinic in Scottsdale a month later for a
follow-up, I had a heart attack. Guess what the cardiologist does when you have a heart
attack in his office? He calls 911; there are no emergency facilities in the Mayo Clinic.
What happened was one of the bypasses clogged up. After an angiogram, it was decided
that nothing could be done to reopen the clogged artery. The heart attack caused 5 percent
damage to the heart, and there has been no noticeable problems since.
Hiring Myron as the CEO was the ultimate violation of the First Rule of Survival,
we turned the company over to a stranger and in my opinion an incompetent. Myron was
in way over his head, he may have grown into the job eventually, but that takes time the
company could not afford. It is a tough job to be a CEO of a public company, in addition
to being a manager of a business, the CEO must manage and direct the culture of the
company, be an expert in finance and accounting rules, understand securities law, make
sales presentations to investors, write and approve financial statements and press releases,
conduct quarterly investor conferences, organize future strategy meetings, decide on the
future direction for the company, earn the respect of the employees, manage and work
with the board of directors, and dream of the future. The board, concerned about the
direction of the company under Myron, decided to put the company on the market, and in
August of 2008 it was sold, to guess who, Comtech Telecommunications and CEO Fred
Kornberg. As I recall, the price paid was $230 million, not too bad from essentially zero
in thirteen short years!
Retirement has brought new opportunities for some practical jokes! I have a
golfing friend, Bob Coles, who at the drop of a Democrat’s name and particularly
Obama, can rant for thirty minutes about, taxes, Obama’s birth certificate, and other stuff
he hears listening to Rush Limbaugh. He drives an SUV. I bought two “I Love Obama”
bumper stickers and put one on his bumper and the other on a cardboard hinge I made. I
took two pieces of cardboard about the same size as the bumper sticker and used duck
tape as a hinge. The bumper sticker was glued to one of the pieces of cardboard. The
hinged bumper sticker had that double sided sticky tape to hold it on the SUV. With Paul
Shimps’ help, I placed it on the top of the SUV so when the SUV was parked, the hinge
closed flat from gravity and couldn't be seen; but when moving, the wind would open the
hinge, the bumper sticker would pop up and drivers behind him could see “I Love
Obama” The idea of the other bumper sticker was so that he would find it and stop
looking for any more. This worked so well that Bob drove for a month without knowing
the “I Love Obama” was being displayed. I wanted to be sure he saw it before the wind
tore it off so I took a picture and emailed it to him and our friends.
A friend of mine of Norwegian extraction, Jim Klugness, was traveling to
Australia on Qantas Airlines. On my AOL account, that allows six or seven screen
names, one of the screen names I set up was Qantas@AOL.COM. Jim's email was also
AOL. When one AOL member emails another, the domain name AOL is often not
used; so when Jim received my email, the from address was only “Qantas”. The subject
line said: Qantas Alert for Travelers to Australia. In the body of the email, it said
“Effective immediately, all passengers of Norwegian origin will be strip searched in
Sidney Airport before allowed in the country.” Whether it took a millisecond or ten
minutes, and I hope, a call to his travel agent, before Jim figured it out, I enjoyed the
thought.
Life is good, pranks are plentiful, and I’m working on the First Rule of
Retirement.
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