Computer Centre One
I'd spoken to the Commodore Regional Direction numerous times on the phone before he agreed to meet me. During those conversations he made it abundantly clear that before I could be approved as a Commodore dealer I had to be approved by him, have my business facility approved and I had to purchase $25,000 in inventory, parts and promotional material. The $25,000 had to be paid up front, it couldn't be financed, and it was a firm Commodore requirement. If I couldn't give him a bank check for $25,000 then I would be wasting both of our time. I never told him I had the $25,000, but I assured him I understood the terms.
I've mentioned before that I score very high in abstract reasoning. What I am about to outline represents the first time I put this rare ability to a practical, legal use and the first time I made a conscious effort to use it. There was no way I could afford a retail store Commodore would approve, nor could I raise $25,000. However, I was confident I could impress the Commodore Computer's Regional Director well enough to overcome these obstacles. I was confident of this because I was able to see the budding computer industry as few could.
It was early 1982. I had read everything available on the new microcomputer industry (personal computer or PC wasn't a term yet) and I knew it was about to blossom, but I could also see it was at a crossroads. Apple had released it's first product, the Apple II in 1977. In the same year Tandy (Radio Shack) released their entry level TRS-80 and Commodore had released it's first model, the PET 4040. Tandy and Commodore had just released updated models with more power and capability and Apple was rumored to be near doing the same with a "revolutionary new computer." Up to this point these three companies were the major players in the microcomputer business. However, the year before a new player with lots of clout had thrown in and was threatening everyone else: IBM and their new product, the "IBM Personal Computer." The IBM PC had been released in 1981 but wasn't as popular as the other three because the IBM PC had it's own proprietary operating system, called PC DOS, which was the IBM PC's problem. Because this new operating system was new it lacked software. IBM and other vendors were working hard to develop and convert software for the new IBM format, but at this point IBM PC sales were flat for this reason.
Commodore on the other hand ran on industry standard CP/M operating system. Microcomputers were all new, but what software was available was designed for the CP/M operating system. So in early 1982, Apple led in sales, but was stagnate because there hardware was dated, (Apple released the IIe and the Lisa a year later in 1983). IBM's PC showed great promise and would be a serious contender in the near future. But at the time I sat in the restaurant with the Commodore Regional Director, it was his company and Tandy who were in a position to control the new microcomputer market. I knew it and he knew it. Commodore was at a critical juncture. A moment of history to be won or lost. The future could be won by Commodore because they had the momentum. But to win Commodore had to move now and they had to move fast.
What Commodore needed most were outlets. Dealers to sell their product. Commodore had just released a new business computer, the CBM-8080. Though under rated by history, the CBM-8080 was the best business based microcomputer available in 1982. Commodore understood this, but they also understood that to sell it they needed professional level dealers. Youngstown was a medium sized market, but a market they weren't represented in. To get into Youngstown, Commodore needed me. More specifically the Regional Director needed a dealer in Youngstown. All I had to do was convince him I was the guy he needed. Before our meeting I had done my homework and knew this. I had called Commodore headquarters and asked questions. I had done something that would later be called "social engineering" to dig deep into the company and get the answers to questions they didn't want to answer.
Without explaining how I knew all that I did, I explained Commodore's position in the industry. I saw Commodore as a gamble. I picked them for this reason. They would either dominate or die in the next two years. I picked them because they had to take risks. I couldn't get in the door with IBM. Tandy was tied to their Radio Shack Stores, and Apple had an established dealer network. Commodore was perfect for me because they had a great product, but a limited time-frame to act. I picked Commodore because they had to gamble. I would be a roll of the dice. I had the will and ability to succeed but I didn't have enough money to play the game. I explained all of this to the Commodore Regional Director, then told him he could have me, but to get me he'd have to wave the $25,000 entry fee, which he could do under extraordinary circumstances. When he asked why he should take such a risk with me I told him he'd do it because he was impressed with me and he was under pressure to open Youngstown.
I'd taken my wife with me to this meeting. Mary sat quietly listening. The guy thought about my offer. He looked over at Mary and she smiled. For some reason that seemed to close the deal. With a handshake he accepted my wild offer. He gave me a valuable Commodore dealership for free and threw in a line of credit with Commodore because he understood I was broke. I used what little money I had to rent a small dump of an office in Youngstown. A single floor motel converted to office use. A dump, but every "office" had its own parking slot and bathroom. The next thirty days was a whirlwind. I sold computers and things were off and running, but mistakes were many and my learning curve nearly killed me. The Commodore CBM 8080 was the most advanced microcomputer available at the time and it was difficult to master. I worked through more nights than I slept, but eventually things began to make sense.
Thirty days after I opened up for business I attracted the attention of Dick Mills, the most powerful businessman in Youngstown. He owned most of the city's buildings, including the IBM building. I offered to come to his office, but Dick Mills insisted on visiting me at mine. In fact, he was in my parking lot talking to me on his car phone. (This was a "radio telephone", three years before cell phones, and four years before they would reach Youngstown.) I looked out the window to see a chauffeur driven Rolls Royce in front of my dumpy office. I'd never seen a Rolls Royce, so was rather impressed with this one. A minute later Dick Mills and two associates stood in my office. I had no guest chairs. He took one look at my kitchen table desk and said, "What a dump." We talked computers for ten minutes before he'd heard enough. He said he'd buy a computer from me (my largest sale at the time) but what he wanted was to help me.
After a ride in his Rolls Royce he showed me a ground floor retail office space in Youngstown's City Centre One building, the area's newest high-rise and it's premiere office space. "It's yours if you want it," Dick Mills said. I could have it rent free for six months, then for a small amount after that until my business took off. "Why," I asked. The City Centre One building was all glass and high-tech, so he wanted a computer store on its ground floor to show it off. He had two conditions: I'd have to leave my kitchen table desk behind. He'd arrange appropriate office furniture. And I'd have to change my company name to "Computer Centre One", to match the building. It wasn't a difficult decision. I can't even remember what it was called before that.
Donald Trump has famously said that the three most important business decisions are: Location, location, and location. After moving into the beautiful City Centre One building I had to agree. Computer Centre One was an instant success. Two months after the meeting in Cleveland with the Commodore Regional Manager the man met with me in my office. He was astounded by my success. The office and showroom were outstanding. I had a secretary, an office manager, a salesman, and six programmers who were kept so busy they couldn't think straight. Life was good. It was then that the Commodore man dropped some bad news on me. Commodore was about to release a new product called the Commodore 64. The 64 was an impressive high end home computer, one that every dealer was required to carry and sell. There were even minimums we had to sell or risk loosing our dealership. I didn't do game computers so I argued against it. It didn't matter, Corporate was pushing the Commodore 64 so it was either carry it or give up my dealership. In the end I agreed with no intentions of selling the thing.
One day that summer I read an article to my programmers about a product Bill Gates was selling. MS-DOS. We had an IBM-PC in the office that we used to develop software and like everyone else we originally used IBM's PC-DOS on the computer, then bought Microsoft's MS-DOS when it came out. We paid $60 for the Microsoft MS-DOS, but it was so much better than IBM's free PC-DOS that everyone did the same. What I read to my guys was an IBM press release that they would begin including Microsoft's MS-DOS with every IBM-PC they sold. It was part of a licensing agreement in which IBM would pay Microsoft $30 for every IBM-PC they sold with MS-DOS included. I told my guys that Bill Gates was an idiot. How could anyone make money selling software for $30 a copy. The obvious answer was that Gates sold a bunch of them.
Without warning thirty Commodore 64's arrived. I was furious, but there was little I could do. At this point my mother had moved up from Georgia to work as my business manager so I gave her the job of re-selling the C-64's through hobby shops. Commodore had strict rules that the C-64 could not be resold thorough anyone other than licensed Commodore dealers and that any violations would result in a loss of dealership. That they would force me to sell a product that didn't fit my dealership didn't sit well with me so I immediately began looking at different computers to sell. With the arrival of those game computers my days with Commodore were numbered.
The C-64 was a hot product, something the hobby shops couldn't get anywhere else, so my mom had no trouble selling them. She sold the first thirty in a day then ordered a hundred more. For the next two months Computer Centre One was the highest volume Commodore dealer in the country, mostly due to C-64 sales. None were sold under Commodore's rules. The C-64 retailed for $595. I can't remember the exact numbers, but I paid something like $414 each. My mom resold them hobby shops around the country for $460 plus shipping. We sold so many my mom said Computer Centre One was more like a bookie joint than a computer store. We had a quarter million dollars a month going through our bank account. Only a fraction was profit, but it was an impressive number for 1982 in Youngstown, Ohio. Especially for a twenty-five year old a few months out of prison.
Five months after opening for business the local newspaper ran a feature article on me called "Taking on IBM". It was a flattering piece that made me out to be the local answer to Microsoft. At the same time the president of the bank I did business with introduced me to his friends as the smartest man he'd ever met. During a lunch at his private club he told a group of distinguished gentleman that he'd never seen anyone able to build a successful business from nothing as fast as I had. Two months later I sat in his office and he told me he'd never seen anyone F-up a business as fast as I had. He told me this after informing me that the FBI had frozen my bank accounts.
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