Lewin and Lalvani were not the only characters who were impressed by the young Alan Sugar. Ronnie Marks was the owner of an audio store on London’s Tottenham Court Road. Running from Oxford Street to Euston Road, this one-way street is a shopping heaven. Although at the north end it houses department and furniture stores, it is best known for its collection of cheap electrical stores. Laptop computers, stereos and DVD players are among the many goods available here at budget prices. The electrical consumer revolution of Tottenham Court Road was sparked in the 1960s, and Ronnie Marks was one of the first men to open a store there. He was also a wholesaler, and one day one of his counter staff told him that there was a ‘new face out front’ who was seeking some goods on credit.
The new face out front was Sugar, who found that Marks needed some convincing to give him any sort of credit deal. He had never met Sugar before, and was therefore unable to assess whether he could trust him. The irascible Sugar wouldn’t back down and eventually a deal was struck. Marks would give him some goods on credit, but he would need to pay for them before he could return to collect a new batch of goods. True, this was a tight arrangement, but Sugar relished a challenge and selling was his forte, so it was not one that he feared. Like clockwork, at the end of each week he would return to the wholesalers with his money for the recent consignment, and ready to fill his vehicle with a brand-new batch of goods.
Once again, he had stepped up to the challenge and passed with flying colours. Within a matter of months, Marks was so impressed that he allowed Sugar more leeway, giving him four weeks to pay for each consignment. Even under this looser way of working, Sugar never let him down. Indeed, he was to regard Marks as a confidant. Like many who are successful early in their life, Sugar gained a lot of respect – but he also found he had to put up with a certain amount of condescension and patronising from some old-school business types. ‘I can’t stand doing business with him because he treats me like a little schoolboy,’ Sugar confided in Marks, as they discussed a third party. ‘He always calls me “son”. I’d rather talk to his storeman.’
However, all the patronising people in the world couldn’t hold Sugar back. His success and reputation soon snowballed. As he approached new wholesalers, he could refer any sceptical questions to those he was already working with, all of whom would give him a glowing recommendation.
Soon, though, Alan Sugar wanted to turn from a salesman into a manufacturer. The first major breakthrough that Amstrad had to this effect came in the hi-fi market. Sugar noted, back in the 1970s, that the dustcovers for turntables were very expensive. ‘So I decided to find out how they were made,’ he said. ‘I’m a quick learner, when I want to be. I found out about injection moulding, how it was done, and got someone to make me a few thousand. Until then, I’d been buying stuff at £1 each, and hustling to sell it at £1.10. With the plastic tops, I became a producer, making something at four shillings [20p], which I sold for a quid. I’d risen above being just a buyer and seller.’ He had invested £1,805 in the injection-moulding machine and he was quickly reaping the rewards.
However, the electrical stores that stocked turntables were also beginning to stock an entirely new kind of product – one that was to make Sugar an absolute fortune.
CHAPTER FOUR
COMPUTERS
As he sat in the Amstrad headquarters, computer engineer Mark Eric-Jones wondered who this charismatic late arrival to the meeting was. It seemed he had just stepped off a plane at Heathrow Airport and strolled into the meeting as if he owned the place. It was a lively meeting, but Eric-Jones noticed that, whenever this man spoke, everybody else would immediately fall silent and listen intently. Who was he? Mark Eric-Jones, meet Alan Sugar.
As the others at the meeting fell silent, Sugar announced that he wanted Amstrad to enter the home-computer trade. This was no vague dream of a rich man: he had a distinct vision as to how his company would pitch themselves in this growing market. Not only that, Sugar wanted to enter the market very quickly – within months. Warming to his theme, he eloquently outlined how he envisaged all this working. He wanted to launch a computer that was ‘a real computer, not a pregnant calculator’. When it came to computers, for Sugar, size was everything. In the 21st century, computer manufacturers struggle to produce ever sleeker, thinner and more diminutive laptops. But, back in the 1980s, Sugar felt that bigger was definitely better.
He had first become interested in the computer market in 1982. Companies such as Commodore, Spectrum, Acorn and Oric were making a tidy profit selling home computers to a public who were fascinated by this new trend. At up to £300 a go, these computers were proving a very nice little earner. He wanted the model to have ‘perceived value for money’, and to gain that he wished to ape the sort of computers that the public normally saw only in airports and offices. Furthermore, this would be an all-in-one model. Those who purchased home computers back then normally had to buy a cassette recorder to plug into the computer, which was then itself plugged into the family television set. It was a complicated, cumbersome and rather ugly arrangement. The connections required were often baffling for a nontechnical generation, and, even if they managed to put the parts together successfully, they were rarely able to tune the television towards even a satisfactory sound and picture quality. Not only that, these computers were also bringing to the family home a whole new set of arguments. In addition to rows over which television show the family would watch of an evening came disputes about when the kids could play Pac-Man without interfering with their parents’ favourite television show.
Sugar had noted this tendency and was determined that his product would be free of such problems. ‘There were lots of rejects coming back because of mismatches on products,’ he said of his rivals. Due to this confusion, he said, many computers were being not just returned to the shops, some of them were also being abandoned underneath customers’ beds, never to be used. ‘Our first computer was a very typical Amstrad concept,’ he said. ‘I decided that the Amstrad philosophy is an all-in-one piece, so we would present our product as complete with a keyboard, cassette mechanism and monitor.’
The other thing about the computer he dreamed of producing was of course its size. He quipped that his model would be far too big to be thrown under a bed, but of course there were other reasons as to why he thought big was beautiful. Putting himself in the place of a customer walking into his local Dixons store, Sugar said, ‘He looks at this thing, with its whacking great big keyboard and a monitor, and he has visions of a girl at Gatwick Airport where he checks himself in for his holidays. And he thinks, “That’s a real computer.” … So that was my marketing concept: the old man, who has got to fork out a couple of hundred quid on kit because the kid is driving him mad for a computer, sees this thing that actually looks like a real computer.’
As we shall see, throughout the design process, Sugar’s knack of understanding what makes the customer tick was vital in the creation of a winning product. At times, this would run counter to the more technical mindset of the team he assembled, but Sugar’s commercial instincts would, quite rightly, prevail. Although Sugar’s plans were very much focused on the ‘man on the street’, he also had a plan to give a nod to the business market. This was to prove to be the salvation of the entire project.
To get to the stage where Mark Eric-Jones would be sat in the Amstrad office wondering who Sugar was, the project had already taken many twists and turns. It was in August 1983 that Amstrad’s Bob Watkins pitched up at the headquarters of Ambit International, carrying a large cardboard box. He opened the box and showed Ambit’s Roland Perry a computer keyboard, with the Amstrad logo emblazoned on it. Watkins told Perry that Amstrad were attempting to design a new computer and that he wanted Perry to help them bring the project to completion. Sugar was a man in a hurry, not least because he had already been let down during his quest for the first Amstrad computer. Being new to this game, he had appointed a couple of engineers of his acquaintance to work on the software side of
the project, while he and Watkins worked on the exterior design. However, the software designer suddenly left the project. When Watkins finally found the designer’s home and gained entry, he found a rather chaotic scene with computer parts strewn everywhere. He eventually discovered that the disappeared designer had cashed a cheque in the north of England. Accordingly, a running joke for the project was born: that the team could always ‘run off to the North’ if things got too bad.
Therefore, time was of the essence and Sugar was actually demanding that the project be completed within five months. Perry first tracked down one of the designers involved in the project so far. He recalls being met by ‘an oldish guy, bearded … and smoking a pipe’ – not quite the youthful über-geek that Perry might have expected. As their conversation continued, it became obvious that the bearded pipe-smoker’s teenage son had actually been doing most of the work on the project. No surprise, then, that Perry decided to build his team from scratch. For this he turned to Britain’s then equivalent of the Silicon Valley – which was Cambridge University. There he met with two sets of designers. One of these teams was unsettled by the fact that Perry couldn’t tell them – due to Sugar’s request for secrecy – who the client was. However, the second team he met were far more enthusiastic.
All seemed to be going well as Perry met the team, but, when the team were asked how long it would take them to complete the job, their answer was ‘about eight months’, which was considerably longer than the timeframe Sugar had demanded. Perry and the team talked on, moving to a local pub for a drink and a bite to eat. So it was that the King’s Arms pub in Dorking was the venue for the discussions that would make Sugar’s vision come true and in the timeframe he had in mind. Compromises were reached, technical details tweaked and a deal was thrashed out. A few days later, the team were invited to Amstrad headquarters, where, as we’ve seen, Mark Eric-Jones had discovered the identity of his client. He was quickly impressed by Sugar. ‘He was the exact opposite of some people who just muddle around,’ recalls Eric-Jones. ‘He had this immense clarity in his ideas and in what he was trying to achieve.’ It was game on.
This was a lean and mean game, too. As David Thomas explains in Alan Sugar – The Amstrad Story, the resources and timeframe for the project dwarfed those offered elsewhere in the industry. ‘When IBM designed its first personal computer, admittedly a more complex machine, it gave 26 in-house engineers, supported by 100 manufacturing technicians and an array of sub-contractors, a year to complete the project – and this went down as a miracle of speed in the annals of the world’s biggest computer company.’
Sugar, meanwhile, was giving six engineers less than five months to design Amstrad’s first computer. As Eric-Jones put it, ‘It was sufficiently close to impossible to do in that timescale that it was a very exciting challenge.’ A statement oozing with ambition and humour – and he’d need plenty of both to pull off the task. An abundance of frozen pizzas helped too, he recalls.
Amstrad’s culture did clash with that of the designers on occasion. Due to security issues, the Amstrad office worked very set hours of 9am to 5.15pm. So it was that, ten minutes before closing time each day, a security guard would give the staff notice to quit the building and the whole team – including Sugar himself – would exit. The Ambit team were used to more relaxed working hours, and so communication was tricky as the two teams were both working consecutively for only a few hours each day. But this problem was lessened because Amstrad were actually quite happy to leave Ambit to get on with it for most of the time. They did, though, get regular demonstrations and these would see Sugar’s customer-focused mindset clash with the Ambit technical mentality. Sugar’s perspective tended to win the day.
After numerous ups and downs, more than a few dramas and plenty of the aforementioned pizzas, the Ambit team hit its deadlines and the first Amstrad home computer was completed and launched in April 1984. The imaginative launch took place at a grand Westminster hall and the new machine was reviewed enthusiastically by the trade press. Guy Kewney of Personal Computer World gave it a thorough testing and liked what he found. ‘The Amstrad is a powerful, fast machine, with plenty of memory, easy to program, and packaged in a way that means it will comfortably outsell the Acorn Electron, and give the Commodore 64 and Sinclair Spectrum a hard run for their money. I expect some 200,000 systems to be sold by the end of the year.’
Although the home-computer market was to peak soon after the launch, the fact that Sugar had given a nod to the business market in the design of his model and the fact that he marketed the computer elsewhere in Europe meant that he sold out and made a nice profit.
The marketing in Europe had been handled brilliantly by Sugar’s contacts overseas. For instance, in France, Marion Vannier promoted it as ‘The Anti-Crisis Home Computer’. Again, the strength of Sugar’s ‘tower concept’ was to the fore here. She was a woman very in tune with Sugar’s ethos. She once said of Amstrad’s French operation that ‘We transform elitist products into mass products. We seed new markets.’
Meanwhile, Jose Luis Dominguez in Spain was also enthusiastically promoting the Amstrad model. Soon, the overseas sales were getting higher and higher: from £10 million in 1983/84 to £174.9 million in 1985/86.
It was at this point that Sugar planned to enter the word-processor market. During a flight to Hong Kong, he produced a rough sketch of the model he had in mind. It took his liking for the ‘all-in-one’ concept to a new level by including the printer in the one-piece model. He codenamed the project ‘Joyce’ after his secretary of the time. Again, Sugar was looking for a slick and speedy operation to bring his dream to fruition. He also wanted it to be very competitive in value. This would be a professional-standard business computer that would sell for the user-friendly price of less than £400. Just five years earlier, such machines would have sold for up to £10,000. Once more, Sugar was bringing the computer to the budget of the people. His attention to detail in this regard paid dividends. When he sat down to read the instruction manual that the engineers had produced, he was horrified. It was full of the most impenetrable jargon imaginable. ‘They all thought they were going to get the Nobel Prize,’ he snapped, showing the neat line in sarcasm that was to become his trademark on The Apprentice. ‘From an engineering point of view, the book was fantastic. It had cross references for every single detail of the Z80 processor. But that doesn’t tell somebody how to write a quick letter about selling a lawnmower.’
The model – and an improved manual – completed, it was time for the launch, which took place in August 1985 in a London conference centre. Three actresses were hired to play the part of secretaries: one who would use only hugely expensive word processors, one who would use a typewriter and one who would use the affordable Amstrad word processor. Sugar told the launch bash that his model would ‘blow the lid off the personal-computer and word-processing market’. He was bringing the word processor into the range of the little guy, he said, and, despite its cheap price, it included ‘features that will make the transatlantic names wince’.
The trade press were also impressed, and the word processor received some glowing reviews. Which Computer magazine said it was ‘truly amazing for a computer in this price range’; Popular Computing added that ‘nothing else comes close’; while Personal Computer World praised its ‘spectacular value for money’. Electrical Trade and Retailer was similarly taken with the model, and its conclusion must have been particularly welcome to Sugar: it praised it as ‘a grown-up computer that does something people want, packed and sold in a way that they can easily understand, at a price they’ll accept’. This positive publicity was due in part to the charm offensive that the computer division of Amstrad – called Amsoft – had undertaken with the gentlemen (they were rarely women in computer magazines) of the press. Although schmoozing the press was not a part of business that Sugar enjoyed, he allowed Amsoft to do as they saw fit.
Other developments in the computer business that Sugar was not too keen o
n, but that he nonetheless went along with, included the launch of an Amstrad Users’ Club. Everyone who bought the word processor would have found inside the box a leaflet with a smiley photograph of Alan Sugar on it. ‘Now you have bought the computer, why don’t you join the club?’ read the text. All these new features were helping to make Amstrad bigger and bigger players within the computer market, and Sugar was loving it. He said of this latest model, ‘The pundits thought we were bloody mad again … They looked at us as the poor relation who needed to go to the mental asylum.’ But, he boasted, he had had the last laugh as he brought ‘computing to the people who never even thought they would use a computer’.
The advertisements promoting the machines were impressive. Featuring old typewriters being thrown into a scrapyard, they boasted of the brilliance of the Amstrad Word Processor, concluding, ‘It’s more than a word processor for less than most typewriters.’
Meanwhile, Sugar had personally visited trade outlet heads to sell them on the charms of the model. He did it well: Dixons took an initial order for 20,000 models after meeting Sugar. This was a good move, because it took off wonderfully. ‘It was one of the great phenomenal takeoffs in my experience,’ recalls the Dixons chairman. He added that it was a ‘bombshell’ to him how well it sold. Not that he had doubted it had potential. ‘The dream of a business of ours was that computers should cease to be exclusive, magic products,’ he said. ‘They would become consumer electronics. That was the great breakthrough. That was the measure of Alan’s genius.’
Sir Alan Sugar Page 5