by Sugar, Alan
9
Young Businessman of the Year
‘And the Award Goes to the Amstrad Blockbuster Computer’
1982–6
In February 1984 I received a letter from the Guardian informing me that their committee of experts had selected me as the Young Businessman of the Year and inviting me to attend a big bash at the Mansion House in the City on 29 March.
I called Tim Holland-Bosworth and asked him what this was all about. He told me it was one of the highest accolades a businessperson could achieve and that it was a really big do, attended by all the City dignitaries, including the Lord Mayor. He added that I would be the guest of honour and would most certainly have to make an acceptance speech. Bloody hell, I thought, the last time I made a speech was at my wedding.
My mood at the time was not that great. I was concerned that the Amstrad bubble might be about to burst. Since flotation, we had doubled our profits year on year, but I knew there was no way we’d achieve this in 1984 and I was worried about what my next business move should be.
Ann and Jim Rice were with me in the car on the way to the Mansion House. I was very nervous at the prospect of speaking to all these people, so while Jim was talking to Ann about what a wonderful event this would be, I was being my usual sceptical self. I felt like a bit of a fraud, accepting this great accolade knowing that the overhyped expectations of me were about to evaporate. Both Ann and Jim told me to stop being a killjoy and shut up. They reminded me how far we’d all come since the days of Ridley Road and told me I should stop being silly. It didn’t help.
When we arrived and I saw the size of the room and the hundreds of people there, I really got cold feet. I sat through the lunch at the top table, nervously trying to exchange pleasantries (ha, ha – me exchanging pleasantries!) with the Lord Mayor and other dignitaries, and then it was time to accept the award and make my speech. Heaven knows what I said. I just blurted out some words, including a joke that got a mild grumble of a laugh, but that’s all I can remember.
After the lunch, I had to hang around while a load of photographers took pictures of me in the line-up with the Lord Mayor and others, but then I got out of there as quickly as possible. I was relieved when it was all over. The next day there were some very nice pictures of Ann and me in the papers and the family all called to say they’d seen them. I’d picked up my first gong.
*
By 1984, sales of our tower systems had flattened out. Like all boom products, they were starting to reach saturation point. Compared to the profits for the year ending 30 June 1983 (£8m on a turnover of £52m), the year ending June 1984 saw profits starting to plateau out at £9m on a turnover of £85m. The figures for 1984 would have been worse if we hadn’t moved into the growing market for colour TVs and VCRs and, once again, the Emperor was to play a role in the Amstrad story.
A couple of years earlier, I had received a call from Itakura of Orion. We had not done any business with them for a long time, but they had noticed the phenomenal growth of Amstrad in the UK audio market. Itakura, obviously prompted by Otake, called to say that they were very interested in supplying us with audio chassis and, if we agreed to this, they might supply us with the colour TV they were now making. He also mentioned that they planned to start VCR production and that when they did, we might be able to buy these also. I didn’t need to kiss Otake’s arse any longer, so I was quite dismissive. Itakura told me that they had purchased some of my tower systems to study and would be able to produce them at a very good price.
In fact, the timing was fortunate. Rumours had been floating around the Taiwanese market that Hawson was in terrible financial trouble. Chi Chi Liu from VQC told me they were not paying their suppliers and that it was inevitable they’d soon go bust. With this in mind, I played along with Itakura, but in a very standoffish manner. I fired some prices at him which were ridiculously lower than those we were paying Hawson, thinking that he’d simply go away.
To my surprise, a couple of days later, he told me that they would be eager to produce at those prices. I sent Bob Watkins to Korea to check it out. He was hosted by Orion’s chief engineer, Mr Ogami, a short, quiet man with a rather shrewd look about him. He was quite a nice fellow who I believe was about the only one that stood up to the Emperor’s nonsense.
Bob called me from Korea and told me that their factory was virtually idle. Bit by bit, he managed to pump information out of Ogami, who told him that Orion’s audio business with Michael Raymond had gone down the pan – my tower systems had taken over and wiped out the music-centre market completely. It was clear that Otake was desperate for work to fill his Korean factory and, typical of him, he used the carrot of selling colour TVs and the promise of supplying VCRs to tempt me to transfer production of my tower system chassis to him. It was nice to have Otake in a position I was comfortable with for once and I took the decision to switch production of the tower system chassis to Orion in Korea on the proviso that he would sell us fourteen-inch colour TVs immediately and VCRs when they started production.
From an engineering point of view, Orion was a far more professionally run organisation than Hawson or Morse. The speed of reaction into production was brilliant and the quality of the tower system chassis was a cut above what we’d been used to. Our after-sales service department had been suffering due to the poor quality of some batches of Hawson chassis, as had our reputation as a result. This reputation for poor quality had to be nipped in the bud quickly, as it was the only argument our competitors could raise against us, so we took the opportunity of sorting this out while we were changing manufacturers. Bob insisted that the products had to be produced to a certain quality level and that we would be placing independent inspectors at the factory to ensure that the goods were perfect. We appointed our own quality-control manager, Chris Pullen, who worked in conjunction with Bob to write up new testing procedures.
You have to take your hat off to Otake – he had a nose for the market. He wanted to move away from the audio business and had spotted that the VCR market – monopolised by JVC with their VHS system – was starting to boom. By the early eighties, JVC had won the video war against Philips, who originally introduced the Video Home Recording system, and Sony, who were next to market with their Betamax system.
Otake duly started a VCR production line, but for some strange reason he was desperate to get his first orders, so desperate that he made an unexpected visit to England, during which he was uncharacteristically pleasant and schmoozy. He asked me to buy 10,000 units and offered to supply them to me on open account, without a letter of credit, quite unprecedented for him, as he always insisted on LCs.
This wily old fox was up to something and I couldn’t quite work out what. Here he was with his new charming persona, begging me to buy VCRs. He didn’t need to beg Amstrad to enter the VCR business – it would be a great boost for us – so while I was confused over his strange change of nature, I didn’t care about the reasons; I was delighted to get into the VCR business.
His price was around ¥72,000 (the Japanese yen had dropped to ¥350 to the pound). This would translate into a retail price of £399, the highest-priced Amstrad product ever, but one had to consider that JVC’s and Ferguson’s VCRs were at least £200 more.
Knowing that the market was desperate for VCRs, I made an appointment with the buyer at Currys, Ian Radley, the same guy who had bought CB radios from us a couple of years earlier. Tricky Dickie and I sat in Radley’s office while he leaned back in his chair, very arrogant, telling us that there was no way we would be able to supply VCRs, due to the strict quota instigated by MITI (the Japanese Ministry of Trade). I told him to mind his own business regarding the technicalities and stick to whether he wanted to buy them or not – it would be up to me to deliver them. He placed an order for 10,000 units, exactly the amount I’d bought from Orion.
Stanley Kalms, the chairman of Dixons, had always had a pretty negative mentality towards Amstrad. He didn’t want to buy from me if he thought I was buyi
ng from someone else – he wanted to buy direct. Dixons’ buyer, Terry Fitt, used to buy a few tower systems from us simply to maintain the credibility of their stores, as they couldn’t be seen to be without the best-selling kit. I would go so far as to say that all my business with Dixons in years to come would be on that basis – I would generate the demand through my ground-breaking products and advertising. There were never any favours coming from Dixons. They bought what they had to buy because the market demanded it.
In this case, Stanley knew who my supplier of VCRs was and went directly to Orion. Otake struck up a relationship with Dixons and cut me out. I complained bitterly to Otake that this was not ethical and he got very angry in return, telling me he had not stolen my customer and that he’d had a relationship with Dixons going back many years, from when he supplied them with tape recorders.
This was total bullshit. Dixons knew that I’d pulled off a coup in getting low-cost VCRs, so they went to Otake who did a deal behind my back. However, we were buying audio chassis from Orion in large volumes and I would be cutting off my nose to spite my face by moving that business elsewhere, so I reluctantly swallowed this dirty double-dealing. I would constantly jibe at Otake, telling him how disappointed I was that he’d gone against what I understood to be the honourable Japanese ethos. This would wind him up no end, which was my only consolation.
I did have something to thank Otake for – persuading me to purchase a fax machine. Otake had been boasting that he no longer communicated by telex and instead had now installed this new thing called a telefax machine, made by Panasonic. He suggested we get one too, as it would enable us to send drawings as well as letters to each other.
Our first fax machine stood as tall as a washing machine. It was a mass of computer-type PCBs, with a huge and complicated paper transport mechanism. You had to pour black toner into it and load it with a massive roll of thermal paper. No longer would we have to airmail drawings or pictures around the world; and instead of sending an urgent message by telex, we’d simply type a letter and fax it. It was a fantastic breakthrough, a real must-have business tool.
*
The family and I would regularly go to Florida around Christmas, staying in the Boca Raton Hotel. At the tail end of the holiday, I’d take them to Las Vegas, to coincide with the Consumer Electronics Show, and we’d fly home from there. During our 1982 Christmas holiday, one of the kids cut their toe in the swimming-pool, so I went off to find a drugstore to get some plasters. On the way, while walking through the hotel lobby, I noticed a sales display for a nearby development of houses in a place called Boca West. I stopped to talk to the lady there and she showed me some pictures of the new houses going up – they looked great. I started to wonder, now I was in the money, whether it would be the right time for us to own a home abroad.
I went on the missing list for about two hours and visited the site to look at one of these homes. The lead salesperson from the developers, Arvida, was so full of shit that inwardly I was killing myself laughing listening to his crap.
It went a bit like this: ‘Sir, these are quality homes. We at Arvida only produce quality homes. The hospital I was born in was built by Arvida. The school I was taught in was built by Arvida. The church I was married in was built by Arvida. And the house that I live in was built by Arvida.’ I thought he was going to burst into some Gospel rap at any moment.
I shut him down pretty quickly and asked him to give me the price and show me which lots were available. There was one location where there were two lots together and I asked him whether it was possible for me to buy them both, so that I could build a tennis court as well. This put the guy into a tail-spin – I was asking him to deviate from his robotic sales script. He said, ‘Sir, we only sell one lot at a time.’
‘Okay, if you only sell one lot at a time, what shall I do? Shall I come in the door, buy the first lot, then go out the door and come in again and buy the second lot?’
‘Ha, ha, you English, you’re so funny – you have a great sense of humour.’
‘Will you please cut the crap and tell me how much for two lots? I want a house on one lot and a tennis court on the other.’
This was far too much for him to take in. He told me that I needed to meet with the actual contractor himself, a guy by the name of Sol Slosberg, who turned out to be a well-respected builder in Florida. He gave me a price for the two lots, including a house and a tennis court – $525,000 – and we virtually shook on it there and then. It dawned on me that I’d better get back to the hotel. More to the point, I’d better tell Ann that as well the plasters I went out for, I’d bought a house! I casually bowled up to the swimming-pool and told her that after lunch she should come with me and see what she thought of something I might buy.
I guess if you speak to Ann, she will tell you that I never fail to surprise her with my crazy ways. In fact, she was delighted, though she did wonder whether this was going to be one of my mad whims. She let me know her concerns, but added, ‘Well, as long as we actually use it, then it’s great.’ As far as I was concerned, as long as I could install a fax machine, there was no problem. This wonderful new invention was the lifeblood of communication to me. I could easily work from Florida by phone and fax.
I did a deal with the builder to make sure the place was ready by the following July, which was pretty tight, but he made it. He was a bit surprised that I wanted it ready by then. He said, ‘Nobody comes to Florida in July and August, as it’s too hot.’ I hadn’t realised this and had already arranged our summer holiday in Florida, inviting Gerry and Norma to stay with us. During this holiday, I had a couple more strange experiences with Americans.
Ann decided we needed a small fridge for the TV room in the new Florida home. I measured the cabinet where the fridge was to go and popped out to Sears Roebuck to buy one. As I walked through to the white goods department I saw a couple of fridges which looked suitable. A salesman, who must have been in his sixties, came up to me. ‘Good morning, sir, welcome to Sears Roebuck and Company.’
‘Morning,’ said I. ‘Do you have a ruler?’
A ruler? What is a ruler, sir?’
A ruler – you know, you measure things with it. Or a tape measure?’
A tape measure? What is a tape measure, sir?’
‘Something to measure the height of the door on this fridge. I need to know whether it will fit into a cabinet.’
Now consider, this bloke and I were standing no more than two feet away from the fridge. He turned to me and said, ‘Sir, Sears Roebuck and Company have a policy – every refrigerator on our display has the dimensions on the door.’
I looked at him and said, ‘Would you turn your head and look at the doors of these two refrigerators and show me where the dimensions are.’
‘Oh my Gaad, you’re right!’
‘Yes, I know. That’s why I’m asking you for a ruler, so I can measure it.’
‘A ruler, sir? What is a ruler?’
‘Please, I need you to get me something to measure the door. When you get me something to measure the door, I will know whether it’s the right size.’
‘Okay, I got it. You wanna measure the door, don’t ya?’
Yes, please.’
‘Okay, please wait, I’ll be back momentarily.’
I watched him walk off, right to the end of the store. Five minutes later, he turned up with a tape measure.
‘Thank you.’ I quickly measured the fridge – no problem at all. ‘Good,’ I said, ‘I’ll have this white one.’
He said, ‘Saarry, we don’t have any in stock’
I asked him, ‘Why didn’t you tell me that when we were discussing the size of it?’
‘Well, I thought maybe you wanted a rain check.’
Now it was my turn. ‘A rain check? What’s a rain check?’
‘It means, pay for it now, then come back and get it when it’s in stock’
‘No. I don’t want a rain check, I want a fridge. Okay, forget the white one. What abo
ut the black one next to it – do you have one of those?’
Yes, sir.’
‘Good. I’ll buy it. Thank you.’
‘Thank you for your custom at Sears Roebuck and Company.’
‘Okay, good, good. Let’s get on with it. Here’s my credit card.’
‘I’m sorry, sir, we don’t accept credit cards at Sears Roebuck and Company, unless you have a Sears credit card?’ (That was their policy back in the early eighties.)
‘No, I’m English. I wouldn’t have a Sears credit card because I don’t live in America. I’m from England – I’m on holiday.’
‘Oh really, sir? That’s very nice. Where are you from?’
‘London.’
‘London! Oh, I know some folk in London.’
‘Yeah, yeah, fine. Look, I don’t have a Sears credit card; I only have American Express or Visa.’
‘We don’t take credit cards, sir.’
‘Okay How much is this fridge?’
‘One hundred and twenty-eight dollars plus tax.’
‘Fine, I’ll pay cash.’
‘Cash? That’s very unusual, sir.’
At this point, he called across to a female assistant standing in the aisle. ‘Myrtle, how d’ya do cash?’
She stopped the conversation she was having with someone else and said, ‘Whaaat?!’
‘Cash! This guy wants to pay cash.’
She walked over and drawled something to him and eventually I was able to pay. Unbelievable. This exercise took at least an hour and there was still more to come. I had to go to the loading bay at the back of the shop, present the paperwork and pick up the fridge, which took another twenty minutes or so.
That was the last time I went out shopping for Ann in Florida. I just cannot take those people behind the counters in department stores – I have no patience whatsoever. Ann totally agrees with me, but it doesn’t stop her having a good spend-up.