The Story of the Data Domain

I noticed the question you asked about the Data Domain's demise and ComputerLand, as stated in Mike's book [Fire in the Valley]. First, you are right, I didn't feel the presence of ComputerLand very much compared to a lot of other things going on at the time. But I think you should know that the Data Domain suffered from the same ailment as Processor Tech, and all the other companies run by techies and not business people.

That is, I didn't know the first thing about running a business. I didn't even know enough to start with a double entry bookkeeping system. I didn't know how to balance a checking account. I knew so little that I didn't know how to ask for help. All I could see was that any outside help was expensive and I needed all the money I had just to keep going. In those days, one paid COD for everything that wasn't paid for in advance. And the only way to get decent discounts was to place large orders. And there was no real way to schedule deliveries nor predict when delivery would be made. I remember very well the day that UPS called me and said I needed $54,000 immediately for a COD from Processor Tech or they would return the order in two days. It was my first shipment of SOL-20 computers, and I had orders backed up for most of them, assembled. (They were delivered as kits.)

I had a special deal with Cromemco because I was their seventh dealer and knew Harry Garland personally and he trusted me. I would sell a computer and call Harry, who would arrange to have the computer delivered direct to the customer on my account, to be paid direct to Cromemco. When the payment was received he would credit my account with the difference between the selling price and my dealer price and apply it against the next order. In other words, I never really saw the profit from the sale, but I retained my dealership, and slowly built up some cash in my account which amounted to equity.

Around 1980 or so, Apple came up with a floor planning deal through ITT Financial. But it required cooperation of the local banks, and they would have nothing to do with it because they never heard of computer retailing, and were far too conservative for anything new. The most liberal bank in the county would only lend 10% of their assets total! They would not even give an SBA loan with a 90% guarantee. They said it was just too much paper work and they had all the loan business they needed without that.

I had put all the money I had into the business and had lost a good deal to bad deals from others who asked for my help. I lost $18,000 to a guy in Ohio who wanted to open an affiliated store, and then let it fail and never paid for the merchandise I sent him. I lost $50,000 to Ted Nelson's itty bitty machine co. in Chicago which failed in less than a year. I had an affiliated store in Dayton Ohio, started by one of my ex-employees and his boss at NCR. They always owed me a few thousand and one day called to tell me that they were changing their name because my credit rating was hurting their business! I told them that they had some kind of nerve, they owed me $11,000 and they were being hurt by my credit rating! There is a Yiddish word for it but I can't spell it.

So, gradually The Data Domain began to lose its momentum. Manufacturers started weeding out the weak dealers by demanding bigger commitments from them. Processor Tech and Apple were particularly bad for us. As Stan Viet pointed out in his book, South West Tech screwed all of its dealers, including us, and left us high and dry with a huge inventory of useless add-on modules and peripherals. The Digital Group announced fantastic products and then never delivered, or worse yet delivered an order in dribs and drabs over a period of months, making angry customers who blamed us for it.

And then there was me. I smoked three or four packs of cigarettes a day, worked in an office that was as organized as a junk yard, and drove walk-in customers away in choking droves. I knew everything that was in the store, from the lowest screw or transistor in the service department to the magazines on the shelf, the computers, add-on boards, disk drives, manuals. Software, peripherals, supplies and everything else in the place, including the prices for each item. But I never learned to delegate authority.

All in all, with 20/20 hindsight, I have to admit that I managed the Data Domain out of business. In 1982 I was running in insolvency when I met some people from Kentucky who were interested in investing. The man and I hit it off very well, and probably would have done OK if left to ourselves, but he was obliged to bring his wife in on the deal, and she was not happy with me. She ruled the roost and I didn't see it coming. I sold 51% to them in exchange for them paying off the creditors and promising money to expand into Evansville and several other cities surrounding Bloomington. At that time sales were running at about $137,500 per month. After a couple months they decided they liked the business, but didn't like me, so they told me to take a hike, effective Feb. 1, 1983. (This was in late Oct. 1982.) So I drew my pay for a couple more months and then left. By Oct. 1, 1983 they sold what was left of the inventory and closed the doors.

The End