You were one step from making it very, very big!
I get it, it’s the journey, not the destination! However when later told by a leading industry analyst, “you were one step away from making it very, very, big!” , you have to ask at what cost?mistakes I made and why?
Key decision was made 30 years ago in February 1994.
Article has generated a quarter of million impressions and counting!
Entrepreneurs are always asked about their decisions.
I have two key ones:
1.
Key to selling systems nationally was the second location. Supporting system in same location lacks the support challenges of remote phone support.
Note: At that time there were no commercial Internet!
I've always made my comparison to Walmart's second store in Harrison. Sam Walton made the decision, and success of the model was the key to Walmart’s current success!
Coincidentally my second location was in Rogers. In my global business development presentations I always referenced two companies with Harrison connections - Duncan Parking Meters and Walmart Store #2. I have seen Duncan Parking Meters (below on left) in numerous cities (Buenos Aires and Rodeo Drive in Beverly Hills). I always checked the parking meters wherever I traveled. David Glass plaque at Store #2
Many US systems were sold by the success of Rogers and later its acquirer Donrey Media Group (locals have heard more about Don W. Reynolds Razorback Stadium than Donrey Media) and a reference letter from their Controller. (below).
Also an opportunity to rip IBM over their installation at their North Bay Cable Operation in Vallejo California.
IBM and Donrey Media Group system in Vallejo California located in the San Francisco Bay Area adjoining Silicon Valley..
First step in creating national and global credibility for an Ozark based technology company !
Finding non-paid evangelists is the biggest key to success! Bigger than investors! They are gold! Start-ups listen up!
Prior to the purchase of the Rogers system by Donrey Media Group we did a demo there for Jake Landrum, VP and general manager of Mid-Coast Cable TV (Houston, Texas area) on October 17,?1981. I remember date since I was hustling to get to Arkansas Texas game in nearby Fayetteville. Significance was that Hogs beat the #1 Longhorns.
Jake was a member of the Texas Cable TV Association of which he was president for several years. So once we had installed Cable/I in the Mid-Coast systems in Wharton and El Campo, we were committed to exhibiting at the annual Texas Show in San Antonio. Texas was the best state show, Jake was another evangelists who sold many Cable/I and CableWorks systems in Texas for us.
Note to start-ups, there are times when your loyalty to a community is not reciprocated, so you move to where it is. Reason people relocated to Silicon Valley. This was the perfect time to do that and maximize my return.
MALARKEY-TAYLOR ASSOCIATES TELECOMMUNICATIONS FINANCIAL, MANAGEMENT AND ENGINEERING CONSULTANTS
December 18, 1986.
President
Mr. Herbert Lair
Computer Utilities of the Ozarkes, Inc.
103 Industrial Park Road, Suite C
Harrison, AR 72601
Dear Herb,
The following is a summary of our effort this year to assist Computer Utilities with the development of a business plan, to raise capital, and expand the business. After our two day visit to Harrison on February 26th and 27th to evaluate the business, we were retained by CUO to assist in finding investors from the cable television industry, as well as a bank that would provide working capital and refinance the present loans from the Guaranty Savings and Loan Association.We discussed the potential of selling stock to Mid-West Corporation, The Essex Group, and Winchester Cable TV. Although all were interested in the prospects for CUO, they each requested that your financing arrangements for working capital be put on a permanent basis.We had discussions at length with the following financial institutions in a effort to obtain a working capital facility.
1. First Federal of Harrison Larry Bryant-E.V.P(501) 741-7641 their lending policies have changed due to the general condition of the other financial institutions in area and service businesses with no fixed assets or real estate, were difficult to finance.
2. Security Bank Wayne Clark (501) 741-8200 we had to turn CUO down for lack of sufficient tangible assets.
3. Richard Ardemargin CPA Pace IndustriesI have introduced CUO to a Fayettville bank since I am very familiar with the general condition of the banks in Harrison but they were only interested in real estate loans.
4 First National Bank of Fayetteville Ed Carlton, SVP (501) 575-7000. We are located approximately 80 miles from Computer Utilities' location and therefore would not be in a position to spend much time with them on an on-going basis.
The major problem CUO is facing with commercial banks in this state is the usury law which is so low we are unwilling to make a commitment on a long term basis that is not fully secured of tangible
MALARKEY-TAYLOR ASSOCIATES, INCORPORATED 1301 PENNSYLVANIA AVENUEN.W
Mr. Herbert Lair December 18, 1986 Page 2
assets. Unfortunately, this is a difficult thing to admit but the service type business is being driven from our state because the restrictions placed us in providing unsecured or semi-secured working capital loans.
5. We also discussed the possibilities of a relationship with the following banks:
A. Bank of Oklahoma - Tulsa Bob Jackson (918) 588-6088
B. Centerre Bank St Louis Stephen Reese (314) 544-7890
C. Citizens Fidelity Bank & Trust-Louisville Mark Wheeler (502) 581-3078
D. Firstmark Financial CorporationWilliam Kennedy (317) 262-5856 EMark Twain Bankshares - StLouis Mack O'Connell (314) 997-7444All of the above would consider working capital loans to CUO if it were located in their city.
The loan request was too small to justify traveling to Harrison for it.
We have concluded that CUO is unable to obtain working capital from financial institutions in its state, and it will have to relocate to a more favorable business climate. Although the business is healthy and growth prospects are good, the present loans can only be paid off on their present repayment programs, until the relocation occurs.
I discussed the loan situation with Daniel J. Suda, special representative for the Federal Savings and Loan Insurance Corporation (312) 580-1650.
I indicated to Mr. Suda that CUO was taking steps to locate new capital and financing. However at this date, it would appear that little can be done until the business is relocatedI would suggest that the loans be re-written for one year to allow CUO to move its facility to a more conducive business environment at which time a working capital loan should be easily obtained to pay off the Guaranty Federal Savings and Loan Association.
I will be happy to discuss this with you further.
Very truly yours,
Clark T. Madigan Vice President, Corporate Finance
Clark’s interest came from operators using our system. Operator at Winchester VIRGINIA WAS AN UNPAIID EVANGELISTS!
Clark is 84 and lives in DC
Note: Archer Taylor teamed up with Martin Malarkey to form Malarkey-Taylor and Associates, a prestigious cable-consulting firm located in Washington D.C. He continued to have an outstanding career in cable and served on the NCTA board as vice-chairman under Fred Stevenson and co-chairman of the NCTA Engineering Standards Committee. Both have died.
2.
Note significance of Taiwan contract - first Chinese translated billing system, both size of Taiwan market and China mainland. Shortly afterwards, we were contacted by market leader, CableData, whom we had successfully competed against, to meet and discuss how we could work together. Always nice when a billion dollar company comes knocking.
I made multiple trips to Taipei, Taiwan - Besides the headquarters of Prime Cable Management Systems there are several set-top box manufacturers that I scheduled meetings with as well.
Distance from Taiwan to mainland China is approximately 100 miles.
China and Taiwan concerns are often compared to current events in Russia and the Ukraine
Selling company (next stage after initial meeting to see how we could work together)
All the success, drew attention from largest cable customer care and billing system headquartered in Sacramento.
It wasn’t a hard choice or easy choice when they made offer to merge. Key point is when you are contacted by a larger company, a deal can be made on your terms. Particularly when you are having success competing. Access to capital in Arkansas was incredibly difficult. We had been passive and reactive in sales, so this opportunity allowed us to take it to the next level. I stayed on for 5 years (initial agreement was 3) primarily in global business development, while keeping the title of President of CUO.?Sidebar: name was changed from Computer Utilities of the Ozarks, Inc.?To CUO, Inc. to drop the Ozarks reference. At management meetings I used humor, asking what CUO stood for my answer was just C-U-O. Also the Arkansas connection – told them I was taken on tour of Napa Valley,?but just tasted, didn’t swallow?(Clinton was President). One meeting I observed it seem strange someone from London (Cable Data International headquartered in London) was speaking on revolution, while someone from the Ozarks was talking on technology and innovation.
Another irony was the 50 page Asset Purchase Agreement (not pictured), that took multiple iterations between their law firm, and mine, Rose Law Firm. My son, Craig Lair was an intern there, while finishing his law degree at Duke. He worked under Wilson Jones. Wilson is a nationally renowned tax, trust and estates?lawyer (with a subtle and wicked sense of humor).
My previous connection to the Rose Law Firm, raised concern that there might be a conflict of interest -- In the 1980's, the FSLIC was shutting down overextended S & L's, and one of those hit was close to home, Guaranty Savings and Loan. My involvement was that my company had a balloon loan with Guaranty (Royce Barrett). Also we had bought computer time for our service bureau from them, actually having access to their facilities after hours; and we were later involved in the purchase of their computer when they upgraded.
We were in a major transition from computer service bureau to a software development business. In essence 100% local businesses changing to 100% not local.
We were developing financial alternatives via Jerry Damerow, in Little Rock. It wasn't happening fast enough for the FSLIC, so I was faced with bankruptcy pressure by the FSLIC's local legal representative, who most didn't realize represented the Rose Law Firm partners (Hillary Clinton, Webb Hubbell, and Vince Foster). They had the FSLIC agreement to handle the shutdowns. Another piece in Whitewater?
I got help from my Congressman (JPH) to work out arrangements to pay in full loan at a slower pace (not a balloon amount), which I did.
So when I asked Wilson, if that was a problem or conflict, he replied, "It's a dead issue!". I never asked if he was referring to Vince Foster. I just know I love the way Wilson "lawyers"!
For those who prefer a video, the following?encapsulates the journey:
See if you can find any familiar faces? Jerry Damerow, Craig Lair, as well as other locals Ed Alspaugh, Jaime McEntire, Sandy Lair, Jerry Criner, Carolyn Green, Loretta Eddings, John Bartlow, Carol Warren, Photographer - Lee Dunlap, Chamber officials - Kay Maris, President
CableData Randy Lintecum and Henry Walton and several other executives.
Footnote: I soon found their interests were created by our agreement with Prime of Taiwan.
For people having difficulty connecting dots - the Taiwan news release was made January 1994, and CableData was at my office in February with a firm offer.
CableData had spent 10’s of $1,000’s in attempting to get their business. Possibly $100K plus? Lost out to CUO!!
Family, friends, and most others were convinced that I was offered much more than company was worth!
Impression was I was looking a gift horse in the mouth! Never was that, interest was driven by our technology, and competition. I knew that!
When I refused their initial offer, most questioned my decision making process. Not unlike today, only now they blame it on Parkinson’s. Tests show I’m still mentally competent! Just unplugged!
It was complicated
My family had ridden the technology roller coaster, and were more than ready to exit. Offer was the best ever, and the unknown was pressure packed.
Besides many were convinced I was living only on borrowed money. Might check Jeff Bezos and Amazon or Fred Smith and FedEx startup stories. Very, very similar.
As far as being one step from making it very, very big; that’s based on a recent conversation with a top industry analyst. Happy to share name and contact information privately.
Another issue I was faced with was capitalization if I turned down the Cable Data offer. I had been self capitalized since mid 80’s and sale was in 1994.
Since Prime in Taiwan was a direct sale, and there were no U.S. companies and consultants involved, there were many unknowns in the administration of contract. How to monitor?
For those interested in my current status — check out Finding Your Happy Place - The Movie, others can watch the Docuseries on Vimeo or YouTube, there are episodes dedicated to global business development in Latin America. Other regions will follow!