When Jack Messman became Novell’s acting President, he had no desire to run a computer company, a field he had little interest in, in Utah, a place he had little interest in. He set about the task of finding a permanent President to lead Novell out of its time of troubles.
He started by looking for local talent. He talked with Jack Davis. Davis was certainly interested and knew the situation, but he had just accepted the presidency at Praxis and felt he needed to follow through on that commitment.
He talked with Reid, the VP of International Sales. International was one of the company’s bright spots of the time, providing 30 or 40% of Novell’s sales. Reid declined.
He talked with Dave Guerrero. Dave was a good talker and Dave had a plan. It sounded good enough that Jack made him acting CEO while he continued the search for a permanent President.
It was on Dave’s shoulders that the unpleasant task of bringing Novell’s costs in line with its revenue fell most heavily. He conducted the series of layoffs in 1982 that followed the March Massacre. He shrank Novell to about twenty people by June of ’82.
It was a thankless task, and no one thanked him.
At each layoff cycle (there were three) he would say, “We’ve cut deep so we won’t have to cut again.”
Even among those who survived there were bitter complaints that he was doing hare-brained things. Dave was a man of action. In his mind action, good or bad, was better than no action. He was desperate, and with good reason. Novell sales were dropping as fast as the employee count.
After the layoffs Dave pursued long-shot ideas because there were no sure-shot ideas available. The printer and the computer had both proved wanting in the general market so trying to boost sales of those products there was fruitless. The LAN was coming but it wasn’t ready so no sales gains could come from it.
The choices he saw were pursuing specialty markets, niche marketplaces, and the foreign marketplace.
Dave was not exceptional in this thinking. Niche markets and foreign markets are time-honored places for electronics companies to survive when the mainstream US domestic market rejects their products. For instance, Wang word-processing machines were sold for years after personal computers had overtaken their capabilities, to customers who already had installed bases of Wang equipment. Commodore, Digital Research, and Atari survived and prospered for years after their products were no longer in demand in the mainstream US personal computer market. Commodore, in particular, used profits from their European sales to try again and again to penetrate the US market. So Dave’s strategy of abandoning the mainstream domestic market might have been disappointing, but it might have been viable.
After May, while Reid and Craig pursued the general-purpose markets overseas, Dave spent most of his time looking for specialty deals to cut domestically. One such niche deal involved turning the terminal computer into a point-of-sale system.
Dave’s actions staved off Novell’s collapse by perhaps six months. But that wasn’t all that Novell needed. It needed vision and a plan that the remaining organization could buy into. It was never clear to those left at Novell what Dave was planning and he produced no vision that others could coordinate with. He could act but he couldn’t end the chaos; by fall 1982 he was out of grace.
Meanwhile Jack Messman continued the hunt for a President.
While the calamities of spring and summer were crashing in, the roots were being deepened for the one product that would in the end save Novell. By summer the LAN was being demonstrated to the sales force and selected customers.
By fall 1982 Novell’s Presidential office looked out onto bare branches from which vultures looked in.
One of the strengths of the free market business system is its handling of failure. In some social systems the failure of an organization is hard to officially recognize so it lurches on, consuming resources but producing little value from them. In other social systems the phrase “head on a platter” isn’t a metaphor. In the fall of 1982 Safeguard was ready to put free market theory to the test. Through the spring and summer they had been unable to find a President who would treat Novell as a going concern, so by fall they were looking for someone who would take the company for salvage value.
The first to come along was a businessman who’d done some pioneering work in bar code readers and was now head of a company in Hauppauge, New Jersey. His original introduction to Novell had been through the point-of-sale project Dave had worked on. He proposed buying the company and taking the LAN technology he was interested in back East, to meld it into his New Jersey operations. He had no intention of marketing it as a PC network. He would have had a deal but Safeguard decided his offering price was too low. They continued looking.
Next Jack Messman saw a light part the clouds and cast off the gloom. He was contacted by Sandy Shipley, a man with considerable interest in a floppy disk–drive maker, looking for a captive outlet for his drives. Sandy liked Novell and he agreed to become President in October ’82.
“I still remember the day,” says Reid. “I looked out my window and there was a limousine, one of the stretch kind, with a uniformed chauffeur, and out steps Sandy Shipley.”
Sandy was the President who took Novell to Comdex 82. He was also the President who gave Dave the axe. But his tenure was short. A week after Comdex, the dark clouds hovering over Novell came back together with a snap. It turned out Sandy had “exaggerated some of his claims” and he was moved out quickly.
This left Safeguard with a rudderless company once again. Depending on your point of view, the man from New Jersey was still waiting politely in the wings offstage or gliding pitilessly overhead while the relentless sun beat down on orphaned Novell. Each time Safeguard handed off their orphan to a new father it came back whining for more attention.