Chapter Beginning.
The New Man.
Job One:.
The Entrepreneur.
The changing of the guard.
In pursuit of the PC-compatible marketplace.

Job One:

Job One in 1983 was to ship product, and Ray used every channel available to get S-Net LANs out the door. He went directly to end users and had systems built to order. Most of his sales efforts were devoted to convincing distributors and resellers that the new Novell could provide LANs that were not only reliable but profitable for them to sell. This was not an easy task, because many distributors had been burned by the products shipped by the old Novell. Ray had to convince them that the manufacturing problems had been fixed, that the product worked, and that Novell would be a company worth dealing with.

Neibauer described the first Novell customers as "hardy pioneers who are technology junkies, who will try anything once. And if those guys come out of it alive, then you begin to get the attention of a few other people."

When Ray came on in January 1983, sales had virtually dried up, at least in the US. Neibauer recalled:

I didn't see any sales really happen to anybody but maybe a few from the Middle East. They were the only people who were actually accepting shipments, you know. There were salesmen who were claiming they were making sales but not much of it ever really shipped.

We were basically looking for any way to survive, anything to make a sale. I can remember being frustrated in the early days of Novell that we couldn't sell a vanilla product.* [A "pure vanilla" product is a basic, durable product that appeals to a mass market. Henry Ford's Model T was a vanilla product.] It seemed like every sale we made had some custom piece involved that we had to go and cook just for that shipping.

We weren't in the process of saying, "This is what we've got. Do you want to buy it?" We always said, "What do you want? We'll make it." And that's the attitude that made us survive.

A major obstacle to a "vanilla" product was the lack of standard PC operating systems. Novell's S-Net LAN operating system ran on the Novell 68000 file server, but the PCs that customers wanted to network might be a DOS-based IBM PC, a CP/M86-based machine, or a CP/M80-based computer--and different manufacturers would customize their operating systems differently. So to make NetWare/S-Net work with these different PC operating systems, the Superset guys had to write a "shell" program that would allow the LAN operating system to interface with the PC operating system.

"There were probably 20 or 30 boxes [PC models] in the early days before there was a big shake-out in the compatibility market," Neibauer recalled. "A lot of them weren't compatible. And most of them ran some flavor of DOS, but not all of them. And we did a lot of work on those kinds of boxes and on supporting them all. You know, creating a shell for every one of the little monsters. Anybody who wanted one, we'd make it."

The job was to start building an installed base of working Novell LANs. Customer by customer, order by order, the number of S-Net systems shipped each month began to grow. By the summer of 1983, the company was shipping about $300,000 worth of product each month.

Job Two: burying the past

While working on building up Novell's strengths, Ray also had to discard what hadn't worked at Novell. Some of the problems were self correcting. Novell had cut a lot of expense in the Time of Six Presidents--none of the survivors were weekly commuters from California--but more needed to be done.

Novell's reincorporation as Novell Inc. aimed at solving a lot of problems. One was to transform much of the debt financing that had been floated for NDSI into equity financing. Another was to rid Novell of it's terminal, printer and personal computer legacy. After the reincorporation Novell stopped supporting those products and Ray sent Reid Clark to Korea to negotiate a deal to sell the remaining inventory to a businessman there.

Finally, Ray needed to decide what talent he needed to carry Novell forward.

Watching the players

As Ray threw himself into the business of Novell in the early months of 1983, he began to identify the staff members who were key to the running of the company. Some employees tried to influence Ray in this transition period, with varying degrees of success. Ray was impressed by hard work and results, not experience or talk.

One of the successful ones to petition Ray was Judy Clark. She volunteered to serve as Ray's secretary, but Ray said he couldn't justify hiring a secretary just for himself. So Judy convinced him he needed an office manager, and he agreed to let her try. Ray liked Judy. She hadn't had an easy life, yet she was a fighter, determined to better herself. She was willing to work long hours for very little pay. In February 1983 Judy was not quite 40 years old, and she was quite attractive. Although Ray has always been scrupulously faithful to his wife, he enjoys being around pretty women.

Judy remembers her interview with Ray: "I went in, and I had a full-page typed list of my demands. They were things we needed to do marketing-wise. We needed to get a PR company. We needed to create a better environment. The employees needed personnel benefits. All my concerns were for marketing the company and for the personnel because we were so battered from this year of just being treated like numbers. So many presidents passing through and nobody really caring about the product or the individuals.

"So I had this list of demands. [Ray] was just looking at me like: `We're just starting and you want all this stuff?'"

But Ray kept the list and used it to establish goals. "In three months we're going to have this. In six months we're going to have this. . . .," Judy said. "And we met every goal that we set together."

One of the first projects Ray gave the green light to when he arrived at Novell was a redesign of the product packaging. Judy recalled that computer companies used very conservative colors in their marketing communications in the early 1980s, in imitation of IBM, "Big Blue" (a blue-chip company with a blue logo and packaging). "I went to the first few trade shows, and I'd look around, and it was just this blue-grey haze, a color--or non-color--through the whole trade show. Everything was the same."

Ray wanted a bright color for the packaging--"anything but blue," he said. "The opposite of blue--what about red?" Judy went to work. She set up a meeting with Dan Reusch, president of a small Salt Lake Agency called Tandem Studios. "I said, I want something that when you walk in the retail computer store, it's going to stand out on the shelf. When you walk into the trade show floor, you won't be able to do anything else except go straight to our booth because you'll want to see what this color is all about.

"I said, I want something that's red, you know, really bright . . . . So the design company came back with red--a red image. And nobody--nobody--in the company liked it at all.

"I talked to Ray about it and said, let's just try it. No one else is doing it. We'll just use it very subtly. Our corporate look will be really nice and corporate, and we'll just use a little bit of red. But then when we want to make a splash, we can do it because we've got the red. We can use an ounce of it or a gallon of it.

"So, he bought off on it. He was pretty willing to go along with almost anything to try and see if it would work. . . . And I would say within six months from changing to red we were starting to get attention. I think it was the combination of the color and the whole image change."

Just a few weeks after Ray arrived on the scene, the more perceptive employees could see who were favored and who were not. Ray spent the most time with his favorites. The four SuperSet guys were obviously crucial, as was Burton, who could articulate a vision of LANing with clarity, sincerity, and enthusiasm.

Ray was also impressed with Harry Armstrong, Maroney's production manager. Although some of the senior managers like Reid Clark considered Harry basically inept, Ray thought Harry was a self-starter. Orders from the two salespeople (Clark and Dave Baumgartner) had slowed to a trickle, and Harry found himself with little to do. On previous jobs Harry had been a salesman, and in a company of 14 employees, everybody pitched in wherever they were needed. Harry would pick up the phone and call previous customers. "This is Harry Armstrong at Novell's manufacturing plant," he would say. "What can I build for you this month?" Ray had never seen a manufacturing guy making sales calls before, so Harry became one of Ray's starting players.

Making the cuts

Other employees did not make the team. Joe Maroney and Rusty Woodbury immediately sensed that they would not fare well under Ray. As senior managers, they drew relatively large salaries, they were partly responsible for NDSI's failure, and they were used to exercising a level of authority that Ray would not allow. They rightly assumed that Ray had marked them for purging. When Reid Clark tried to put in a good word for Maroney with Ray, Clark got his first lesson in Novell politics.

Clark remembered the incident vividly: "The most reprimanded, I think, I ever got from Noorda was when I went and told him that I thought Maroney was the guy that contributed more to keeping the company moving than anyone on board. If there's anyway that he could take a good look at that, I'd help him with whatever information I had. But as the new man, he ought to know that.

"Boy, he just ripped me down one side and up the other."

Ray was irritated first with Clark's advice, which he considered stupid, and second with Clark's presumption. Ray wasn't a "new man"--he was the savior and bankroller and CEO--and he certainly didn't need advice from a member of the management team that had botched up NDSI. Furthermore, he had already made up his mind that Maroney was responsible for the manufacturing problems and product returns that had plagued the predecessor company. Novell was Noorda's company, and he would make his own decisions.

Clark himself only narrowly escaped the fate of Maroney and Woodbury; he was the only member of the NDSI management team to survive. "Tell me what you can about this guy Reid Clark," Ray asked Jack Davis. Although Ray was concerned about keeping on a senior member of the NDSI team, in the end he decided to let Reid stay, partly out of charity, partly because of Reid's contacts abroad (the foreign sales generated by Reid accounted for about 30 percent of Novell's sales in 1983), and mostly because he didn't consider Reid a threat to his authority. Reid was a good Mormon, had a bunch of kids in BYU, and had no ambition to challenge or interfere with Ray.

The decision to keep Reid Clark shows an interesting side to Ray. Ray can be ruthlessly abrupt in dispensing with people for the good of the business, especially people who, in Ray's opinion, can fend for themselves. He can also be generous when the spirit moves him, as it did with Reid Clark. Another example of his generosity is his reaction towards an employee who worked in a department which was under consideration for lay-offs. The employee had muscular dystrophy. "She stays," said Ray, "even if I have to pay her salary myself."

Another high-level employee whom Ray decided he didn't need was Dave Baumgartner, the salesman brought on by Guerrero in the summer of 82. Guerrero had recruited Baumgartner through a headhunter for a fee in the $30,000 range. It didn't take Baumgartner long to figure out he had climbed aboard a sinking ship, and by the time Noorda arrived, he was spending several hours a day looking for another job. When Ray came on, he said, "Well, Dave, why don't you quit?" and in a couple of months, Baumgartner was gone.

Maroney and Woodbury followed soon after and the decks were cleared for Novell's reemergence.

Chapter Beginning.
The New Man.
Job One:.
The Entrepreneur.
The changing of the guard.
In pursuit of the PC-compatible marketplace.