What You See Is What You Get: My Autobiography (33 page)

One of the first projects I gave Malcolm was to come up with a packaging design for a new range of car speakers and also work through some advertising ideas. My unpaid marketing expert Colin Lewin told me that the bee's knees in car speakers was Pioneer - their kit was selling like hotcakes and the Taiwanese were effectively copying them. The packaging design for our kit looked identical to Pioneer's - even the typeface was the same, albeit Amstrad's was in our corporate plum colour while Pioneer's was blue.

He'd done a good job in conjunction with our advertising agency, who handled all the artwork, which was swiftly sent to Taiwan. Within weeks, we started to sell these speakers and they were a tremendous success. Colin Lewin lapped them up, as did Comet, Laskys and G. W. Smith.

One day, Colin asked me, in passing, 'Are you sure you're not going to get into trouble with these, as they're virtually identical to the Pioneer ones?'

I didn't quite understand what he meant at the time, but I would certainly find out later!

*

Because the electronics industry was really booming in the mid to late seventies, a merchant bank had suggested to Laskys, G. W. Smith and a wholesaler called Eagle Products that they should combine their powers and form a public company known as Audiotronic. This sounded like a good idea, as the shareholders of all three companies would get a large capital payout when the new company floated on the stock market. They went ahead and offered 40 per cent of the shares to the market. The money received was divided between the original shareholders in the appropriate proportions.

Derek Smith, a very solid businessman from G. W. Smith, was initially put in charge of buying for the whole group, which effectively covered his shops and all of Laskys' shops. The Adler brothers, who owned Eagle (I believe the company was started by their father), were supposedly in charge of buying stuff for the wholesale side of Eagle's business as well as for Laskys' wholesale arm, HR Factors, while Kenny Lasky, the son of one of the founders of Laskys, also took up a senior position within the group.

The company seemed to run smoothly for a while, but very soon rumours were rife within the industry that all these personalities and egos were having problems, jockeying for power. From what I recall, there were various management reshuffles internally.

After trading for a year or so on the stock market and not seeing any
significant increase in share price, I believe the Adler brothers became disenchanted and had the customary 'irreconcilable differences' with the board. They left the company and no doubt disposed of whatever shares they had left in Audiotronic. Audiotronic got itself into poor financial order and appointed a so-called company doctor to help them through the rough times.

One day, Kenny Lasky asked if he could come to see me. This was a rather unusual move. Kenny's father and uncle were nice enough fellows - tough but fair - although it was hard doing business with them. I guess they remembered me as the little hustler and I always felt they were reluctant to purchase from this kid, but then again, as true retailers, they had to buy what was selling.

Kenny was also a decent fellow, but he had this air of aloofness about him. When I spoke to him, he would be a bit dismissive. Some might say he was slightly jealous - after all, he must have heard from his father how this young kid from Clapton had grown this big hi-fi business. I don't know whether that was on his mind, but it's certainly the impression he gave.

So there I was, meeting with Kenny Lasky, who, in one of the innumerable reshuffles at Audiotronic, had been promoted to be the man who buys all the stuff. During his visit, he explained that his strategy was to expand Audiotronic's business. He asked whether I would mind meeting privately with the company doctor at his father's flat at Regent's Park.

Intrigued, and with nothing to lose, I agreed to go along. His father, Harry, was hovering in the background in a very nice lounge overlooking the park. Kenny introduced me to the company doctor, a slim, bespectacled Jewish man in his forties, who did all the talking. The long and short of it was that Kenny had recommended to the board of Audiotronic that an acquisition of this new up-and-coming company, Amstrad, would be very interesting. They had done some calculations and suggested to me that they'd like to acquire 75 per cent of my company, leaving me with 25 per cent. And they offered to pay PS2 million for this 75 per cent share.

This was around November 1978. Here was I, the boy from Clapton who used to hustle around with empty Tizer bottles, now being offered two million quid. I guess this sum would equate to around fifty million in today's terms.

I'm quite proud of myself when I think back to the response I gave at the time. Instead of jumping at the offer, I coolly asked for clarification. If Audiotronic were going to buy 75 per cent of my company, I wanted to know whether they'd be running it as a separate company or as part of the Audiotronic group.

The company doctor bullshitted that they had expertise in the public company area and saw an opportunity of floating Amstrad separately on the stock market, and that when they did, they would make a lot of money on the 75 per cent they owned, as indeed would I on my 25 per cent.

I went home and told Ann about this. Typical of her, she said something like, 'Very nice, what are you going to do?' To Ann, if it were two million, twenty million or two hundred million, it would make no difference. All she was interested in was good family life and the welfare of those she loved.

The offer, of course, was preying on my mind. I didn't really have anybody to consult with. I had no partners; I certainly wasn't going to tell Tricky Dickie or any of the others about this, as they wouldn't understand. It might have even demoralised them, as they enjoyed the family dynamic of the firm and wouldn't relish the prospect of being part of a large group.

I did mention the deal to Ashley Morris, who said I should take the money and run. And I talked to my accountant, Neville Shaw. He was very excited and told me how proud he and his partner Guy Gordon were of me. I'd been using their small firm in Old Street since I started and they'd both seen me grow from this acorn into an oak. Neville enthused about how unbelievable this was and that I should grab the opportunity - again, take the money and run. But, at thirty-one years old, where was I going to run to?

I was in a quandary. Suddenly it dawned on me that if I were to go ahead with the deal and be acquired by Audiotronic (who owned Laskys and G. W. Smith), my other big customer, Comet, would get the raving hump. There was no way that Comet would buy goods from, in effect, Laskys and G. W. Smith, which is what I would become if I agreed to the deal. Neither would my smaller customers, such as Henry's Radio and a host of others, buy from Audiotronic. It's just one of those things - people don't want to buy from their competitors, even if it means cutting off their nose to spite their face.

It occurred to me to go above Gerry Mason's head and speak to his boss, Michael Hollingbury I had only met him once or twice very briefly, when I visited their Hull headquarters and popped into his office to shake his hand. I was quite nervous about phoning this guy - he was the big boss of Comet, and Comet was the leading retailer in the country.

Michael Hollingbury was a gentleman. Although his family and background was in Hull, he was obviously educated at a public school. He spoke with a very posh accent and was ideally positioned as the chairman of a large public company.

I explained the situation to Michael. I guess I was testing him for two reasons. One was to see whether, if I did go ahead with the Audiotronic deal, he would threaten to stop buying products from me. The other was to see whether I could elicit a counter-offer from him. I figured he might think that if Audiotronic were going after this, then perhaps he should step in and do the same.

He listened quietly to what I was telling him and gave no reaction other than to tell me he would get back to me in a couple of days. When he did, he said this to me: 'Young man, you have a good business and these Audiotronic people know that. In fact, I think you have a better business than they do. They're going nowhere, but you
are
going somewhere. However, we at Comet are
retailers
and we need to stick to what we know, so we would not be interested at all in being associated with any manufacturer [that was nice to hear - he classed me as a manufacturer] because of the obvious negative effect it would have with our other suppliers - in other words, your competitors.'

He finished by telling me that he'd made contact with Kleinwort Benson, a merchant bank in the City of London, and had set up an appointment for me to talk the matter through with them, as they would give me good independent advice. I went along to the meeting and was introduced to a gentleman by the name of Tim Holland-Bosworth, a typical City gent, rather tall, very posh-sounding, slicked-back hair, tortoiseshell glasses, pin-striped suit, striped shirt and a bright-red tie. We spoke about the company and Tim agreed he would visit me and investigate what advice, if any, they could give me.

Tim's initial instinct was that Audiotronic was trying to leg me over. He reckoned if they were offering me PS2 million for 75 per cent as a starting point, they were trying to steal the company and it must be worth more than that. He suggested I could go back to them and demand more, but at the same time I should seriously consider whether I wanted to work for someone else again. I told him straightaway that I didn't like that idea at all; indeed, the so-called company doctor looked a real slimy git to me.

That's when Tim told me his other idea - that Amstrad could be floated on the stock market. This was an exciting prospect, but he immediately added that a lot of work would have to be done beforehand and the timing would have to be right.

This was around spring 1979. He told me to contact him again in a few months to see if they felt it was the right time to plan a flotation. I did so in late summer and he told me that the time still wasn't right and that he would
come back to me, possibly at the start of 1980, to see if anything could be done.

*

Amstrad had grown to such a size that the accounting firm I used was getting out of its depth, so I moved to Mordant Latham & Co. The senior partner was a gentleman called Neville Shearman who also acted as a liquidator specialising in the electrical industry. I knew this because after a few of my customers went bust, I naively attended the creditors' meeting, thinking there might be a chance I'd get paid what I was owed, only to find it was a waste of time. Normally, by the time the liquidator gets involved, there's hardly any money left to be paid out. And even if there were, it would be something like ten pence in the pound, which you'd get two years later.

Neville informed me that a supplier of mine - a company by the name of Fircastle Ltd - had gone into liquidation. They were a woodworking factory who supplied us with speaker cabinets of our own design. We'd then fit the speaker units, wire them, test them and finish them off.

It was bad news to hear that Fircastle was going bust, but it occurred to me there was a deal to be done. Perhaps it was time for me to move into the cabinet-making business. Neville told me that tenders were going out to the industry to see whether there would be any parties interested in buying the company as a going concern. From my point of view, losing Fircastle meant that I would need to find another cabinet supplier, so I moved very swiftly and made them an offer of PS50,000 to buy the plant and all the machinery. However, Neville told me that there was another party interested - guess who?

Gulu Lalvani had heard on the grapevine that my supplier had gone bust and he was poking his nose around, making a bloody nuisance of himself. I called Gulu and asked him what he was doing sodding around, knowing that he had no intention whatsoever of running a woodwork factory.

'No, Alan, we are very serious,' he said. 'We really want to buy this factory. We are going to start making speakers, just like you do. We are going to move into the hi-fi separates market.'

I knew that Gulu's customers were not the type that bought speakers; they bought radios and tape recorders, or fancy goods like watches and lighters. I accused him of simply messing around trying to put a spanner in the works, which he denied. When you put all of Gulu's bullshit about how he admired me and all that to one side, he had this perverse streak in him. I wouldn't say it was jealousy, but he had this tendency to try to scupper his
competitors. He obviously thought I was one of them. In the end, I agreed to give him five grand to go away.

This was typical Gulu. Of course he didn't need PS5,000 - he had a good business. The money was insignificant, but the fact that he'd managed to pull the wool over my eyes delighted him.

I acquired the assets of Fircastle Ltd and had the option to keep the factory in Stock Road, Southend-on-Sea. It was a move away from my ethos of not getting involved in manufacturing, but this was a different situation - speaker cabinets were the lifeblood of the company and the margin on speakers was fantastic.

I shot down to Stock Road and met the factory manager, Harold Livesey, who was anxious to find out what my intentions were. At the meeting was an engineer by the name of Mick O'Malley, who was responsible for keeping the machinery running, as well as a burly Geordie called Norman Thorne, the production manager.

They must have seen me as some kind of Santa Claus. I assured them there and then that no one was going to lose their job and that Amstrad was going to take over this factory and keep it running. However, we would no longer be selling speaker cabinets to other manufacturers - the factory would be making them for Amstrad only. What's more, I told them I would be transferring the
entire
assembly process to Stock Road. This would mean they'd have to learn how to wire up the speaker units and circuit boards inside the cabinets, and pack them up as finished products ready to ship to customers.