What You See Is What You Get: My Autobiography (50 page)

The story of Sears World Trade doesn't end there. It got a bit messy. Pero believed he was diddled out of a great business opportunity and he went to an ambulance-chaser lawyer in Chicago and started a class action against Sears World Trade and Amstrad.

The ambulance-chaser was obviously working on a contingency fee. He was banking on the fact that if he caused enough aggravation to a giant organisation like Sears World Trade, they would just pay him some money to get rid of him. He made the fatal error of thinking that's also what I'd do.

To cut a long story, we employed lawyers in Chicago to fight the issue on our behalf. Pero had contacted Dominguez and told him that if I were to agree that Sears World Trade had screwed Pero and give a witness statement to that effect, he would drop the action against Amstrad - all he wanted to do was get a lot of money out of the subsidiary of the giant Sears.

Under the American laws of deposition, the lawyers acting for Pero came to England to take a statement from me. In that statement I had to explain everything that went on, as far as transactions were concerned, in the relationship between Amstrad and Sears World Trade and also declare anything else that had gone on which may influence the case.

These smart-arse lawyers were firing questions at me all day long till it got to the stage when they asked me if I'd had any contact with Pero since the last meetings in Chicago.

'Yes,' I replied.

'What did he say to you?'

I told the lawyers, 'I'm sure you don't want to hear what he said to me.'

They thought they'd struck gold.'
We'll
decide whether we want to hear it or not. What did he say to you?'

I replied, 'Are you sure you want to push me on this - on what he said to me?'

'Yes,' they said impatiently. Bear in mind that also in the room was a lawyer from the main Sears legal department.

'Well, you asked for it. What your client said to me was, "Alan, if you write me a witness statement saying that Sears screwed me, I will let you off the hook and I will not sue your company." Okay? Are you happy with that?'

David Hyams couldn't hold back his laughter. He turned to them and said, 'He did warn you! He asked you twice whether you wanted to hear it, you said yes, so he told you. Now it's in the deposition.'

'When did my client ring you and say this? Last week? A couple of weeks ago?'

'Dunno,' said I, 'but he also said it to Mr Dominguez. I'm sure that when Mr Dominguez is called into the courtroom in Chicago, he will also give witness to this fact.'

The ambulance-chaser was not a happy bunny. He was deflating like a balloon.

A couple of weeks later, the Sears corporate lawyers decided to settle with Pero and give him some money to get rid of the irritation. His lawyers must have copped a large share of this, leaving Pero with the dreg ends.
We
told them both to get stuffed - they got nothing out of us. Unfortunately, under American law, there's no way to claim back your legal fees, even if someone brings a failed action against you, so the ambulance-chasers rely on large corporations realising it's going to cost them a fortune to defend their position and deeming it cheaper simply to pay some money for them to go away.

In truth, it would have been cheaper for Amstrad to give Pero $100,000 and tell him to piss off, because the bill we got from our high-class Chicago lawyers, Mayer, Platt & Brown, must have been for well over a quarter of a million dollars. But it was the principle that mattered in this particular case.

People often argue that my principles are wrong if they cost me money. There have been times when I've spent a fortune on lawyers just to get a point over, knowing I had no chance of getting all the money back. I don't know whether I'm right or wrong - commercial people would say I'm wrong. I defy
the principles of business which say, 'Pay a few quid and tell the people to clear off.' Somehow I don't think I could ever bring myself to do that.

*

Otake was never one to dish out compliments, but he used to say to me, 'Sugar-san, you are a gambler. I like your fighting spirit.' By this he meant that he'd never come across a person like me who was prepared to place large orders based on unproved concepts. In the Harvard Business School manual, they advise that before anyone embarks upon large-scale production of any item, they should test the market with sophisticated market research techniques. Then, and only then, should they sample the market by making a small production run to see how the products are accepted.

This is all well and good in certain sectors, but in the dynamic electronics industry of the eighties, there was no time for this nonsense and I had to trust my gut instinct when it came to gauging what consumers would go for. This ability took in things like spotting trends and tendencies, observing what competitors were doing, trying to condense and feature-pack a product (Amstrad was the Swiss Army knife of electronics) and at the same time bring it down to a price affordable by my target consumer, whom I warmly referred to as 'the truck driver and his wife'.

I'll now tell you a story which will be hard for so-called business experts to understand. What I was about to embark on, you can't learn from a book. Nor can you go into Boots and buy a bottle of entrepreneur juice to teach you how to do it.

In February 1986, Bob Watkins and I were on one of our regular trips to the Far East. I was staying at the Peninsular Hotel in Hong Kong, on the Kowloon side, a fantastic place that brings back so many great memories for me. While there, I received a message asking me to call Mark Souhami of Dixons at the Mandarin Hotel.

I thought this rather strange and called him back to ask what he, a retailer, was doing in Hong Kong. He explained he was there with Stanley Kalms on a general trip around the Far East and that Stanley thought it would be a nice idea for me to pop over and have tea at the Mandarin.

'Have tea with Stanley?' I said, puzzled. 'What are you going on about? Stanley doesn't have
tea.
What's going on, Mark? What do you really want?'

Alan, why are you so sceptical? Why are you so suspicious? We're friends! We're all in Hong Kong. Pop over, have tea. What's wrong with that?'

'Nothing wrong with that, Mark, but rather strange, to say the least.'

Intrigued by the invitation, next day I took the ferry from Kowloon
across Victoria Harbour, which dropped me right outside the Mandarin Hotel. I went up to Stanley's suite.

'Good afternoon, Stanley, I'm surprised to see you here. What are you trying to do - contact my suppliers, as usual? You're wasting your time, mate. You can't screw me any more, you know.'

Usually, nobody would talk to Stanley in that way, but I had this cheeky knack of getting away with it, as it came across as half-joking. I am like an elephant - I never forget - and this was my little dig at him for the way he'd screwed me on VCRs. While Stanley liked me personally, there would be no favours coming from him in business terms. And the feeling was mutual.

'So, what do you want, Stanley? What have you schlapped me over here for? I'm busy. I've got no time for tea.'

'Calm down, Alan. I just thought it would be nice for us to touch base.'

Yeah, okay, Stanley, forget all that touching base stuff and tell me what you want.'

'Oh, you are terrible, you really are terrible, Alan. All right, well, look, let me tell you this - this Clive Sinclair fellow is going bust.'

I was shocked, but seconds after digesting the statement I remembered hearing rumours that he was running out of money fast and I'd seen a frontpage story in the
Mirror
about how the mogul Robert Maxwell was going to rescue Sinclair.

'Right, okay . . .' I said cautiously.

'Well, we sell hundreds of thousands of his products and we've been approached by Price Waterhouse to see whether we would take over his company to get him out of trouble. Now as you know, Alan, we are retailers. We're not interested in this, so I'm giving you the heads-up. You need to jump in quickly and see if you can sort a deal out.'

Wow! Now that
was
interesting. It actually took the wind out of my sails.

First of all, I couldn't help feeling some satisfaction that my arch-competitor was going down the pan. I know it's not a nice thing to say, but I'm being honest. Secondly, the acquisition of the Sinclair brand would be a massive coup for Amstrad.

After further discussion with Mark and Stanley, the story became clearer. The truth of the matter was that the man at Price Waterhouse had
not
suggested that Dixons buy the company, but had actually asked for an introduction to me, knowing that I was also a supplier to Dixons.

Dixons quite selfishly realised that if Sinclair went bust, they would be stuffed in two ways. One, they would lose a lot of business because they were selling hundreds of thousands of Sinclair Spectrums; and two, they would
have no after-sales service path for the millions of Sinclair units they'd put into the marketplace.

From Stanley's suite in the Mandarin Hotel, we called London to speak to the guy at Price Waterhouse. From what I could gather, Sinclair was in dire financial straits. Barclays Bank had a debenture over the company and by 31 March 1986 either Sinclair had to cough up the money they owed them or they were going to force them into administration.

Clive Sinclair at that time was a national treasure and the guy at Price Waterhouse explained to me that there were deep political connotations here. They could not allow Sinclair to go into bankruptcy - it would be deemed a disaster for the flag-bearer of the British computer industry to go under. So many songs had been sung about his enterprises and Barclays Bank would be seen to be the people that shot Bambi's mum. It's true to say that if Clive Sinclair, who by then had been knighted, wasn't as famous or popular as he was, the company would have simply been slung into liquidation and no one would have heard any more about it.

I agreed to call the guy from Price Waterhouse back in a couple of hours as I didn't want to discuss my business affairs in front of Stanley and Mark. On my second call with the chap, it became clear to me there was a deal to be done. I discussed this with Bob Watkins, who was very excited at the prospect and understood what a blockbusting event this would be.

Now, here is where I defied all business logic. With no deal done, I decided there and then - before meeting Clive Sinclair or discussing numbers with banks - that I was going to buy the Sinclair business one way or another.

We rushed over to our Hong Kong office and instructed the designer to look up pictures of the Sinclair computer in some trade magazines. My concept was to redesign the Sinclair Spectrum to incorporate a built-in cassette data-recorder in line with the Amstrad philosophy. By noon next day, with a bit of tweaking from Bob and myself, we had a full colour picture on the drawing-board of our version of the Sinclair computer. Remember, still no deal discussed.

We had been buying some audio chassis from the company Avnet in Taiwan and they had been pestering Bob for ages to let them make some of our computers. We'd resisted, simply because Otake was doing a great job, despite his regular tantrums.

Taiwan was only an hour's flight from Hong Kong, so Bob called Colin Heald, the production director of Avnet, and asked him to jump on a plane and get over to our Hong Kong office. The night before, Bob had telephoned Ivor Spital back at Amstrad and instructed him to go and buy a Sinclair
computer at Dixons, open it up and report back to Bob in the morning with a list of components on the PCB - this was to be our preliminary bill of materials for us to cost in Hong Kong.

With the usual Amstrad efficiency, this information was waiting for us first thing in the morning. In our meeting with Colin Heald, we came up with a rough costing, including a cassette mechanism, all the plastic works and the packaging. We realised we could produce a fantastic new version of the Sinclair Spectrum with a built-in data-recorder and sell it at a retail price of PS139.

By that afternoon, Isaac Ip, one of our draughtsmen in Hong Kong, had drawn up the external cabinet dimensions of this new Amstrad Sinclair. His drawing included details of the internal construction and showed the size of the PCB and cassette mechanism module. We printed off this huge drawing on his draughtsman's plotting machine, then sliced it up into A4 pages and faxed the whole lot through to Avnet's mechanical engineering department in Taiwan. We asked them to study the drawings immediately and give us an estimate of the tooling cost. Colin Heald stayed with us for a day or so while all this was going on. Within two days, we had worked out the bill of material and tooling costs. Again, still no deal with anyone.

If we were to get stocks into the market for the Christmas season of 1986, we would have to press the button on tooling there and then and decide whether we wanted to make one set of injection tools or more. During the Christmas season, these Sinclair computers would sell at the rate of 100,000 a month through all the distribution channels in the British market. One set of tools was capable of producing 30,000 mouldings per month, so if we wanted to bring 100,000 computers into the market quickly, we would need at least three sets of tools.

Now, here's another reality check: I'd done no deal to buy the company (I'd never even met Clive Sinclair) and I hadn't discussed anything with his bank. Despite this, I pushed the green button and told Avnet to go ahead with the tooling, an expenditure of approximately $100,000 for three tools. The way I saw it, if everything went tits up in my negotiations when I got back to England, it was just a bad outing that didn't come off.