the 1940s to 2020s … I was there.
It was August of 1981, early morning, in the office of John Lutz, managing partner of McKinsey Management Consulting in Mexico City. I was three months out of Stanford with an MBA degree, working for McKinsey Management Consulting in Mexico City.
The McKinsey offices sat in a very stylish high-profile office building overlooking a critical freeway junction over Chapultepec Park, linking the fancy Las Lomas residential area with Polanco and the Paseo de Reforma main business district. The streets were wet from rain overnight, and the freeway was, as almost always, jammed. The sky was dense, a mixture of rain clouds and smog.
I was mortified to tell Lutz that I needed to quit. I’d only been there a few weeks. I didn’t like to see myself as the archetypical fancy MBA blowing off the first job. I was 33 years old, married, and my wife was expecting our fourth child. I was way too mature for this stuff.
I certainly didn’t belong there. I’d been entrepreneurial for 10 straight years, making my own way with freelance journalism and, later, my own consulting, and I wasn’t up to faking awe for the partners. And as a family, we didn’t belong in Mexico City. I had loved that place for nine years in the 70s, it had been good to me, but I was done. And Vange was just as done, even though it was her city. It had become too big, too hard to deal with. We had left in 1979 and shouldn’t have gone back in 1981.
The above was our young family in 1979 on the driving trip from Mexico City to Stanford campus.
Furthermore, as I’d come out of the business school, I chose McKinsey for the wrong reasons. It was the job that made me look best in the eyes of my peers. It wasn’t just the money and prestige, it was also the competition. With McKinsey, I’d won.
But the job I’d chose was meant for a 26-year-old single person blinded by ambition and unencumbered by relationships. Like most professional firms, success involved putting up with a corporate culture that spent 12 to 14 hours a day in the office, whether or not there was work to be done. The firm actively discouraged families by encouraging long-term business travel but without families, and by running 5-day strategy meetings at beach resorts and forbidding families coming along, even at the family’s own expense. I was not supposed to disagree with partners. Lutz’s previous one-on-one with me was to complain about my second-guessing a partner, in a cocktail setting, in front of a client. But the issue on that one was about an imminent peso devaluation, and I was right and the partner wrong. Staying quiet about peso devaluations never occured to me. After all, I’d been the Business Week correspondent in Mexico for years, and I’d learned to read the signs. I’d bet right on devaluation and earned enough from it to pay for a year in school. Also, aside from that one, an associate I was supposed to put up with one of the partners who parked his six extra cars in the reserved spaces of associates, one of which was mine — in Mexico City, where parking spaces were so scarce you could take hours looking. Oh, and at the end of the day, as an associate, I was warned not to leave before all of the six partners had left. It would have meant hanging around, with nothing to do, from six to nine, while Vange and our three kids waited at home. I ignored that advice, of course. I mention it here because it illustrates the awkwardness of that job, for me.
So, back in the office with John Lutz, did I tell him why I was leaving? That I didn’t like the job, had made a bad decision, didn’t like Mexico City either? No. I didn’t. I told him I needed a lot more money.
This is one of the best arguments ever for telling the damn truth, even when it’s embarrassing. I’m still embarrassed, but I’m older now, and, well, I think this is a good lesson to share.
The next day they doubled my peso salary. But I still left, and I left looking and feeling really stupid. Why didn’t I just tell the truth in the first place? If the first conversation was hard, the second, when I told him I was still leaving, was ten times harder.
I’ve made a lot of mistakes. You can’t build a business from scratch without making mistakes. It’s an entire category on my blog, more than 150 posts. This dumb MBA mistake wasn’t my worst, but it’s one of the easiest to explain afterwards, and I hope one that might help others avoid making it too. There is a moral to this story.
As it turned out, the mistakes were choosing the job in the first place, and then not telling the truth about why I was leaving. But leaving, the main decision, was not a mistake. I had arranged a job waiting for me with Creative Strategies International in San Jose. For me and my family, returning back to the San Francisco peninsula, Silicon Valley, seemed like returning from exile back to paradise.
There are two morals to the story. First, never make decisions to impress others. Second, never slant away from the truth to make a hard moment easier. Give it a spin instead, and you risk looking twice as bad later.
Late summer, 1983. I asked Philippe how his software project was going.
“They are writing a new compiler,” he answered. “They’ve decided there is no good PASCAL compiler for MS-DOS. So they are writing a new compiler first.” The “they” was a team of Danish programmers.
In that instant, I imagined myself as waving goodbye to money that had sprouted wings and was flying away. So you understand, the idea of “they are writing a compiler first” sounded something like having to climb Mount Everest first. They were supposed to take some software that ran in one operating system and convert it to a second operating system. Instead, they were recreating an entire programming language.
I was sure this was disaster. I had skin in the game. I’d foregone my consulting fees with Philippe and had taken one percent ownership in the company — Borland International — instead. And yet, in fact, it was the key to success. It turned out to be a spectacularly good move. The compiler they wrote became Turbo Pascal. Look it up. In fact, three links for you: 1.) https://en.wikipedia.org/wiki/Philippe_Kahn … 2.) https://en.wikipedia.org/wiki/Borland … 3.) https://en.wikipedia.org/wiki/Turbo_Pascal
The project in question was converting some menu interface software that ran on one existing personal computer operating system (CP/M if you’re interested in history) to a newer more marketable operating system (MS-DOS). You have source code written in PASCAL, a programming language. The PASCAL compiler reads the code and converts it to machine language, so that any computer using that operating system can run it as an application, a finished software product. To move that software application to another operating system, you start with the source code as a text document, load it into a PASCAL compiler built for the other operating system, and run it there (compile it) to create machine code that works in the new operating system. It’s called “porting” software.
Personal computing was still in its infancy. There were a million or so early Apple I and Apple II computers around, and the Apple Lisa (look it up) just started. There were a single- million personal computers in businesses. One source says there were fewer than a million home computers, another says single-digit million microcomputers being used in business. Business computing on the new microcomputers (aka personal computers) was a huge growth market.
Philippe was Philippe Kahn, a software pioneer, a tall, portly Frenchman in his with an overabundance of gestures, enthusiasm, optimism, and drive. He had founded Borland the previous May. You can look him up too. He became a celebrity entrepreneur and was later credited with inventing the camera phone. He was about my age then, early thirties. I had done his business plan, and redone it, and I’d kept on revising almost weekly. He was not the easiest person to deal with, a bit more certain than I was used to, but I liked him and liked working with him. He was originally supposed to pay me a couple of thousand dollars for my consulting, but as time went on and my fees accumulated, he asked me to take equity and a seat on the board of directors instead of fees. I’m not sure I really had a choice, but I did take him up on the offer, so I became what we called then “a co-founder” of Borland International.
That moment with Philippe became on of those key moments, engraved in memory, for which you even remember where you were at the time. We were in the parking lot of the office building at Keily Blvd and Saratoga Ave. in San Jose, where I had my offices with Creative Strategies International, and Philippe had a rented single desk in some other software business. We had met for lunch and we were walking and talking on our way.
As this happened, I’d fallen in love with personal computer software and programming, and made a career of it. I discovered programming with the BASIC programming language on the Tops 20 minicomputer in the basement of the Stanford business school. The admittance packet included a book titled “Teach Yourself BASIC” and I did. I became a paid monitor in the computer facility, helping other students with programming. I got my part-time employer, Creative Strategies, to let me program a forecasting system on their computer as a summer job. Later, while I went full time with Creative Strategies after the MBA, I wrote an entire bookkeeping system in CBASIC, for a consulting client. Then I started a group within Creative Strategies to do market analysis and market forecasts of that business. I became the VP in charge of micro (personal) computer software market analysis. Which is where Philippe found me, with the recommendation of my older brother, who was his lawyer.
Two months later, early October of 1983, Philippe called a board meeting on a Saturday morning in his new offices in Scott’s Valley. Turbo Pascal was ready to go. It was sensational software, way better than the $440 Microsoft Pascal then available for MS-DOS. To give you the idea, if you were working with the existing PASCAL language, when you had a program ready to go you would tell it to compile and wait 20, 30, or more minutes. Programmers would set the compile and go to lunch. And, most of the time, the compile command would just stop with an error message, but not tell the programmers what error and in what line of code.
What we saw that October morning in 1983 was sensational. You’d manage the lines of code like normal. But when you told it to compile, it would start going and almost immediately, seemingly instantly, kick out an error message with the first error encounter, plus the line of code it was in, and what was the error message. It made programming in PASCAL 100 times easier.
Philippe seized the moment. I said he should price Turbo Pascal at $500 because it was way better than Microsoft’s $440 PASCAL; and price is the best marketing message. Philippe said no, we would price it at $49.95 and blow up the market. They would cost us only $5 to build (there was no Internet and no downloading so selling software was selling a disc and a manual. Philippe was right. We created a sensation. Philippe bet the business on a few full-page ads in the main personal computer magazines of the day. That worked. Turbo Pascal took off. Suddenly, almost overnight, Borland was a big deal. Everybody wanted Turbo Pascal. Sales poured in. Philippe hired people and Borland was up and running. And I am proud I was a part of it, although I don’t claim much credit. Philippe made the call against my advice. At least I had the sense to recognize sensational software when I saw it.
I was asked how I started Palo Alto Software.
How? Slowly, carefully, bolstered by good product and reviews that validated, doing a lot of coding and documentation myself, and not spending money we didn’t have.
It started as spreadsheet templates. The first of those was published in 1984 to accompany a book “How to Develop Your Business Plan,” published by Oasis Press. In 1988 I separated from that book, and redid the templates to accompany my own book when I published “Business Plan Toolkit,” released in MacWorld January 1988. All of these early products were 100% my work, my spreadsheet macros and my documentation. It helped to have a diverse background, including 10 years as a professional journalist, foreign correspondent in Mexico City, plus a Stanford MBA. I could write about business so (people told me) others could understand.
I released ‘Business Plan Toolkit’ in January of 1988 at the San Francisco MacWorld exhibit. Laura and Sabrina shared the booth duty with me.
Throughout the early years I kept up a healthy consulting practice doing business plans for some startups, and that plus market research and strategy consulting for some larger high tech companies, plus workshops on business planning for dealers of high tech companies. Apple was by far my best client, with repeat business in consulting on business planning from the beginning until 1994 (Hector Saldaña was a steady client for years, and a supporter of the business idea, and informal advisor). The consulting supported marketing expenses. There was no Internet to speak of until 1995, so the early marketing was a combination of small ads in the back of magazines and product reviews in major computer magazines. I did about $1.4 million worth of consulting for Apple Computer between 1982 and 1994.
During the consulting years I never lost site of the main goal of building my own business. I was sacrificing consulting revenues to prop up products. My mantra was “I want to sell boxes, not hours.”
When we moved it from Palo Alto to Eugene OR in 1992, I had three early equity shareholders (1% each) who agreed to surrender their shares because there was no value in them. One of them was my brother, Chip.
There is another chapter here on the darkness before dawn in 1994, when all seemed lost; and how I created Business Plan Pro to snatch victory from the jaws of defeat. in 1995 PAS gained critical mass with Business Plan Pro so I was able to stop consulting and dedicate myself to the business. We grew quickly to more than $5 million annual revenues by 2000.
I was talking to a group of students recently and I was asked to comment on what makes an entrepreneur. The student who asked the question wrapped it in the mythology of the entrepreneur driven by the idea, stubbornly, tirelessly proving its value to the world. She wanted me to tell about me wanting to build something big.
But I had to admit that my case was different.
I was running away from boredom, not building castles.
Me
When I left a good job at Creative Strategies and started on my own, in truth it was not because of something I wanted to build, not because of a creative vision, but rather because I thought I could make enough money to keep my family whole and do what I wanted. I wanted interesting work, and I wanted to choose my work. I wanted to actually do the writing and research, not supervise others. It was important to me that what I spend hours doing was something fun — I always found writing and planning and working numbers fun — even though I didn’t have the idea that would create the empire.
Or maybe you like this shorter version:
I was married, had kids, so we needed the money; and nobody else would pay me what I needed to make.
me
And the idea of a software product, that creative vision? Yes, that happened, but that came slowly, over years.
It started as spreadsheet templates. The first of those was published in 1984 to accompany a book “How to Develop Your Business Plan,” published by Oasis Press. In 1988 I separated from that book, and redid the templates to accompany my own book when I published “Business Plan Toolkit,” released in MacWorld January 1988. All of these early products were 100% my work, my spreadsheet macros and my documentation. It helped to have a diverse background, including 10 years as a professional journalist, foreign correspondent in Mexico City, plus a Stanford MBA. I could write about business so (people told me) others could understand.
I released ‘Business Plan Toolkit’ in January of 1988 at the San Francisco MacWorld exhibit. Laura and Sabrina shared the booth duty with me.
Throughout the early years I kept up a healthy consulting practice doing business plans for some startups, and that plus market research and strategy consulting for some larger high tech companies, plus workshops on business planning for dealers of high tech companies. Apple was by far my best client, with repeat business in consulting on business planning from the beginning until 1994 (Hector Saldaña was a steady client for years, and a supporter of the business idea, and informal advisor). The consulting supported marketing expenses. There was no Internet to speak of until 1995, so the early marketing was a combination of small ads in the back of magazines and product reviews in major computer magazines. I did about $1.4 million worth of consulting for Apple Computer between 1982 and 1994.
During the consulting years I never lost site of the main goal of building my own business. I was sacrificing consulting revenues to prop up products. My mantra was “I want to sell boxes, not hours.”
When we moved it from Palo Alto to Eugene OR in 1992, I had three early equity shareholders (1% each) who agreed to surrender their shares because there was no value in them. One of them was my brother, Chip.