What You See Is What You Get: My Autobiography (40 page)

It was 11 p.m. and I had just about drawn the outline of the front panel. I was stuck because I had no implement to draw the circles for the knobs. The Okura Hotel sewing kit came in very handy here - the shirt buttons in the kit were proportionally the right size for my drawing (it was drawn to half scale) and so I drew around one to create the four knobs on the front panel. Shigano was very surprised at our breakfast meeting the next morning when I presented him with the drawings and told him I had produced them myself. Can you imagine explaining that?

'How did you arrive at that design?'

'Er, with shirt buttons, mate!'

I had taken the wind out of Shigano's sails and I told him that now he had no excuse and could immediately start tooling the front panel. Being Japanese, he could not lose face. I then set off back to London. In the one-hour layover in Moscow I bought a set of Russian dolls as a present for Ann and the kids. This, I understood, was a typical Russian novelty. Credit to Shigano,
he stuck to his word. We airfreighted in the first shipments of CB radios at great expense and hit the market in November 1981, before anyone else. This enabled us to open up some new customers, such as Rumbelows, with whom we'd not previously dealt. These were giant chain stores with hundreds of shops all over the country.

Through Ken Sladen, I'd managed to sell tower systems to Currys, but CB wasn't his department. He told me the buyer who dealt with this was Ian Radley. On this occasion, Currys' rude and arrogant attitude was dispensed with. As soon as I entered their headquarters and spoke to the receptionist, I was told to go up to the ninth floor to see Radley. He was hot to trot to buy CB radio and wanted to be the first in the market.

He tried it on, saying he would not buy from us unless Currys had exclusivity. Then he started bullshitting about having other suppliers who had products coming, but I knew from Shigano that we had consumed the first quantities of the Sanyo chips and that we were the only company with cargo on the way.

I told Radley that there was no chance I was giving him exclusivity and, to Dickie's surprise, I closed my notepad, as if to say the meeting was over, and made as if I was going to stand up and leave. The guy got my body language, backed down and booked a massive order for quite a few thousand units. In fact, I had underestimated the size of the market, so unbeknown to Currys, their order was so large that they got exclusivity by virtue of the fact that I had nothing else to ship! I didn't let Radley know that.

I asked Shigano to see if he could ramp up production. He did accommodate my wishes, though not immediately; we had to wait a few more weeks for production to increase. There was tremendous demand in the early days of CB radio. My other customers, including Rumbelows, were starting to question me, justifiably I guess, as to why I couldn't supply them with Amstrad CB radios when they'd seen them in Currys' stores.

I explained to them that Currys had bought my first lot and paid extra for airfreight. I was stuck between the devil and the deep blue sea - either I would have to pay an extra PS3-4 per unit to airfreight them in or wait an extra five weeks for them to arrive via the sea route. Many of the customers agreed to pay an extra PS5 per unit for airfreight and, looking back over the whole CB exercise, we must have airfreighted in 90 per cent of what we sold.

Like all fads, CB radio died very swiftly. We supplied the market with tens of thousands of units and the first wave of nutters scrambled to buy their CB radios. This gave the false impression that there was a gold rush on. It was another lesson learned: when dealing with big retailers like Currys, their large
orders fill the pipeline and can cause confusion and create a false market as far as volume is concerned.

Come the downturn in CB radio by the summer of 1982, Currys demonstrated just how mercenary retailers are. They simply pulled the plug on taking more goods, despite the fact that they had given me firm purchase orders! The options open to me were to sue them for breach of contract or swallow it on the basis that you don't want to alienate a customer for life. This shoddy treatment by Currys taught me that an order from a big chain retailer is not worth the paper it's printed on. You can only consider that you've had an order when you've delivered and been paid.

Currys was a good barometer. Clearly they had seen their sales drop dramatically and the buyer's alarm call to me indicated that we should give up CB radio quickly. I instructed Dickie Mould to start dumping them in the marketplace at just above our cost price, which was the right decision. Some of the other customers didn't have sophisticated enough radar to see that the market was dying, so when we slashed the price of our CB radio, they thought their boat had come in, only to find they were well and truly lumbered.

We all played around with the CB radio sets, installing them in our cars and giving ourselves handles. I also arranged a base station at home for my two boys to play with - they would speak to people driving by. It was fun, but a classic example of a passing fad. The speed to market and realistic acceptance of when the market was dead was a classic case of get in, make a killing, get out, move on. I know I might sound a bit of a bigshot talking about pulling off this coup, but at the time I had no idea it would be a passing craze. It taught me a big lesson.

The shirt-button story floated around Amstrad's engineering department for years to come. They thought it was quite funny that the design of our CB radio and the dimensions of the knobs were based on the shirt buttons in the Okura Hotel's sewing kit. It
was
funny, when you think about it.

*

When we floated the company in 1980, the forecast profit published in the prospectus was PS1.25m and, as recommended by Kleinwort Benson and all the advisers, we would need to comfortably beat that figure, which we duly did. That said, the share price didn't change much, remaining pretty stable. It had risen from its initial 83.3p to around PS1.20, dipping to about PS1.10 from time to time.

I didn't know much about the workings of the stock market, but I'm a quick learner. One of the first things I learned was not to accept everything
Kleinwort Benson told me! Quite early on, they explained I would have to get used to playing the public company game and this included attending what they called 'special investors' meetings'.

I was summoned to a meeting with a bunch of people from the Middle East who expressed interest in the hi-tech sector. We were told to set up a display of some of our products in the meeting room at the conference centre and provide a member of staff to demonstrate the equipment. When I got there, the room was full of gentlemen dressed in thobes and ghutras (the traditional Arab white robes and head coverings). Apart from a couple of fellows from Kleinwort, we were the only ones in Western clothing. Tim Holland-Bosworth told me to mingle with the crowd, but I didn't have a clue what to do or say. In fact, one of the Middle Eastern guys must have mistaken me for a waiter, as I was in a black suit, because he asked me for a glass of sparkling water.

I popped over to my bloke demonstrating our stereo equipment to enquire if there had been any interest shown and couldn't resist telling him, 'Watch what you play - three choruses of "Hava Nagila" won't go down too well here.'

I felt the meeting was a total waste of my time, but Holland-Bosworth came over to me and commented on how well the event was going.

'Going well? What are you going on about, Tim? I've had Lawrence of Arabia asking for a Perrier and no one's asked me any questions about the company or the products. I don't know what I'm doing here. Perhaps I should run around with some canapes: "Here, sir, try the sheep's eye and pineapple, they are very good."'

'No, no, Alan, these things take time. Trust me; we've done a good selling job here. I'm sure they will invest.'

'Maybe I'm missing the point here, Tim. I've done my deal; I've got my money for the shares I sold - where am I going wrong?'

I still don't know what that meeting was all about. Needless to say, it was the last one I attended.

*

My next lesson came on 30 June 1981 when I got a strange phone call from some fellow at Greenwell, our stockbrokers, who introduced himself as being on the corporate side of the company. He advised me that within the company there was an impenetrable Chinese wall. People like me - the chairman of a public company - could talk to the corporate side confidentially about the way the company was performing and that this information would be
kept secret from the Rottweilers on the other side of the Chinese wall - the actual traders. At the time, I just had my head down and was getting on with business. I was very happy that I'd copped my two million quid and figured that we'd just keep moving on by way of organic growth and that the share price would grow steadily.

Jim Rice had run the accounts and informed me that in actual fact we were looking like making PS2.4m to the end of June 1981 - in other words, we had doubled our profits. The stock market was expecting a moderate growth of around 20 per cent, in line with what they were told a year earlier.

When Greenwell's corporate bloke rang me, he said, 'Well, Mr Sugar, it's the end of your first financial year as a public company. Do you have an indication of how well the year has gone? Is there anything I need to hear in preparation for the publication of your accounts in October?'

Without a thought, I said to him, 'Well, actually, we're doing all right. Looks like we've got two point four million on the clock.'

There was silence for a moment, then he said, 'That's fine, it sounds very good. Okay, right, I must go now, I've got a lunch to go to.'

What a bunch of bloody gangsters they were.

That afternoon I was at my desk minding my own business when Jim Rice came and told me that he'd been receiving phone calls from the
Evening Standard
saying our share price had shot up from PS1.10 to PS2.80 and they wanted to know if there was any reason for this.

Suddenly the penny dropped. This bloody gangster who was supposed to be on
my
side of the Chinese wall had run off to his trading department, who had obviously started to sell stocks to their mates. The share price was running away. My second lesson on the stock market was well and truly branded on my forehead: don't trust anybody in the broking firms - they are full of gangsters and monkeys.

I called Edward Walker-Arnott and explained what had gone on. He kind of chuckled and told me that I hadn't done anything wrong, that if I was speaking to the corporate side of my brokers, then it was quite right for me to give them the heads-up. He said that if there
was
an inquiry, I would be completely clean. He added, 'That is, as long as you, your family or any of your employees haven't bought a lot of shares.' Of course, none of us was minded to do that.

I had been very naive and didn't understand the possible effects of our profits doubling. It was only when the results were finally published in our preliminary announcement in late September that it dawned on me what a great achievement we'd made in catching the market by surprise. There were
great headlines about us doubling our profits and a lot more interest was directed towards the company. The share price rose to somewhere in the region of PS4 and Howard Miles at Greenwell (not a gangster or a monkey) told me that there was only a very small amount of stock in the marketplace.

I remember going to Currys with Boycie to take Ken Sladen to lunch one day. Long before the days of mobile phones, I had a Storno phone in my car, made by a Swedish company. You called a central operator and gave them the number you required, then you were put through to the person. The phone worked on a push-to-talk basis and I can't tell you the number of times I had to say to people, 'I'm on a special phone - let me talk, then I'll stop, then you talk and when you stop, I'll talk again.' It took people a while to get the hang of it.

While driving to Ken's head office in Ealing, I received a call from Howard Miles. He told me that if I were prepared to sell another 8 per cent of my shares - reducing my holding to 67 per cent - he could get me PS4m for them.

Was I becoming a bit blase or what? 'Righto, Howard, go on then, do it.'

As we sat down to lunch with Ken Sladen, I told Boycie that I'd just flogged another four million quid of shares. Sladen couldn't believe the relaxed manner in which I made that statement. The way I saw it was that after the excitement of selling 25 per cent of my shares for PS2m about eighteen months ago, it didn't seem a big deal to be selling just 8 per cent for PS4m.

The next year, we doubled the profits again to PS4.8m, and the year after that (to June 1983) we did it yet again - an PS8m profit. We were flying in the stock market and I was the City's blue-eyed boy, doubling profits three times over since we'd floated.

I can't recall exactly how many shares I sold on the up, but I adopted this policy of selling a small percentage every time the share price doubled. My original PS2m had paled into insignificance and I was now a multi-millionaire.

*

I wasn't the only Sugar selling shares in Amstrad. Dad was loving watching his shares double and triple. One day, quite sheepishly, he asked me if it would be okay if he sold some. I explained to him that, as an employee of the company, he needed to wait until a certain time of year and that Jim Rice would let him know when he could. He duly disposed of some of his shares and made what he felt was a fortune.

By now Mum and Dad had moved from Woolmer House to a brand-new
council estate in Stamford Hill. Their old neighbour, Ivy Moore, had also moved into one of these flats, but sadly her husband Percy had passed away by then. The location was good for my dad to get to work in Tottenham - he simply caught a bus from Stamford Hill up to the Spurs ground, then walked through the back doubles. He was really only working because he wanted something to do and spent his time running up to the bank for Jim Rice and doing various other bits and pieces.