What You See Is What You Get: My Autobiography (45 page)

We initially discussed the possibility of appointing a distributor there, as we had no expertise and very few staff (in fact, it was just Marion plus one or two others dealing with logistics and accounting), but then something strange happened. While Marion had been moderately successful in selling audio to small and medium-sized dealers, she'd never made any major breakthroughs with the giant companies such as La Redoute and FNAC. When it came to the CPC464, however, these companies were contacting
her.
This tipped the scales in taking the decision to run the computer business ourselves and not appoint a distributor, which turned out to be a wise move. To fast-track this story, the CPC464 grabbed the imagination of French consumers due to its all-in-one appeal. In fact, I believe we sold more CPC464s in France than we did in the UK.

It also took us into Spain, where we had no representation and no
understanding of the Spanish market, which was very protectionist. As an example, the importation of items containing a radio tuner was banned so as to protect home-produced products. Amstrad had never been successful in Spain - even with audio equipment - but that was about to change.

Just before we moved to Brentwood in 1984, Bob told me that he was being driven mad by a Spanish gentleman called Jose Luis Dominguez who wanted to do business with us. Dominguez was so keen, he flew over from Spain and turned up unannounced at Garman Road demanding an audience with me.

I don't quite know why I agreed to meet Dominguez - I think Bob persuaded me he was worth listening to. I walked into Bob's office in a rather flippant mood and told Dominguez that I was very busy, but that I'd give him a few minutes. He hardly spoke any English, but managed to explain that he had a company, Indescomp (essentially a two-man band), and wanted to represent Amstrad in Spain for our computer. In exchange, he would give us ten software programs that they had written for the CPC464, free of charge, for us to sell in all markets throughout Europe.

This was an attractive offer because the more software titles there were for the computer, the more successful the product would be in the marketplace. The games Dominguez had were very colourful and gripping, although they needed a little modification. We named the hero character after Roland Perry and the games were called Roland on the Ropes, Roland in the Caves, etc. I didn't realise what an ego boost this was for Roland within the computer industry. People thought it a rather exciting move to name a series of games after one of the senior engineers at Amstrad and it attracted a lot of media attention.

As we didn't know Dominguez from Adam, we insisted that he come up with letters of credit. I remember being very couldn't-care-less with him, an attitude I could afford to take because we were selling so many computers in other markets.

Somehow or other, Dominguez managed to find the finance to open LCs and started to sell the CPC464 in Spain. Once again, it was a massive success. His main customer was the department store chain El Corte Ingles, as well as an array of larger Spanish retailers such as Galerias. He also appointed a distributor for the Catalonia region which, I was told, was culturally different from the rest of Spain and needed to be dealt with separately. To be perfectly honest, I couldn't have cared less about the history and culture of the Spanish market - all I was interested in was the LC. To this day, I still don't know how Dominguez managed to finance the business in Spain, but
he was now buying unbelievable quantities of these computers, similar volumes to those going to France.

One day, he invited all of Amstrad's distributors in Britain, France and Germany to a giant press launch and dinner in the Melia Hotel in Madrid. I didn't quite get the purpose of this, but, according to him, the audience would be full of customers from across the whole of Spain and they would deem it an honour if I were to attend with Marion and other members of Amstrad. He booked me into the biggest suite in the hotel, so big you could have held a football match in it. Marion told me that her room was also massive.

That evening, Marion and I walked into this grand hall and took in the music and the glitz, the big stage with a set and flashing lights and the hundreds of people assembled. We looked at each other as if to say, 'How is this guy
paying
for all this? And what's the purpose of it?'

I remember shrugging my shoulders and saying, 'I don't care - we're getting the letters of credit,' to which she replied, 'You're right, that's all you have to worry about.'

Dominguez was an unbelievable showman. What rung his bells was personal fame and fortune. There were ten photographers standing strategically in the walkway approaching the main table, so that as Marion and I walked through, the cameras flashed away. It was similar to the way you see the paparazzi chasing after celebrities these days.

When we finally sat down to this grand dinner, I asked Dominguez where all these photographers were from and why they were taking pictures. He openly admitted that he'd hired them to impress upon the audience that we were very important people. Again, I remember looking at Marion and shrugging my shoulders as if to say, 'Not only is this guy nuts, I think he's a bit sick.'

*

We certainly were the darlings of the computer media, so much so that we started to get nominated for awards. Nick Hewer pestered me to attend some bash in Birmingham, the Computer Trade Association's annual dinner, which he assured me was a very important industry event.

To be honest, I wasn't interested in these things. I always find they turn out to be a bloody bore, with people pestering you and slipping you their cards, trying to do some business one way or another. By this time, I'd already done my fair share of corporate entertaining - wining and dining customers and talking a load of bullshit. For the punters, it was a big night out and the staff saw it as some kind of treat, but as boss of the company, I didn't see it as
anything special - I'd rather have been sitting at home watching TV and relaxing.

So there I was, all dressed up in a dinner jacket and talking to a load of boring people on my table, looking at my watch and wondering when I could get out of this place. The award ceremony started and went on for about half an hour until it got to the final top award of the night. While drifting away with boredom, to my surprise, I heard the Master of Ceremonies declare, 'The Product of the Year Award goes to Alan Sugar of Amstrad for the CPC464.' The whole room stood up and applauded, except me. I was stunned. Nick nudged me, as if to say, 'You'd better get up there and accept the award.' I guess it was a nice thing to have. I am terrible when you think about it - I made no fuss or showed any sign of elation.

*

There comes a time when a business grows to such spectacular heights that, regrettably, some of the staff initially tasked with jobs such as accounting or sales find themselves out of their depth. This was the case at Amstrad with Jim Rice and Dickie Mould.

Jim had been employed back in the days of Ridley Road, taking over an accounts department that was run by one person. He was perfectly qualified to run the small department and transform it into something larger, but by now we were becoming a giant public company and we needed a heavier hitter. I appointed Ken Ashcroft as our new finance director. Ken, who was quite well known in the City, had held the same position at Comet and was recommended to me by Nick Lightowler. Ken put a lot of systems into place very quickly, including a big IBM mainframe computer to control the whole business.

It's a tricky subject to bring up with one of your loyal staff members - to tell them it's time for them to move aside and let someone else step in - but the new job I had in mind for Jim was no small task. Though he was initially upset at the prospect of someone else taking over the accounting reins, he finally accepted that it was the sensible thing to do. Instead, he would move into the newly created position of operations director, controlling our distribution and warehousing logistics for the whole of Europe. He had successfully supervised the building of our facility at Shoeburyness, and his new role was to ensure that our expansion in places like France was dealt with efficiently.

Dickie Mould - Boycie - was good in his day, dealing with the small retailers, but was totally out of his depth handling the Rottweiler-type buyers
at companies such as Dixons, Rumbelows, WHSmith, Littlewoods, BMOC and Argos. My philosophy of selling in Britain was to stick to large organisations such as these, who would buy in bulk, and, to be perfectly frank, I largely ignored the individual and smaller dealers, but we had appointed one wholesaler in the Midlands who would supply the smaller retailers on a ones-and-twos basis. The company was run by a pair of old fogeys who wanted to retire and, as far as Ken Ashcroft was concerned, it would be a financial risk to extend them any more credit.

I could never understand where there was any margin for small retailers. Since I wasn't prepared to sell to the wholesaler at a lower price than I was selling to Dixons, and since the wholesaler would have to make a profit when selling it to the retailer, how could the retailer compete with Dixons' price?

With this in mind, I never had much enthusiasm for supplying wholesalers. It was like walking into a hornets' nest because small dealers still felt, quite rightly, that they too needed after-sales service and technical support. Nevertheless, we bought this small wholesale company in Stoke-on-Trent because I saw this as a convenient opportunity to help Dickie Mould save face. There was no job for him at our head office and it would have been unfair to get rid of him through no fault of his own - he was simply a victim of the dynamic growth of the company. Instead, I created a new company, Amstrad Distribution, and appointed him as managing director to run the wholesale side. Effectively, he was trading with the Amstrad head office on an arm'-length basis by buying from us and selling to small retailers.

All of this coincided with a general expansion of our executive staff. We were still very much in the audio business - indeed, Shoeburyness was built so we could produce massive volumes of tower systems as well as provide warehousing for speakers shipped from the Far East. Audio was still important to me - I was not prepared to ignore the business upon which Amstrad was founded, despite the temptation to concentrate solely on computers.

Malcolm and I decided that we'd bring in a new tier of management, known as product managers. On the audio, TV and VCR side of the business, Malcolm took on a young man called Anthony Sethill, who'd previously worked for Hitachi, as our consumer electronics product manager, and on the computer side of the business, we employed David Hennell as our computer product manager, along with Keith Collins as a specialist computer salesman.

In entering the computer business we became more and more entangled in legal documentation, especially with software companies, who were paranoid about being ripped-off. We found that we were using a lot of external legal resources, which were costing an arm and a leg, so we decided to recruit
our first corporate lawyer, David Hyams, to deal with the increasing number of licence agreements and contracts.

With new markets opening up in Spain and Germany, we also needed to employ someone who was familiar with the logistics of export - the paperwork, the letters of credit and so on - and who could bring it under control. Waco in Japan was finding business tough, as changes in the nature of trading between manufacturers and customers abroad meant there was less opportunity for agents such as them. The shrinking of their organisation resulted in the departures of Sakai and Joe Oki, so we asked Joe to come to England and be our export sales manager, handling orders to France.

While on the subject of personnel, I had asked Mike Forsey to leave the company a while back, as he just didn't fit in with the Amstrad culture - he dithered and pontificated and was somewhat awkward in his manner - and I promoted Bob Watkins to technical director.

In discussion with our corporate advisers, I decided to initiate a share option scheme for the staff. In simple terms, it was a way of giving my employees the right to purchase Amstrad shares three years after the options were granted. As an example, if when I granted the options the share price was PS1 and three years later the share price had risen to PS10, the employees would have the right to pay PS1 per share, sell at PS10 per share and make PS9 per share profit. I am sure some technical guru will disagree with my simple explanation, but trust me, that's more or less the nuts and bolts of it in simple Hackney terms.

Share options were granted to all my key staff. Naturally, the directors got a lot more than the general staff. Most employees didn't realise the benefits that were about to be bestowed upon them. They thought it was similar to the various incentives that sometimes crop up in companies - in other words, to be taken with a pinch of salt as some kind of management gimmick to try to make the staff feel wanted. The scheme was put into place at a time when Amstrad's share price had dropped back a bit, due to what the market perceived as disappointing results at the end of June 1984.

*

Roland, Bill, Bob and I had been talking about the next model of our microcomputer. We decided to get rid of the archaic method of downloading games via cassette and replace it with a floppy disk drive, which was clearly the way forward. This would raise the profile of the computer into a different league and would allow more sophisticated programs, such as spreadsheets or word processors, to be run on it. It would also allow third parties to write
software for this new platform and would leave the Sinclairs, Commodores and Ataris standing - as simple games machines. Of course we knew that even if we
did
add a floppy disk drive to bring sophistication to the product, its real use would still be for games. Nevertheless, parents would always want to buy the best for their children in the belief that it was an educational tool.