What You See Is What You Get: My Autobiography (51 page)

While Mark Souhami and Stanley Kalms were still on their Far East trip, Souhami met up with his senior buyer, Brent Wilkinson. I invited them over to Amstrad's Hong Kong office and we showed them the drawing of the new Amstrad Sinclair. Not only that, one of the Amstrad Hong Kong engineers had carved out of polystyrene the profile of what the thing would look like in real life. They had stuck the drawing on top of it and generally painted it up, so that one could get an idea of the size.

Souhami and Wilkinson couldn't believe their eyes. Souhami said, 'I only met you a couple of days ago, Alan. My God! What are you doing? You haven't bought Sinclair yet - you haven't done a deal. What are you playing at?'

I explained to Souhami that I'd spoken a bit more with Price Waterhouse and my gut feeling was that this deal would happen. I said, 'All
you
need to focus on is whether you want to be the first to buy these. The retail price is PS139.99 and I've already pushed the button on making the first production of a hundred thousand units. So, do you want to buy them - yes or no? You've got nothing to lose really - if it doesn't happen, you've lost nothing.'

Incredible as it may sound, they placed an order there and then for 100,000 units on the basis that we would start shipping them to Dixons in mid-September.

It was time for me to get back to England and meet the Price Waterhouse chap for the first time, as well as Clive Sinclair. The following week, Clive Sinclair came to our Brentwood headquarters late in the evening, slipping in through the rear fire escape. If anyone from the industry or the media had seen him creeping into my offices, it would have been front-page news.

As I had recalled, a few weeks earlier the
Daily Mirror
and their infamous owner Robert Maxwell had declared, 'We are going to rescue Sir Clive.' The guy from Price Waterhouse told me that Maxwell was full of shit. When it came to putting some cash on the table, he was all talk.

The purpose of the meeting was to try to come up with a mutual win-win situation. It was a momentous event meeting Clive for the first time - after all, he was a national hero, the so-called father of the computer industry in Britain. He was quite polite, even humble, with no hint of arrogance, and admitted that his passion for research had caused him to take his eye off the ball and overspend. He was no fool and could see there was no way out for him. With his reputation about to go down the pan, he was clearly looking for an elegant way to preserve his image.

I was very polite in return and showed him the respect he deserved. Having said that, I did need to keep the meeting on track and every so often, in a diplomatic way, reiterate that he was bust and I was there to find a mutually acceptable way out. Clive was angling for me simply to rescue the company and allow him to run it, but there was absolutely no chance of this. All I was interested in was acquiring the intellectual property rights and the brand name Sinclair - and that's it. I had no intentions of inheriting any of the problems his company had got itself into.

Clive left the meeting very despondent. He'd thought I was a white knight
who was going to rescue his company, leaving him in charge to continue developing his new ideas.

I was also disappointed - it seemed the arrangements I'd made in Hong Kong the week before were premature. Perhaps I'd jumped the gun.

Next day, the Price Waterhouse man called me and told me that Clive wanted to see me again. Clive had digested the very blunt stance I had taken and was starting to realise that there weren't any other options. I jumped in a car with Bob Watkins, who was very excited at the prospect of meeting Clive, and drove to Cambridge. We met Clive at his house rather than his famous research centre, as that would have caused a furore in the marketplace and the media. This time, the Price Waterhouse people were not present, as Clive wanted to see whether he could come out of this deal with some money for himself.

Once again, I had to be blunt. I told him that I was a simple-thinking man with a very narrow focus on my objectives and that I didn't like overcomplicated situations.
All
I would be interested in was acquiring the Sinclair rights so that Amstrad could make stuff under the Sinclair brand, with no other strings attached. (I had not mentioned the model we'd designed to Clive or Price Waterhouse.) This second meeting with Clive was his last throw of the dice to try to rescue his personal integrity and secure a few quid for himself for this massive albatross he had built.

Things went quiet for a few days. I was not prepared to move from my stance.

On 20 March 1986 I was due to fly to Florida with the family. I was contacted by Price Waterhouse who asked me whether I would be prepared to attend a meeting on 24 March (which happened to be my birthday) at Barclays' headquarters in the City. I agreed and suggested that Ann and the kids travelled to Florida ahead of me. Family holidays were important to Ann, so she was not a happy bunny, but I promised her that I would be there on the 24th, one way or another. I worked out that if I left the City at about 3.30 p.m., I could catch the 5 p.m. Concorde to New York and from there fly down to Fort Lauderdale, which would get me into Boca Raton by about 10 p.m.

I arrived at Barclays' headquarters and was greeted by the guy from Price Waterhouse who asked if I'd mind waiting outside for a while. I agreed but said, 'Whatever happens, I'm leaving here at half three, so you can forget about these City meetings that go on till midnight - I'll be gone, like it or not.'

He'd obviously relayed this to the people in the meeting and I was rapidly called in. It was a massive boardroom packed with people from Barclays. Sitting at the other end of the boardroom table was Clive and a few of his blokes.
More importantly, his suppliers and sub-contractors were there. One of these was the company AB Electronics who were based in Wales. They were his main sub-contractor and were very badly exposed by events. If Sinclair went bust, then AB would lose millions, as would their other sub-contractor, Timex in Scotland, who were in the same boat.

They wanted to hear my proposition and I spelled out very clearly that I would throw PS5m on the table today in exchange for all Sinclair's intellectual property rights, including its brand name and any software applicable to the operating system. I made it plain that I was not interested in anything else. I did not wish to take on any of their staff, I did not wish to acquire any of their premises and neither would I be responsible for any of the work in progress at AB or Timex or any other sub-contractor.

I could see this was a massive smack in the face for all the people at the table. I don't know what the guy from Price Waterhouse had told them about me, but they must have had visions that I would come in as a white knight and rescue the situation. Not only had the bank presumed that I was going to step into Sinclair's shoes as far as its debts were concerned, AB and Timex had presumed I was going to simply take over the reins and it would be business as usual.

They asked if I would step outside again while they discussed my proposition. The guy from Price Waterhouse escorted me into another room and I asked him, 'What the hell have you told these people? It seems to me that they were all shocked at my offer. Have you been bullshitting and telling them that I was going to rescue the company?'

'No, not at all, Mr Sugar, not at all. Look at me as a kind of
catalyst;
look at me as someone who's just trying to come up with a win-win situation for everyone. Barclays is very embarrassed here, as is Her Majesty's Government. Grants have been given to Sinclair up in Scotland to help employment in the Timex factory and AB employs hundreds of people in Wales. The whole Sinclair image is now about to go down the pan. You
are
the white knight.'

He was trying to big me up, to play to my ego, and I have to say that in some cases that might have worked - sometimes people do silly things that cost them a lot of money if they don't think rationally. In this case, my ego wasn't going to get in the way. While this was going to be a great coup for Amstrad, I knew enough about Sinclair's business to see it was double-barrelled bust and I wasn't going to get involved with taking over its debt. What's more, their way of manufacturing was wrong - they should never have made their low-cost computers in the UK, but rather in the Far East, as we did. Plus, the after-sales service liability was a nightmare. The quality of
the product Sinclair was producing was junk at the time and the returns were horrendous - so much so that he'd made a special arrangement with the Post Office whereby people could send their faulty units back to his warehouse in Cambridge, marking the package 'Sinclair Freepost'.

I reminded the guy from Price Waterhouse that 'In one and a half hours' time, I'm walking out of here and frankly I don't care what they say; I'm catching my plane.' Just at that moment, the door opened and Clive appeared and asked me whether there was any possibility of me increasing my offer. I knew then that I had them on the hook. I rejoined the meeting.

It occurred to me that one of the ways to win over this deal was to see if I could find a way out for Timex and AB. This would also be good politically - the last thing I wanted was to be branded as the person who put a load of people out of work in Scotland and Wales.

I came up with my final offer: PS5m on the table there and then, plus I would take responsibility for all of the work in progress that Timex and AB had for the current model. In other words, if they had 50,000 computers in various stages of assembly, they should finish assembling them and I would pay a fair price for them and take responsibility for selling them. I had Dixons in the back of my mind to dump this lot of cargo on, even if I had to sell them at the price I negotiated with AB and Timex.

Once again, they asked me to leave the room and now AB and Timex joined me in a small sub-office. They wanted to know how much I would pay them per unit. I told them that I was going to get them out of jail and they should be happy if they recovered all their costs and not start looking for any profit.

I asked them to tell me there and then what their costs were. After a few phone calls backwards and forwards, they presented me with some figures which I didn't believe. When I compared their costs to the retail price of the Sinclair Spectrum, there was a big discrepancy. They were trying it on. I made them an offer of PS40 per unit - take it or leave it. A few more phone calls, a bit more negotiation, and they agreed at PS48. We went back into the meeting. Now that Timex and AB were onside, this just left Barclays Bank.

'In half an hour's time,' I warned them again, 'I'm going. I'm sorry, gentlemen, but I have to leave to catch my flight.'

Having been coached by the man from Price Waterhouse, I made a little speech to Barclays that must have rung their bells. 'I understand that on 31 March 1986 you have no alternative but to foreclose on Sinclair, as the debenture expires. It is now 24 March and you have exactly seven days to find another solution. I have bent over backwards trying to help AB and Timex
with their employment problems in Wales and Scotland. What happens now is entirely up to you.'

They still hadn't made a decision, so I stuck to my guns. I wished them farewell and departed for the airport.

As you can imagine, my head was spinning on the journey to Florida. I was wondering whether I was going to get this deal or not. I was also wondering whether I should throttle-back and cut my losses with Avnet in Taiwan.

The next day, in Florida, I got a call from the Price Waterhouse man. He told me that he
thought
everybody had agreed, though Barclays would make the final decision. They wanted to know whether I could come to a meeting with lawyers to draft up an agreement.

I replied, 'You know my number - you've just called it.'

'Yes . . .' he said in a puzzled voice.

'Well, then you'll know you dialled America. I am not coming to any bloody meeting in London. I'm over here with my family. Now cut the crap and tell me what the next move is. Have I got a deal or not? If I have, then I'll get a team of my people to meet with you - they are more than capable of thrashing out a contract. I don't need to be there.'

'Fair enough, Mr Sugar, we'll do that then. I'll let you know where and when the meeting will be.'

The meeting was scheduled for 30 March, which was a bank holiday weekend. I insisted that someone from my lawyers, Herbert Smith, together with David Hyams, Ken Ashcroft and Bob Watkins attended this meeting. My people were happy to do this, but Herbert Smith sent a junior intellectual-property lawyer who was unfamiliar with the computer industry, but was the only one prepared to work over the bank holiday. He wasn't the brightest star in the sky, but it turned out that we didn't really need him in the end. Bob was at the meeting, even though his wife was on the verge of having a baby.

The meeting started at 9 a.m. UK time. When I woke up in Florida at 7 a.m. (noon UK time), I got in touch with Bob and Ken and they told me we'd got virtually nowhere. Ken asked me what the main bullet points we needed to put in this contract were. With David, Bob and Ken on the phone, we discussed the main criteria.

Barclays, Sinclair and everyone else had been trying to throw in all sorts of other obligations, such as after-sales service. I'd already told them that I had no interest in inheriting their past problems, but they still tried it on.

Throughout the course of the day, the phone was red-hot. My team was going backwards and forwards, speaking to me then arguing with the
Barclays mob. Finally, they got to the stage of having a draft contract, which Ken insisted I see.