What You See Is What You Get: My Autobiography (57 page)

Daniel, who is two years younger than Simon, joined the company as a junior clerk in the sales department. We'd found a great niche for him - while he wasn't suited to design and development, he definitely had a trader's instinct. Part of his job was the disposal of B-grade merchandise, an important side of the business. During the dynamic rise of Amstrad, our sales people were focused purely on new sales and we hadn't highlighted the issue of disposing of B-grade merchandise. This was merchandise returned from mail-order companies for various reasons - either it was faulty or a customer simply sent it back because they didn't want it. With lots of stock building up in the warehouse, I realised we needed to pay attention to this and find an outlet to dispose of it - otherwise it was just cash sitting around.
It had to be disposed of quickly, while the product was still in fashion, to avoid it becoming 'obsolete technology'.

The customers who would buy this stuff were job buyers. They would test and repair the merchandise and sell it to wholesalers, who would sell it on to market traders or ship it abroad to Eastern Bloc countries. It was important that the B-grade merchandise never came into the normal distribution channels in the UK, as this would ruin our reputation. All consumer electronics companies have these problems and it is a special art to ensure that the disposal of the product is conducted in an orderly fashion.

The buyers for this stuff were a real bunch of characters; some of them were a little bit sharp to say the least. Talk about shake their hand and count your fingers afterwards - that's putting it mildly. Daniel got a good grounding in dealing with these tricky people and it showed him a side of business that sharpened his wits. Be under no illusion, the sales volume here was not peanuts. It was important to convert this returned merchandise back into cash. Naturally, there were laws one had to comply with - refurbished products could not be sold as brand-new goods.

*

As we headed into 1988 with every sign that the company would once again be increasing its profits, I made another acquisition. The success of Amstrad in consumer electronics brought about the demise of many other British audio companies. One such failure was Fidelity, run by Jack Dickman and his sons. Sadly, Jack had died and his sons took over the business. They were unable to compete with Amstrad and were taken over by Caparo Industries, an iron and steel importer who wanted to diversify into electronics.

Caparo ran the business for about a year or so and, if I remember rightly, took legal action against the Dickman brothers over some alleged misrepresentation when they sold the business. In February, Caparo gave up this electronics business and sold me the intellectual property rights and the brand name Fidelity. I purchased this to try to distance the audio, TV and VCR business from the professional computer business. It gave us yet another brand name to trade with, bearing in mind we also owned the Sinclair brand.

The introduction of Fidelity branding on Amstrad products was phased in gradually. Initially, we branded all audio and consumer electronic products Amstrad-Fidelity', with the idea of eventually dropping the Amstrad, leaving all consumer electronics products being branded Fidelity.

*

As I've mentioned, I had been selling shares in Amstrad while the price was on the way up and had accumulated very large sums of cash. My thinking was, Amstrad is my business gamble,' and it's true to say that I did embark on some very risky strategies. I needed a kind of personal piggy bank that was secure in case of disaster at Amstrad and by now this piggy bank was substantial. It would be enough money for the family to live on for the rest of our lives in the style we'd become accustomed to.

I often tell people that a lot of my success is down to knowing what
not
to do, a statement based on the lessons I've learned through my failures. People say that the best thing about casinos is that they show you how quickly you can lose your money. Similarly, one failure of mine turned out to be one of the best things that ever happened to me.

A lot of people in my position, who have made loads of money out of business, find themselves faced with a so-called 'high-class dilemma - what should they do with the cash they've amassed? Sticking it in a bank to earn interest is deemed boring. Many people I know have entrusted money to so-called stock market experts to put into various funds.

Shortly after I floated the company in 1980, and just after I got the money I lent the synagogue back, I was approached by the Japanese bank Nomura. A little Japanese fellow came to see me and told me that Nomura had opened a stockbroking arm in London. He said they were experts on trading in the Japanese market and explained that I should invest my money with them and they would make it grow at a far greater rate than I could achieve with it lying stagnant in my bank. Like a mug, I gave this bloke a quarter of a million quid to play with.

A couple of days later, my people were telling me that the telex machine was totally blocked by this lunatic sending through telexes, sometimes three yards long. Completely uninterested, I would glance at these telexes, which turned out to be transactions this fellow was making. I was just annoyed that he was blocking the telex line, as it was my only way of communicating with my suppliers, and called him up to give him a bollocking. I told him that I didn't need to see these telexes. If he wanted to send me the stuff for the record, he should put it in the post. That's how ludicrous the situation was.

I only realised what was going on when, at the end of that financial year, my personal accountant pointed out to me that this fellow was losing me money as if it were going out of fashion. It transpired that he was buying and selling hundreds and hundreds of different companies' stocks every day, taking a commission for buying, taking a commission for selling and using his discretion as to whether to get in or out.

On top of this, to make matters worse, all the transactions were in yen. When I gave him the PS250,000, the yen was around the 600 mark; by now it had dropped to something like 400. He had lost me a small fortune. I went berserk at this little man, but it seems I had signed some piece of paper that exonerated Nomura from any cock-ups. This was a lesson learned. I got out and cut my losses.

From that day onwards, I've taken no notice whatsoever of any of these so-called experts in the stock market or fund managers who want to look after my money. If these bloody people know so much, why haven't they got yachts and private planes themselves? Why do they need to do it for other people?

I'm so happy that Nomura taught me a lesson. Putting it in perspective, it was cheap at the price because there are some
real
disaster stories to be told about the losses made by brokers and bankers on their clients' behalf. It's amazing how these companies can bamboozle you into signing forms that totally insulate them from any of the risk. Clearly what they do is not unlawful - the devil is in the detail of what you sign.

Instead, I decided to invest my cash in property, based on the following simple criteria. Buy a building that is occupied by a well-known and respected tenant, in a good location. Look at the length of the lease the tenant has signed and if it's longer than ten years, it would appear that this is a safe place to invest my money, as long as the return is at least equivalent to what I could receive by placing the money in a bank on deposit. The upside is that the values of the properties will increase as the years go by. Pretty damn boring, but it suited me down to the ground. It's not that I am a distrustful person - certainly not - but I have absolutely no respect at all for the brokers, fund managers and all those other tossers in the City.

*

What to do with your money is a good problem to have and in the summer of 1988, my staff were to share this dilemma. The share options I'd granted them three years earlier were about to mature and kick in. Bob Watkins, Malcolm Miller, Jim Rice, Marion Vannier, Ken Ashcroft and my brother-in-law Mark Simons became millionaires overnight. If they came up with the money to pay for the shares I'd granted at the option price, they could immediately sell them and make themselves a fortune. Other staff, such as Dave Smith, Ivor Spital and a host of others, made in the region of PS150,000-250,000. These were ordinary people and this was a load of money in those days, so you can imagine the elation.

Jim Rice, in conjunction with the brokers, worked out a scheme whereby the employees would be lent some money for about half an hour to enable them to buy the shares then immediately sell some of them, so they ended up with cash in hand.

I was delighted for everybody. It was real payback for a loyal group of people who had helped this dynamic company grow. I guess if you spoke to all of them today, they would say that never in their lifetime would they have imagined that just by being a simple employee they'd hit the jackpot like this.

Each and every person was warned that they should put aside approximately 30 per cent of their windfall to pay capital gains tax. There was also the consideration that the directors should not be seen to be selling
all
their shares immediately - this would have been frowned upon by the City. So although they were looking at windfalls of around PS1.5m in some cases, it was inappropriate to cash in and sell the whole lot. While I couldn't tell them what to do, I did suggest they keep half their shares and cash in on the other half. They followed my advice and understood that this would be acceptable as far as the City was concerned.

Bob, Malcolm and Mark decided to buy themselves new luxurious homes with their windfall. People like Jim and Ken, being typical accountants, were more streetwise and cautious and would never go down the path of getting themselves into potential financial problems. But there were some sad stories, similar to those you read nowadays about people who win the lottery and blow the lot. One member of the junior engineering team, a Scouser, was quite blunt when the big payday came. So much for loyalty - he copped his PS250,000 and immediately resigned, saying that he was retiring to Spain with his wife to open a bar there. He was around thirty years old. When I heard this news, I shook my head, as if to say, 'You poor, poor fellow. You'll be back in a couple of years - a quarter of a million pounds is going to get you nowhere because there's something called inflation.' I don't know what happened to him, but I suspect, like so many other people in those days who thought PS250,000 was going to last them a lifetime, he must have got a wake-up call somewhere down the line.

One sad story that emerged before the share options kicked in concerned Dickie Mould - Boycie - who was up in Stoke-on-Trent running Amstrad Distribution. It turned out he'd got himself into a lot of trouble. The first I knew about it was when Jim Rice told me that Dickie was banged up in Pentonville Prison. We were both shocked. Jim had found out that this had happened after the fourth or fifth time the police had been called to his house
because of matrimonial disturbances. Unfortunately, this news was reported in one of the national papers, which must have been a further hammer-blow to him. I received a hand-written letter from Dickie, apologising to me for the shame that he'd brought on the company and asking me to accept his resignation.

What also came to light was something that surprised us all - he had successfully disguised the fact that he was an alcoholic. As usual, after the event, you start hearing stories. The staff up in Stoke-on-Trent were saying that he was always pissed in the evening; sometimes he didn't turn up; other times he'd make irrational decisions. I guess it's easy to spot the signs in hindsight.

I recalled a day when Dickie and I had visited Argos in Edgware. The fellow we went to see had an empty bottle of whisky in his dustbin. As we left his office, Dickie said to me, 'Did you see that? There was an empty bottle of whisky in his bin - he must be on the sauce.' I didn't think anything of it at the time, but I guess it goes to show that it takes one to know one.

Poor Dickie. Obviously things had got out of hand. I don't know whether this was because he had to spend most of his time up in the Midlands or whether he was struggling with his own ego, in that he'd had a sideways promotion and was no longer a kingpin at Amstrad's head office. Apparently, he was always telling the staff at Stoke-on-Trent that he was 'talking to Alan every day' when in fact he wasn't. I guess I kind of left him on his own up there to get on with things and he must have craved my attention. To this day, I don't know what sparked off his alcoholism, but what had I been thinking? How come I hadn't known that this man was so troubled? One of the saddest parts about this was that, due to his resignation six months earlier, he was not eligible for his share option windfall.

Jim kept in close contact with Dickie afterwards, so we knew that he'd decided to move to Spain to try to start a new life. It hurts me to say this, but the man we had so much fun with - taking the mickey out of him for his mad ways - one day, in a deep depression, committed suicide.

There was a terrible feeling around the company. I felt guilty and vented my anger on people like Jim Rice, Bob Watkins and Malcolm Miller, unfairly saying that it was our fault.
We
had taken the piss out of him,
we
had ostracised him,
we
had sidelined him.

Malcolm and Bob told me that we shouldn't feel guilty. We never knew of his secret alcoholism, we never knew anything about his private life. In fact, we'd never met his wife, not even at Amstrad Christmas parties. It was a really sad time and I think all of us felt bad seeing a colleague who had grown up
with this monster company not being able to live with himself for reasons known only to his inner demons.