Excelan was by and large a technology supplier to OEMs. These OEMs were tbuilding super-microcomputers using a plethora of Micro-processors and busses. Most of them ran a version UNIX, many of them were packaged as engineering workstation with CAD applications bundled in. By the time I became CEO in March of 1985, Excelan had signed 30+ such OEMs. We had every body but Sun Micro-system, the eventual winner, as our OEM. These OEMs were to bundle our TCP/IP and Ethernet boards to network enable their boxes but none of them was generating any volume for us. With money running out and no certainty that any of them will break loose any time soon, I took the drastic action of packaging networking solutions for end-users so I could bypass these OEMs. There was a three month crash program to effect this change.
There were eventually four OEMs that came on line and took significant volume. They included NCR, Sperry, Siemens and Masscomp. I had actually stopped focusing on this business, when we got a call from NCR saying that they were ready to take volume. We had a very elaborate contract with them. They were getting 60% discount on the hardware and software. They were to buy boards in lots of 200, they were to give us a 90 heads up for an order so we could secure parts and a firm order 60 days before the shipment date. I took a chance and built 200 boards in anticipation. It was a risky move as it cost about $60,000 just to buy parts. 90 days passed but no firm order came. I was feeling very foolish for spending the cash to build the inventory. Then out of the blue, 2 days before the end of May they sent us an expedited order to ship 200 boards by federal express. As per our agreement, they were supposed to pay us expediting charges and fedex shipment charges. When I reminded the buyer that our deal required then to pay these additional charges, he threatened to cancel the order if I insisted on that. I was in no position to do that as this order alone was to make our month. I sucked-up and expedited the shipment. Anticipating that they may need boards again in June, I went ahead and built boards again. Again no firm order till two days before the end of the month. I had to suck up again and make the expedited shipment.
By July, our end user business had taken off. I had gone ahead and built another two hundred boards for NCR in anticipation of the month-end order. Order came two days before the end of the month but this time I refused to ship without expediting charges and extra charges for fedex. The buyer on the phone blustered about cancelling the order on me. I was unmoved and told him to go ahead and do it. We had enough end-user business to make our monthly numbers. Buyer was stunned to hear this and pleaded with me to ship as I had done previous two months. I told him that I was not going to ship without extra charges as stipulated in our contract. Later I got a phone call from a senior manager at NCR asking me if there was a problem. Why were we not shipping the boards as they are a big customer. I told him that I appreciated them as a customer but we had a contract and they were not living up to it. He was surprised to hear that. After understanding what was going on, he apologized and agreed to pay the extra charges as required by the contract. I released the shipment. NCR started giving me two months notice of firm orders and we never had any problem with them any more.
I had come to realize that every business relationship has a power balance. One has to know which side of the power equation one is on. When I needed the business in May and June, I was in no position to enforce my rights. In July, I could have lived without the NCR business and it was a perfect time to enforce the contract. I knew that they have to ship two hundred system to make their numbers and I could stop them from making their numbers.
My management team and Excelan board watched in awe how I played the game. I had become a hard-nosed CEO playing the game as it should be played. . We were making our numbers and business was growing nicely month on month.
We had done $5 million in revenue and had lost $2.5 million in 1984. We finished 1985 with $10 million in revenue and about $250K in profits. It was a great turn around and we were on our way. Further, all the talk of me being an interim CEO also muted down.
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