Too Hot To Handle: Losing Control

"Things got screwed up."

 

The creators of a hot product don't always have the resources to market it. Often they have to bring in someone who can turn their invention into a phenomenon. That can mean giving up some control -- or even surrendering the product.

Take Robert Frankston and Daniel Bricklin. They had an idea that they knew they could turn into a product. But Frankston was a computer programmer; Bricklin was studying at Harvard Business School. And the industry they were targeting barely existed.

So, in 1979, they signed a marketing agreement with Personal Software Inc., a company in the fledgling PC-software industry that was run by a recent graduate of the business school. They took a 36% royalty on sales of the program. "It was an uncertain product," says Bricklin. "It would've been presumptuous of us to think that it would be the biggest hit in the industry."

It was a hit. VisiCalc was the first spreadsheet program for personal computers. More than 700,000 copies of it were sold at prices of from $99 to $250 apiece. Within a few years, Personal Software had estimated sales of $30 million and a new name: VisiCorp. Bricklin and Frankston's company, Software Arts Inc., received payment of some $10 million.

The trouble began, Frankston says, when VisiCorp tried, among other things, to reduce Software Art's royalty payments. When the pair stood firm, VisiCorp sued them for $60 million. Software Arts countersued and announced that it was going to market VisiCalc itself. The suit wasn't the biggest problem, though; a new spreadsheet called Lotus 1-2-3 was. "While the lawsuit was going on, it was hurting sales," says Bricklin, now president of Software Garden Inc. "We weren't spending time responding to the competition." VisiCorp lost interest in updating VisiCalc because by 1984 it was pushing its own product.

The rest is VisiHistory. The companies settled out of court in 1984 and have since ceased operations. "We had a hot thing and we should have reinvested in it," laments Frankston, now a chief scientist at Lotus Development Corp.