INC.: Do you ever wish you had sold out to McGraw-Hill back in '85 when it made an offer, and spared yourself having to get serious?
KAHN: No, I have never regretted the decision.
INC.: You didn't have a green card and could have turned over a year-and-a-half-old company for big money. Who could resist?
KAHN: The arrangement was for an earn-out over three years, and I had to commit to working there, probably in Manhattan. That was the hitch -- living in a corporate environment, which was very new to me. I like mountains better.
INC.: For $75 million, couldn't you have tried to like sidewalks?
KAHN: Well, it was a lot of money, and extremely tempting for early stockholders. At that time I had no experience with such things -- I had never been to New York -- so I said certainly, let's talk. I mean, how much more can you do than go for the first time to Manhattan and stay at the Plaza and have your first appointment on the 49th floor of the McGraw-Hill building? It was my first encounter with big corporate America.
INC.: And it turned you off?
KAHN: It's a long story.
INC.: Let's hear the highlights.
KAHN: First thing in the morning, I enter the boardroom. It has a totally glossy table, and there are portraits of the founders on the walls, and there are typical executives dressed in white shirts and navy blue suits with burgundy ties, and everybody turns around to see who is this guy
(continued)
we're supposed to talk to for two hours. It was like a movie.
INC.: Just you alone? You didn't bring an attorney?
KAHN: Just me alone. And not only was I wearing the wrong shirt, the wrong tie, and the wrong jacket, but the wrong shoes. It was winter, and I thought I'd better wear my big, rubber-soled shoes. I didn't realize that suddenly I would be in a corporate suite with everybody wearing thin, Italian shoes. All the time I was talking, I kept thinking I have on the wrong shoes, this is not going to happen.
INC.: But it did.
KAHN: I felt it went terribly, but it went very well, actually, and their board approved the essence of the deal. The next morning, a newspaper article came out about me and Borland, and I got a phone call from the guy I was dealing with at McGraw-Hill. He said, "You're on the front page of The Wall Street Journal." I said, "Great, great!" "They say you're an illegal alien, and our people don't want to buy a company from an illegal alien. You didn't tell us you were illegal." I said, "Our lawyers did tell your lawyers that I'm in the process of getting a green card." "The article also talks about your toga parties and other stuff," he said. For two weeks they tried to keep the ball rolling, but I got fed up. If this little problem can become a big problem, what's the rest going to be like?
INC.: You have to admit you did have a reputation as a party thrower.
KAHN: That image was very much overblown. It was a marketing ploy.
INC.: You promoted that image?
KAHN: Yeah, the toga affairs and all. The truth is we were a bunch of people working hard building products, and there weren't that many parties. But the image paid off. When you're a contrarian, you get noticed.
INC.: In July 1986 you brought Borland public. Always the contrarian, you did it in London, rather than New York City.
KAHN: There's a simpler explanation: Wall Street is not a place to make deals if you don't know whom you're talking to. I had a friend who had been an investment banker in London, and he arranged it. It achieved the same goal -- to raise capital and create a public market for our shares. It was very efficient, and it worked out well for the company. But I realize there are trade-offs. For one, American business publications follow you less. And now that there's a lot of stock held by U.S. institutions, we have to report to the SEC; we do the filings of a U.S. listing, but we don't get the benefits.
INC.: Just before your offering came out, Mrs. Fields Inc. also went public in London, but apparently that issue didn't go smoothly. Did its difficulties affect yours?
KAHN: Yes, it was a problem in the end, because British institutions kept comparing it, as an American company listed in London, with Borland. "Mrs. Fields Cookies has such-and-such a ratio, therefore. . . ." I would say, "Wait a minute, ever try to eat a floppy disk? We're a high-tech company."
INC.: We can't help but notice that the incremental sizes of your sailboats about match Borland's sales growth. Is there any significance to that as a ratio?
KAHN: You're right, there is a certain parallel. When I was in France, I couldn't afford big boats, so I sailed very small boats. When Turbo Pascal began selling, I bought a 20-foot boat even before a house or car. The year after, when we were doing about a million dollars a month, I bought a 37-footer. Then right after we went public, a 43-foot boat. This year [1988] I went into a 70-foot racing machine.
INC.: And in July you won the Pacific Cup race from San Francisco to Hawaii. But at the same time, back in Scotts Valley, Borland was undergoing its first losing quarter.
KAHN: That was a strange coincidence. Before leaving the dock, I went to the store and there was a magazine with stories about business guys who had lost it all. So I bought it and stuffed it in the boat in case I wanted to read something entertaining about business. There was a piece about Nolan Bushnell and Pizza Time Theatre, how he was so successful and how he was also into sailboat racing. Then it went on about how the year he won the race from Los Angeles to Hawaii, as soon as he got into Honolulu there was a telegram waiting for him saying the company had just suffered a huge loss, and he had to fly back. It was the beginning of the end of his tenure at Pizza Time. I said to myself, wait a minute, maybe I shouldn't be reading this. The next thing I did was get on the marine radio and call the office: how are things?
