Late on Saturday afternoon Ohlson dropped a bombshell. Some weeks earlier, Berst recalls, Ohlson had ordered $40,000 worth of communications devices to sell to the IBM market. Berst, Eme, and Dote were incredulous. ICC had never gone close to IBM products. It was mainly a DEC house. Why all of a sudden get into something they knew virtually nothing about? Ohlson sat back with a broad smile. "Don't worry," he assured them. "I'll take care of it."
The decision resulted in one sale with a low margin and an overly generous warranty backed by ICC. A dispute over what had been actually delivered resulted in an investigation by ICC's lawyers to get the company its due. (Much of that $40,000 inventory still sits in ICC's warehouse.)
Berst believes the decision signaled a move by Ohlson to take the company in a direction that would put it more under his control. Ohlson maintains the company needed to evolve from its existing markets to the sale of electronic "boxes," such as modems and multiplexers, rather than just cable. In effect, ICC had to offer "systems solutions." His partners argued the exact opposite: ICC was cutting its own throat by getting away from what it did best -- selling cable.
To sell these boxes, Ohlson persuaded his partners he needed to hire and mold a new breed: briefcase-toting, college-educated salesmen in three-piece suits who would spend a lot of time on the road. They would be true professionals, salesmen who could penetrate new markets and put ICC on the map. Again Ohlson's partners fought the move. The overhead these new hires would create was greater than that of the existing sales force -- trained in house, skilled at selling computer cable to all takers over the phone.
When Ohlson interviewed these prospective hires he openly bad-mouthed ICC, telling them how unprofessional the sales operation was. Ohlson assured one candidate that he would be made sales manager within six months. Berst claims that Ohlson paid the moving expenses of another without telling the partners. Ohlson had ICC provide that salesman with a data link for his personal computer, giving him better access to a vendor. When other salesmen complained, Ohlson replied: "Well, he's an entrepreneur."
This entrepreneur wanted to use the computer to hack his way into a vendor's cost database. When Eme found out about it he approached Ohlson: "What if the vendor finds out? What sort of liability does ICC have?"
Ohlson waved him off with his usual reply. "Don't worry about it," he said. "I'll handle it."
Suspicions and Delusions
John Berst had always been loyal to Bob Ohlson, doubtful of the other two partners. But he was the company's CFO, the man who kept the books. And by mid-1986 it was apparent that the books didn't lie.
Berst recalls his shock when he discovered that Ohlson had paid a headhunter $5,000 to find a salesman without telling his partners. "I nearly fell off my chair. I said, 'What's this for? We haven't done anything like this before.' " Ohlson's decisions were driving Dote and Eme nuts -- when they knew about them. They owned 60% of the company, yet Ohlson was committing them to decisions they knew nothing about.
Berst admits he "was really close to Bob." Blowing the whistle didn't feel right. The two men worked together six days a week. Their Saturdays had become a ritual. In at 8:00 a.m. to strategize about the business, out for a leisurely breakfast at 10:00 for more company talk, back to the office till 1:00. The bond strengthened in August 1986 when the company expanded into a second building, physically separating sales from administration. Ohlson started prowling the halls, stewing over the image that loomed ever more vivid in his mind of Dote and Eme over in the other building, feet on their desks, eyes fixed firmly on the clock. These were suspicions that Berst also bought into.
Berst began to see those suspicions as distorted delusion as summer turned to fall. His break with Ohlson came at October's end, when ICC closed the fiscal year. For the second year in a row Ohlson came into the year-end meeting with examples from the business press of salary ranges for corporate managers. Now, he wanted $125,000 for himself, $90,000 for Berst, $72,000 each for Dote and Eme. Eme's proposed salary amounted to a $3,000 cut.
Berst, who had started three years earlier at $36,000, was stunned. He was flattered that Ohlson thought he was worth so much, but he knew the company couldn't afford to pay him that much money. He also knew that Ohlson didn't deserve that kind of money. "That was the first time the veil dropped from my eyes. Bob Ohlson couldn't compromise."
Ohlson now saw Berst in a different light as well -- as a traitor to the cause. Anger rose in Ohlson as he reasserted that he was the president of this corporation.
"I'm a managing partner of this corporation, too," interjected Ralph Dote, "and don't you forget it."
The next week the partners met again to hash out the salary dispute. Dote came in and said, "Here's my plan. You get $100,000, and the rest of us get $85,000. We're going back to equality in this company."
Dote knew he could make his plan stick. In half a year he had moved from being the odd man out to having the support of Eme -- and now, at last, Berst. Ohlson had succeeded in allying his partners against him. Stymied and angry, Ohlson said: "Fine, I'm going to sit back like Ralph and Jim, put my feet up on the desk, and not do any work. Then we'll see what happens."
'Buy Me Out, John'
His partners had spent a year trying to stem Ohlson's unilateral actions, but somehow, like water working on a leaky dike, his will had always found the opening it sought. "This guy has a determination factor you wouldn't believe," Eme recalls. "He'll wear you down.'
