TFN operates in a universe of $1-billion companies with strange, futuristic names such as Entex, Vanstar, and CompuCom. So far it has escaped fatal collision with those giants because, as Theye puts it, "we have a good business model." And what best defines that model is Theye's willingness to continually reconfigure TFN as if it were a computer system, acting swiftly and completely to meet a dynamic market. He has not grown wedded to his own ideas in the face of the constant need for change. "This is not an ego thing with Terry. He's not an entrepreneur who has built something up and must have his arms around it at all times," says Dick Sanford, chairman of IE, which has been a strategic partner with TFN and will soon be its parent company.
Theye has saved his company by periodically reinventing it. What follows is a look at some of those incarnations.
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Phase One
Switching Products:
From Word Processing to a Shot at the Big Time
Back in 1986 Terry Theye still enjoyed a luxury he cannot imagine today: he could make a mistake. He could even laugh about it.
At the time, Theye and two partners were running a business they then called Cincinnati Word Processing (CWP). Theye recalls getting a call from a manufacturer entreating CWP to carry its surefire hit product. Theye demurred, later commenting to his partners with a scratch of his head, "Can you imagine someone naming their company 'Apple'?"
Parochial in scope and ambition, CWP sold one product, Wang Laboratories' word-processing equipment, out of offices in four midwestern cities: Cincinnati, Columbus, Dayton, and Louisville. CWP targeted customers that did a lot of typing and data entry, such as the legal community and the state government, and it grew smartly from zero in 1975 to about $5 million by 1985. The business generated gross margins of 25%. But then a novel device entered the business scene, something called the personal computer.
By late 1988 Theye had aggressively repositioned CWP, moving it away from peddling word-processing equipment to carrying PCs. To signify the shift in market emphasis, Theye changed the company's name to the Future Now, adopting that moniker from a company CWP had acquired earlier.
Theye's ability to abandon word processing -- before it abandoned him -- reflected more than his willingness to rectify his own mistakes. It also demonstrated a curious but ultimately necessary aspect of Theye's business behavior. To ensure TFN's survival, he has not allowed himself to become attached to any of the company's components. Early on, he even sold TFN to save it. Such detachment comes more naturally to Theye than to most company builders, for he is an accidental entrepreneur.
After 13 years at IBM Corp., Theye was recruited in 1973 to establish a midwestern market for Exxon Office Systems, a vendor of word-processing equipment. Two years later, with the energy crisis in full swing, the oil giant got out of the information business to concentrate on the rush to develop fresh reserves of oil and gas. Exxon offered to sell the division to Theye and two partners. The three took out second mortgages on their houses, and thus was born CWP, the company that would later become known as the Future Now, one of countless purveyors of personal computers.
The industry in those early years was wide open, drawing thinly capitalized entrepreneurs with the lure of exploding sales. Neatly hidden was the hook of collapsing margins. "We were soon running out of money," Theye notes.
He knew he had to put CWP on a sounder financial footing if it was to weather the inevitable shakeout, and in 1985 he found deliverance. He sold CWP to a local investor who owned a couple of soft-drink bottling plants, giving it a much-needed cash infusion. Theye stayed on as president, preferring to act as a hired hand with no equity rather than struggle along as a broke entrepreneur with a cash-starved business.
But Theye was also a dogged optimist. He figured if he stayed around, something might break his way.
It did. His buyer had actually purchased the company to give his son, returning from the West Coast, something to do. Two years later the young man headed west again. By then the bottler could no longer stomach the risk associated with such a fast-moving business and wanted to sell out. He helped Theye find a local investment banker willing to structure a leveraged buyout of the company. The banker would take an equity stake in the company while helping to find Theye a lender to finance the balance of the purchase, which meant dumping a load of debt on Theye's shoulders. "That was an emotional time," Theye recalls without a trace of emotion in his voice. "Now the risk was on my shoulders." And still, there was no money in his pocket.
Fourteen years after he'd founded the company, Theye's equity amounted to zero. Nonetheless he had grown a $20-million business, engineering its financial survival along the way. And now that he was back in control, he had the chance to get rich.
