Belated Business Success of a Reformed Politician

Company: Network Hardware Resale Inc.
Year founded: 1986
Quiet period: Six years
Turning point: Founder's abandoning his political career

Although Chuck Sheldon founded Strand Computer Resale, now called Network Hardware Resale (#93), in 1986, his heart wasn't in the business. What excited him was the politics of his adopted hometown, the scenic Los Angeles suburb of Hermosa Beach. That's where he and his wife, Missy, and their two sons had settled in 1978 after a nomadic life of moving from city to city while Sheldon worked as a marketing manager and planner for IBM.

Sheldon had quickly established himself as a civic leader in Hermosa Beach. A Republican, he won a seat on the city council in 1987 and served as mayor in 1990 and 1991, but soon he'd had enough of political life. He shifted all his energy to his business, then a semidormant reseller of used computer hardware, such as IBM computers and Codex modems. He refocused the company on network hardware, including Cisco and Lucent products.

In 1994, Sheldon hired his younger son, John, as his top deputy. Since then the company's revenues have soared -- they are projected to reach $20 million this year. Sheldon has relocated Network Hardware's offices to Goleta, Calif., some 100 miles from Hermosa Beach. Although the former mayor is keeping a home in his beloved Hermosa Beach, he is building a second house closer to the office.

Born Again with Microsoft

Year founded: 1983
Quiet period: 13 years
Turning point: Reorienting products to Windows NT

Right from the start BEI Corp. piggybacked its software on computers offered by Wang Laboratories, which emerged in the 1970s and 1980s as a leading maker of word-processing hardware. That was the technology that BEI cofounder Morgan Edwards knew best. After all, he had worked for Wang as a sales rep in Honolulu before starting his own company in 1983.

BEI, based in Bellevue, Wash., owed much of its early success to a spell-check program that the company developed for use in Wang minicomputers. Although BEI never reached $1 million in revenues, it did just fine by confining its payroll to four employees and diversifying its product line into data-backup software.

At Wang, however, sales began to plummet from a high of $3 billion in 1989 to less than $1 billion five years later. "The installed user base dropped from over 60,000 to under 10,000, and we started losing customers left and right," Edwards recalls. Mirroring Wang's misfortunes, BEI saw its revenues wither to $400,000 by 1995. As Edwards says dryly, he knew that the company had to "reinvent" itself.

It did so by casting in its lot with Microsoft (#80, 1984; #163, 1985). BEI started to produce a spell-check program for Microsoft Word -- an $80,000 false start, as it turned out, because the program already contained a free spell-check utility. Edwards then developed a Microsoft-based application to back up files and recover lost data. When he introduced the product, in 1995, BEI was still deriving 90% of its meager revenues from selling software to die-hard Wang users. The company's numbers flip-flopped the following year, when Windows NT customers accounted for 90% of BEI's sales. The company also revamped its name, becoming (#417) two years ago. Now Edwards, 53, is predicting that his company will post 2001 revenues of $10 million.

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