HISTORY WILL RECORD THAT COMPUTERLAND WAS ONE OF THE hottest franchise start-ups in the history of American enterprise. During its first seven years, it was doubling in size every year, with sales climbing from $1 million in its first seven months to $770 million in fiscal 1983. ComputerLand did not simply ride the market into the age of the personal computer; by making a range of personal computers available to individuals and small businesses, its burgeoning chain of retail outlets was instrumental in creating that market as well. Even in the early days, there was plenty of capital, an abundance of suppliers, and lots of good press. What competition there was was far behind.
By the summer of 1983, however, when Bill Millard, ComputerLand Corp.'s founder, stepped to the podium at the annual conference of the company's 500-odd franchisees, there were signs that something was not right. In the past, these conferences had been boisterous affairs, given to optimistic sales figures, spontaneous beer busts, and wild tales of fortunes made overnight in the computer retail trade. But this year, standing in the ballroom of San Francisco's plush Fairmont Hotel, Millard was ill at ease. His hands gripped the podium tightly, his eyes scanned his text as if what he really wanted to say just wasn't there. "You can trust me," he told his audience as he announced a sweeping reorganization that would, for the first time, put him in charge of the day-to-day operations of ComputerLand's booming worldwide operation. "I will die rather than fail you."
Two years later, Millard had failed. A California court had just ordered a $141-million damage award against Millard and ComputerLand and ordered Millard to hand over 20% of the company stock, much of it to a competitor. Simultaneously, the largest and most successful franchisees were threatening a mutiny. To stave off the total collapse of the company, Millard was forced in late 1985 to give up his title and his seat on the board of directors. Day-to-day control passed to a former associate whom he had once eased out. Reluctantly, he even agreed to take the company public.
How did such a successful start-up end up in such a predicament? And how did Bill Millard come to gamble his successful new company in a legal contest that even some of his lawyers thought he would lose? As with so many companies, the answers have to do with the perils of rapid growth, the hazards of franchising, and the declining fortunes of the personal-computer market. But at ComputerLand, as we quickly discovered, there was another crucial factor: the popular human-potential movement known as est. Est was the corporate culture that became a corporate cult at ComputerLand, an attitude of confidence and self-reliance that soon gave way to inflexibility and pride. In the case of Bill Millard and his associates, est so thoroughly blurred their vision and warped their focus that the bottom line eventually slipped from view.
William H. Millard first made his mark in the computer world with a software program called "Faster." To those who knew him, it seemed an apt moniker.
He started out as a ditchdigger, a truck driver, and a welder's helper. Then, in 1958, he landed a job as a field representative for Pacific Finance Corp., where he was introduced to electronic data processing. In 1961, Alameda County, Calif., made him its chief of data processing, where he conceived and managed the development of the world's first computerized police information network. He later replicated the project for the city and county of San Francisco, where his opinions were sought by computer delegations from cities around the world. By 1969, his own software firm, Systems Dynamics Inc., was up and running.
Millard's pace was furious, relying on horsepower more than brainpower to propel his career. "I had no ticket," boasted this son of a railroad clerk: no college degree, no family money, no family network to get him started. "The absence of all those things was what I needed in order to never rest, never relax," Millard once said. And his energy was truly contagious. "I saw him as a fantastic, charming, and inspirational leader who cared about people," recalls Seymour Rubinstein, who worked briefly at Systems Dynamics, and later went on to found MicroPro International Corp. "He was, in my mind's eye, the picture of what a business leader should be."
Systems Dynamics's venture capitalists didn't see it quite that way. In their view, Millard had drastically underestimated the marketing effort that "Faster" would require, and failed to keep them apprised of the company's worsening cash position. At a climactic meeting, the angry investors told Millard they were tired of his promises. They demanded faster profits, faster sales, faster results. "The image I had was of being flagellated, of [having to] stand up against the wall and take the beating for something that was beyond my control," is how Millard remembers the meeting.
Within a few months, Systems Dynamics had failed and Millard had learned what he would consider the first great lesson of business and of life: never, ever give up control of your own destiny.
It was around this time that Millard struck up an acquaintance with a onetime used-car salesman from Philadelphia, Jack Rosenberg, who had begun making a name for himself as Werner Erhard. Handsome, intense, and articulate, Erhard had developed a popular brand of consciousness-raising originally dubbed Erhard Seminars Training, or est. The training was a loose synthesis of Eastern philosophies, Dale Carnegie "positive thinking," and pop psychology. New trainees underwent psychologically cauterizing weekends in chilled auditoriums, with little food, drink, or rest -- all the better to jolt them into new perspectives. Erhard preached that it was mind, not education, social class, or even talent that determined who would be the elect in the new world of enlightened businesspeople. If Millard would only learn to "take responsibility for his whole life," Erhard told him, he would become the creator of his own circumstances. It was just the message that Millard, the once-failed entrepreneur, needed and wanted to hear.
Est became central to Millard's business, and his business became his life. "I never made a distinction between business growth and personal growth," he says. At IMS Associates Inc., a small computer consulting and engineering firm he started in 1972, he would spend long hours teaching employees how to "go to the center of their fears," tapping new wellsprings of energy. He encouraged -- some say demanded -- that his executives "take the training." Whether it was attending est seminars together, where verbal abuse helped to strip them of unneeded psychological baggage, or rappeling down the side of a cliff during an est mountaineering course, Millard and his employees enjoyed a rare and intense fraternal bond. "There was love, there was real caring, the there was honesty," remembers a former IMS employee.
Within the budding computer world of Silicon Valley, the IMS management style was unusual. While most of the techies wore their hair long and gravitated to the culture of the slightly eccentric "Home Brew Club," Millard's band were salesmen first and foremost -- intense, stylish, well-spoken. They were not only going to sell more computers than anyone else, they would also change the way business was done. "We were on a mission from God," remembers PC Magazine publisher William Lohse, who in the mid-1970s was Millard's leading salesman. "We were out to prove to the world that we could do 10 times more than anyone thought we could do. We were in the business of helping business transform itself."
Millard's hold over his employees was extraordinary, much of it derived from his est training. In one-on-one conversations, nobody could be more persuasive. "Bill would just wear you down," recalls one former employee. "He would just not let you out of the office until you saw it his way." There were two employees, however, who would soon become reluctant disciples in Millard's church. And they would prove to be his undoing.
The first was Philip Reed III. A Harvard-educated Bostonian whose family owned a venture capital firm, Marriner & Co., Reed in many ways represented a world apart from that of gritty, up-from-the-streets Bill Millard. Despite this, the two men grew close. Reed had originally come to Millard for help in developing a computer system for a car dealership, but stayed on when he saw the commercial possibilities of the IM-SAI 8080, a microcomputer the company introduced late in 1975, even before the Apple. The relationship, in the words of Millard, became one of "blind absolute trust, friendship, and even love."
By January 1976, IMS found itself short of capital, and Millard turned to Reed's family for help. The $250,000 loan from Marriner, headed by Reed's father, P. Loring Reed Jr., was exchanged for a five-year convertible debenture at 12% interest, to be paid in periodic installments. Shortly after the loan agreement was signed, however, things began to sour between Millard and the Reeds. By May, Philip had left IMS, disgruntled that Millard had refused to give him an equity position in the company, let alone a significant management role. And by year's end, Philip's father had discovered that his $250,000 was being used indirectly as seed money for development of a retailing company called Computer Shack Inc. (later renamed ComputerLand). "I don't know what you call it out there, but back in Boston under those circumstances, we got a name for it and that's theft," the elder Reed asserted. "That not corporate opportunity." For months the two men warred by letter about Marriner's claim to an interest in Computer Shack. Finally, in May 1977, they struck a tenuous peace: the terms of the original loan were revised to include Computer Shack in the stock-conversion option. Millard signed the note.
In the meantime, Millard had begun to work closely with John Martin-Musumeci, the owner of a chain of employment agencies who originally had proposed to Millard the idea of franchising computer stores to sell IMS computers. Millard retained Martin-Musumeci as a consultant to develop the first stores, but by early 1977, the men were at loggerheads -- Millard insisting Martin-Musumeci had not done what he was supposed to, Martin-Musumeci saying he had, and demanding 50 shares of stock in the new venture, which was renamed ComputerLand Corp. Eventually, Millard would cede 10 1/2 shares, or about 1% of the stock. Then he fired his new stockholder. An angry Martin-Musumeci vowed to open up his own chain of computer stores. As Edward E. Faber, ComputerLand's president, remembers it, Martin-Musumeci issued a terse warning: "Come a year from this December, we'll be kicking your ass."
The envelope that came to Millard's house in Piedmont, Calif., nearly four years later looked innocent enough. The contents, however, were explosive. A company named Micro/Vest Corp. declared it had acquired the Marriner note, and that it intended to invoke the stock-conversion provision that would give it 20% of IMS holdings, including 20% of ComputerLand. Among Micro/Vest's principals were John Martin-Musumeci and the Reeds. Millard recalls his reaction on learning of the betrayal of his former associates: "Shocked . . . surprised . . . stunned . . . angry."
To Millard, these dealings represented the ultimate horror: it was as if pieces of himself were being parceled out and sold at public auction. Not only had Martin-Musumeci arranged the acquisition of the Marriner note and added it to his own small holdings; he had also begun to syndicate his interests to a number of investors, including one Bruno Andrighetto, a wealthy San Francisco produce dealer, and William Agee, the controversial president of Bendix Corp. To Bill Millard's way of thinking, these men cared nothing for ComputerLand, its employees, its future. They wanted money -- or revenge.
And yet, as bad and unjust as it might have seemed to ComputerLand's founder, it was only 20%. With sales doubling annually, one of his law firms urged him to settle rather than allow a prolonged suit to sap the company of its momentum. But "settling" was not part of Millard's vocabularly. It was not "telling the whole truth," as he had come to learn in est. And as he would later say, "Attorneys don't know where things are going. . . . I got this far without professional advice. What do I need professionals for all of a sudden?"
In fact, Bill Millard had relied on dozens of professionals in his career, among them Ed Faber, who, more than any individual, was responsible for ComputerLand's remarkable success. An ex-Marine and ex-sales manager for IBM who became ComputerLand's first employee, Faber had nurtured the company from its rocky inception into a $770-million giant by 1983. At ComputerLand's headquarters in Hayward, Calif., Faber had perfected a "walking around" style of management. Like Millard, Faber had taken the training and encouraged employees to follow his lead. But unlike Millard, he viewed est more as a motivational tool and less as a religion.
Faber also was well regarded by ComputerLand's franchisees across the country. The franchisees paid an initial license fee of anywhere from $15,000 to $75,000 to ComputerLand Corp., depending on market size. They also paid a royalty fee of 8% of gross sales and a national advertising fee of 1%. And for a while, many of them made big money bringing the personal-computer revolution to the homes and businesses along America's Main Street.
Millard was also making big money. By the early 1980s, computerLand's gross margins were estimated in the neighborhood of 40%, and much of the aftertax profit was paid out each year in dividends. With effective control of virtually all of the company's stock, Millard was amassing a fortune in the hundreds of millions that catapulted him into Forbes magazine's list of the 400 richest Americans. But even so, Millard was not totally satisfied. His own efforts at making a success of IMS's manufacturing subsidiary had failed in 1979. Now ComputerLand was a success, but it was a success more nearly Faber's than his.
In mid-1983, Millard suddenly began appearing more and more frequently at ComputerLand headquarters, wanting to talk at length with Faber about the future course of the company. The details of the discussions were kept secret from most employees, but sources within the company say the two men differed strongly about how much emphasis should be put on expanding outside the United States -- Millard excited by the possibilities of international expansion, Faber preferring to keep the company focused on its cash cows, the U.S. franchisees. "There were enormous amounts of strife between the two," recalls Don McConnell, once the company's communications vice-president and Millard's speech writer. "It was clear to us that it was taking its toll on Ed." It was also clear that Millard had begun to groom his daughter Barbara for a top position in the company. And that, too, left Faber chafing.
Finally, in August 1983, a frustrated Faber resigned his position as president and retired to a more leisurely pace in Arizona. Millard declared himself chief executive officer, and at the company's annual meeting a few weeks later in San Francisco, assured his franchisees that he would not let them down.
The change in management style was immediate and striking. While Millard claimed, in classic "est-speak," to be "empowering" his employees, his system left the company's various vice-presidents and divisional heads with little real authority. "No one could make any decision without calling two or three other people and voting on it," one vice-president recalls. Reduced to playing internal politics, ComputerLand's officers focused heavily on building their own private fiefdoms. Hiring went out of control: within the first five months of "Millard's tenure, its corporate staff grew by one-third, or about 250 employees.
Also with Millard came a reemphasis on est. While Faber had begun to downplay the importance of "taking the training," Millard seemed intent on making everyone speak his language. He contracted with an Erhard organization to give an est communications seminar for his managers. He elevated former est leaders and trainers to important positions within the company -- among them Gordon Starr, whom Millard made his chief of staff. "The flow from est's staff of ComputerLand's was incredible," McConnell remembers. Sidney Rittenberg, then a manager of Millard's China project, agrees: "People were picked for their ideological compatibility with Bill rather than for their competence."
Meanwhile, Millard was hell-bent on international expansion. In Land, ComputerLand's in-house magazine, there began to appear a veritable travel album of corporate trips. There was Millard standing in front of his Falcon jet at Shanghai's airport; Millard en route to Beijing in Chairman Mao's private railroad car; Millard at a business meeting on a riverboat on the Yellow River. Millard and his associates were crisscrossing Asia, setting up franchises in Japan, Manila, Singapore, Kuala Lumpur. In Europe, he was joined at store openings by the son of the grand duke of Luxembourg. By the end of fiscal 1984, there were 142 ComputerLand outlets outside the United States, generating $160 million in sales.
Millard's belief, as it had been at IMS, was that ComputerLand could be a different kind of business. "Bill had a vision that extended way beyond managing stores and profits," says Goldon Starr. "He wanted to create a worldwide network, with the intention that it would contribute to worldwide peace. Individual franchising would transcend political boundaries, and you'd have a network of people all linked commonly with ComputerLand."
Not everyone at ComputerLand, however, spoke or thought in this language of est. More often, these were business professionals, or lawyers, whom Millard scorned and distrusted. All had been encouraged repeatedly to "take the training," but few actually did. As a result, it seemed to Millard that they were fixated too much on limits and problems, and not enough on opportunity and challenge. "For those of us who were not esties, it made it impossible," recalls one former employee. "The people with professional backgrounds did not have the personal clout. We were closed out of doing our jobs properly."
Millard's reluctance to deal with managers who did not share his outlook began to affect the company's performance. In the United Kingdom, for example, Millard insisted on replicating ComputerLand's U.S. franchise agreement against the advice of legal counsel and divisional managers. ComputerLand Europe, he declared, would receive the right of succession to any real estate acquired by franchisees -- a demand contrary to local legal custom. "The result was that during a period when we could have had up to 40 stores, we got only 6," a former international staff member says.
In another row, Millard became obsessed with the idea that his European franchisees might be keeping a double set of books that would allow them to reduce payments to ComputerLand. A two-month study by the international staff produced a report assuring Millard that there was nothing improper going on. But Millard insisted on confronting the franchisees at a hastily called meeting in Luxembourg. "I don't see how we can do business together," is how one international staff member recalls Millard's attitude toward his European partners. "And one by one, they had to go around the room and tell him 'we don't cheat you.' Our credibility with the franchises was hurt."
But Millard seemed too busy to worry about such things. He had to go faster, make international bigger, make the world safer. "He'd walk around the office telling people to make a miracle, make a commitment, but he'd operate on a whim," one former staff member recalls. Without any marketing study or strategy, Millard pushed through ComputerLand's China project, spending several million dollars on a joint venture he proclaimed would "bring the entrepreneurial system" to the world's largest communist economy. The venture was later abandoned in favor of direct sales to local trading companies and supply depots of government ministries.
By the end of 1984, Bill Millard could accurately brag that ComputerLand's international operations had generated $166 million in retail sales. But it had been achieved at an enormous price. To those inside the company, it was clear that domestic sales were still subsidizing the much more lavish overseas operations. Europe, in the words of one staff member, had "become a running hemorrhage," and Japan was losing money too. "No one wanted to tell Bill that," the former head of a ComputerLand subsidiary recalls. "Everyone was just happy to have cars and jets and car phones. They were not going to challenge him."
In the summer of 1984, Personal Computing magazine published a rare interview with Bill Millard. Editors James Fawcette and Charles Martin wanted to know if the soaring level of growth in the personal-computer industry could be sustained.
"The environment is dynamic, it is healthy, and it is expanding constantly," Millard replied. "Unlike any other industry I can name or remember, I predict that the computer industry will only expand."
Isn't there a saturation point? pressed the editors.
"No," said Millard. His answer was pure est. "There are only two ways that human beings can grow and expand. One is mechanically, physically, if you will. The other is mentally. If you view the computer as being one way that we multiply ourselves -- enhance ourselves mentally -- I don't see there ever being an end to that. . . ."
Millard, of course, was not the only businessman in 1984 to hold such optimistic views. But back in the United States, the franchisees were sensing that the go-go years were about to end. Up to that point, much of ComputerLand's success had rested on its massive buying power and its favorable arrangements with IBM and Apple Computer Inc. But now they began to encounter fierce price competition from a slew of new competitors to whom a newly aggressive IBM had begun to sell at prices discounted, at one point, nearly 30%. During 1983 alone, more than 500 competing stores in well-financed chains sprouted nationwide. And for the first time in its history, ComputerLand's claim on the percentage of the nation's computer retail outlets fell. Lost market share couldn't be far behind.
For ComputerLand franchisees, these rapid changes in the marketplace were a cause for concern. But when the bottom fell out of the personal-computer market in 1984, concern turned to apprehension. Credit lines were reduced, making it even more difficult to increase volume and make up some of the profit lost to price-cutting competition. During good times, the franchises were said to have enjoyed gross margins of 40%, with profits of 15% to 16%. But now those gross margins were down to 30%, and profits were disappearing.
Service from ComputerLand corporate seemed to deteriorate as well. To be fair, service had never been what franchisees expected -- even under Ed Faber, orders took several days to process and ship. But under Millard, who hoped to save money by keeping inventories low, delivery time was measured in weeks. A typical response to a complaint, as one franchise representative remembers it: "Thank you for sharing that with me."
The est way of doing business rankled franchisees in other ways.In early 1985, Millard and his daughter Barbara, whom he had named chief operating officer late in 1984, initiated the ComputerLand Hunger Initiative. Based loosely on Werner Erhard's Hunger Project, ComputerLand's Hunger Initiative sought to "end world hunger by 2000," by creating an international coalition of concerned businesspeople. The goals and objectives, like Erhard's own project, remained hazy, but the commitment from ComputerLand itself was quite precise: $1 million. The money was spent on a series of advertisements in The Wall Street Journal that explained, among other things, "Why ComputerLand Did Not Send Money to Ethiopia." Franchisees blanched at the sentiment, and at the extravagance: it was money that they thought could better have been used to generate sales in more direct ways. Phoenix franchisee Tom Niccoli remembers asking Millard what it was all supposed to accomplish. Millard responded, "Just see yourself inaugurating a network with others about hunger. Maybe somebody in Phoenix will call you about how you can do something together."
About the only thing franchisees were doing together, however, was complaining about what they saw was insensitivity to bottom-line business interests. Their frustrations quickly focused on their earlier demand that the 8% royalty and the 1% advertising fee be rolled back. Millard refused. To his mind, rolling back agreements was not "telling the truth." And in good est fashion, he urged them to forget the clouds that loomed on their horizons and focus on the silver lining. "If we trim the fat from our operations," he proclaimed at the company's sixth international conference in August 1984, "if we become firmly in control of our cash flow, inventory, and overhead, then we will emerge from this challenge stronger than we were before."
There was little fat trimming at ComputerLand, however. By the next year, despite modest growth in sales, company profits were down. The corporate staff continued to expand, until it had about doubled its 1983 size. And in the office of ComputerLand's chairman, Millard continued to spend millions of dollars on the accoutrements of success: two jets and a prop plane, complete with standby pilots; luxurious accommodations in China; a winery; and three security guards. All this was on top of Millard's quarterly dividends, his "management fee" of more than $1 million each year, and the $32,000 monthly reimbursement he received for the company's intermittent use of the conference room in his house. "We operated on the basis that we were a tiny company that was going to be GM -- real soon," says McConnell. "We were doubling in size every year, after all, and Bill really believed it would continue."
The jurors, attorneys, and litigants filing into the cacophonous hallways of the Alameda County courthouse in January 1985 were an incongruous lot. There was Bill Millard, the white, wealthy businessman whose bodyguards and California est-speak must have seemed a bit foreign to the mostly inner-city jury impaneled to rule on his fate. Millard's attorneys had been flown in from Washington, D.C., where the firm of Williams & Connolly is among the best known of the capital's establishment law firms. Opposing them were a Boston Yankee (Phil Reed), a San Francisco produce dealer (Bruno Andrighetto), and a onetime computer franchisor (John Martin-Musumeci). And as their attorney, the plaintiffs had hired Herbert Hafif, a loud, bombastic, and notoriously successful litigator who had once run unsuccessfully for governor of California.
The trial that began in January dragged on for seven weeks. Before it was over, it would generate filing cabinets' worth of pleadings, depositions, exhibits, and rulings from the bench. But despite all the theatrics, the astonishing sums of money involved, and the cryptic subplots revealed during the trial, the case of Micro/Vest Corp. v. ComputerLand Corp. et al really boiled down to a simple and rather convincing piece of evidence: the $250,000 note signed eight years earlier by Bill Millard that guaranteed its holder 20% of the stock in IMS, its holding company, "and also all other corporations and business entities owned directly or indirectly by the Millards. . . ."
Hafif's courtroom strategy was to paint a picture of Millard as arrogant, insensitive, and greedy. He took the jury laboriously through the history, first of IMS, then ComputerLand. His clients, Hafif argued, were entitled not only to the 20% of ComputerLand stock, but also to punitive damages for having been stonewalled in their request to exercise stock-conversion rights four years earlier.
For their part, Millard and his attorneys tried to paint the plaintiffs as vindictive former employees, scheming competitors, and crap-shooting investors whose lawsuit was merely "the lowest form of hostile takeover." John Martin-Musumeci, after all, had left ComputerLand under tense circumstances. And more recently, Reed had been a founder of a competing chain of computer stores under the less than original name of Businessland Inc. As for that loan note, Millard explained to the jurors that it had long ago been superseded by an oral agreement he had reached with the Reeds.
The trial ended on a Friday afternoon. On the following Tuesday, March 11, the jurors returned to rule in favor of the plaintiffs and their claim to 20% of the stock in ComputerLand and other businesses owned directly or indirectly by the Millards. Two days later, in a separate proceeding, the jury awarded Micro/Vest $125 million in damages -- $115 from the Millards and $10 million from ComputerLand. The judge later tacked on $11 million in attorneys' fees and $5 million in dividends. Within days, the Bank of America refused to renew a crucial $10-million line of credit to the company. For Millard and ComputerLand, things very quickly were unraveling.
To the public," Barbara Millard told Savvy magazine in an interview published in July 1985, "I'm a new phenomenon." And certainly she was. At 27, the daughter of Bill Millard was perhaps the youngest woman in the country running a billion-dollar company. Like her father, she was confident and energetic. And like her father, she came to business without formal business education, but with training in est. As things at ComputerLand turned from bad to worse, Barbara Millard came to represent her father's last chance to hang on to ComputerLand.
By July 1985, ComputerLand found itself deep in debt to its bankers and suppliers, and cash was very tight. IBM, its principal supplier, began insisting on more prompt payments as a condition of delivery. And because Millard was determined to appeal the Micro/Vest ruling, the company was required to post a $283-million appeals bond with the California courts. Unwilling to make the necessary arrangements for the bond, Bill Millard considered out loud the possibility of filing for bankruptcy protection for IMS. "Millard is a kamikaze," taunted Martin-Musumeci from the pages of The Wall Street Journal. "He'll go down in flames before he gives up."
For franchisees, Millard's talk of bankruptcy meant still more anxiety, still further credit limitations by their banks. Again, they pressed for relief in the form of a rollback in royalties. And once again Millard responded personally and defensively. "You are misrepresenting your hardships to me to get a better deal," is how one senior vice-president remembers Millard's response at a meeting with franchisees late that summer.
Ed Faber had been monitoring much of the debacle from his home in Arizona. Several important franchisees were still on friendly terms with him, and still called from time to time for counsel on how to deal with Millard. By late August, they actively had begun to lobby for his return.
It all came to a head late in September 1985, in a teleconference between representatives of the franchisees and Barbara Millard. The franchisees threatened to withhold all royalty payments to ComputerLand if changes weren't made in the royalty fee and in the overall management of the company. They talked of a class-action suit and the possibility of jumping to another firm. Most of all, the franchisees wanted Ed Faber back. When the conference was over, a shaken Barbara Millard took the tapes to her father, and they replayed them together. Then Barbara put in a call to Faber, who was on a fishing trip in northern California. Within a few days, Faber was back at ComputerLand, essentially running the show.
Over the next two months, Barbara Millard would play a crucial role in negotiating a settlement to the many problems confronting her father and ComputerLand. She had come to trust her father's new attorney, Terry Giles, and together they worked at convincing Bill Millard that his best interests as a "citizen of the world" were not served by being tied down to ComputerLand. Terry Giles, in turn, began having conversations with Faber, Micro/Vest attorney Herb Hafif, and a court-appointed trustee.
On December 12, 1985, an agreement was filed. In many ways, it represented Millard's ultimate gamble. The Reeds, Martin-Musumeci, and their associates agreed to waive the $125 million in punitive damages in exchange for a reported 35% of ComputerLand's stock -- but only if the jury's original award were to be upheld on appeal. Millard promised ComputerLand's management that he would cede control of the company's operations and remove himself from the board of directors, at least until 1994. And to satisfy franchisees and creditors looking for fresh sources of capital, Millard agreed to do what he once promised he would never do: allow ComputerLand to be taken public. From now on, his company would be in the hands of its top employees, its franchisees, and thousands of outside investors.
Although he no longer is at ComputerLand, Bill Millard is very busy these days. From his new home on the small island of Saipan, near Guam, he sent word this spring that he is actively looking for a buyer for the assets of IMS Associates, the holding company through which he controls his ComputerLand stock. It is unclear how his decision may affect his upcoming appeal of the Micro/Vest decision, or ComputerLand's plan to go public. Asked by The Wall Street Journal how he felt about putting ComputerLand up for sale, Millard replied, "It's like a child. I created it and built it to what it's become, and now it's time for someone else to take over."
Millard is also working on a number of new business ventures, he says, including "something global, involving world trade, that will be a multiple of everything I've ever done." In the Marianas, he has already formed a company, Commonwealth Utilities Corp., to look into the possibility of taking over the islands' government-run utility system. His initial interest in the electric company, he says, came as a result of frequent power failures on the island, which he complains make it difficult to keep his computers operating smoothly.
At ComputerLand's headquarters in Hayward, Calif., meanwhile, an official told The Wall Street Journal that Millard's decision to sell his stake in the company was "a positive step." Things generally have settled down under the new chairman, Ed Faber. "People are standing a little taller and a little straighter," said one executive who had lived through the Millard years. About a third of the corporate staff has been trimmed. Franchise unrest has been quelled by a percentage-point rollback in the royalty fee and a temporary suspension of the 1% advertising fee. Faber has sold the jets, divested the company of its Canadian operations, and introduced a private-label personal computer this past June. In 1985, revenues were still an impressive $1.4 billion, but profits were down.
And what of est, the philosophy that guided so many of Bill Millard's management decisions and was the basis for ComputerLand's corporate culture? Ironically, after attracting, by its own account, half a million Americans to its programs over the years, Erhard suspended est-training programs in 1984. But Erhard is busier than ever, lecturing to business groups and conducting management seminars. In addition, he has taken a page from the book of his friend Bill Millard, and begun to franchise his ideas about "empowerment," "commitment," and "creating powerful ways of speaking and listening" into a national network of affiliated business consultants. Already, 45 consultants have paid their $15,000 franchise fee for the right to offer Transformational Technologies. And already they are quietly instructing the managers of a few of the nation's largest corporations, TRW and General Motors among them. According to its brochure, TT is "committed to opening a new possibility in organizations -- a new freedom for action, the possibility of unpredictable results."