The saga of a partnership gone bad
There's no uglier spectacle in business than a partnership gone bad. Usually such dramas play themselves out behind closed doors, with everyone involved too scared -- or intimidated -- to go public with their story.
"Blowup" provides a rare opportunity to go behind the scenes of a business -- founded with the best of intentions, built on the trust and energy of equal partners -- whose future hangs in the balance as the partners wage their own personal war. -- E. O. W.
When Jim Eme walked into the building on a Monday morning in July 1987, he was met by a roomful of empty desks and a pile of resignation letters thrust through the mail slot and fallen to the floor. Over the weekend, six of his eight salesmen had stolen into the company and cleaned out their desks while co-workers mingled at the company picnic. Gone, Eme says, were customer lists, price lists, and valuable parts diagrams that Illinois Computer Cable (ICC) had painstakingly assembled in five years of business. Even calculators and staplers had been swept off desks. The place was barren, as empty as the feeling in Eme's gut. The company he had founded was dead.
John Berst, ICC's president, was over in the administrative offices, in a one-story brick building on what had been in more innocent times a rolling stretch of midwestern prairie, since transposed into suburban Chicago industrial parkland. When Berst's phone rang that morning, Eme was on the other end saying, "John, you'd better get over here right away." Then he told him what had happened. Berst thought he had exorcised this demon earlier in the year when one of ICC's four partners, Bob Ohlson, angrily left the company, unable to gain the control he felt he needed to run it. Eme, Berst, and ICC's fourth partner, Ralph Dote (pronounced DO-tee), had come to see Ohlson as a man on an increasingly vicious power trip. They wanted him out.
In March 1987, when Bob Ohlson left ICC, he did not go gently. Rather, he kept reappearing like the ghost of Hamlet's father, warning darkly of things to come. One day in April he showed up at ICC at 7:00 a.m. to tell bleary-eyed factory workers that he had not resigned, he had been fired. In June he barged into an operations meeting at a local restaurant, haranguing Berst for "sticking a knife in my back." He next arrived on the doorstep of Ralph Dote, who was about to move into a new house nearby. When Dote's wife came to the door, Ohlson warned her that bankruptcy court would be the couple's next address; the company would fail if he and Ralph did not wrest control of ICC.
About the only thing left in the sales office that day in July was a business card for a nearby company that Berst had never heard of: Cable Comm Technologies Inc. When Berst called Dun & Bradstreet that afternoon, his worst fear was confirmed: Cable Comm's president was one Robert Ohlson. The renegade company, as it turned out, had formed amidst the fear and loathing that swirled around ICC in the spring of 1987, well before the mass defection of July 20. Unbeknownst to Berst, Ohlson had been planning this coup for the past four months, summoning his loyalists inside ICC to evening meetings at his house.
Ohlson had taken 18 of ICC's 80-odd employees with him, including three-fourths of the sales staff in a sales-driven business. He beheaded ICC and, not pausing at that, proudly displayed his prize on a pike. "I could have wiped out the whole organization if I had had the money," he recently boasted, sitting in his new office. This was sweet revenge for the betrayal Ohlson felt he had suffered at the hands of Berst.
It was Berst, however, who had felt betrayed as he closed his office door that July morning and tried to center his thoughts. His first call went to his banker, who, after listening to his plight, said, "Tell me, John, what sort of forecast do you have for July?"
Berst replied, "Look, I don't even know what I have left here."
Illinois Computer Cable Inc. began life five years earlier in Downers Grove, Ill., with an act almost as startling as the coup of July 20, 1987. Jim Eme, fresh from vacation, returned to the cable company he worked for at the time, Tel Com Products Inc., to find someone else sitting at his desk. Eme, 36, had been Tel Com's sales manager; now, he was being demoted to salesman. Eme had worried that it would come to this. As Tel Com had grown, its founder's ego had kept pace. The running joke around the office was that every time the ashtray in the boss's car filled up, he bought a new car. Morale was in free-fall. Tel Com was in the process of phasing out its in-house sales staff and going to outside sales reps. Eme knew he had to get out, and in August 1982 he did, founding Illinois Computer Cable in the basement of his house.
On his way out at Tel Com, Eme had tried to get Ralph Dote to join him. Eme had faith in himself as a marketer, but he needed a younger man's energy to hook his talent to. Dote was 31, Tel Com's star salesman. For two years he had sold more than $1 million worth of cable. He was making 50 grand a year, not bad for a young guy without a college degree. Eme had warned Dote that even he would get his comeuppance at Tel Com. Dote scoffed at the thought. "I told him, 'Jim, you're crazy. What can they do to me? I'm their best salesman.' He said, 'Ralph, you wait. You'll see.' "
Eme's warning proved prophetic. At Dote's next salary review, it was proposed that his base pay be lowered and his commission percentage cut. By January a disillusioned Dote had joined Eme.
Dote's mentor at Tel Com had been Bob Ohlson, 20 years his senior. Ohlson joined ICC in February and then persuaded his partners to hire John Berst, 41, away from Tel Com as ICC's chief financial officer. Eme, Dote, and Ohlson made a 10% share of ICC available to Berst. Four men, embittered by life at one company, left to form a new one. This time, they vowed, things would be different.
The 'Weak Link'
Jim Eme had started over at a vulnerable time in his life: children and mortgage, the ego-bruising experience at Tel Com. Now, he was president and founder of a new company, but he opted for humility. He saw himself as a partner in a business devoid of hierarchy -- an entrepreneur among equals.
By early 1985 Bob Ohlson believed that that kind of sentiment was nice, but it wouldn't grow the company. He told the other three they needed to structure ICC more like a corporation, less like a partnership. He proposed a change in job titles and duties. He would assume Eme's: president. Eme, whom Ohlson pegged as an ideas man, would become head of R&D. Eme was ambivalent about the switch. "It took me three or four months to get over it, yet it was also a relief," he recalls. "Those responsibilities were now on his shoulders." And Ohlson gladly inherited them.
Ohlson had a steel-trap mind. He had always been good with numbers; he spoke well. In later years, when life had become increasingly bitter, his powers of persuasion only grew. His partners took to calling him "the man with the golden tongue."
In ICC, Ohlson saw a golden business he was loath to entrust to others he thought less worthy or capable. By its fourth year ICC's sales had climbed to $4.7 million; net profit approached 15%. Yet Ohlson demeaned his partners, labeling Dote "a lucky SOB, a guy in the right spot at the right time." As for Eme, Ohlson says: "He was the worst sales guy I ever saw in my life."
In his zeal to mold the company in an image he deemed worthy, Ohlson hired a management-consulting firm in mid-1985 to assess the partners' effectiveness. The consultants came in and asked each partner about the weaknesses of the other three. When it came Ralph Dote's turn he spoke up: "Well, I think I have some weaknesses, too." Dote felt blindsided when the consultants' report came back naming him the "weak link" in the partnership. He claims he was the only one of the four to level with the consultants about his own shortcomings.
Ralph Dote had always been the top salesman in the company. It was his accounts -- 85% of which he brought over the first year from Tel Com -- that formed ICC's underpinnings. But now his honesty had given Bob Ohlson an opening. In sales meetings Ohlson would rip into Dote, saying he was a lousy sales manager and that he could never produce enough. What really stung was that Eme, Dote's presumed ally, was chiming in and criticizing him as a "weak player."
"God, I don't believe it. He's got Jim believing this," Dote recalls thinking. He asked Eme to meet him for breakfast one day. "Don't you see what he's trying to do, Jim? He's trying to divide us," Dote said to Eme, who responded with a blank look.
With Dote on the ropes, Ohlson subsequently turned his fire on Eme. Dote recalls Ohlson berating Eme, "You don't bring in sales. I ask you a question and I get a dissertation." Wounded, Eme next sought out Dote. "Ralph, I see what you were saying," he said. "You were right, and I was wrong."
John Berst grew up in a household where hard work was a given. His father was a wagon jobber: he bought popcorn, peanuts, and pretzels in bulk and rebagged them for sale to neighborhood bars and convenience stores. He worked seven days a week; his son began helping him at the age of six.
Berst's workaholic tendencies jibed with Ohlson's. This was a bond between the two, a bond strengthened by Ohlson's initial advocacy of Berst's cause. It was Ohlson who had brought Berst to ICC. The two shared other things as well. Temperamentally, they were a lot alike; they were close in age. Their children were grown or in college; they had time on their hands, unlike Eme and Dote, who were starting families, doing their best to juggle work and home life.
If Bob Ohlson was fire, Jim Eme was air. Eme was soft-spoken, unflappable. Ohlson misread Eme's subdued nature. He saw him as a guy with his feet on the desk, his nose buried in technical journals -- a man of inaction.
That impression was wrong. In his twenties Eme had been a Chicago police officer assigned to a quiet section of the city. Bored by writing traffic tickets, he volunteered for duty in one of Chicago's roughest neighborhoods. Eme's first marriage ended in divorce, fostered in part by the disjunction between the commonplace cares at home and the ready presence of death on the street. Distracted by his personal affairs, Eme started walking, unthinking, into dangerous situations on the job. He knew it was time to quit being a cop.
Bob Ohlson, likewise, carried private burdens. His wife had cancer. Ohlson would linger at the office until 6:00 or 7:00 at night. He often came in on Saturday mornings. Ohlson saw the time he put in as evidence of his superior commitment to ICC. Eme and Dote saw in it a need to escape the reminders of death that awaited him at home.
"I fell into Bob's trap," concedes Berst. "By now he had me wondering what were they doing over there when we were over here busting our cans. He made a pretty good case." Ohlson and Berst started discussing how to gain control of the company when they held only 40%. One strategy they settled on was to hire a salesman, with the secret intent of elevating him to sales manager, displacing Dote.
To turn up the heat on Dote and Eme, Ohlson came into a meeting at the end of the fiscal year in October 1985 proposing salary increases for himself and Berst. In his mind, they were the workers, Dote and Eme the drones. "We knew what it takes to run an entrepreneurial venture," Ohlson says. "The better things got, the more Ralph and Jim decided they were going to retire without extending us the courtesy of getting off the payroll.'
Berst sat quietly by as Dote objected. "We're partners," Dote said.
"This is a corporation, and I'm the president," Ohlson rejoined. Ohlson had come to the meeting armed with magazine articles on typical salary ranges among top managers. Other presidents made more than their subordinates, he asserted.
After some heated debate it was agreed Ohlson would make $90,000, Berst $80,000, Eme $75,000, and Dote $65,000. The hierarchy was now in place. Dote knew Ohlson didn't need the money, and Ohlson admitted as much. "This is just a way to keep score, Ralph," he said.
Bob Ohlson was an "excellence" freak. In addition to hiring consultants, he was always trying to get his partners to read books on management. He interpreted their relative lack of interest as a sign of their business ineptitude. In early 1986, in his ongoing compulsion to systemize the business, Ohlson planned a weekend retreat for the four partners at Berst's vacation house in Wisconsin. Ohlson typed up daily agendas for the team to follow, hour by hour, including when they would break for lunch. On the way up in Berst's van he played Tom Peters and Lee Iacocca tapes.
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.'
By the time Berst and Ohlson met on January 31, 1987, Ohlson's determination had driven him to the edge -- and brought him back to his former ally. He told Berst the stress was threatening his health. "Buy me out, John," he said.
Berst softened. He knew no business was worth a man's health, but he also knew by now it was all but over between him and Ohlson. Two weeks earlier, with sales slumping, Berst had attended a sales meeting to buck up the troops. Before Berst returned to the administrative offices, word had gotten back to Ohlson. Berst claims that when he entered the building Ohlson confronted him, demanding to know what right he had to meddle with sales.
On February 3 the four men met. Eme asked Ohlson pointedly what made him think that one of them could simply buy another out when the buy-sell agreement stipulated that any shares sold would go to the corporation, not an individual. That provoked a half-hour monologue by Ohlson about how poorly run ICC was. By now perceptions were so skewed that a meeting of the minds was impossible. The first quarter of the fiscal year had been bad. Ohlson blamed it on excessive spending by the others. They countered that these were justifiable capital expenses, agreed to by a majority of the group, which would yield benefits down the road. As Ohlson got up to leave the meeting his exasperation boiled over into threat. "I can take four or five people out of here and start a company," he warned.
In that last utterance lay the seed of truth, the spark of action. Bob Ohlson was a visible figure around ICC. Production workers saw nothing of the angry, driven man squaring off with his partners behind closed doors. They saw the kindly, caring president, the man with his finger on the corporate pulse. The man was credible. His partners knew he could tear the company apart with a few reckless statements. They knew it was time to separate Ohlson from ICC.
On March 9, 1987, the four met again, but this time the arena had shifted; the stakes had been raised to match emotions. Ohlson maintains that when they sat down in the office of ICC's attorney, the other three owners fired him and that a buyout offer -- for 60% of stock value -- came only later. Berst, Eme, and Dote recall offering that day to buy Ohlson out for $150,000 -- more than 100% of stock value. They offered Ohlson a company car, a consulting contract, and health insurance. Then they told Ohlson they wanted a noncompete clause.
That stunned him. Eme recalls Ohlson sitting expressionless in his seat as though he had just been hit full force in the chest. "I think he truly felt that we would make him a hell of an offer," Eme says. "His delusion was that everything was going to be OK." Offended by the offer, Ohlson balked at signing. He wasn't about to do that when he had his signature on a $700,000 line of company credit. Suddenly, Ohlson was not in control.
His partners then said they had no choice but to accept his resignation, since under the agreement a majority stake could vote a minority holder out. Berst and Dote approached to limply shake their former partner's hand. Dote recalls extending his hand and saying, "Bob, I'm sorry. I never thought it would come to this." Dote assumed this was good-bye.
The next day Dote's phone rang. Ohlson was on the line, asking Dote to meet him for breakfast. Dote, incredulous, acquiesced.
Over breakfast, Ohlson did the talking. "You and I could control the company," Dote recalls him saying. "We could get rid of Jim and John."
When Ohlson started criticizing Eme, Dote cut him short. "Wait a minute, Bob. Two years ago it was me you were jumping on."
Ohlson rejoined: "And Ralph, you're better for it. I made an entrepreneur out of you."
Ohlson's Svengali nature had been evident with people like Ralph Dote. Despite his salesman's bravado, Dote had his vulnerable side. He had married at 22. Eight months later his wife was diagnosed as having cancer. Within two years she died. Soon after that, he started a small business, a grocery store, and it foundered. Two or three weeks after Dote closed the doors of that business, his father died.
When Dote started at ICC he was a young man with few assets. Ohlson lent him $10,000 so he could pick up his stock options. Ohlson interpreted such a gesture as an emblem of the future faith he had in Dote. Others saw his motives differently. Through gestures like that, Ohlson gained control over those around him.
The breakfast meeting was merely the opening salvo in Ohlson's campaign to regain Dote's heart and mind -- and so the company into which he had invested so much of himself. The campaign gathered steam when Ohlson began sending off impassioned, overwrought letters to Dote, commenting on how ICC was about to go down and it wasn't too late for Dote to jump ship. A letter came from a Michigan corporation offering to buy Dote's stake in ICC. This was strange. ICC had never before received an unsolicited offer like this. Moreover, what was the point in buying a minority share? Dote claims that Ohlson's attorney was working through the corporation.
Asked about this, Ohlson replies obliquely that he had found a generous buyer for ICC, and his partners were too dumb to know a good deal when they saw one.
Dote sent copies of the letters to his lawyer. For a month he would not answer his phone. One day when Dote was at work, Ohlson knocked on his door at home and warned his second wife, Jackie, that ICC would go down the tubes if he wasn't let back in. In a few months the Dotes were to move into a new house. Ohlson told Jackie they'd never move into the house. When Dote learned of Ohlson's visit he told his lawyer, "I would have killed the son of a bitch if I had been there."
Working on Dote proved to be one front of a two-front war Ohlson was gearing up to wage against ICC. His rebuff at the March meeting had only quickened his appetite for revenge. That month Ohlson and those most loyal to him started meeting after-hours to plan their shadow company. Salespeople formed the core of a constituency Ohlson knew he needed to broaden if he were to pull this off. That called for a bold strike.
Early one April morning he strode unannounced into the cafeteria, where production workers were gulping coffee before the start of the day shift. His sources had told him that Eme was at a trade show, Berst on vacation, and Dote in the other building. He announced to the stunned workers that he had not resigned, he had been fired. The production manager phoned over to the other building: "Ralph, you won't believe who's over here." By the time Dote got over to the administrative building, Ohlson was gone.
The guerrilla theater continued in June and July when Ohlson twice showed up at sales meetings in which he berated Berst, who had since been elected ICC's new president, for betraying him. In July Ohlson swept past the receptionist and into Berst's office, demanding they settle their dispute. When Berst told Ohlson the attorneys were working on just that, Ohlson summarily vowed that Berst's fortunes, like Dote's, would fall with ICC's. Berst recalls him saying: "John, one day I'll live in your house and play with your toys."
Ohlson's outbursts were surface flares signaling deeper tensions at ICC, where in the spring of 1987 an eerie and exhausted calm prevailed. In May and June John Berst started losing employees one by one. The office manager left. The inventory supervisor, a quality-control supervisor, a production manager, and a couple of production people followed. The attrition made Berst edgy. He wondered if this were Ohlson's doing.
Berst's suspicion deepened at the beginning of July when ICC's purchasing agent came into Berst's office and handed him his resignation. This was an employee Berst had courted for months. Berst considered himself the younger man's mentor. Now, he too was leaving. Berst looked him in the eye and said, "Just be man enough to tell me this: does this have anything to do with Bob Ohlson?" The employee took offense at the inference and angrily denied it.
In June an abnormally large amount of inventory came in the door at ICC and a lot of product went out. Commission checks would go out on July 15 for product shipped in June. In the meantime, Berst got notice from more people who said they were leaving, not in two weeks, but on July 15, the same day his salespeople drew their hefty June commission checks. Ohlson was after Berst to settle their case by July 15 and was willing to accept substantially less money than first offered. July 15. Berst kept hearing the date as though he was Caesar and a voice in his head was urging him to beware. He called up ICC's lawyer: "Tell Bob Ohlson we've got a deal -- but not till after the 15 of July."
The deal was blown away by the mass resignation that greeted Berst on Monday, July 20, 1987, an event that he labels simply "the coup." After getting the news from Eme, Berst closed his office door and stared at the wall. He had been in business 25 years, and now all of that had been destroyed by a single act. "Everything I had done in my professional career was about to come crashing down," he recalls. "This was the end of the world.'
The self-pity soon passed, hardening into anger. Berst knew that with his experience and education, he would survive. But what about the others? "I have 65 people working for me. A lot of them are not worried about paying for college educations. They're worried about next week's paycheck."
First he called his banker and gave him the news. Then he sat down with Eme and Dote and agreed that ICC had to get back to its core business in order to survive. Ohlson had been trying to move them away from selling cable over the phone to mere comprehensive "systems solutions" peddled by high-priced salesmen on the road. The three men agreed to promote a number of customer-ser-vice people to sales. Berst next stepped onto the factory floor.
What he felt in the room was fear. "We had a number of husband-and-wife combinations on the floor, single parents, people who had been with the company four of five years," recalls Berst. "These people don't make a lot of money; they've always relied on their paychecks." Tension had been growing for months among the partners, and they had done their best to build an emotional firewall between their disputes and the rest of the company. In a small shop like ICC, that didn't work. Rumors inevitably started, fed by the high-profile, high-energy persona of Bob Ohlson. Berst spoke.
"We've had a lot of resignations, and we're angry about it," Berst said to his workers. "But we're not going to lie down and die. If you have confidence in us, and if we stay angry enough, we'll pull this out."
In the coup's aftermath the plot began to come to light. In July one of ICC's salespeople, working on deals that would close in the future, had said he worked for Cable Comm, Ohlson's company-to-be, but claimed it was a subsidiary of ICC. Hence he could offer customers the usual comfort level provided by an established company, but future payment would go to Cable Comm, not ICC. Another salesman, again claiming to represent ICC, had subcontracted with another cable manufacturer to supply cable to an ICC customer, thus pocketing the profit. This was revealed one day in July when Berst got a call from a customer wanting to know where the cable was that he had ordered. Berst had no record of it.
The large amount of product shipped in June -- for which the salesmen were compensated on July 15 -- now also made sense. Some of it had originally been promised for the future. Some of it had never even been ordered. In the latter part of July, a lot of it came back. That month John Berst wrote $60,000 worth of credits to customers for product they had not ordered. That month he also received calls from headhunters who had heard from former ICC employees that the company was going into Chapter 11.
Bob Ohlson's shadow company was indeed hungry for start-up money. He had lured many people from ICC with the promise of equity ownership in the company, provided they were willing to invest. This issue came to be fraught with symbolism, evidence of how enlightened the new company would be in contrast to ICC. Bruce Swoboda, ICC's systems manager, calls Bob Ohlson "the world's greatest salesperson. He could talk you into anything. It's very scary." Swoboda asserts that a lot of these salespeople were not unduly unhappy at ICC, but they fell under Bob Ohlson's persuasive power. Swoboda points to the Cable Comm business card one salesman left behind. "I take that as a sign that he feels guilty about what he did."
"If I had had enough money, I probably could have cleaned the whole organization out. This was a super move on our part." Bob Ohlson's smile broadens as he leans back on the couch in his office, lights a cigarette, rests a foot on the arm of his desk chair, and launches into a vigorous self-defense of what went down at ICC. The bravado -- the obvious lack of remorse -- overlays a bitterness that rises when the subject turns to how this experience had marked him. "Obviously I'm more cynical about personal relationships. At one time I would have considered John Berst my best friend in the whole world. And then he went and stuck a knife in my back."
Ohlson is a tall, affable, slightly stoop-shouldered man. His new company, Cable Comm, had 36 employees and by his account is doing "very well." In its first year he had hoped Cable Comm would do $3 million in sales but fell "a little short of that." He won't say how short. In conversation Ohlson's demeanor ranges from courtly to profane, with one oft-recurring word being "vision." Bob Ohlson claims that he had it and his partners did not.
Ohlson's former partners claim the vision he implanted in many impressionable minds at ICC -- chiefly the sales staff -- had little to do with the company's central mission as agreed to by the partners. Ohlson's idea was to sell whole systems solutions instead of just cable. Equity ownership also became a part of the emergent and renegade vision. Again, it had never been raised as a point of contention, claims Berst; yet when people defected with Ohlson, it was flung back in Berst's face as evidence of how retrograde ICC was.
Ohlson denies any wrongdoing in setting up his company, claiming that he consulted a lawyer. Asked about some of his salespeople taking ICC customer lists, he replies: "A customer list doesn't mean a damn thing. We know where the customers are." He labels "entirely false" charges that before July 15 ICC salespeople loyal to him misrepresented themselves to gain commissions for Cable Comm. He concedes that the pressure he put on Ralph Dote amounted to harassment, "but I had heard Ralph was sitting on the fence." As for the secrecy and timing surrounding the coup, Ohlson defends them as necessary. "I know John Berst well enough to know that if this had been done any other way, he would have stopped payment on those [June commission] checks." He adds: "This was carefully planned. People stayed on two or three days after getting paid so those checks would clear." Finally, Ohlson asserts that his former partners' insistence on a noncomplete clause drove him to extreme measures: "It was bull. Why should I sign my life away for a measly $150,000? You know, if this had been handled cleanly none of this would have happened. These guys threw me a challenge. And" -- again he offers a confiding smile -- "the more I thought about it, the more I said, 'Screw them.' "
"I'm still angry at Bob. I may never get over that," says John Berst as he wheels his Lincoln Continental out of the ICC parking lot and heads across the prairie cum-industrial-parkland for lunch at a nearby restaurant. "But Bob and I were also friends," he continues. "I miss that. I'd like to see him again, but if I said, 'Hey, let's have lunch,' I can hear his tone already. He's so arrogant." The easy ride of the big car seems to buffer us from a raw winter day and the larger shocks beyond that life inevitably provides.
It's almost a year and a half after the coup, and ICC is back from the dead. The company now employs 95 people, up from 60 in July 1987. In 1988 it opened 875 new accounts. Sales were $5.8 million, up $1 million from the year before. By June the company will move into a new building.
We have just come from ICC's factory floor, walking through a maze of workers bending over cable-handling equipment and stacking inventory toward the ceiling. Berst had shown me a carton full of identical die-cast parts and picked one up. The part is called an Ethernet hood, and it fits over the coupling on the end of a computer cable. It also serves as emblem to a larger issue. When Jim Eme wanted ICC to make the Ethernet hood, Bob Ohlson scoffed at the idea. "The piece was researched by Jim," Berst says. "We can't bring it in fast enough. I could sell twice as many of these. Bob said it would never sell. It's not a winner."
The Ethernet hood is one of about 20 identifiable contributions, technical and otherwise, that mark Eme in Berst's mind as a true "resource." These are contributions, he adds, that Bob Ohlson was either unable or unwilling to acknowledge.
Berst believes that Ohlson ultimately did him a favor. Ohlson's fanaticism forced Berst to see Ohlson for what he was. It moved him as well to refocus the business and reflect on his partners as people. Berst, under Ohlson's sway, could not appreciate the subtleties of Eme's character. He, too, saw Dote as the weak link.
In the ICC meetings, which used to turn inevitably stormy, Ohlson would often enter with a schedule for how long people would speak on a given subject. Now, if the partners need to chew over an issue, they do just that, no matter how long it takes. And once a year, Berst submits his resignation to Eme and Dote. He gives up control to get back his partners' respect.
But trust, in the deeper sense, may never be regained at Illinois Computer Cable. Berst admits that candor was once the norm at ICC, but the coup changed all that. He confesses now to a "loneliness," adding: "I tend to hold my thoughts in. I feel I have to be guarded about what I say and whom I say it to now. You're not sure who may be passing information to the other company or entertaining thoughts of doing something like this again."
John Berst these days may be running a revived company, but he is also looking over his shoulder. And he has lost a friend and confidant. "With Bob Ohlson I bared my soul," he says. "Now, I'm reluctant to totally confide in anyone." n