David Kay Interview FD

FD: I’m honored today to speak with someone who was a key player around the Kaypro line of computers, Mr. David Kay. Hi, David. How are you, sir?

David: How are you doing? Great to be here.

FD: Excellent. So I always like to start out by having the interviewee telling us where you live and what you do today.

David: Okay. I live in La Jolla, California, which is a little suburb of San Diego. After Kaypro, I started a company called WordSmart. I raised some seed capital for that. And it was based on some technology that I was able to buy. And it involved some psychometric data and really a lot of data about words and words in order of difficulty. What I did was I took that IP and I started a company called WordSmart. And it was a company that sold a series of 10 disks with increasing level of difficulty of words. It was all done in a game format. We ran that company all the way until 2016. And we got up to about $18 million, which wasn't near as big as Kaypro.

But eventually those disks became obsolete. I'm transitioning, taking that same IP, all these words in order of difficulty, and I'm taking that and putting it in a new company called Knowledge Crunch, where I'm taking all these really popular word games that are out there and integrating my IP into those word games to make them more engaging and more fun.

So I think that's where I can build retention. And when you build retention, that's how you make money in the freemium mobile game app world.

FD: That’s excellent. So I'd like to start out by getting a little bit of background on you. What was your educational background?

David: I graduated with a mathematics degree from University of California at San Diego, which was very, very small at the time. In fact, I was the first graduating class in 69. I also minored in economics. But all through my college, I was always interested in psychology and philosophy.

When I got out of college and I started in the entrepreneurial world, the psychology and philosophy dovetails nicely into marketing. I spent all my life in product development and marketing, obviously at Kaypro that was my role.

I was president for a while, and built that company up until we took it public after a couple of years being there.

FD: I know your dad was pretty well known as having started Kaypro as well as doing other things. What was it like growing up with Andrew Kay as a dad?

David: It was very scintillating. There was always another subject to talk about at the dinner table. He was a voracious reader of history and science journals. His own field was electronics. From when he started the original company which was called Non-Linear Systems. My father was the inventor of the digital voltmeter.

I had gone off starting my own independent companies. I had started a windmill company. Before the tax credits went away for windmills, I had over 120 windmills all over the Southwest and in Hawaii for electric generation. I also went and studied with Johnson O'Connor back in Boston, which was a precursor to me starting a company after my time at Kaypro, which was called WordSmart. My present company is called Knowledge Crunch.

There's a kind of an interesting story about having studied with Johnson O'Connor back at the human engineering laboratory in Boston. When I joined Non-Linear we were going to start with three products. My father and I developed these products.

One would become the Kaypro computer.

One was this medical device.

And another product was a teaching machine, which would utilize the information that I had gained and all the IP we had contracted from the Johnson O'Connor Research Foundation. There's quite a long history to my interest and passion for the Johnson O'Connor property that I utilize now in Knowledge Crunch.

When we started the Kaypro was called Kaycomp at first. Kaycomp became wildly successful. In 1980 we went to the Moscone Center in San Francisco, which held a computer fair every year. There was a lot of very elite people that were into the computer business there.

There was no such thing as a microcomputer, except the Apple II and the TRS-80. There was the Altair and some of the other very primitive computers. The thing (Kaycomp computer) took off like a rocket.

We decided we'd put all our energy behind the computer. We engineered the motherboards, built them, and developed graphics for the case, which caught a lot of people's attention. We went from doing a million and a half dollars a year annually in sales, to $75 million in a year and a half. We took the company public in 83. That was quite a ride.

FD: Was that the first time that you worked with your dad at Non-Linear Systems?

David: No, right out of college we started some learning centers using the same intellectual property from the Johnston O'Connor Research Foundation. We had these centers that were distantly competitive with the Evelyn Wood Speed Reading Course.

People could come in and spend several hours a day using our teaching machines. That didn't work out well. That's when I took off for Boston. I spent a couple of years in Boston.

My father had lost quite a bit of money on the learning centers. I decided I wanted to learn all I could about the field so I went back there. After returning from Boston I joined Non-Linear because the windmill business was cut off because the tax credits were gone.

We developed the Kaypro and the other two products. Since we didn’t have the microcomputer with large amounts of memory, the teaching machines really didn't make a lot of sense because it was too much to store all the audio and the video we wanted to have.

At the Moscone Center we only had a 10-foot wide booth and it was four to five people deep for the whole two days of the conference. When we got home we had our work cut out for ourselves.

We just had a prototype up there so we had to really scramble to get all the different aspects of the machine built out and ready for production. It was quite a scramble to get everything built. In fact the motherboard we took to the Moscone Center wasn't really the motherboard we ended up shipping.

It was a board we had just utilized and had programs for. So we had to really start from scratch and build up the motherboard, and create a BIOS. This is a little before Microsoft came out with their operating system. So we were operating on CPM.

But in any case we had a CPM computer and when Microsoft came out with the MS-DOS that's what we adopted and transitioned to their suite of office products and bundled them in and so we were very competitive.

FD: When you first came in to Non-Linear Systems/Kaypro, what was your initial role there?

David: Well actually when I came into the company I was an electronics technician and I was troubleshooting printed circuit boards for the oscilloscopes that were being made. The marketing VP had some health problems and he quit and my father said “Why don't you do this and I had a little experience in the windmill business in selling so started selling the digital voltmeters.

We had panel meters, the multimeters, the little mini oscilloscopes but in the meantime and after hours we were puttering around and trying to figure out what kind of computer we could build given the fact that Apple was out there and it seemed like that was kind of the popular thing for people.

FD: So I read somewhere that the Ferguson Big Board might have had an influence on those early Kaypro machines, is that accurate?

David: That’s the board we took to the Moscone Center. So when we got back we tried to license the Ferguson Board and he wouldn't do it. We had to develop our own which we did. All discrete components and yeah it was quite a challenge.

FD: What you took to the Moscone Center was a prototype computer with that board in it?

David: Yes.

FD: You also mentioned that you were able to bundle a lot of software with your machine. Can you explain to us how you managed to get such a great bundle of software you know with the machine so cheaply and which made your machine such a great deal?

David: Right, It was quite an expense if you really looked at the cost of all those manuals. The manuals alone you know they were a quarter to an inch thick and we sent out six of them because we had six different software products we bundled with the computer. We had in the days before Microsoft what was called the Perfect series. There was WordPerfect (Perfect Writer not WordPerfect), there was PerfectCal, there was PerfectFiler and so on.

So there's a whole bunch of these manuals and disks we sent along with the computer and that was one of the big selling points that we could undercut you know IBM and some of the other big players out there. Compaq came in fairly early. Osborne was the major competitor that we had. Although in a way they weren't a competitor because they had tied up all the big computer outlets which don't exist anymore like Computer City, Businessland, and Computerland. In those days all computers were sold through outlets that were specific to computers. They were specialized and the reason for that was is that there's a lot of service and maintenance and stuff that the machine needed and they were very difficult to use in those days.

Just copying a disk was kind of a challenge for the layperson. There was a lot of support that had to go along and that's why they were sold in those big outlets. Today you don't even see them at Costco anymore but in those days they were all sold by these huge outlets. There were 55 Xerox stores, a 150 Computerlands, plus Businesslands. These major outlets were dominated by Osborne. Osborne went out of business because everyone saw our screen, it was twice as big. Theirs was a five-inch screen.

Compaq came along and they took the place of Osborne and they were in all the big major outlets. That's one of the slogans I developed for our company. We became “the champion of the independents” and the independents at that time were 40% of the market.

It was quite a big chunk that we had. We had over 1,000 independent dealers that bought Kaypros and advertised Kaypros and made Kaypro a very popular brand and made it into kind of a cult brand. People thought it was cool to have a Kaypro.

We had a lot of great PR too because we had a bunch of famous novelists, science fiction writers, actresses that used Kaypros. There was a lot of good PR we were able to garner during that period.

FD: Did you use a lot of famous people in your ads then? Did they become spokespeople for Kaypro?

David: We didn't need to use them that much because we had a pretty good ad budget at the time. In those days, it was about $3 or $4 million a year. We were running big ads in USA Today and the Wall Street Journal. Full-page ads in many cases. Those folks that were using our computers were kind of specialized. They weren't necessarily known by the general public, but some of them were.

I don't remember. I think maybe we tried to use them. I don't remember actually now, but we might have had to pay them too much money because they were very popular. I think we had one of the stars of Dallas. There's just a whole bunch of movie stars and famous writers. We had one particular PR author, Peter McWilliams. He was also an author, but he did a lot of good PR for us. He fell in love with Kaypro, he really did a fantastic job because he wrote books about computing and how people that want to write have to dump their typewriters and use Kaypros. It was quite a boon for us. We got to know him pretty well. He just kept pushing our brand. He loved it. He was a great guy. He was out of New York and Hollywood. He introduced Kaypro to all these folks in Hollywood. But most of the ads we did were either just the computer itself or my father was in the ads a lot of times.

FD: Did you sell the computer through the Byte Shop or any of those computer stores at the time?

David: Yes, we did. We had our computers in the Byte Shop. We had our computers in another store down in the LA area, quite a big dealer. They had seven locations. I can't remember the name now, but they sold a ton.

We had 47th Street Photo in New York, which was a major outlet for us. 47th Street Photo had, I think, two or three stores in New York City. They were probably the biggest dealer.

We had community computers down in Washington, DC.

FD: It sounds like it was a lot of fun doing marketing with that machine back then.

David: I was famous and infamous around the company for having long creative meetings. I'd have folks that I thought were creative, even though they may not have been in the marketing department, but whether they were in the art department or even engineering, I'd drag them into these meetings.

We'd just throw around crazy ideas. We'd come up with good ideas for ads, for PR slogans, just to try to open up the brainpower of the folks that were there to create the best impression for the company and really get out there and make the computer a household name, a popular name. The other slogans I came up with was we were not only the champion of the independent dealers, we had a policy which no other computer company at the time had.

Because computers, remember, in those days, they weren't like now. They weren't just a commodity and they're reliable, just like your cell phone and your television. They were constantly needing support and help or replacement parts.

I came up with this idea of what we call hot spares. In other words, what that meant, and this is one of the things that won us a lot of popularity with the dealers because they weren't that cash flush. What it meant was that if they would just call us, we would ship them another part, a hard drive or a monitor or whatever it had broken on the computer.

We would send that out before we got the old part back because we trusted them. They really appreciated that and that kept us in a very good stead with the thousand independent dealers. A lot of Japanese companies came in, huge companies like Toshiba, NEC, Epson.

They couldn't get into the major outlets like Computerland and Xerox stores, so they tried to go to independent dealers. Since we had built this rapport with our dealers, even though they would come in and offer them all sorts of money up front, they trusted us and we kept them on. That was one of our major strengths in the field.

We also had a policy where the top dealers in various regions of the country would be invited to a vacation with me at distant locations. One of them was in Tahiti. One of them was in Australia. We paid for these folks to come with us. It was another thing that built a lot of good rapport. We went to Jamaica, Tahiti, Australia, Hawaii, where else did we go? Baja, California, the Caribbean.

Every year we had a different location. It was a really fun thing to do and it really kept the dealer rapport very high and kept us from getting pushed out by much bigger companies that just throw around money. What the dealers would do from NEC, the Japanese company would come in with a pile of money and they'd take it and then they'd take the money and they'd advertise and they'd try to sell a few of those computers.

As soon as the money ran out, they would come back to Kaypro. They would still simultaneously sell Kaypro, but there was no sustainability to their marketing program. It was just a chunk of money up front to try to get into those independent dealers.

FD: That’s an awesome glimpse into the marketing of the Kaypro. I really appreciate that. At some point, you became president of Kaypro. How did that come about?

David: I’m actually not sure. I think it's probably because my father didn't want to retire. He wanted to be chairman of the board. I think it may have been because I was the face of Kaypro. I was happy to travel to New York every quarter for the six years when I was in the company.

While Kaypro was really doing well, interviews with the big magazines like PC Magazine and Infoworld, there used to be at least a couple of dozen major magazines. They were always doing articles on the computer business because it was a hot thing.

It was a brand new concept that everyone should have a computer. It was a completely new idea. It was like the dot-com boom almost. The whole world changed in a way, especially for business people and in their homes. A computer was as common as a television. I was at the forefront of that with Kaypro. They wanted to interview me. I'd go to New York and do all these interviews, get written up in the magazines, trying to promote our computer.

They'd also talk to me about what trends were like in the industry, what sorts of ideas might be coming down the pike. With the new technology, technology was leapfrogging. You might remember we started out with the 8080 chip. [Editor’s note: He is referring to the DOS machines. The CPM machines had run Z80 processors.]

Then we went to the 286, 386, 486. Then we went to the Pentium. These were all the chips that were the basis of the computers, the central processing unit. That was all Intel. Then, of course, AMD came along fairly soon after. They were another alternative.

One of the big trends that was important at that time was networking. We kept saying next year is going to be the year of the network. At that time, networks were really difficult. It was really hard to network computers. Within a company, the next office over, you needed to communicate easily. That was important.

Finally, another big trend that came along right as I was leaving Kaypro was the whole idea of the modem. We had been putting a modem as a bundle for some years. The last few years only, of course, because the modems were just invented.

I forget what year we started putting them in, but it was probably 1985, 1986 or something like that. I remember at the time, even a programmer trying to communicate with a modem to another programmer. I would get on the telephone first for 15 or 20 minutes just to get all the different codes to line up and match up so it would actually work. That's how crazy it was.

Now, we take it completely for granted that I can get on the internet and see whatever I want or have a communication with my friend Randall here at the drop of a hat. You don't even have to think about it. It's second nature. Back then, it wasn't second nature. It was a brand new thing. That's just how the industry was. There were constant news articles about it and what's next.

I guess right after that would be the invention of the CD-ROM. Back in the day, it only had a few kilobytes of memory. Now, we are talking about terabytes. Then after the CD-ROM revolution and getting away from floppies, the whole dot-com boom happened. Then the whole worldwide web. Then, as you know, it's a whole other revolution now with AI.

When I was at Kaypro, we always tried to keep up with them, be the first on the block to have a modem or to have a printer bundled or have a networking set up. We tried as much as we could to keep up with all these different trends that were evolving and becoming commonplace at the time.

FD: Kaypro ended up producing a lot of different models of computers. Naming was always a little confusing, I thought. Can you tell us what the logic was behind the naming?

David: At first we had the Kaycomp II. Then, we had to change the name because the fellow that had that name wouldn't sell it. We changed it to the Kaypro. For some reason, we skipped I [Roman Numeral], but we had the Kaypro II. Then, we sold a lot of those.

It only had one disk drive. Then we went to two disk drives. [Editor’s note: There is no evidence for only having one disk drive until the NEW 2 came out.]

That was the Kaypro II. Then, we had the Kaypro 4. Then, we had the Kaypro 10.

The Kaypro 10 is the first one that had a hard drive in it. Then, we had the desktop series where we sold the most. We got up to $120 million that year.

I think it was 84, 85 and that was, I forget. What did we call that? I think we just called it the Kaypro… I think we called it… We called it the Kaypro 286 after the Intel processor.

Then we had the Kaypro 386. Then we had the Kaypro 486. [Editor’s note: There is no evidence for a Kaypro 486 machine.] Finally, the Pentium was the next one. I think I left before we started using the Pentium. I'm fuzzy on that now.

FD: Okay. Do you know why the last CPM machine that you guys made was called the Kaypro 1? That's always a little confusing.

David: We never had a Kaypro 1. Just like Apple, they never had a Apple 1. [Editor’s note: I think that David didn’t remember that machine.]

FD: No, there was a Kaypro 1, not the Roman numeral one, but there was a Kaypro 1. Do you remember that machine?

David: It never went into production. It never went into production. That may have been what we called the Ferguson board unit, the Ferguson board model. I forget now.

FD: Actually, this was the last CPM machine that you guys made. It was actually referred to as the Kaypro 1. This was very late in the lifespan.

David: The later model that was a Kaypro 1? The later model, like an 87, 88?

FD: Somewhere in that time frame, because it was your last CPM model. That's okay if you don't remember that machine.

David: The CPM models went out in, I would say, 1984.

We didn't sell any CPM, because as soon as we started seeing that the writing on the wall of Microsoft was going to dominate, we switched from CPM to the MS-DOS. Then our bundle was all different. As far as word processing, remember, word processing was the first major application for a person, for a normal average person to buy a computer.

We had WordPerfect [Actually Perfect Writer]. Then we went to WordStar. You might remember that name. It was a very successful company. People went public and made a lot of money on that. Then we went to Microsoft Word. [I cannot find any material on this.] Once Microsoft, Bill Gates managed to use his power of having the operating system, he was able to get everyone to come to Microsoft's suite. That's what really did the trick. [I remember this happening in the 1990’s after Kaypro was bankrupt.]

PART 2

FD: So speaking of Microsoft, I read Kaypro had to pay them a lot of money. Do you know the story behind that?

David: I don't think they didn't charge us any more than anyone else to get started with them. I think the story was at the end when Kaypro, I had left in October 88. And I think Kaypro owed Microsoft about $300,000, and they never got paid. That's all I know.

I don't remember that we had to pay them anything outrageous upfront or anything when we started up with them. We just signed up like any other computer company. There were quite a few companies at the time. Compaq, HP, and some other brands were out there. I don't remember.

I don't think there was any major payments upfront you had to pay them. I know we owed a bunch of people money when my father bankrupted the company and it was on its last legs.

The reason I left was that there was no way for us or any other manufacturer at the time to make our product in the US and survive. It was because the margins, you just couldn't get the margin. His solution to the shrinking margins was to go mail order, like Dell had done. My financial people and I punched numbers. There was no way to make that change because we didn't have the war chest to cut off all our dealers. There were 1000 dealers putting in an order every month. If we cut them off and then built up our name within the mail order community, and do the ads with all the magazines and so on. There was no way to pull that off. There was no cash to do the transition.

The money we had we had collected during going public was gone. So that's when I left, because I knew that it wouldn't work. And unfortunately, it didn't.

FD: So I understand you left, then you came back for a very short period of time, and then you left again. Is that what you're referring to?

David: I got another job with another computer company up the coast here in Carlsbad, Oceanside, and worked there for a little less than a year. My father at the time, was really struggling and tried to solve the error of his ways as soon as he started advertising in the magazines and cutting out our dealers and build mail order.

It's a classic channel conflict. If you try to have both mail order and dealers, you find can't have both because you're going to undercut one or the other. So he figured out that was a problem. He didn't have any money to advertise anyways. So I tried to come back and help him out, but there was nothing I could do at the time. The dealers had already fled, went to other brands, and that was it.

We were buying more than 10,000 Samsung monitors every month in ’86 and ’87. And Samsung came in and they showed us a computer that was built just like our desktop. It was beautiful. They wanted to make our product for us. We should have done it, but I couldn't get my father to do it.

I actually did exhaustive studies and regardless of quantity, we could not buy the components, much less all the labor costs, indirect labor costs and warehousing costs and be competitive. The Hong Kong and Taiwanese manufacturer that the Koreans could buy it from wouldn't sell to the US without a bigger markup. There's just no way we could have done manufacturing here, especially at our own facility.

Another thing that really clenched it for me was when I saw, I think it was in 87, I saw the Samsung motherboard. They had these incredibly fine traces. We couldn't do that in our own facilities, our technology was way behind. So I knew that there's no way we could upgrade it quick enough.

In Asia at that time they didn't have the environmental constraints. They don't have all the other constraints. They would have made it, they could have kept us in business, but we would have had to put “Designed in America”, not “Made in America”. I don't think anyone would have cared.

I just moved on. I wanted to do my, I wanted to do my WordSmart company. I consider it a fantastic technology that the John Snow Connor Research Foundation came up with. And I wanted to use it. I wanted to try to make a go of it. I wanted to kind of get out of Kaypro. If I would have stayed there, I would have probably been building some software products. But in any case, it worked out. I was free as a bird, Kaypro had gone under.

FD: They said you were health conscious in those days, and you had a juice bar available to the employees. Is that something you continued after Kaypro days?

David: Sell a lunch, very healthy, a salad with cottage cheese and a glass of fresh squeezed carrot juice or a combination of celery and carrot for a dollar. That’s what we did that for quite a few years.

FD: I bet the employees appreciated that.

David: A lot of people liked it. There was a contingent that was more health conscious, it was probably a minority. Maybe 20 or 30% company would take advantage of it. But a lot of people wanted their burgers and hot dogs.

FD: Did you stay involved with the company after you left the last time?

David: Well, there wasn't much to be involved in. I first left in the late 88, I think October. 89 was really tough. I think I came back around the end of 89 or 90, a couple of meetings with my father and the bank girls, and there were just nothing, nothing that could be done. You know, it was the dealers that had been left, they had been betrayed in their minds, and they were betrayed.

There was nothing much to do at the time. Father just had to take the thing into bankruptcy. And they didn't involve me much because by the time it went bankrupt, I had been gone two years. If you had left the company two years before it went bankrupt, even though you were an officer, they wouldn't come after you. They didn’t come after me.

FD: Kaypro seemed like it was a very family oriented company. I think maybe your brother was involved, maybe your sister was involved in some manner.

David: That was overblown. One of the newspapers got ahold of one of our ex employees that was very disgruntled, and he made up the term, “Too many Kays, not enough Pros”. I can laugh at it now, but that it really wasn't true. My brother had a very minimal role.

My sister was only the architect of the new buildings that we built, including the entryway. So she wasn't involved. My father and I were involved. We were the ones that ran it and did everything significant on the management. There really weren't that many Kays. My grandfather was there, but he just did maintenance. He wasn't involved in the kind of operational authority. My uncle ran a printing press for a while.

But again, it was my father and I that did it all. We tried to hire outside talent, but a problem in getting outside talent was there's no real effective board of directors. My father owned 62% of the stock. There was no way to override him. I loved him, and I loved him still, but he needed to be overridden on certain things.

But that was where it was tough to get outside talent. I spent a lot of my time just trying to talk to my father about marketing, because he really wasn't a marketing person at all. He didn't even like the term marketing.

He thought all you needed was a good product and some back slapping salesman, and you could have a success. That may have been true in the 40s or in the 20s. It wasn't true in the 80s. You needed more than just salesman and a good product. He'd never done color brochures. I had to change all that and convince him every step of the way. He didn't do marketing, real marketing.

FD: You talked about the fact that Kaypro started developing IBM compatible machines at some point rather than CPM, so once it was clear that IBM compatible was the only way to survive, did you guys consider exiting the market at that point? Why did you decide to just switch over to IBM compatibles?

David: The market made the decision. IBM compatible was the key. If you weren't IBM compatible, you just didn't sell. IBM had PC-DOS and everyone else had MS-DOS. We held out a little while, but it was just obvious, it was not a real hard decision there, but we had to go with the MS-DOS. We wouldn't have been in business past a six-month period. MS-DOS had come out and Microsoft was gaining a monopoly.

I used to talk to Bill Gates at ComDex in Las Vegas. He was formidable in intellect and he cornered that market and there was no way of getting around it.

FD: Have you stayed in touch with him? You ever tried to contact him since then?

David: No. I tried, I went to Seattle a couple of times to talk to the Bill and Melinda Gates Foundation about my ideas for using the ??Glasgow Conner literacy software and technology, and they didn't want to be part of it.

FD: What are you most proud of about your time at Kaypro?

David: Well, I would say the design of our box originally. The unique design and style of the logo that I created with my artist. The lines and the marketing slogan, we were champion of the independent.

Also the technology, the innovations that we kept adding as technology advanced. We added in different things that we could afford and to make the package sweeter and better for the end user. For instance, we bundled in the printer, we bundled in this software, in different software, additional software.

We bundled in other things like the modem. Keeping up with the incredibly fast pace of the technology at the time, was a challenging, formidable deal.

To get things into production, create the literature, create the product and make sure it all played and worked well with the computer. I think we did a good job for a long time up until around 88, when I tried to get my father to bite the bullet and say goodbye to some of what he was very loyal to. I know it was really hard on him. He never did it, but he should have said “Look guys the party's over. Here's some stock or here's some severance, but we have to get the product made overseas there is no other way. I mean, IBM at the time was making theirs in Mexico, Hong Kong or some other place.

Everyone was doing it. For us to do it, would not have been a big deal, it had to be done because of the margins we could not make the products here. I mean, you saw what IBM did with, with their laptop, their Thinkpad, it's made in China, but it's under the name Lenovo, a big brand in China.

It's just something that had to be done in order for us to stay in business. Now, a lot of people say Dell was very successful and they did great. One of the big mistakes he made when he tried to go mail order. No matter what you bought, you needed to have support because the computer would fail. Something would fail the hard drive, the floppy disk, the keyboard. They weren't bulletproof like they are now.

So one of the things that Dell offered was a 24 hour onsite service contract. You bought a Dell, I think it was Honeywell or one of those big company would come to your facility and swap the part within 24 hours, that costs $24 per computer for the manufacturer. My dad refused to pay that. He thought, we don't need that. I told him that's what Dell offers. That's why people buy Dell because they know that somebody could be in their office within a day to fix it and a lot of them needed fixing. You come full circle, right back around to the margins. It wasn't $24 to pay Honeywell Gold to do that because we didn't have the margins on the manufacturing end. So it's all the same issue.

In the maturing of any market your margins are squeezed. You get consolidation. That was the problem.

FD: Do you stay in touch with any of the people you've worked with at Kaypro?

David: I do. I have a friend that was in the art department and set up all these big trips that we took with all of our dealers to exotic locations. I keep in touch with him. His name is Henry. The older folks that were in my father's generation they passed away.

There's a couple of people in the marketing and sales department that are younger than me or my age that I do touch base with infrequently, but now and then they're around.

FD: I don't see any behind you, but I'm curious whether you have any Kaypro computers in your possession today.

David: I’ve got a couple in the garage. I've got a Kaypro II. I've also got one of the dumb things we did with Kaypro was tried to make a laptop. That was a mess. Took a lot more money. We contracted with Citizen, a Japanese company, that made watches. We got a contract with them to make our laptop. The pace of the technology was too fast.

The cost of changing and iteration would have to be funded. We just didn't have the war chest to do it. That burned up some money. It was not a good decision either. That's partly my fault. I thought it would be great to have a laptop, but it took a lot more investment.

I mean, all the other companies that succeeded had a lot more money than we did. I mean, we only went public that one time. We raised 50 million. But our competition was had four or five stock issuances. They raised tons of money. Year after year, they'd raise money. So did Dell.

We needed a lot more money to really be successful with a laptop. I still say we could have been successful with the independent dealers, because there's still quite a few around even now.

FD: Were you aware that there are vintage computer shows that cover computers from that era, like the Kaypro?

David: I didn’t know that, no.

But I know that the two fellows, I think I told you the two fellows that have archived a lot of information about Kaypro, they came out here. One guy's in Germany. [He is referring to Thomas Brase.] One guy is here in, I forget, Indiana someplace. [That is Frank Rahman, me, in Illinois.]

He's done a lot of work compiling all this. I'm sure he goes to those shows. He says he has 30 Kaypros in his garage.

So he came out and looked through all my scrapbooks and he wasn't too impressed with my computer. He knew more about the different models than I did, a lot more. He had the serial numbers and all this stuff, detailed, and it's quite an awakening.

But yeah, I know it'd be fun to go to see an old Osborne. You know, the old Osborne had the five-inch screen, and they probably had a nice new shiny Kaypro, and it's all maintained. Mine's kind of dusty.

FD: Do you ever pull it out for any reason?

David: I don't pull it out. It just sits there, and I look at it fondly, but it's quite a rocket, because I'll know that when I was in that blue Kaypro.

It's fun to keep. My son told me, Dad, don't ever throw that away.

If you don't want it, I'll keep it. I'll take care of it. I have a 30-year-old son, and he doesn't want me to throw it away.

I said, okay, well, I'll call you if I don't want to look at it anymore.

FD: That's all the questions I had prepared. Is there anything else I should have asked?

David: Well, I don't know. Maybe the management. We had some real back and forth with our management.

I tried really hard to hire outside folks. Just one little bit about the management is my father, he was so used to running a company of a size that he could be in every meeting that ever was in the company, personally be there.

At Non-linear, it never got over 100. I think it always stayed around 70 or 80 or 60. So everything that went on he could know about he was a genius.

He had a memory like an elephant. So he could be at every department meeting and every decision. At Kaypro, we got up to 700 people. No matter how much I tried to talk to him about it, he would always resent it when he saw a meeting going on that he wasn't there in the meeting. He would let me have the creative meetings because I was his son.

He was always getting involved in the accounting and in the manufacturing and this and that. I always wanted to hire really competent people to delegate to. I saw that that was our path to grow. I don't want to rag on my dad. He was a wonderful dad and great to work with in a lot of cases. But he was an inventor, and that was his forte.

When it got into running a bigger company than what Non-linear was, that's where I think we really had our differences. We tried to hire this one fellow who claimed to be a Harvard MBA. He was probably the worst guy we ever hired.

The best guy we hired was our attorney that took us public. He was John Hendrick My dad really liked him. He was our attorney that worked for a big LA law firm called Reardon McKenzie. The head of the law firm had become mayor, Richard Reardon.

He came on board as our legal advisor and all-around management person. My dad liked him a lot, but he still couldn't convince my dad that we needed to hire really talented people in accounting, marketing, and manufacturing.

We got sued by Bill Lirac. Every company got sued back in those days by this company called Weisberg something, something, Lirac. I don't know if you ever heard about that part of the industry. He sued Compaq. He sued Epson. He sued us. He sued IBM. He sued everyone.

They had these blanket lawsuits that were sort of cookie-cutter. They're based on your quarterly reports, and if he found one little thing, he would start a class action suit against you.

He did, and that's where John Hendrick really came in, really helping us. He got us insurance. It was $11 million settlement, and our insurance paid $10 million of it. We still had to pay a million of it, but he really helped us.