Doug Carlston - Software People. An Insider’s Look at the Personal Computer Software Industry

Adventure International’s biggest asset has always been Scott Adams’s formidable programming talent. But as his company grew, Adams was increasingly drawn into the day-to-day operations of the business. His plans for a new adventure program generator with far more capability than past such generators fell further and further behind schedule. Soon, the ads he had taken for the product were no more than faint memories in the minds of a few of the old-time aficionados.

Many founders of entrepreneurial ventures find themselves in the kind of fix that confronted Scott Adams. There are only two ways out of this dilemma. Either the entrepreneur brings in professional management to run the business and goes back to spending his time developing new products, or (and this is far less likely to succeed) one becomes professional management and contracts for product development. Successful companies like Microsoft chose the former route. Brøderbund has tried the far-riskier latter route. Scott and Alexis appear to have opted for the latter route too.

As of early 1985, Adventure International seems to have put all of its chips on one major outside relationship with the Marvel Comics Group. AI’s plan appears to be to develop programs using the well-known Marvel characters. It remains to be seen whether or not the software AI is developing for these licensed characters will catapult it from its present obscurity back into the ranks of profitable publishers.

Adventure International’s former regional distributor. Ken Williams (founder of Sierra On-Line), sold his inventory and receivables to Bob Leff in 1980. Shortly after that, Leff found a partner, Dave Wagman, and they turned their company, Softsel, into the world’s largest distributor of microcomputer software. In June 1984, Softsel had 330 employees and was closing the books on $150 million in sales. Bob, who only recently turned thirty, and Dave, who is only a few years older, moved more smoothly and with less help from their origins as programmers than any of the rest of us. Indeed, I was surprised to learn that they are both accomplished programmers. Bob in particular has always appeared to be the quintessential businessman. Yet it has become clear over time that Softsel’s success has been due far less to their experience or business training than to their intelligence and capacity for extraordinarily hard work.

I first heard of Bob Leff and Dave Wagman from a computer-store manager in Illinois during my first (and only) sales trek across the country in August 1980. The store manager told me that although Leff and Wagman’s company, then called Robwin, had started distributing to his store only very recently, he already knew that the company was just what computer dealers needed. Robwin had a reputation for fast delivery and good service. I later heard the same thing from a dealer in Connecticut, who gave me his business card and scribbled the name R. Sherwin Leff on the back.

After I got back to Oregon, Gary and I frequently talked about distributors. The industry clearly needed them—it just didn’t make sense for stores to call every supplier for goods. The problem was that we, the suppliers, didn’t see how we could afford distributors. We sold everything to dealers at 50 percent off list price (usually $11 to $14), and our manufacturing and royalty costs were $7 to $10. There just wasn’t room in our budget for the 15 percent that a distributor would need.

The only way we would be able to afford to do it would be to cut back the dealer margin by ten points, and that seemed like a fairly hostile thing for a small software company like ours to do to its customers. Still, we couldn’t see any other solution. Stores were proliferating, and we couldn’t afford to track down and service every account personally and at the same time try to run our company and come up with new products. Distributors were clearly the wave of the future. More and more of the stores that Gary called were recommending that we sell to Robwin, to whom they were starting to turn for their purchasing. The dealers had some of the same problems we had—they couldn’t afford to keep track of every new software publisher, especially in those early days when a new one appeared every week.

In November 1980, Gary called Robwin and talked with Leff, who was friendly and outgoing. He was twenty-six at the time, which was even younger than we were. (I was thirty-two, and Gary was twenty-eight.) No matter when we called, he was always there to talk to us. We had no idea that he was also operating out of his house. We thought he just worked all the time. We liked that. We liked Wagman as well. Both he and Bob were professional and pleasant, and we worked out the details of our business relationship with them very quickly and easily.

Robwin is one of three entities (the other two are Softalk magazine and Star Craft of Japan) that Gary and I credit as most responsible for ensuring Broderbund’s survival in our early days. Bob and Dave gave us a tremendous lift right at the end of our first year. We had just received an unfinished version of a terrific new game from Star Craft called Apple Galaxian. Bob wanted to send 400 copies of the game to dealers along with his new catalogue to encourage the dealers to buy from Robwin. We agreed to provide the demonstration disks at our cost, but we worried about being able to handle the orders. Broderbund still didn’t have much money in the bank.

Bob was talking about getting orders of five to ten copies of Apple Galaxian from at least 50 percent of the stores on the list, which amounted to two or three thousand disks. We couldn’t afford to supply them. “How much money do you need?” he asked. We told him that we were going to be at least $5000 short, and a day later we received a check from Robwin for $5000. We spent every penny of it on floppy disks. If Bob Leff said he was going to sell at least 2000 disks, we had no doubt whatever that he was going to sell them.

Minoru Nakazawa, the president of Star Craft, came over from Japan with the finished master disk, and we worked in shifts through the night for a week to duplicate those 2000 disks. Nakazawa slept on the living room couch while Gary or I duplicated disks, two at a time, on the kitchen table. Gary worked in the early evening, I took over in the late evening, and Nakazawa started working at three in the morning. When I finished my shift, I went into the living room and tapped Nakazawa on the shoulder. He would awaken abruptly and immediately sit up, talking as though he had never been asleep. It would take him a few moments each time to realize that he was speaking in Japanese.

December 1980 was a truly phenomenal month. In retrospect, it is clear that it was a breakthrough for the company-

Our sales more than quintupled, from $10,000 in November to $55,000 the following month, and the level of monthly sales never went below that from then on—in fact, monthly revenues kept growing. We were grateful to Robwin for its assistance. But it wasn’t until later that we realized that its $5000 loan to us represented a significant portion of Robwin’s liquid assets. In fact, technically speaking, Robwin didn’t have any cash assets at all. The money it had loaned us came directly out of its cash flow. But we shipped the products to Robwin right away, and it sold our products (and everyone else’s) COD, which brought in money quickly enough to cover the loan.

Robwin was a contraction of Leff’s first and middle names—Robert and Sherwin—and it was begun, sometime before Dave Wagman came into the picture, as a corporate shell that Bob had set up for a previous entrepreneurial fling. He had gotten into software distribution in a funny way. At the beginning of 1980, Bob was a product manager at Informatics, a mainframe computer software firm. He was twenty-six, had received his masters in computer science at the State University of New York in Albany, and was on a relatively common corporate track for men of his age and background. He’s a fairly striking person in both his appearance and his manner. He has a dark complexion, dense, curly hair, and a heavy beard and mustache. Although generally pleasant, he does have a temper, as well as a sharp, incisive manner, and he seldom gives the impression of uncertainty.