Novell had more than cycles. It had astounding growth. The ’80s were a time when several companies sprang from nothing to billions of dollars in annual sales. Besides Novell, such companies included Microsoft and Compaq Computer. In all these companies not only did sales grow, employee numbers grew as well.
I don’t need to take up space here summarizing Microsoft’s amazing history.
Compaq was founded in 1982, was the largest startup company of its time, for many years was the largest maker of PC-compatibles, grew enough to buy DEC in 1998 when that minicomputer company was on the rocks, then imploded in the face of competitors such as Dell and sold out to HP in 2002.
Here are some stories about how Novell did its growing.
The rapid growth in both income and installed base caused equally rapid changes in the company’s personnel. One of the major changes was raw growth: More employees and managers were hired. The number of Novell employees more than doubled, from about 97 at the end of 1984 to about 236 by the end of 1985, with some 200 based in Orem.
As mentioned above (p. 124), Ron Eliason’s connection with Novell began in the fall of 1984 when he was a Vice President, based in Salt Lake City, of First Security Bank (which became part of Wells Fargo in 2000). Eliason recalled:
The branch manager in Orem said, “Why don’t you go visit Novell; I think they’re turning around.” So I went down and called on Ray Noorda and found out he was working for a line of credit and Zion’s Bank currently had the line, and they [Novell] subsequently went back and met with Bill Gillan, the controller, and we extended a line of credit and Zion’s did, and Novell preferred what First Security offered and we got the business.
Some months after that, I was aware that Ray was looking for a CFO to replace Bill Gillan. I had taken Ray out to dinner at the Underground Restaurant in Provo, when he was first looking for the CFO, and volunteered my services and gave him my resume. That’s when they hired Dick Eales as CFO.
Eales had been the CFO of the Penn Central Corporation’s Energy Group from about 1979 to 1984. His involvement with Novell began in January 1984, when he worked as a financial consultant to Safeguard and Novell. In November 1984, he became Novell’s CFO, although he continued to spend as much as half of his time working as a consultant to Safeguard and its affiliates.
According to Eliason, the replacement of Eales as CFO was made possible by Safeguard’s sale of its Novell holdings.
Ray wanted a CFO, but at that time, Safeguard owned 52% of the company. And Safeguard wanted to put their own guy in, and so they hired Dick Eales, who was based in Philadelphia. He commuted from Philadelphia to Orem for about a year. After the public offering in January 1985, Safeguard no longer owned 52%, so Ray figured he could do what he wanted.
Eliason recalled that Ray hired him the same way he had hired Jack Davis at General Automation years before: At an early morning meeting.
About July 5, 1985, Ray called me at 7:00 in the morning and said, “Why don’t you stop by before you go up to Salt Lake City?” And so I did, and that’s when he offered me the job to take Dick Eales’s place. It was August 5th when I joined the company, and it was planned that Dick Eales would leave at the end of December. He did, and I became CFO.
I remember Dick Eales’ telling me as we had this five months of overlap, “Ray likes to do things quick and dirty”—that was his terminology. Which meant that he won’t give you any help and he likes to do things as quickly with as few resources as possible and kind of wing it, and that turned out to be exactly true.
Another key person brought on in April 1985 was Richard King. Richard’s is a classic story of once-in-a-lifetime opportunity narrowly missed, like the person who loses a winning lottery ticket, or Gary Kildall of Digital Research (makers of CP/M) allowing Gates and Microsoft to get IBM’s main contract for licensing a PC disk-operating system (DOS).
It seems that Richard had the opportunity to become a member of SuperSet. In 1981, he received a BS degree in computer science from BYU. He used to hang out with Drew, Kyle, Dale, and Mark when they were still undergraduates at the Y. Richard was invited to join SuperSet when they incorporated and were doing contract work for Novell Data Systems, but Richard declined because he had landed a regular job—with a salary in the low 20s and benefits—in BYU’s computer science department. Richard was married and had a couple of kids, so he decided he was better off playing it safe.
At the time it seemed like the right thing to do. Who could have guessed that so many multimillionaires would leap from the loins of the failing company?
In 1985, Richard’s old SuperSet buddies finally convinced him that Novell was going places and he ought to come along for the ride. He was hired in April as Manager of Software Development. A year later, he was promoted to Vice President of Software Development and his department had grown to 22 employees.
The personal computer industry of the mid-’80s was new enough that there were not enough industry experts to go around. Finding a resume that said “Five years experience in the personal computer industry” was like finding a needle in a haystack. In the Provo-Orem area, people from all walks of life were now getting hired into Novell and its sister high tech growth company, WordPerfect, but this was not enough. People conduits were set up.
One conduit was from the declining minicomputer industry to Novell. As minicomputer companies began to feel the heat of competition from the still viable mainframes above them and the new PCs and PC-based LANs below them, their growth suffered and they reorganized or (a term that became popular in the ’90s) downsized. Many of the people they laid off moved into the growing PC and LAN companies.
David Bradford was recruited by a different route. He had been running a retail computer store in the Bay area. David was hired as company Secretary and staff legal counsel October 1985, reporting to Ron.
Besides recruiting, the other tool Ray used to grow Novell personnel was acquisitions—he would buy a company to get its good people. This was a strong tool for getting people, but like any strong tool, it could be misused. The hazard of adding people through acquisition was that they would bring their culture from the acquired company into Novell relatively intact, even if that culture had been a losing one in the marketplace.
It was from acquisitions that the eclipsing of the Utah-centric management of Novell occurred. Most of the companies acquired had their top management in northern California. As Novell grew by acquisition, it became like many high tech companies—an organization with top management in Silicon Valley and much productivity taking place in hinterland areas in the US or overseas. In the case of Novell, Utah became the main hinterland. As we will see (“Culture Clash”, p. 187 below), this created a problem of having different cultures understand each other and cooperate successfully.