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The End of NetWare Centers

In 1987 Ray finally gave up on the idea of NetWare Centers. But dismantling them was not quick or easy. In his interview, Craig discussed how that was handled.

Craig: I guess it was about a year later that Lon Davis was hired, and Lon was Senior VP of Human Resources. He was a kind of a bright guy, and he said to Ray, “What in the world are you doing out in St. Louis? You’ve got a whole other company with a whole headquarters staff. You’re producing stuff in Provo, you’re shipping it to your central warehouse in California, then you’re shipping it to St. Louis and some of it to Virginia. You’re handling this stuff three times, and this is hardware, big boxes, heavy stuff.”

So thanks to Lon Davis, we finally got St. Louis dismantled. And I’m trying to remember if that was ’88 or ’89 that we did that. It was in March of ’87 that we had the acquisition of CXI [a Silicon Valley company that was itself the fruit of many acquisitions] and SoftCraft [the Austin, Texas, company mentioned above, pp. 123 and 161]. And with CXI, we got their management, Jerry Thompson, who had been their CFO, and Lou Cole, who’d been the President, so those two were given the job of dismantling St. Louis … very, very sad.

This dismantling was a very critical problem to handle because they had the MIS system upon which all the shipping and billing was conducted. If we did it wrong and caused a mutiny, that could have shut down the entire company, just like that. We were very, very nervous about that.

What we worked out was a program of paying the people either several weeks’ or several months’ pay, depending on how long we wanted to keep them, and kind of phasing it down. So I think once the employees got resigned to the fact that they were going away, that they were being treated decently—you know, being given enough money that they’d be able to survive in the transition—fortunately it kept the place operating until we got it all transferred back to Provo. That was probably the highest risk position the company was ever in.

Interviewer: And Ken Kousky, what happened to him?

Craig: Lou Cole was given the job of asking him to leave.

Interviewer: Ray must have thought very highly of Ken to trust him with such a critical function.

Craig: Well, Ken is a very, very intelligent man. He’s … Ray used to say in meetings, “Ken is a genius”; he’s really extremely intelligent. But the problem, as always, was politics, and Ken Kousky and Vern Mann, his CFO, had visions of taking their company public, spinning it off from Novell, and doing grand and glorious things, and they just had a different agenda than Ray had.

And Ray wanted to get out of the hardware business, as you know, and Kousky got us not only into our own hardware, but into everybody else’s. We were remarketing third-party hardware, which has a margin of about zilch. And so the inventory started ballooning, and the margins started going down, and Ray was just fighting it on all fronts, so he finally decided, with Lon Davis’s little boot, “Yeah, let’s shut this one down. It’s more trouble than it’s worth.”

In the end the activities of the NetWare Centers were quietly folded back into Novell, or cut loose, and Ken left and went on to Wave Technologies.

But all during the NetWare Centers interval, Novell had been growing, and acquiring, and there were now many other bright aggressive managers available to take his place at Novell.

In Conclusion

The purpose of this story is to show that even in white hot success stories such as Novell’s, many mistakes are made.

But unlike other aspiring high tech companies that continued to wander in the small-company wilderness, Novell made and successfully exploited more right choices and cut off the wrong ones with minimal damage to the company.

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