One of several ideas just slightly ahead of its time...
Michael McCafferty's Adventures in Business!
I am a serial entrepreneur.
I like to build successful businesses out of nothing.
It has been that way for a long time...
One of several ideas just slightly ahead of its time...
I am a serial entrepreneur.
I like to build successful businesses out of nothing.
It has been that way for a long time...
Next came the Lynnwood Cycle Shop, a bicycle repair service for the kids in the neighborhood. I think
I worked with my brother Bud on that business. I enjoyed making things work, but I really liked
getting paid for it. It became clear to me early on that there is really no limit to your success
if you are in your own business. I was hooked.
I have a dim memory of my first business adventure being a lemonade stand, out in front of the
house.
First experiments
An institution is the lengthened shadow of one man.
Emerson
During the 50s and 60s, all young men were required to serve their country in the military. There were few choices involved. Either you were drafted into the Army, or you could enlist in some other branch of the military such as the Air Force, Navy, Marines, etc. The law was written that all men at the age of 18 must register with the Selective Service System.
There were a only three ways to avoid "The Draft" as it was called.
1. If you were "unfit" for military service, they would give you an exemption. This means you have some physical and/or mental condition which makes you undesirable. I was fit, and was not about to shoot myself in the foot (literally!) to avoid the military, so that left only two other ways out.
2. If you went on to college, you could get a deferment of your military obligations until after you graduated from college. I had just completed 12 years of institutional education (8 in elementary school plus 4 in high school), and I was looking for something a little more interesting than another 4 years in an institution, so that left me with the only remaining option:
3. Be Married.
Choosing the least of 3 Evils, I asked my girlfriend du jour to marry me. I had always been attracted to women with high intelligence and an delightful sense of humor, but I was a bit taken aback by the peals of laughter that followed my earnest proposal.
The options were narrowing: for the next 4 years I would be either soldier or student.
I mentioned my decision to my father. "Where would you like to go to college?" he asked pleasantly, and with what I thought at the time was a benevolent smile.
This was not something I had spent a lot of time thinking about, but I knew where I didn't want to go. My older brother had just completed his first year at Notre Dame, so I preferred to find some place where I could stand on my own and not be cast in the role of "the little brother".
"Harvard? Oxford?" I said, completely innocently.
I haven't heard my father laugh so hard before or since, it was the high moment of his wonderful sense of humor. When he finally calmed down and regained his composure and reassumed his persona as Great Provider, he told me that he had heard of a place that might accept me. He knew that this would not be an easy thing. I was just barely graduating from high school. Academic excellence was not among the goals I pursued. Girls, cars, and "testing the System" were more to my liking. Therefore, without the proper academic credentials, it would be a real challenge to get into any decent college. But I had complete faith in my father's abilities.
He took on this great challenge knowing that to fail to get me into college would be put me into the military. And that could mean getting shot at. This was now a life and death situation. It was a few days later that my father and I were sitting in the office of the President of Mt. St. Mary's College (now University), a small Catholic boys-only (now co-ed) institution located in the foothills of the Blue Ridge mountains of rural Maryland. I remember nothing of the conversation except one sentence uttered by my father: "Monsignor, I know Mt. St. Mary's doesn't need my son, but my son needs Mt. St. Mary's!" It was at that moment I knew my future as a student was assured.
The following four years were filled with the most unlikely misadventures, which I call Capers, and which Webster defines as "capricious escapades".
Trouble came a few months later, at a Homecoming weekend. I was in the Student Union building
during an open meeting of parents and faculty, when I heard one of the parents ask one of the
priests quite loudly: "Where is Father McCafferty? I want to meet him and thank him for making
sure our son got a birthday cake!" Father McCafferty? How in God's name did somebody think I
was a priest? It hit me like a ton of bricks: I had signed the letters "F. Michael McCafferty",
with the "F." simply being the last remaining vestige of my given name, as I transitioned over
to the self-chosen "Michael". It was obvious, but wholly unintentional, that some parents thought
they were buying from a religious person who abbreviated Father with F. Well, you can imagine
how much trouble I got into for impersonating a priest, and for profit, the lowest most contemptible
thing a young Catholic boy could do!
I was not starting my college days with great popularity, either with the students on the yearbook
committee, or with the faculty. That may have accounted for my loss in the race for Class Treasurer.
I wasn't interested in being President, I wanted to be near the money! After that, I stayed out
of politics and went strictly business.
One day I noticed that there was a group of students who frequented the races at Shenandoah Downs. It
was a relatively long drive, took up a whole day, and they invariably lost money. I seized the
opportunity by offering them track odds, and they could save their gas money and time. Thus
began my days as a bookie, and it would have lasted for a lot longer if they had at least won
*something*, but these students were incredibly bad handicappers. I think they preferred to lose
their money anonymously, rather than have me know about it. For a while it made a pretty good
income.
One interesting note about my brief period as a bookie: I never placed any personal bets on the horses.
I figured it was a sucker play! Nowadays, I don't gamble at all, on anything, not even lottery tickets.
The way I see it, gambling is just another way to take money from the people who can least afford it.
We decorated the place in the theme of the "Beatnik" coffeehouses of the day, with
burlap bags on the ceiling, and flat black walls, while the stage was painted our signature
color of purple. Our big challenge was furniture. We needed tables and chairs, and the
only low cost "resource" was an abandoned building on campus which originally housed the swimming
pool. Over the years, the unused and drained pool was used to accumulate cast-off desks and chairs
from the dorm rooms! Most of the stuff was really ugly and beat up, but it was perfect for our
needs after a quick spray coat of flat black paint. It was going to be in a very dark environment,
so pretty was not a requirement. We liberated all the furniture we needed in a late night
visit. This "scavenging" mission was also one of my first validations
of the premise "It is better to ask forgiveness than it is to ask permission." On opening night
a couple of the faculty priests showed up to check us out, and one of them pulled me aside and remarked
that the tables and chairs had a certain familiar quality about them! I was non-committal in my
reply, but I was shaking in my boots, thinking that this would surely be the caper that would get
me expelled and sent on to prison for the rest of my life. But nothing came of it; I think the priests
were secretly very pleased with our spirit and resourcefulness. Opening night had lines down the
block and around the corner. It was pretty girls as far as the eye could see!
And they loved it! Danny Reagen played the piano (a real "find" at a Gettysburg used furniture store),
and John McKee and his Blue Ridge Singers provided great entertainment.
It wasn't long before we used our new base of operations to branch out into the food delivery
business. This was eons before it caught on big in America. We started out by filling orders
phoned in from the dorms, but soon we were making subs (hoagies) by the hundred, "on spec", and walking through the dorm
hallways with the smell wafting through the air. It was virtually impossible
to NOT have one. This was the last straw for the local merchants in the food/drink business. We
were sucking up almost all of the disposable student cash, so they started playing hardball. They
closed down our food delivery operation on the grounds that we did not have state approved food
delivery vehicles (our vehicles were barely road worthy!). So that leveled the playing field, and
gave me my first taste of hardball competition. Very educational.
In my last two years of college, whenever I needed a few extra bucks, I could usually get what I
needed in the pool hall. At first, I played a lot simply to learn the game.
It was 10 cents a game, but I looked at it as 10 cents a lesson.
As I got better, it became a business, as there was
always a lot of gambling on 9-ball and straight pool. In four years of college, I became quite good
at the game and earned a fair income at it. Especially the first few weeks of my senior year.
Over the previous summer I had spent 6 straight weeks living inside Allinger's pool hall in downtown Philadelphia,
playing with the old men who were great teachers. I would be there when the place opened in the
morning and play until they closed late at night, eating junk food and Cokes out of the machines.
When I got back to school my game had improved dramatically, but of course it would have been dumb
of me to shoot at that new level without extracting all the odds (and cash) I could from my opponents. The key
rationale is that they could have been practicing even more over the summer. So the
hustling that they got only made up for the hustling I got when I first started playing. It's all
part of the magical circle of Life and Commerce!
Pinball machines were also a profit center for me, the ones that paid off in nickels, not free games. Here was
an intellectual pursuit just waiting to be mastered. Pure physics in action! I got pretty darn
good with those machines, but it took a long time to earn any real money.
And then Fate, literally, opened a door! I was walking down the hallway of the Student Union
building, on my way to get lunch, not a care in the world, got a job, school is out in a couple of
weeks, life is good. A door opens out into the hallway, surprisingly quickly, almost hitting me,
and in a reflex of self defense, I grab the door handle to stop the swing. A fellow senior
is attached to the other side of the door handle, looks up at me, grins, and asks "You next?".
I told him, no, I was not next, but why the smirk, and what would happen if I was next. He
explains that on the other side of that door was a gentleman from IBM who was looking to hire
a salesman, and that IBM only takes people from the top 10 percent, and the joke being that I was
far from being in the top 10 percent in academic standing. I was more likely in the lowest
2 percent (as it was to turn out, I was even lower than that). So here was this other senior
getting a kick out of thinking I was going to waste my time by trying to get a job with IBM, but
I was thinking that this guy from IBM was wasting his time by looking for a good salesman in the
top ten percent.
And then I walked right up to the gray haired man (George Roper, IBM Branch Manager, Hagerstown, MD)
and told him he was wasting his time if he
was going to be so narrow in his rules. I also mentioned that there were absolutely no good
sales candidates in this graduating class in the top ten percent, and, only one really
good sales rep in the whole school, and that particular fellow was definitely not in the top
ten percent. Well, he digested that for a few seconds and came back with the perfect question:
"Who is this really good sales rep?" And in reply, I simply said "Me!".
He must have had nothing better to do with his time, and instead of just throwing me out on my butt,
he asked if I would mind taking a simple little written test. I could see he was interested, but
my instincts had been honed to a keen edge and I told him that I was really on my way to get a
sandwich, but that maybe I would stop by on the way back. You could tell he was getting
frustrated, because he was powerless. I just stumbled in there by accident, so I had nothing
to lose. It was a perfect selling situation, for me!
I went and got my sandwich, came back, took his little test which he graded instantly, smiled, and
invited me to take a more serious test at the branch office in Hagerstown, just 30 miles down the
road. Well, now this was a bit of an inconvenience for me, so I asked him a few questions about
what this salesman job was all about, and when he got to talking money, he indicated some numbers
that easily beat what I could make at selling insurance, and this IBM job came with a salary in
addition to a commission, and no limit on commission. This was sounding pretty good, so I went the
next day for the test, which they again graded instantly, smiled again, and started introducing
me around to a lot of really nice people, as if I were really going to work there! I had the job!
It never really sank in until I mentioned it to a few of the guys at school, and to my parents.
To the news that I got a job at IBM, people were struck dumb. It was the neatest reaction! Nobody
could believe that a guy who so completely typified the anti-student would ever be selected to
work for IBM. ("Does not compute")
For my parents who had put up with my shenanigans for so very long, the news that IBM wanted their
son was the greatest thing that ever happened. All of a sudden I could do no wrong, I was validated
as, evidently, a good kid, and therefore their work was well done. I was a hero.
To the other guys at school, it was the complete opposite. I was a guy who never studied,
and cut tons of classes, and I made everyone else in the school feel superior because of my
low academic standing. But all of a sudden, their world was turned upside down. The best
company on the planet, IBM, had ignored all their hard work all these many years, had invalidated all they
believed to be true, and selected the school's biggest screw-up, that McCafferty kid.
But there were still a few more hurdles to leap before any of this fantasy of a job at IBM would
come to pass.
First of all, IBM wanted a transcript showing my academic records. This was not a good thing.
I figured that although IBM knew that I was not in the top ten percent, and that was OK with them, that it
may really mess things up if they found out that I was in the lowest two percent.
I told them that I would make sure that the college sent them right out. And then I ignored it. When IBM
asked again, after waiting a week, I told them there would probably be some understandable delays
due to the high demand for this kind of information at this time of year. Blah, blah, blah...
This happened a couple of times, then it was just dropped. I guess they figured they really
didn't need it after they decided to keep me around.
And so it came to pass that I dodged another bullet!
The next challenge was much more formidable.
Of course, I was really bummed about this. I figured IBM would be totally turned off with me not
having a college degree, and withdraw the offer. But worse was the humiliation and suffering it
would cause my parents who were now riding the highest levels of emotion, telling their friends
about their son who will be working for IBM, the greatest company in the world, and how proud
they are that I finally did something good, and who worried for so long about my
errant ways. I figure they lit many candles and said many prayers of thanks to St. Jude, the Patron
Saint of The Impossible.
OK, so how did I deal with this graduation challenge? I ignored it. There were two weeks between the
last day of school and Graduation Day, so I really didn't have to worry about it right away, after all I have
14 whole days of no work, no school, why should I fill them with humiliation and worry? That got me through the
first 13 days ok, but that last day was stressful. I realized at last that on the very next
morning my parents would load the car with me and high expectations for the moment they have
looked forward to for 4 years, drive 3 hours to school, and then what? Hear me tell them THEN that I knew
all along that I wasn't going to graduate? No way. A man would have to be in love with pain
to choose that path. There was only one choice left: I just MUST graduate. And that
meant that I had to SELL the dreaded Dean of Men. I called him on the phone and told him I wanted
come down there TODAY, right now, and talk with him about this graduation thing. He was direct.
"You can come down here if you want, but you will not graduate." Ok, with me, one step at a time.
I got in my car and drove 3 hours and walked into his office, sat down, and started talking.
I wish I could recall for you exactly what I said, because I'm sure it would be very educational.
All I can tell you is that I talked and talked and didn't stop talking until I heard the words
"OK, you can graduate." And then I stopped talking instantly, and probably groveled a Thank you,
and escaped before he could change his mind.
This was a major selling experience for me. I would relearn the lesson from a very wise and
street smart used car salesman Steve Hopkins. He said it this way: "You stop talkin', they
start walkin'." Therefore, DO NOT stop talking. Under any circumstances. Until the sale
is made. Period.
So I drive the 3 hours back home, getting in around 11 at night. I hear Mom
calling to me as I'm going up the stairs to my room "Where have you been?" I told her: "Oh, just
out with a few friends, having a beer, shooting some pool." I can remember her words to this
day, the most beautiful and lyrical and happy words I had heard in my young life: "Well, get some
sleep now, remember YOU GRADUATE IN THE MORNING!". I slept very soundly that night.
On my first day on the job, the branch manager called me into is office and suggested that "We
don't dress that way here", indicating that my attire, consisting of a Madras sport coat and penny loafers,
was in need of some upgrading. On the
second day they sent me out to watch a field engineer do some work, which involved a lot of
wires and really scary electrical stuff. When I got back to the office I told the manager
that I didn't like electrical stuff and that maybe I should just leave and go sell insurance.
He went into a big routine about how these machines are really safe, and how I wouldn't be
working with the wires very much, and that I would really grow to enjoy it once I had gone
to school to learn all about it. So now I'm really bummed. I just got out of school all my life,
and this guy wants me to go back! But he calmed me down, I spent some more time with it,
the salary was great, and I even enjoyed the school. A lot. In fact, it was downright
addictive. I loved it. And my hunger for knowledge exploded like never before. I became
a workaholic. I was consumed with it.
And I sold a lot of computer systems. My job was in a New Account territory. That means that
they have no idea what's out there, and they want me to identify prospects and sell them. It was
part of the four states of PA, MD, VA, and WV. Their confidence in me was well
rewarded. But better than all the money I earned there, I got something even more important, the
education. IBM was known for the extraordinary training they gave their sales reps in the inner
workings of businesses, down to the most minute detail. This would allow their sales reps to deal
with the leaders of the biggest companies and be equal in confidence. IBM taught us not only
how businesses work, but how to think about how they work. Very powerful stuff.
We were not only trained to understand computers, and how to program them, but also how they
were designed and built! We were trained in physical site planning, construction, and installation,
systems design, forms design, programming, operation, troubleshooting, and more.
Then we were taught how to think like the
managers and executives of the companies who would buy the computers: what was it that motivated
them first as human beings, then as managerial employees of an organization. And
finally we were taught how to think like the very top people in the organization, the president/CEO,
and the Board of Directors who represent the stockholders. We were given the secrets to how businesses work.
And since businesses exist to make money, we
were taught, by the best company on earth at the time, how to make money, and how to use computers
to make even MORE money. And they are PAYING me a nice salary while they are revealing all
these secrets! Is this like the luckiest thing that ever happened to me, or what? It made me
so grateful that I worked extra hard to earn it.
There was a room in the branch office building called The Library, in reality just a bunch
of file cabinets and bookcases, all packed with thousands and thousands of documents about
all of the different computers, software products, application notes, success stories,
technical analysis, theoretical papers, and on and on. Immediately, I started at the first
drawer, inspecting every document cover to cover, replacing it and going to the next folder,
then next drawer, the next file cabinet, and then started with the bookshelves, book by shelf by
wall. That was Pass One. Pass Two took longer, because now I was being more selective about
what I wanted to read. Forget the theoretical stuff, the stuff with a lot of
mathematical jargon, forget the stuff with a lot of electrical diagrams. What I wanted were
the documents which would help me sell low cost computers to the small and medium sized
businesses in my area. Specifically I was interested in the applications that every business
had a need for: accounting (my specialty in college... ok, I didn't really pay that much attention
at school, but at least I remembered that the debits are by the window, and the credits are by the
wall). Business needed to account for itself, its money. I wanted to learn all the different
ways you could slice and dice the sales pitch for why you should be using computers in your
business. I wanted to have EVERY bit of understanding I could get.
I knew right away that I was playing catch up. The people all around me were extraordinarily
capable, intelligent, decisive, resourceful, energetic, positive, results-oriented, personable,
and even good looking and very well groomed. I felt instantly like a sore thumb, a black sheep.
It made me work even harder, to let no one ever doubt for a minute that I was earning my keep.
You couldn't change the fact, however, that I was still one of the more unusual specimens of
the IBM experience. And there are many stories to illuminate this point, but
I may be digressing.
I sold a lot of computers. It was almost easy. Even so, I still worked very hard, lots of hours,
total focus on nights and weekends. Most commission checks sat uncashed because I didn't need the
money after my rent and car were paid. I wasn't into living high in those days... I just
got out of a dormitory, so just having my own apartment was like heaven!
My challenge was that while I was real good at selling computers, I really didn't know enough about
programming them. This led to the conclusion that I should get a job as a programmer so that I could learn
more about programming.
I applied to Technitrol, Inc. in Philadelphia and got a job as the solitary programmer on the
IBM 1130 Computing System. The company president at the time was
E. Stuart Eichert.
He was at University of Pennsylvania at the same time they were inventing the first computer. Stu held the patent for rotating
magnetic storage. Smart guy. I interviewed with Stu and we hit it off. I didn't have to write any code, or
take a test, so it was a quick decision. I think he was impressed that I worked for IBM, and that
was pretty much good enough for him. I said a few words of Fortran, a programming language
used by engineers and scientists. A few words was all I knew. I surely never did any real programming
in the language. In fact, I had never done any serious programming at all, in any language, but here I was
getting a job as the only programmer in the company! I had to spend the next two weeks in Savannah Georgia on retreat with the
167 Airlift Wing of the West Virginia Air National Guard. I took the IBM manual on
Fortran IV to Savannah, and learned how to program. Theoretically. I also took the manual for the computer.
The first day on the job was interesting. They must have just told Louise just that morning that some guy was
coming in to be her new boss, and that she wasn't going to be reporting directly to the president any more.
She was feisty, and smart, and put me through many tests. It started right after she grumped "Hello" to me.
I told her how I was looking forward to working as a team and that I was really
going to need her help and experience, and then I asked her to turn on the machine. She comes right back and
says "Turn it on yourself!". This caused me no end of discomfort because I didn't know where the power
switch was for the computer, and I sure didn't want to admit that on my first day. I was supposed to be the genius!
This was my first management challenge in the real world. Needless to say, Louise turned it on, and we got
a lot of good work done together. And I learned programming by doing programming.
After about a year of programming, I was convinced I knew enough about programming to be able run a computer
service bureau. Besides just programming for Technitrol for the last year, I was also gathering information
about other local and national computer service companies. My lower right desk drawer was filled with great
competitive information. I was loaded for bear, and ready to rock.
It was right at this time that one of those incredible coincidences again visited my life. Stu Eichert, president
of Technitrol, came to me and said he would like me to do some preliminary research on some of the more well
known computer services companies. He was thinking that Technitrol, an electronics device manufacturer,
would benefit from expanding into services. I told him right away that there might be some conflict of interest
on my part because I was going to quit soon and start my own service bureau. He suggested that maybe we
could help each other and by that he meant that he could put up the money and I would do all the work, and for
that I would get 20% of the deal. Sounded OK to me, and I made a presentation of my ideas to the
Board of Directors at Technitrol. And so it came to pass that, at 26 years of age,
I became the President of Eastern Data Processing (EDP),
8th and Chestnut Streets in Philadelphia, a subsidiary of Technitrol, then listed on the American Stock Exchange.
This was HUGE for someone so young! And yet, it was a complete arms-length transaction.
He just honored all the checks
when they came for payment, and I made things happen.
Meetings were almost non-existent with him... until about 6 months later.
The plan was that we would become a payroll service bureau,
and kick the butt of our very big competitor Automatic Data Processing
(ADP). I was supposed to hire some programmers and create the software and then hire the salesreps and start
making money. That seemed a bit slow to me. I hired a salesman (Bob Foley) early and as I had learned at IBM "Any good
salesman can keep an infinite number of programmers busy forever." Bob brought in all kinds of
business but it wasn't payroll business. And the new business tied up the programmers to write the applications.
Soon enough, I had the "big talk" with Stu. He reminded me of the plan, highlighted how I had made no progress
on the plan, and lost money. This was not my finest hour. I told him I understood very well, and that if I
were him I would unquestionably fire me. His reply was one of great wisdom. He suggested that I
had just received a $400,000 education (the amount of the losses so far), and that he paid for it, and that
if he fired me he would be throwing that education away. I was relieved and awed by his great wisdom. And
I spent the next 6 years working my butt off to make it happen. And it did.
I designed the overall system, the forms and reports and then wrote a lot of the software in COBOL
(COmmon Business Oriented Language), but I had help from
a couple of good programmers too. At first, we ran the payroll service on an
IBM 360 Model 30 with
2311 Disk Drives
and 2 Tape Units. Main memory was 64k. It had a most impressive front panel with hundreds of little lights
that would flicker all the time and impress everyone who viewed it.
When Stu died, the board of directors claimed that they had no record of anything about me having any agreement
with Stu or the company that says that I get 20% of Eastern Data Processing. This is after 7 years of total
focus, and unbelievable hours. (It ultimately grew very nicely and was a 3-shift a day operation doing thousands of payrolls.)
With this news, there was no future in staying at EDP, so I took a job in Chicago for Robert F. White and Company,
located at State and Madison, the epicenter of The Loop. I was the VP of Operations. It was a natural
move because Bob White, the owner of the company, had been aware of my progress and success in Philly for
several years. He asked me what it would take for me to come to Chicago and do for his company what I had done
for EDP. I told him, and he made it happen. One of the big things was that our agreement be in writing, so
I learned my lesson from Philly. Bob White was the best boss a guy could have. Left me completely on my own
to run a 3 shift, 7 day operation that was many times bigger than what I had built in Philly.
But I soon learned that Chicago was just too darn cold for me.
It was in Chicago that I bought my first Ferrari, but the roads were awful most of the year due to the weather.
That's when I realized that what was of most value
was the output of my brain, and that my brain could work anywhere, so I should take it where my body feels good.
And where the roads are fun to drive all year 'round.
Ergo: San Diego.
I gave Bob a year's notice and finished up the conversion from punched cards to tape/disk payroll files,
and then headed west to start a new life.
The first 4 days I sold zero. And then in my first full
month on the job, I sold more cars than anyone had ever sold in a month at that store.
The reason for my success was partly my personal initiative, and partly the
good natured competition with Steve Hopkins. Steve was the former best salesman in the place, and he kept pushing me
all the way. We became great friends.
So now it's several years later, and Dave gets to wondering whatever happened to Michael McCafferty, and gets my
number in San Diego from my previous employer in Chicago (never burn your bridges). He calls me, and asks if I've made my
first million yet. I had to admit I was still quite a bit short of that goal. He announces that he has sold his
software company and was looking to invest in something and was wondering if "I would invent something and he
will back me and we would make a lot of money and have fun, 50/50, ok?"
So what did I have to lose, right? I'm selling Fiats! This was just treading water.
However, since I had gone through this startup
ordeal before, and if I was going to do it again, then I was determined to do it right this time.
So I sat down
with a clean sheet of paper, and made a list of all the things I wanted in an ideal business. The list
looked something like this:
A creative, unique business that has never been done before, ever, anywhere.
There were about 13 points on the paper after a lot of thought over many days. The only trouble was that
I still had to invent the business to conform to these constraints. This took 3 months. The result was "PAL", the world's
first completely free, round the clock, anonymous computer service, accessed over ordinary telephone lines,
needing no computer for the user (only a Touch Tone telephone, PC's hadn't been invented yet). The application was a
real-time replacement for the Yellow Pages, along with other free applications to gain traffic. It was,
in fact, a precursor to Google and the World Wide Web which would come along more than 16 years later. Nothing like being
a little ahead of the crowd...
The name PAL was an acronym for "Product & Area Locator" and a take-off on "HAL", the computer
in the movie 2001: A Space Odyssey.
Callers would be greeted with a computer voice: "Hello,
this is PAL, how may I help you?" The caller would reply by touching the keys on the phone which would spell
out the name of a product or service and then their zip code, and PAL would locate the closest listing, speak
the database information (including special offers going on now) and even switch the call, free, if the caller
wanted.
My potential investor Dave was overwhelmed. He thought maybe I would invent a software product (that would
come later) and that the business model and target audience would be clearly defined and something he had
experience with. This PAL stuff was completely beyond his comfort level. He wanted to have proof that such
amazing things could be done with a computer. So I programmed the application on "GEnie", General Electric's
timesharing service, probably the
only online computer service that had a voice response system available for use on the network. When he saw an
early prototype of PAL, he believed that
it was technically feasible, but now he wanted proof that it could be sold. Would businesses really buy such
a new fangled electronic Yellow Pages?
To demonstrate the answer, I put together a group of experienced telemarketers in
a small office in Cardiff-by-the-Sea, California, and we wrote
a script for a one-shot phone presentation aimed at getting Cash Now. The pitch was that we told the prospect
that there were amazing developments happening with computers (never an argument) and that they would be a great
help to business (no argument) and individuals (no argument) and a huge leap in computers for everyone was just
made right here in San Diego and would be released in 3 months to everyone who lived or worked in San Diego.
We told these prospects that they were among the first businesses in San Diego to be contacted to participate
in this wonderful opportunity, and if they
signed up now they would be able to take advantage of introductory special prices, AND they would also be able
to reserve the best of a very limited number of ad spots which their competition would never be able to take over
(as long as they kept paying the bills).
Put another way, we were telling them that this thing had never been done before, and that we were going to do it
in three months, and that we wanted them to sign up Now and we would be out that same day to pick up their
check! That was the outrageous part to me, picking up the check right away. But I deferred to the experience
of our telemarketers. They wanted to get paid, and they were paid commission only, and only on collected funds.
They were experts at getting the money now. It was a beautiful thing to behold.
What made all the difference was the real-time nature of this new advertising medium. It was possible for our
employees to re-program PAL immediately to refer each new advertiser's information in the database. This completely
binary situation, either you are in the database or you are not, coupled with the perception of the very limited
number of ad spots (3). These conditions set a fire under the telemarketers, and their enthusiasm showed in their
sales. Dave was convinced, and now all I had to do was make it happen.
So with the money we raised selling the ads in advance, I bought a computer (Cromemco CPM machine with a 10MB
hard disk drive and 4 modems and a Votrax voice response unit), and programmed the main software in COBOL
myself, and subcontracted a couple of machine language subroutines. What I was asking this little toy
computer to do was way beyond its capabilities, but somehow I got it to work. And finally, the big day
arrived when I had to let the world know that PAL was alive and well, and that the world would never again
be the same.
This was a very big idea, and just before I pulled the trigger on the announcement, I got scared.
I had no idea what the phone company would do when
I announced it, but I knew they wouldn't like it. One of their big profit centers has always been the
Yellow Pages. The phone company could easily squash my little business like a bug, or keep us tied up
in court with injunctions until we gave up, or just cause a lot of line static, and interfere with
the calls. There were plenty of ways they could cause problems, and it worried me a lot. And I struggled long and hard
with the idea of actually notifying them of my idea before I went ahead, but I felt that was
definitely the wrong way to go about it. They would study it forever before I got an answer, and the
answer would probably be NO.
This was one of those times when it would be "Better to Beg Forgiveness than to Ask Permission".
The thing that got me to move ahead with confidence
was one of my favorite quotes attributed to Goethe:
This was certainly a Dream, and it surely required Boldness, so when it was all ready to announce,
I sat down and wrote up a Press Release, and slipped a few copies in the mail to the media.
The first to bite was XETV, a San Diego run station transmitting from a tower in Tijuana, Mexico.
They called
me in to do an on-camera interview and it aired that same night. The rest, as they say, is history.
The storyline was about this relatively young computer guy (me!) who invents this free public computer service you can use on
your phone. And about how it will change everything. I was off on a huge roller-coaster ride,
one of the biggest adventures of my life!
The next day the press was all over it, and the following day there
were TV interviews on the rest of the stations in the area. Once the press got hold of it, it went out over the
UPI news wire and was written up in newspapers throughout the US.
My parents called to say I had finally made it into
their local paper (Philadelphia Inquirer). The fallout was even more interesting.
The Discovery Channel wanted to learn more
about how to use my new service as a way of doing interactive TV.
They invited me to a think tank in Maryland to
join with some other brains to think new thoughts on the convergence of TV and computers.
Everyone wanted to see the computer. But I wouldn't allow it. It had to remain a mystery. If they ever saw
my butt-ugly stack of cheap hardware with tangled wires everywhere, they wouldn't believe their eyes. They would,
every one of them, expect to see something much larger. They would expect that a machine which would handle
the inquiries a million San Diegans to be a giant. If they saw it, it would be trivialized. Competitors
could get greedy thoughts. It would be best if the computer stayed a mystery.
Soon enough it wasn't news anymore. We had to prove ourselves. Before we announced the service, it was easy to sell
on the come. After the service was turned on, then we became real and advertisers wanted real numbers so they
could make intelligent decisions about which keywords and which zip codes they should buy. It completely changed
the dynamic of selling.
The nail in the coffin for PAL was my partner Dave.
When he saw that he would have to invest real (serious) money, he
bailed out. Abruptly. I was left with a brand new startup with a bad case of "Cashus Interruptus".
I had to pay rent and payroll and suppliers... and what the heck was I going to do?
It was a long, slow, painful time for PAL. I moved him out of his office and into my spare bedroom, and only had
one phone line, but he was alive to the world, and living to serve. Soon the vultures appeared. A guy
from out of nowhere, Joe Labert, shows up and
figures he can get the money needed to get going again. He brings in Jimmy Geiger. Joe and Jimmy sold motor homes
together at La Mesa RV, a motorhome dealer.
Jimmy knows a guy in Mexico with more money than God, and he can get us
a shot at presenting the idea, but if this thing happens then it will be equal shares for Joe, Jimmy and me, and the
other 51% for the guy from Mexico. That dropped me from 100% of the company to 16%, but I was shark bait,
and there was no way I could resist.
When we showed up in Mexico City, and as we were ushered into an office, Max (the Money Man) came rushing by, and announced that his brother
had just had a heart problem in Houston and Max was leaving on his jet to go there now, but that he had about 20
minutes to learn about this new business he had heard about. This was devastating! I was told that I would have
meetings over 4 days to go into detail about this fantastic, global business that would soon change the world.
Instead of 4 days, I had 20 minutes. I talked like a man possessed of his subject, passionate and knowledgeable,
and as convincinly as one who had kissed the Blarney stone. At the end of 20 minutes, Max makes a move to get up, and I go in for the
close immediately, extending my hand: "So, Max, partners?" He shook my hand and we had a deal. PAL would live again. But the
adventure would become very strange indeed.
Max poured a ton of money into the business, and we learned a lot along the way.
For example: when people can anonymously request anything they can think of, just by keying it in on their
telephone, what would you expect would be the top two things they want? Did you say Food and Sex?
Well, to be more specific, it is Pizza and Topless Bars. Can you imagine the kind of demographic information
we could gather, by Zip Code? It was fantastic!
But even the best business idea the world has ever seen (am I being a bit un-humble here?) can still go
horribly awry. A successful business needs a lot more than a great idea. And I learned that lesson
the hard way...
Instead of going into some of the gory details of the devolution of PAL into nothingness,
let's simply say that it devolved. From that same nothingness sprang the vision of what became, 15 years later,
what we now call the internet, and Google, and Amazon, and Match.com and Electronic Voting, and Mapquest and more...
After PAL came a period of about a year of feeling sorry for myself, and wondering "why me?", and
generally being depressed about the vanishing of my dream.
I was living on my credit cards, and eventually they hit the wall,
and then the bill collectors started calling and that's when I realized that I had hit
the wall. I filed for personal bankruptcy March 17, 1983 and Started Over from scratch.
It took a lot of energy to focus on coming back from total destruction.
The only good thing is that there is nowhere to go but Up.
Things have to get better, by definition.
After PAL came the
After I sold the TeleMagic software company,
Air Mikie Biplane Rides didn't last long.
It was when I got to college that the entrepreneurial adventures really began. As a new freshman,
living away from home for the first time, and off campus, I was truly on my own and my creative
juices really bubbled up. My first money making adventure was to create a desk blotter, about
24"x36", for every student in school. On this blotter I sold advertising space to the local
merchants, and distributed the blotters free to every student's desk. For the students it was
a handy reference with phone numbers and addresses. For the merchants it was a great way to keep
their ad in front of the students all the time. The merchants loved it and I sold out the spaces
on the blotter very quickly. I remember the number $600 as my profit on the deal. It was a couple
of weeks after this coup that the chairman of the yearbook advertising committee visited me, accusing
me of using deceptive business practices in getting the ads, telling merchants that it was a school
sponsored business. It wasn't true of course, he was just miffed because I had beaten his people
to the merchants, and when they were hit twice in short succession for advertising, they all said
"Hey, your man McCafferty was just here last week!" A minor misunderstanding, of course, but it
would set the stage for further legends to follow.
The Blotter Caper
After the great Blotter Caper, I branched out into interstate commerce, using direct mail.
It occurred to me that there were about 700 students at school who would have birthdays away from
their families, and that I could sell birthday cakes to parents who would naturally want to do
something special for their son so far away from home on his birthday. To do the direct mail piece,
I bought writing paper and envelopes at the college bookstore, with the school name and logo, and
had printed on the writing paper a standard presentation of the heart-rending case of their child
being lonely on his birthday, and that there were 3 sizes of cakes available, with custom messages
possible in the frosting. It went over very, very well, and I got to deliver and eat a lot of cake.
The Birthday Cake Caper
My classes were all business oriented. Accounting, Economics, Business Law, etc, with a little bit of
Fine Arts, Logic, Cosmology and fun stuff thrown in. It helped in my business pursuits in later
life, but my school days business adventures were much more experiential.
The Bookie Caper
The Purple Onion (named after the original beatnik coffeehouse in San Francisco) was a caper
that will long be remembered. There was a drugstore which went out
of business, leaving a most intriguing empty store in a prime location in the center of town. It
just screamed out to me to figure out something to do with it. It came to me that what this little
college town needed more than anything was a nice, wholesome environment where I could meet girls!
And that empty store was going to be the place. Of course, it couldn't be empty, it had to be a
place that pretty girls would want to go to, and that meant entertainment and food, and guys. Since my
school was guys-only, all I had to do was figure out the entertainment and food. This was my first
lesson in "strategic alliances". We got all the refrigeration equipment, freezers, soda dispensing
equipment, coolers, etc from the suppliers of the food and drinks, for no money up front, simply
because we would be buying product from them. You just gotta love it! But this adventure needed
some big bucks to get started, and I needed help with the labor, so I took on two partners,
John McKee and Gabe Roscoe, and we each
put up 50 bucks. And so for a total of $150 we started the Purple Onion, the hottest thing to
hit that town in a long time.
The Purple Onion Caper
Fast Mikie
(family and work are incompatible with shooting serious pool)
I have taken up the game again.
The big difference this time around is that I do not gamble.
It's probably a result of my awareness of the Law of Karma.
Click here to visit my pool page.
The entrepreneur is essentially a visualizer and an actualizer...
He can visualize something, and when he visualizes it
he sees exactly how to make it happen.
Robert L. Schwartz
When it finally came time to graduate from college, there was this natural expectation that we
would all get a "job". And that meant working for somebody else in a corporation, law firm,
accounting practice, or some other large, structured conservative business endeavor. This kind
of thinking had no appeal whatsoever. I wanted to work for myself. And I wanted to be where the
money was. I've always been a rather independent thinker, and did my share of checking around and
decided that the perfect "job" for me was as an insurance salesman. No limit on earnings,
flexible hours, get paid commissions for the life of the customer for selling just once. Perfect.
I interviewed and got offers from several companies. They just needed a pulse, but I was being
very selective. I chose an insurance company operating out of Harrisburg, PA. My life was set.
The Great IBM Caper
After final exam results were posted, which I passed (but just barely), I was informed
that I would NOT be graduating with my class. Something to do with over cutting a class. I knew
it was a technical foul, and they got me fair and square, but it shouldn't be so serious that it
would keep me from the fulfillment of my 4 years of, um, work... ("being there" would be
more accurate). Anyway, they should really be happy to see me go! I was a pain they endured
for 4 years, they surely wanted to see me go. But no. They were adamant. Actually, it was
just one man who was calling the shot. The Dean of Men. The Emperor, Father Fives.
His word was Law. There
was no appeal. I met with him privately and he left absolutely no doubt that I would not
graduate, telling me to not even bother to show up for the graduation ceremony
because my name will not be called,
I will receive no document, and that is all there is to it. Period. Go away.
The Miracle of my Graduation from College
IBM: The Path of True Enlightenment
After 3 years with IBM, I was ready to go out on my own. Actually I was dying to get out on my own.
The big brother of IBM was just a little oppressive for my spirit. My plan was to go into
business for myself, using the education I got at IBM. Instead of selling one computer to one company, I would
lease one computer and rent it for whatever I could get per hour. The key to this approach is to add value.
The EDP Adventure
In San Diego, I got into selling cars for a while, just for something different, not intended to be long term.
I followed up on an ad at Tipton Oldsmobile and they hired me on the spot. On my way home, I realized it was a long
commute, so I stopped by West Coast Imports which was a lot closer to home and sold neater cars (Fiats, Saabs and Lancias).
I told
the manager at West Coast that I had just got a job at Tipton, was supposed to start Monday, but that I would
prefer to work at West Coast. So they hired me on the spot. Jobs selling cars are easy to get.
Selling Cars
The car biz can wring you out. After more than a year of selling cars, I was getting
burned out with the scene. That's when I got a call from a name out of the past.
Dave Shefrin had been the owner/president
of a software company in Hartford, CT who supplied the Accounts Receivable software for the services
we offered on our computer at EDP. But the product didn't have a sales analysis subsystem, and that's what
really sold services was all the neat sales reports you could get. So I wrote the sales software myself in
a couple of days, making it a very generalized package that could do almost anything.
All parameter driven, it was really a report generator, and it worked like a charm.
I gave (as in no money) the software to Dave who then added it to his A/R package. It was
a big hit with his customers. It didn't matter to me that I never saw a dime from it
because I just wrote what was needed, and gave it to those who needed it.
There was no intention to gain from it. It was this spirit which I feel was the Karma behind Dave's call
to me which got the whole magical adventure going.
The PAL Adventure
No competition. A monopoly.
No receivables.
No physical inventory.
No employees. Run by computers.
No limits. Global, all people, all markets, round the clock.
Massively scalable. Rapid deployment.
Simple. Easy to use, easy to sell.
For Boldness has Genius, Power and Magic in it.
Begin it Now.
TeleMagic Adventure,
certainly the most financially rewarding to date.
Click here to read about the TeleMagic Adventure
I bought a magnificent open-cockpit biplane and started learning to fly.
I set up a company to give biplane rides up and down the beach,
and hired a pilot to handle the flying until I got my license.
(click for HUGE image)
The chief pilot completely demolished the biplane
when he landed with the parking brake on.
Luckily no customers were aboard, and he was unhurt.
I closed the business and decided to just enjoy flying by myself.
Click here to read the stories of my personal biplane adventures flying the USA and Europe.
That takes us up to The Landmark National Bank adventure,
which ended on October 25, 2006 when I resigned as a Director
so that I could focus full time on my Next Big Thing.
Click here for the full story of The Landmark National Bank Adventure
Nowadays I'm mostly retired,
but I do some mentoring of a few budding entrepreneurs,
and I shoot a lot of pool,
and write, and read, and hang out in my hammock by the sea,
while I plan my next adventures.
