Also, Andy Kay’s company at times hired people with unusual backgrounds. Clifford Odendhal, a musician-dancer-songwriter in his thirties, had come by way of COJO Wind, David Kay’s alternative energy firm. David asked Odendhal to help Non-Linear Systems catch up on back correspondence, leading to a customer-service job there. Eventually, Odendhal was helping with public relations. “This is the first job outside of entertainment that I have ever cared about beyond my paycheck,” he said.
Andy said of David, “He’s less cautious about hiring people than I am. If they don’t work out, he just lets them go.”
David, a six-foot-three-inch surfer with a degree in math and a hobby of collecting dictionaries, had himself started with the company several years before the birth of the Kaypro. Now he was vice-president for marketing, and when an investment banker asked Andy if David was a vice-president because he was Andy’s son or because he was the best man for the job, Andy replied: “Both.” He believed that David’s role in the development and marketing of the Kaypro “was extremely important. In thirty years I’ve never seen a man in marketing who measures up to one-tenth the dedication and performance he’s shown.”
Andy’s son used what the Wall Street Journal described as “idiosyncratic” marketing techniques. Dealers couldn’t sell Kaypros by mail. They didn’t enjoy extended credit. The Kaypro Division, in fact, did not even spend much at first on national advertising.
Examined closely, however, each policy seemed logical. Most customers couldn’t just walk out the door of their computer dealer and wave an eternal good-bye. Chances are that they’d be back for advice or repairs. So Kaypro wanted local dealers not to face competition from cutthroat mail-order houses that left the customer on his own.
Without a strong network of local stores, Kaypro might perish. Andy Kay appreciated this. “If a fellow does mail order and the contract says he can’t,” Kay said, “David cuts him off without a qualm. Maybe the dealer says we need him or he won’t be able to support his family and kids. Well, forget it. This is a business, but it’s also our livelihood, too.” Of course, not all mail-order establishments in the computer trade were unethical: I knew of some good ones. But from a manufacturer’s viewpoint the policy made sense. The Kays at the time wanted to befriend the independent dealers, who were less likely to flood the market with heavily discounted computers than the chains were.
However sympathetic to the independents, Kaypro didn’t follow the lead of some expansion-minded computer companies and grant extended credit—a sensible policy in this volatile business. A California chain folded, owing hundreds of thousands to Apple as well as customers. As to how he originally picked up many dealers, Andy Kay said, “The orders just started rolling in. Now we’re sort of clearing out dealers which are operating out of backs of cars or whatever.”
Kay was also benefiting by selling through his own network rather than being at the mercy of distributors—and supporting their profit margins.
By the summer of 1983, Kaypros were selling at some thousand dealerships. Christiansen observed that Kaypro gave dealers “30 or 40 percent margins. So does Osborne. That’s how they get the dealers to carry the damned things. You know, when you have fifty guys a week knocking on your door, you pick the one who’s going to put the most money in your pocket, and Osborne and Kaypro both know how to play this game as well as or better than anyone else. How do you think Kaypro went from nothing in 1982 to 100,000 units in 1983?” Kay disputed this. He said that the Kaypro’s quality sold the computers, that he hadn’t offered more than 25 percent dealer discounts, and never would; and his claim seemed creditable enough when some stores dropped the Kaypro because the markup wasn’t big enough. Whatever the facts, Kaypro in 1983 boasted sales offices in some fifteen U.S. cities and one in the Netherlands. One-third of the computer-store ads in the Washington Post business supplement of August 8, 1983, mentioned the Kaypro.
The limited national advertising was equally wise. Why not depend at first on local ads telling where people could buy the product? And what was the use of creating a demand for more computers than Kaypro could make? Andy Kay had learned from Osborne’s example. Adam Osborne’s splashy ads had helped create the market that the Kaypro was now enjoying.