“It’s done wonders for my earning power,” he said from his offices at Merrill Lynch Leasing, Inc., where he was a $75,000-a-year assistant vice-president. “I got this job because I walked in and told them I could do a better job on an Apple.
“I didn’t own one at home at the time. But you can be sure that I bought one promptly and boned up on it for the next three weeks, and of course I’d done a lot of research on the Apple before then to make sure I could deliver on my promise.
“My previous company had refused to let me get one to improve operations there and do estate taxes. I had to do them by hand on a calculator. It took hours per client. And I got mad. Most people my age are afraid of computers, but I’d worked with word processors. And what are word processors but another kind of computer?”
So Scharf left his job as an estate tax planner with a staid old brokerage firm and set up shop at Merrill Lynch’s division dealing with real estate and equipment leasing.
It was a VisiCalc devotee’s dream job, one calling for quick, repetitive, accurate math in deals as big as $150 million. Merrill Lynch Leasing made bids to companies hungry for better cash flow. The leasing company (and rivals) offered to buy their headquarters buildings or other real estate, freeing the money for bigger factories or research and development. It was a series of leaseback arrangements. Merrill Lynch organized syndicates for the ultimate buyers—people or companies eager for tax shelters. And that meant more than a little numbers crunching.
Imagine the variables. The deals had to be sexy enough to the selling companies for Merrill Lynch to win the bids. At the same time, the tax shelters couldn’t leak. The deals must provide the buyers with the write-offs that the prospectuses from the leasing company promised. Ideally, too, they would yield maximum tax advantages on minimum investments. And for investments of different sizes and at different tax rates, just what would the various benefits be?
When Scharf reported for work, he found that the real estate department of the leasing company was on the verge of spending $200,000 a year tapping into an outside firm’s computer to come up with the right numbers. The big machine would have been able to do simple debt-amortization calculations. Scharf could have told a company, for instance, how long it would take to pay off a mortgage on a building for which Merrill Lynch proposed a leaseback. But that was only a small part of what the job needed. And what about the costs?
So Scharf instead used an Apple system costing less than $7,000, a one-time investment. The Apple couldn’t do all the calculations needed, but it could actually outperform the time-sharing system in some ways.
Consider simultaneous equations. The software on big machines—at least by way of the terminals at Merrill Lynch Leasing—just didn’t include them. But the Apple could simulate this capability. With the VisiCalc spreadsheet it could juggle around dozens of interrelated statistics, using nightmarishly elaborate algebra with Catch-22-like mathematical spirals. In other words, you wanted to know the value of x, and it depended on the value of y and z, and you couldn’t solve for y until you solved z, and you couldn’t solve for z until you knew x. That’s how it worked, except, quite possibly, Scharf and his staff would be wrestling with, say, a through k instead of just x through z.
Struggling with these Catch-22s, the Apple was a slowpoke by computer standards. It still took half an hour. That might seem like the Indy 500 to someone accustomed to hand calculations. But Scharf must have felt the same way I did about inferior word-processing software. However faster than without a computer, it still limited your possibilities. You didn’t have as much time to experiment with all your choices. And the more time Scharf had, the more closely he could consider all the variables and the more attractive could be Merrill Lynch’s leaseback bids. The Apple did its job. “We used it to compete successfully for work with a number of well-known clients,” Scharf said. “Anheuser Busch—we did their office building in St. Louis. We worked with Beneficial Corporation. We’ve done a number of K mart stores.”