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Published in U.S. 1 Newspaper on June 28, 2000. All rights reserved.

Glenn Paul: Following the Digital Market

E-mail: BarbaraFox@princetoninfo.com

Business school professors might label Glenn Paul a

"serial entrepreneur" because, one by one, he has opened and

closed a half-dozen businesses in the last 20 years. Saying that he

has always been in the computer business, Paul objects to the "serial"

label because, he notes, he has merely changed to stay current with

the industry.

"I’m in the computer business, and I look for places to add value,

but the market keeps changing," says Paul. "There was value

in hardware for a while and value in repair services for a while,

and software — for a while — will allow you to create value."

Paul grew up in Atlanta where his father was a sales manager and his

mother was a homemaker and a nurse. He earned an English degree from

Princeton University in 1979. At age 23, in 1981, when PCs were just

beginning to be popular, he partnered with investor Bob Clancy to

start Clancy Paul Computers and built it to be a more than $35 million

business in five years.

Like many computer retail businesses in the mid ’80s, Clancy Paul

needed capital, and so in 1988 Paul sold out to a national firm, ValCom,

getting a substantial chunk of ValCom stock and taking a salaried

job as regional president. Frustrated with corporate work, he left

ValCom two years later and ended up buying the original retail store

back from ValCom in 1991. "It’s more fun to do it your own way,"

he said then. "When you run your own business, you feel like you

are making a difference."

Until this year Clancy Paul Computers continued as Glenn Paul’s most

visible enterprise in the Princeton area. His investors at the time

of the repurchase were an unnamed silent partner and a working partner,

Dave Zboray, the president. "The business did very well for a

few years and was one of the fastest growing companies in New Jersey

again. At its peak it did $5 or $6 million."

In the late 1980s he made a non-technology related investment, a coffee

and dessert shop run by Rose Spera, owner of Pizza Star at the Princeton

Shopping Center. Paul was going to help her franchise it. "I had

been in Seattle and thought coffee houses were going to be very popular,

and they were. But somehow I ended up running the business, and on

the day the entire staff decided to go to the Grateful Dead concert,

I decided to close it," says Paul.

By May, 1993, Paul had another new business, Accelerated Systems Inc.,

which was not even listed in the telephone book when it was being

written up in Business Week and PC World. This new company had a design

for PCs with patented technology for an expansion slot (a "bus")

that guaranteed fast processing but would not get outdated. The company

traded as Lexar Systems, and Paul set up manufacturing and distribution

space in 7,000 square feet on South Gold Drive.

In addition to signing up distributors in New Jersey, Lexar had dealers

around the country. Because mail-order outlets were already undercutting

retailers, Paul tried to make it very easy for dealers and manufacturers

to sell his product "hassle free." His pledge involved time-limit

responses (three hours for a faxed quotation, 24-hour shipment on

single units, phone calls returned within 30 minutes) a 50 mile-radius

exclusive territory, and a promise of a Lexar representative for joint

calls on large accounts).

Lexar was practically a virtual company. It bought components (including

motherboards made in Austin by IBM) and assembled them in Robbinsville.

Dealers and manufacturers representatives composed the sales force.

Firms known as "floor planning companies" collected the receivables

for two percent per month. A national network of service companies

provided onsite service. It was an exciting venture, but risky, as

Paul knew then. "It has been very trying at times. But nothing

is more exciting than riding a new product," he said, and made

a prediction: "We are at 6 o’clock on the morning of the information

age. It hasn’t even started."

By that timeline, the hardware business was going to fall apart before

breakfast. In 1993 and 1994 Compaq thumbed its nose at the industry

and started making low-cost computers. Margins collapsed.

Paul also ran afoul of IBM. "We obtained licensing rights for

the patents for the multiple bus structure," says Paul, "but

it appeared to us that IBM — which was producing the equipment

— was advertising its own computer with the very same features.

We called them about it. They invited us to North Carolina, and they

brought out seven lawyers to say they did not think they were infringing

on our patent. Then I realize what patent protection affords you:

Very little, unless you are prepared to sue companies with far greater

resources."

So Paul turned from hardware to software, closing Lexar,

and concentrating on his new project, QwikQuote sales quotation

software. By 1995 he was going full speed ahead to develop QwikQuote,

which gives salespeople multiple databases, clickable product information,

and prices on demand.

Still, he had one foot in the retail business. In 1996 he expanded

the Clancy Paul stores by opening a branch in Trenton at the Roebling

Center. Customers could save money (paying half the usual amount of

sales tax on purchases and repairs) and do drive-up drop-offs for

service. If this worked, said Paul then, he would roll out a chain

of repair centers for PCs.

It did not work. "We had done a survey and lots of people said

they would come to Trenton to save three percent on sales tax, but

they didn’t," says Paul. He also discovered that people aren’t

willing to pay to have their computers repaired. They consider their

hardware to be disposable.

The year after Paul opened in Trenton, 1997, he downsized in Princeton,

shedding more than 3,000 square feet with a move from the middle of

the shopping center to a corner spot. In 1998 he closed the Trenton

store as well. But he still owned Clancy Paul stores in two locations

and QwikQuote Development. Even though Zboray had day-to-day supervision

of the stores, a bad week could find Paul up until 6 a.m. updating

databases for his computer stores on one morning and until 3 a.m.

writing manuals for his software the next morning.

Paul discovered that getting software to work means perfecting the

design and the testing and putting loads of sweat equity into the

documentation. "Over the years I have come to realize that every

time we change one thing we break another. Now we’re very careful

about getting the stuff out into the field. It’s really hard to make

good software; I thought it would be easier when I got into it,"

says Paul. "It gets to be something that’s a group endeavor that

you can’t really do in your basement anymore."

When Win Straube invested in the software and collaborated with Paul

on some hardware, Electronic Business Universe, a lobby kiosk that

could substitute for a receptionist, Paul moved both products into

2,000 feet at the Straube Center in Pennington.

QwikQuote, now going strong, has 15,000 users and is sold in 100

countries. A dealer in Germany has translated the website. "It’s

a niche market," says Paul. "Most of our customers use contact

programs, and we do the other products and services. Tim Heath is

running that as president, and I still control it; I funded that out

of my own pocket."

As prices dropped and mail order orders proliferated, the hardware

business continued to spiral downhill. Valcom had morphed into Inacom,

which filed for Chapter 11 bankruptcy on June 16.

Though one small computer store has opened at Quakerbridge Executive

Center, and Gateway has put a showroom on Nassau Street, two computer

stores have closed, those owned by S.T. Monforte on State Road and

Route 33.

Paul got out of the business last year. "We exited the Clancy

Paul business as gracefully as we could," says Paul, "We have

liquidated the remaining assets of Clancy Paul and are settling with

all of our creditors," he says. He sold the retail store at the

Princeton Shopping Center to Radhey Gupta, who he says "is doing

a nice job, and we are referring people to him." (See story, page

45.)

The troubled hardware industry was the driving force to create dotPhoto.

"I’m looking at this business, saying it does not have enough

upside for the level of investment we have in it, and asking how can

we create some value, how we can get involved in Internet projects,"

says Paul. His original silent partner and his Clancy Paul partner

Dave Zboray both have shares in dotPhoto. Zboray now works at a not-for-profit

former client, Mercer Street Friends. Paul anticipates that if dotPhoto

is successful some of the Clancy Paul creditors will benefit. "I

haven’t really had any troubles until this latest incarnation, and

I was personally guaranteeing some of the debt."

At the suggestion that he might have missed his chance to be Michael

Dell, the legendary entrepreneur who made his fortune on mail order

computers, Paul reminisces. "It’s funny you say that," says

Paul. "About 1987 I came back from Atlanta, and IBM had just introduced

the PS2, and it was going to kill everyone. Then I went to the Comdex

fair and noticed the price of components was incredibly cheap, and

that we could build it for half the price of IBM’s."

"But my executive committee said `These little mail order companies

will never go anywhere," says Paul. "Everyone was vociferous

about it, but many of those same people are working for the mail order

companies now. Just because you have an idea doesn’t mean you can

be Michael Dell."

— Barbara Fox


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