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Published in U.S. 1 Newspaper on June 28, 2000. All rights reserved.
Glenn Paul: Following the Digital Market
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
"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
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
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
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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