Terry Cunningham’s Adventures: Crystal and Coral8 (Part 3)

SM: Did you have the same business model approach with Microsoft as you had with Borland?

TC: Yes. We put some ‘nag ware’ in the product to check for updates. When you started Crystal Reports it said ‘Welcome to Crystal Reports, please register now or later’. This was pre-Internet, so if you had a modem it would dial into our bank of modems and register a name and address which would take the product away.

The Microsoft product manager saw the nag ware in the second-to-last release and said, “That is gone – it cannot be in this product!” Our response was no because that was our entire business model. We had a huge battle for about a week. He kept coming back with “Bill wants it out”, and we were answering with “Terry wants it in”.

We then asked for all the names of every registered VB user. They said no, but they would get us the chance to rent the list three times a year. I pushed back on that as well. To make a long story short, they said if we did not pull the nag ware they were going to pull the product from Visual Basic. That represented 10 months of development work. My developer, Greg, said, “They are not going to pull it. They are releasing to manufacture next Thursday. If they pull it they will be delayed six months. There is no way they are going to do that!” He convinced me, so I called back and told them it was staying in. They called back an hour later and said, “OK, but next release it is coming out and by the way, Bill is pissed!”

It stayed in, and the irony is that it stayed in forever. Now you look at Windows and there is that little thing called Registration Activation. It is standard now. We are proud to say we invented nag ware. The big deal is that it worked. We were doing zero-dollar, miniscule revenue and the company went from $2 million to $5 million, $15 million, $30 million, and just skyrocketed. It was all from that.

SM: You had bootstrapped the whole thing, right?

TC: I had borrowed some money from my dad. The shipping business was doing well so he was kind enough to lend me some money. He got all his money back plus interest plus more. In parallel I sold the company to Seagate. I paid him back about six months before we did that deal, but I had a million in debt spread over three years.

After the Microsoft deal, finances actually got worse for a time. The phone was ringing off the hook. There were payrolls and other issues to deal with and once we got that down then the company took off.

SM: You started consulting in 1983, which bootstrapped most of the business, and then brought your dad in. Was he in panic mode for about five years?

TC: That’s about right. He was going, “damn kids, what is this thing?”

SM: That makes for some very difficult dynamics.

TC: Very interesting family dinners. It all worked out fine and everybody loves each other, but during that time it was very stressful.

SM: Would you take money from your dad again?

TC: No.

SM: I have the same conclusion. I took money from my dad the first time. I paid him back, but there was a lot of tension during that time.

TC: You want to love your dad and you want your dad to love you. You don’t want to inject money stuff into that. I get to look back and say it worked out fine, but I often wonder what things would be like if it had not worked out OK.

SM: Unfortunately this is the situation that every first-time entrepreneur is faced with. No professional investor is going to invest in them. They have to go to friends and family.

TC: Sometimes it works out well and sometimes it doesn’t.

SM: Most of the time it doesn’t.

TC: My sister, in Vancouver, is involved with CAFE, which is Canadian Association of Family Enterprise. My other sister runs the family businesses office at the University of British Columbia. It brings up all the challenges of family businesses, and there are a lot of them. There are a lot of dysfunctional family relationships as a result of that. Her mandate in life is to help people realize that business and family can go together but you need to have ground rules. It is good to talk about issues as opposed to what most families do, which is to stop talking to each other.

This segment is part 3 in the series : Terry Cunningham’s Adventures: Crystal and Coral8
1 2 3 4 5 6 7