Speaker 1: Welcome to Business on the Brink, a production from I
Speaker 1: Heart Radio and How Stuff Works. Commodore had the most
Speaker 1: popular computer of all time, yes, even against Apple and Microsoft,
Speaker 1: and later would upgrade to merge with another computer system,
Speaker 1: making them a double powerhouse. But the same strategy that
Speaker 1: made the brand sell so well was the same glitch
Speaker 1: in the system that would eventually lead to its crash.
Speaker 1: It's a calculated story full of crazy drama that sometimes
Speaker 1: might make you go, does not compute. So join us
Speaker 1: as we take a bite that's b y t e
Speaker 1: into the story of Commodore as a business on the brink. Hey,
Speaker 1: everybody on Jonathan's trick Wine and I'm arial casting and
Speaker 1: this is a sea guestion by a listener, Crystal vander Least.
Speaker 1: Thank you, Crystal, Yeah, thank you. I appreciate it because
Speaker 1: it's right in my wheelhouse. Well, it may not be
Speaker 1: in my wheelhouse, but I owned both Commodore's and Amigos,
Speaker 1: which is the other commuter we're gonna be talking about. Yeah,
Speaker 1: you're ahead of me. I never had an Amiga. I
Speaker 1: never had a Commodore either. I had a Texas Instrument
Speaker 1: trash e D. But I never had a Commodore. I'm sorry.
Speaker 1: The Commodore sixty four for it today was a really
Speaker 1: good computer. Yeah, we're gonna talk a lot about that
Speaker 1: because obviously it's a big important part of this story,
Speaker 1: and one of the things we really wanted to focus
Speaker 1: on was the way this company actually had its fall
Speaker 1: from grace, which means we're gonna go real light on
Speaker 1: the history part so that we can get to the
Speaker 1: juicy bits. But it is important to know where the
Speaker 1: company came from in order for us to understand what happened. Yeah, So,
Speaker 1: to begin with, Commodore International was founded by Jack Trammel
Speaker 1: in Eno as Commodore Business Machines Incorporated. He was an immigrant.
Speaker 1: He had actually survived Auschwitz and then after trying a
Speaker 1: few jobs in New York, whence he moved to New York,
Speaker 1: he moved to Canada and started manufacturing typewriters. Yeah, he
Speaker 1: actually got some money from a g I bill in
Speaker 1: order to fund that. And some other things we should
Speaker 1: know about Trammel that will become very important throughout this
Speaker 1: episode is that he was I wrote the line fiercely competitive,
Speaker 1: but I don't feel that truly captures the spirit. Do
Speaker 1: you think it's too mild description. I mean, he he
Speaker 1: literally was one of the entrepreneurs who said business is war.
Speaker 1: That's like a direct quote from Trammel. He said that
Speaker 1: when you go to business, you're not You're not just
Speaker 1: there to make money. You are there to declare war
Speaker 1: against all your competitors, and your goal has to be
Speaker 1: to win. I mean, a little bit of that attitude
Speaker 1: can maybe be healthy, but not entirely. You're you're missing
Speaker 1: out on key components of what made people like Pany. Yeah,
Speaker 1: and there's going to be some discussion about his leadership style,
Speaker 1: which obviously rubbed some people the wrong way. But at
Speaker 1: the same time he was considered truly a visionary in
Speaker 1: that he really believed strongly in innovation and trying to
Speaker 1: take the lead in the industry. So it's kind of
Speaker 1: a double edged sword. Trammel. Yeah, but we're not there
Speaker 1: yet because as markets changed and the typewriter business got
Speaker 1: too competitive and two fears and not that he was
Speaker 1: scared from it, but he moved from typewriters to adding machines. Yeah.
Speaker 1: So what was going on was that the Japanese markets
Speaker 1: were starting to create typewriters. This was right around the
Speaker 1: time where Japan was starting to evolve into a technology
Speaker 1: and manufacturing powerhouse. So this is you know, the immediate
Speaker 1: post World War two was about Japan kind of re
Speaker 1: establishing itself and then it sort of went full on
Speaker 1: into this manufacturing phase. And the problem was they were
Speaker 1: able to make the same stuff that Commodore was making,
Speaker 1: but make it less expensive, so it was very hard
Speaker 1: to compete. And by that we mean typewriters, not computers. Yes,
Speaker 1: so we're not there yet. After adding machines, he moved
Speaker 1: to calculators and during that time he incorporated which was
Speaker 1: in and he went public on the New York Stock
Speaker 1: Exchange in nineteen sixty two under the name Commodore International Limited. Yes,
Speaker 1: and shortly after that the company wasn't a bit of
Speaker 1: a rough patch. It was finding itself short of cash.
Speaker 1: And so one thing that Commodore ended up doing was
Speaker 1: selling a significant number of shares to a Canadian businessman
Speaker 1: named Irving Gould, and Gould would actually do that again.
Speaker 1: He would ultimately invest about three and a half million
Speaker 1: dollars into the company and then as a result he
Speaker 1: became a major shareholder in Commodore and decision maker. Yes,
Speaker 1: he would actually end up becoming the chairman of the board. Yes,
Speaker 1: but before then, when Commodore was working in calculators, they
Speaker 1: were actually known for being a calculator manufacturer. They lost
Speaker 1: their supplier for the chips that go in the calculator
Speaker 1: and uh, Texas Instruments, and they actually Texas Instruments actually
Speaker 1: decided to sell calculators directly. Right, So now Texas instrument
Speaker 1: is making the competing product and it's taken away the
Speaker 1: source of chips that were powering the Commodore calculators. Yeah,
Speaker 1: so Commodore found other resources for chips and eventually bought
Speaker 1: MS Technology, which was a chip manufacturer, and assimilated their
Speaker 1: chip designer, Chuck Pedal. And this is important because it's
Speaker 1: Chuck who convinced Trammel and Commodore to start looking towards
Speaker 1: computers instead of calculators, and specifically home computers, because at
Speaker 1: this point in time, computers are mainly for business. Yeah.
Speaker 1: In fact, up to the mid nineteen seventies, you were
Speaker 1: not likely to find a computer unless you were either
Speaker 1: in like a scientific or research laboratory, or if you
Speaker 1: were working in a really big business something like a
Speaker 1: bank or you know, some other fine ancial institution something
Speaker 1: that had to crunch a lot of numbers, because up
Speaker 1: to that point computers were pretty big. They were like
Speaker 1: the size of a desk, and we're just getting to
Speaker 1: the phase where computers could be miniaturized enough to be
Speaker 1: a desktop computer. And even then you had hobbyists who
Speaker 1: were interested in building their own computers, and you had
Speaker 1: computer kits that were coming out, but there weren't very
Speaker 1: many PCs that were being built and sold as a
Speaker 1: full product. Right, this is the very dawn of that age.
Speaker 1: So this is where we see pet Old say to Trammel, like,
Speaker 1: this is a market that's going to explode, and we
Speaker 1: can get in on the ground floor, and they did so.
Speaker 1: In nine Commodore International Limiteds moved their headquarters to Pennsylvania,
Speaker 1: and then a year later they came out with our
Speaker 1: first computer, which was the Commodore PET Personal Electronic Transactor,
Speaker 1: the PET, the PET, and by the turn of the
Speaker 1: decade it was one of the top three computer companies.
Speaker 1: Commodore was at least among micro computers or home computers.
Speaker 1: Yeah yeah, yeah, Because I mean again, this was like
Speaker 1: the early days. You did see a lot of companies
Speaker 1: attempt to get into this market. The ones we tend
Speaker 1: to remember really from this era would be Apple because
Speaker 1: the IBM PC would come a little bit later, and
Speaker 1: kind of radio Shock, Yeah, and Texas instruments to a
Speaker 1: to an extent. If you if you were around back then,
Speaker 1: you might remember them. But if you were, say, born
Speaker 1: after I don't know, five, then maybe you don't remember
Speaker 1: these other computers. Um. So let's let's talk about what
Speaker 1: was going on with this. Because they launched the PET.
Speaker 1: The PET was not a runaway success for Commodore. No, no, Um,
Speaker 1: they were. They were one of the top three computer companies,
Speaker 1: but they didn't have a good marketing plan or good
Speaker 1: tech support. And you know, computer home computers are a
Speaker 1: new thing that are going to be bugs. Yeah, and
Speaker 1: if another company is known for being more responsive, uh
Speaker 1: and providing better support than they're going to start looking favorable. Yeah.
Speaker 1: So a year and a half later, Commodore dropped in
Speaker 1: the ranks of computers pretty hard. Um. They did course
Speaker 1: correct and we got the VIC twenty Yes, which was
Speaker 1: incredibly successful. Yeah, one of the first personal computers to
Speaker 1: hit one million units sold. Yeah, they they hold the
Speaker 1: record for that, Like Commodore hit that benchmark before any
Speaker 1: the Apple too did not sell a million units before
Speaker 1: the and then we got, more importantly to me, the
Speaker 1: Commodore sixty four. That was my first computer that I remember. Um.
Speaker 1: I came out in eighty two when I was born.
Speaker 1: That written knows my age now, but you know, I
Speaker 1: remember owning it. I remember playing Sticky Bear and Space
Speaker 1: Taxi and Kuala Pad and whole position. And I'm going
Speaker 1: to stop now. Um. Yeah. And one of the things
Speaker 1: that really set the Commodore sixty for apart was that
Speaker 1: not just that it was a very good personal computer,
Speaker 1: at least according to Arial's memory. I never got to
Speaker 1: use one, so I'm just basing this upon her ardent
Speaker 1: support in the notes, and yeah, I put down hashtag
Speaker 1: bias not bias. Yes, the fact that you drew little
Speaker 1: hearts and puppy dogs people. I'm sorry, I'm sorry. Anyway,
Speaker 1: they were both the VIC twenty and the the Commodore
Speaker 1: sixty four. We're both priced incredibly competitively. So the VIC
Speaker 1: twenty came out, it was priced or initially at three
Speaker 1: hundred dollars, actually less than three hundred dollars. That's Incredible's
Speaker 1: like then you had the Commodore sixty four. It started
Speaker 1: at five dollars, and then they got into kind of
Speaker 1: a price war with the other computers that were on
Speaker 1: the market. So before long the Commodore sixty four is
Speaker 1: price dropped and dropped and dropped until it hit about
Speaker 1: one dollars for new Commodore sixty which is ridiculous for computer. Yeah,
Speaker 1: it also probably meant that they were barely making any profit,
Speaker 1: if any at all, because the profit margins are pretty
Speaker 1: thin when you get down to that level. But this
Speaker 1: was Trammel's philosophy of business is war, and it meant that, yeah,
Speaker 1: we might not be making as much per sale, but
Speaker 1: we are totally the sales. Yeah, we're getting the sales.
Speaker 1: We're given the screw to all those other companies out there,
Speaker 1: take that apple. Yeah, they did beat out the t
Speaker 1: S from Radio, checking price, the t I from Texas Instruments,
Speaker 1: and Atari, who was one of their fiercest competitors, and
Speaker 1: weren't going to get into that. And just a little
Speaker 1: bit Yeah that this story gets so juicy, It gets
Speaker 1: so so fun is the wrong word. It's interesting? Interesting, Yes, fascinating.
Speaker 1: So Trammel, like I said, was said to be difficult
Speaker 1: to work for. There were stories about him firing entire
Speaker 1: management teams if things weren't going well, if you felt
Speaker 1: that they weren't weren't doing their job. And he was
Speaker 1: also known to really kind of leverage different suppliers against
Speaker 1: each other and try to make them dependent upon Commodore
Speaker 1: so that they wouldn't work with anybody else. He was
Speaker 1: also litigious. He would bring lawsuits against other companies, sometimes
Speaker 1: not even with the intent of winning a lawsuit, but
Speaker 1: rather just to slow down his his his competition so
Speaker 1: that they couldn't beat him to market um. He was
Speaker 1: also known to occasionally pull a fast one on retailers.
Speaker 1: One of the stories I read was that he signed
Speaker 1: a deal with Kmart to sell the VIC twenty at
Speaker 1: a price that was actually lower than the wholesale price
Speaker 1: he was offering to a computer retailer called computer Land. So,
Speaker 1: in other words, computer Land was having to spend more
Speaker 1: to purchase a computer from Commodore sixty four in order
Speaker 1: to sell it off at a markup than Kmart was
Speaker 1: even selling the Commodore sixty four in the first place.
Speaker 1: And so of course you can't keep that up for
Speaker 1: very along the computer Land said CIA. It seems like
Speaker 1: he was shooting himself in the foot, not building goodwill
Speaker 1: with the people who would sell his product, especially as
Speaker 1: you're getting all of these competitors. That being said, they
Speaker 1: did sell one billion dollars worth of computers by and
Speaker 1: the Commodo sixty four, as we said in the intro,
Speaker 1: is the most popular computer system ever sold. Yeah, so
Speaker 1: you might think, well, how the heck could accompany that's
Speaker 1: dominating the personal computer industry, one that has has got
Speaker 1: all of the firsts, like the first to hit a
Speaker 1: million units, sold a billion dollars in sales. How could
Speaker 1: this company end up faltering? How isn't it too big
Speaker 1: to fail? I mean no, but we'll talk about that
Speaker 1: right after this break. Al Right, So, like you said,
Speaker 1: Commodore was selling really well, out selling all of the competitors,
Speaker 1: but all of the price cutting that Trammel is doing.
Speaker 1: The suits were not happy with it, Yeah, because it
Speaker 1: meant that you had very low profits. I mean, yes,
Speaker 1: you had incredible revenue, but very low profits because that
Speaker 1: margin was so razor thin. And Irving Gould particularly objected
Speaker 1: to this. He had been the guy who had, at
Speaker 1: least in his own eyes, rescued Commodore from certain disaster.
Speaker 1: By investing so much money. And so there was this
Speaker 1: fundamental disagreement between Trammel, who was saying, let's take no
Speaker 1: prisoners in march into war and defeat our enemies, and Gould,
Speaker 1: who was saying, let's not, you know, end up making
Speaker 1: being number one at the expense of profit. And eventually
Speaker 1: you get to this fundamental disagreement where Gould felt that
Speaker 1: Trammel had led the company to a billion dollars in
Speaker 1: sales but would not be able to grow it. They're
Speaker 1: up to ten billion in sales, in other words, not
Speaker 1: if he kept cutting prices, yeah, it wasn't Or or
Speaker 1: if you did ten billion in sales, it wouldn't matter
Speaker 1: because you were selling it for less than what it
Speaker 1: costs to make it and you're just losing money anyway.
Speaker 1: It's reckless thinking. Yeah. So there have been a lot
Speaker 1: of arguments on both sides about the fact that one
Speaker 1: side is wrong or the other side's wrong. A lot
Speaker 1: of people have said both sides were kind of wrong
Speaker 1: and that there were there were legitimate points on either
Speaker 1: point of view, but they were also legitimate shortcomings on
Speaker 1: both sides. The bottom line here is that you have
Speaker 1: these spoort of directors who have decided that Trammel can't
Speaker 1: stay in charge, he's got to go. And of course
Speaker 1: he was the founder of the company, and so there's
Speaker 1: a story about the board meaning making their decision and
Speaker 1: giving Trammel the boot, and the way the story goes
Speaker 1: is that it happened pretty darn publicly. So there are
Speaker 1: other rumors about how Trammel was bringing his sons on.
Speaker 1: That wasn't a rumor that actually did happen. He had
Speaker 1: three sons and they had joined the company. But whether
Speaker 1: he was doing it to gain more political footing over Gold,
Speaker 1: that's that's another question. Yeah, whether or not that was
Speaker 1: an actual concern or if that was just a perception
Speaker 1: on the part of Gould. But by the end of
Speaker 1: nineteen eighty three or the beginning of nineteen eighty four,
Speaker 1: right around there is when the board of directors decided
Speaker 1: that Trammel had to go. He had to he had
Speaker 1: to be forced out of the role of CEO of
Speaker 1: the company. And uh, there's a whole story about him
Speaker 1: being at c e S nineteen eighty four, which happens
Speaker 1: in January every year, and that while he was there,
Speaker 1: he gave a presentation and you know, he had all
Speaker 1: these great things to say about Commodore in the sense
Speaker 1: that they had a billion dollars in sales, that's a
Speaker 1: huge thing, but that he was visibly unhappy while giving
Speaker 1: the presentation, And so the story goes that he had
Speaker 1: already he knew he was on his way out, but
Speaker 1: then had to still go forward and give this presentation
Speaker 1: in front of the public, and then essentially a week later,
Speaker 1: the actual announcement of his departure became public news. Yeah,
Speaker 1: Commodore hired a steel guy named Marshall F. Smith to
Speaker 1: run the company, and Trammel took his ball if ball
Speaker 1: equals a bunch of engineers and started another company, Trammel Technologies,
Speaker 1: and then he bought Atari's consumer division, creating Atari Corp. Uh,
Speaker 1: the parent company of Atari. Warner Communications only wanted the
Speaker 1: video game side of Atari, which is what most people
Speaker 1: are familiar with. Right. We will have to do a
Speaker 1: full episode on Atari at some point. That's a very
Speaker 1: complicated story because, as you see right here, the company
Speaker 1: of Atari had been split into two. You had the
Speaker 1: video game side of it that remained with Warner, and
Speaker 1: then you had the personal computer side, which went to
Speaker 1: Trammel uh. And it's also interesting that we see how Trammel,
Speaker 1: who had built Commodore up, was now determined to take
Speaker 1: it down because of this betrayal. He was ready to
Speaker 1: go to war against the very company that he had founded. Well,
Speaker 1: Commodore it was kind of on the same track because
Speaker 1: they bought a small computer company named Amiga million dollars
Speaker 1: and this gets so juice. Yes, all right, so Amiga
Speaker 1: had been trying to launch a personal computer, uh for
Speaker 1: a bit. It had multiple failed attempts over the few
Speaker 1: years leading up to their acquisition, mainly from the revenue
Speaker 1: side of thinks, some from the development side, but a
Speaker 1: lot of it was revenue based, and we're about to
Speaker 1: get into that. And the merge companies became Commodore Amiga.
Speaker 1: But the problem is is that Amiga an Atari, before
Speaker 1: being bought by Arrivals, were working together. Yeah, so you
Speaker 1: had Amiga and Atari working on a project because the
Speaker 1: initial idea was to build a personal computer. But then
Speaker 1: the guy who really was the driving force behind the
Speaker 1: Amiga found a lot of resistance to the idea of
Speaker 1: building a personal computer, but there was a lot of
Speaker 1: reception to build a video game system. So then he
Speaker 1: switches gears, and he's he's still really building a personal computer,
Speaker 1: but building a personal computer that's being marketed as a
Speaker 1: video game. But he's getting a lot of pushback for
Speaker 1: all of the personal computer type things he wants to
Speaker 1: add to it. Yes, and then you had the infamous
Speaker 1: video game crash of nineteen eighty three Slash four, And
Speaker 1: now suddenly the there's no market to sell video game
Speaker 1: consoles anymore in North America. So now Atari is totally
Speaker 1: flipping out and like, oh no, no, no, we should
Speaker 1: turn this into a personal computer, which was what the
Speaker 1: plan was from the first place. Yes, but now their
Speaker 1: revenue was gone, and you had this complicated rivalry that
Speaker 1: was really messing things up because you had this agreement
Speaker 1: between Atari and Amiga. Then Atari gets taken over by
Speaker 1: a former Commodore UH founder and leader, and then Amiga
Speaker 1: gets taken over by Commodore, so it became a very
Speaker 1: um let's say, awkward business relationship. Well, Commodore tried to
Speaker 1: sue some of the engineers that left for Atari Corps
Speaker 1: from Commodore to keep them from releasing Amiga's ideas once
Speaker 1: they were working together. Tram Trammel counter suit because of
Speaker 1: Atari's contract with Amiga, there was a a loan that
Speaker 1: if it wasn't paid back, Atari would get Amiga's I
Speaker 1: p Yeah, So that was all coming to a head,
Speaker 1: right like, it looks like Amiga was not going to
Speaker 1: be able to pay back this loan. It looked like
Speaker 1: Amiga was going to completely get wrapped up into Atari.
Speaker 1: And then in swoops Commodore the essentially said hey, we'll
Speaker 1: pay that loan off for you. Trammel, who has to
Speaker 1: accept the payment for the loan, suddenly sees this prize
Speaker 1: that was going to be his swept away by the
Speaker 1: company that had spurned him. I told you against Juicy.
Speaker 1: Yeah yeah. But all this time, while these two companies
Speaker 1: are fighting it out, Apple, IBM and Microsoft start grabbing
Speaker 1: the market. Yes, so you have these two giants that
Speaker 1: are in a battle over Amiga, and meanwhile there's not
Speaker 1: a whole lot of progress being made on the product
Speaker 1: side of Amiga because all this all this corporate stuff
Speaker 1: has to get worked out, and so that gave plenty
Speaker 1: of opportunities for the other companies. This is the same
Speaker 1: time when Apple released its first Macintosh computer, the IBM
Speaker 1: personal computer was hitting the market. So now IBM was
Speaker 1: actually entering into the home market. Microsoft was playing every
Speaker 1: side against every other side and getting it software on
Speaker 1: anything and everything that was remotely a computer. And so
Speaker 1: this was this was a bad time for Amiga because
Speaker 1: that that design had a lot of merit. Yes, yes,
Speaker 1: did I owned it an Amiga two thousand, which is
Speaker 1: later on they were working on the Amiga one thousand
Speaker 1: at this point. But yeah, it was a computer way
Speaker 1: ahead of its time. And so not only were they
Speaker 1: suing each other to try to keep their competing products
Speaker 1: from going out before the other one, which you said
Speaker 1: Trammell did it was known for doing. Uh. Commodore at
Speaker 1: the same time, to try to get some money back
Speaker 1: from spending all of the money they did to buy Amiga,
Speaker 1: was releasing weird models of computers they were kind of
Speaker 1: competing with themselves, like the C sixteen. Yeah, they started
Speaker 1: releasing a bunch of Commodore branded computers that were very
Speaker 1: confusing to the market because even Commodore was not really
Speaker 1: good at explaining what the differences were between the different
Speaker 1: systems apart from their different price tags, and uh, some
Speaker 1: of them were kind of underpowered compared to a lot
Speaker 1: of the other stuff on the market, and because it
Speaker 1: seemed rather directionless, or at least in part because as
Speaker 1: it was rather directionless, there wasn't a lot of adoption,
Speaker 1: so there weren't a lot of people going on buying
Speaker 1: these systems. If you want to look into this stuff,
Speaker 1: we're not going to go into it because it gets
Speaker 1: really technical. But the Computer History Museum online has a
Speaker 1: ton of stuff about the different Commodore computers that came out,
Speaker 1: and you'll see that there was a lot of there's
Speaker 1: a lot of stuff out there that could confuse the
Speaker 1: average consumer who just wants to have a working personal computer.
Speaker 1: Yeah yeah, Um. By the time the Amigo one thousand
Speaker 1: was ready to hit the market, they didn't have the resources.
Speaker 1: During that time the st which was the Atari Computer
Speaker 1: came out, UM and Commodore Amigo once they finally did
Speaker 1: get the Amigo one thousand out, didn't really do a
Speaker 1: good job at marketing, and they were also late to
Speaker 1: the market, so they kind of missed the opening window
Speaker 1: for the holiday season that year. And then they decided
Speaker 1: not to put themselves on the same in the same
Speaker 1: stores like Sears. I think it was as as the
Speaker 1: Atari Computer it or and then they also had bugs. Yeah,
Speaker 1: the Amiga one thousand was known for having some shortcomings
Speaker 1: as far as that's concerned, Like where it shown, it
Speaker 1: outperformed all the other personal computers of that era. Yeah,
Speaker 1: and that was largely in the graphics and sound departments.
Speaker 1: Like I mean, not a big surprise. The Amiga had
Speaker 1: for a while been laser focused into being a video
Speaker 1: game machine, and now it no longer was quote unquote
Speaker 1: just a video game machine. But the things that a
Speaker 1: video game machine needs to do well, largely graphics and sound,
Speaker 1: the Amiga did better than any other personal computer. And
Speaker 1: I think that's a pretty solid statement you could make.
Speaker 1: I remember when I first saw an Amiga in action.
Speaker 1: I was because it was at the time when it
Speaker 1: was first was brand new, because that's how old I am.
Speaker 1: I remember being totally blown away because it's so left
Speaker 1: everything else I'd ever played or worked on behind. As
Speaker 1: far as that the graphics and sound working man, I
Speaker 1: loved it, uh, And they had one thing, so despite
Speaker 1: the marketing issues and the sales issues, they were easier
Speaker 1: to work with. A lot of people didn't want to
Speaker 1: work with Trammels, so he didn't get as much good
Speaker 1: software for his computer, and he had to price it
Speaker 1: lower than the Amiga because he didn't have as many
Speaker 1: cool bills and whistles, and the Amiga did outlast the
Speaker 1: st Yeah, so this was a case where Trammel's personality
Speaker 1: would end up being a drawback. You know, it's he
Speaker 1: he was very good at going up against competitors, but
Speaker 1: he alienated a lot of people along the way. So
Speaker 1: in this in this sense, Commodore was in a better position,
Speaker 1: but it seemed like it was a company that didn't
Speaker 1: know what to do with its star product, and that
Speaker 1: story is only going to get worse. But before we
Speaker 1: get into that, let's take another quick break. Okay, so
Speaker 1: we're in the Amiga era. It's nineteen eighty five. What
Speaker 1: happens next? Al Right? So in five, Mr Smith, who
Speaker 1: is the CEO of Commodore, also an agent who was
Speaker 1: going after Neo. Yes, he was really trying to make
Speaker 1: Commodore Amiga profitable again, so he kept payroll by nearly half. Wow,
Speaker 1: they had had losses of two dred and thirty seven
Speaker 1: million dollars that same year, so he was really just
Speaker 1: trying to pay off some of their debt and stay afloat.
Speaker 1: It seems like and then the next year they opted
Speaker 1: not to do the big electronic shows like c S
Speaker 1: that they usually showcased at again to save money and
Speaker 1: focus on development. But that the problem with is it
Speaker 1: creates a public perception that your company is not doing it. Yeah. Yeah,
Speaker 1: So then we got a management change. Oh yeah, don't
Speaker 1: just by the way, would become a common theme. Yes, Yes,
Speaker 1: so Smith stepped down and we got Thomas Radigan who
Speaker 1: took his place under a five year contracts. So it's
Speaker 1: important to note it was a five year contract. Yes.
Speaker 1: Radigan did three more rounds of layoffs and cut a
Speaker 1: bunch of old and underperforming product lines, right, some of
Speaker 1: those confusing Commodore machines we talked about in the last segment. Yes,
Speaker 1: and then he relocated the Amiga team, at least those
Speaker 1: who agreed to go from California to Pennsylvania. Yeah. The
Speaker 1: guy who was the the sort of the father of
Speaker 1: the Amiga J minor was not one of those people. Know,
Speaker 1: and these thing has worked. The company was profitable again.
Speaker 1: By the end of put people were not so happy. Yeah. Now,
Speaker 1: Ratigan really wanted to to kind of put some of
Speaker 1: Commodore's marketing power behind the Amiga. He really believed in
Speaker 1: that being a possible way to stand out among the
Speaker 1: field of personal computers that were starting to proliferate in
Speaker 1: the mid eighties. Um And he also kind of oversaw
Speaker 1: the the creation of two different lines of Amiga computers.
Speaker 1: So you had sort of the low end and in
Speaker 1: the upper end, which is not that unusual. We see
Speaker 1: that all the time today in personal computers right now.
Speaker 1: Back in the early early days, like the Apple Too.
Speaker 1: When the Apple two came out, it was just the
Speaker 1: Apple Too. You would eventually get things like the Apple
Speaker 1: to E and the Apple two G and things like that,
Speaker 1: but early on, if you went out to get a
Speaker 1: computer you got there was just one of each brand.
Speaker 1: This was sort of the birth of, or at least
Speaker 1: an early example of having the low end and the
Speaker 1: high end of the same computer family. Yes, and the
Speaker 1: high end was the Amega, the one that you owned,
Speaker 1: the one that I owned that I love so much,
Speaker 1: so much, uh, and then the one for casual use,
Speaker 1: the lower end one, the Amiga five. Now, they made
Speaker 1: a very odd decision when they were building these Amiga
Speaker 1: is right, they did. Rodigan decided not to put the
Speaker 1: Amiga developer team on either project. So they had non
Speaker 1: Amiga team people building the next generation of a Mega machines.
Speaker 1: Meanwhile the Amiga team people are working on other projects. Yeah, well,
Speaker 1: or just sitting around being upset that they're on the
Speaker 1: design team for the either way. Either way, they were upset.
Speaker 1: On top of that, both of these computers their development
Speaker 1: experienced delays and so they still were not coming out.
Speaker 1: They weren't meeting their goals for release, and Irving gold
Speaker 1: Yep saying hey, I had expectations they are not being met.
Speaker 1: So what is his solution to this problem? Well, he
Speaker 1: hires a consultant to look at the company and suggest changes. Yeah.
Speaker 1: I used to work for consultants. I knew exactly what
Speaker 1: they do. So what did they do? They say, Hey,
Speaker 1: you need to fire the dude who's in charge. Yes,
Speaker 1: that's what consultants do. We call them the bobs. It's
Speaker 1: an office space reference. Yeah. So here's the problem. You
Speaker 1: remember what we mentioned about Ratigan and just a couple
Speaker 1: of minutes ago. Yeah, he had a five year contract. Yeah,
Speaker 1: we're not five years into that. So getting rid of
Speaker 1: somebody who has a contract that says he's going to
Speaker 1: hold this position for a minimum of five years. You
Speaker 1: get into some sticky situations, specifically lawsuits and countersuits for
Speaker 1: breach of contract and in one nine million dollars and
Speaker 1: unpaid wages. And then gold took over Commodore Amiga for
Speaker 1: a while. Yeah, he became the interim CEO, so he's
Speaker 1: chairman and interim CEO. Uh, the five hundred and the
Speaker 1: two thousand Amiga's would come out in which you know,
Speaker 1: they came out. They were great computers. But part of
Speaker 1: the problem was that all those delays meant that it
Speaker 1: was harder for Commodore to capitalize on their launch because
Speaker 1: while they were being developed, other computers were still advancing
Speaker 1: and evolving. I still would argue that no one was
Speaker 1: coming close to the graphics and sound. I would agree,
Speaker 1: but you also have to figure since this is such
Speaker 1: a new area for consumers, they don't understand why they
Speaker 1: might need new, better graphics and sound in a personal
Speaker 1: computer as opposed to a gaming console. And it also
Speaker 1: didn't help that they couldn't run the same software as
Speaker 1: other computers. And so these other computers that have been
Speaker 1: on the market for a while and it really established themselves.
Speaker 1: You had software developers who were dedicating themselves to making
Speaker 1: stuff either for the PC or for the Apple the
Speaker 1: Macintosh line. It's very hard for a developer to devote
Speaker 1: assets to making different versions of the same program for
Speaker 1: every single computer platform. So Amiga did not have the
Speaker 1: software support. Had a lot of video game support, but
Speaker 1: not a lot of software support. Uh. Then we get
Speaker 1: a new CEO in uh Mehdi Ali, who was someone
Speaker 1: who had worked for Commodore for just three years. You've
Speaker 1: only been there since nineteen six before Gould tapped him
Speaker 1: to be the new CEO, and um he is to
Speaker 1: call him a controversial figure at Commodore is putting it mildly. Uh.
Speaker 1: There were employees who outright hated Ali so much so
Speaker 1: that there is a documentary shot. I'm not even documentary,
Speaker 1: it was it was like home movies shot by a
Speaker 1: former chief engineer over at Commodore, where in part of
Speaker 1: the video they burn Ali in effigy, and that the
Speaker 1: things things did not go well as you imagine. There
Speaker 1: were a lot of complaints that Ali was a very
Speaker 1: highly compensated CEO, something like two million dollars a year,
Speaker 1: which was just you know, a much much larger salary
Speaker 1: than what the engineers were making and meanwhile, he didn't
Speaker 1: seem to have a vision that would lead Commodore to success.
Speaker 1: So people said that it was a terrible case of
Speaker 1: mismanagement and that the executive team was more interested in
Speaker 1: pocketing profits than using the money to reinvest in the company.
Speaker 1: In fact, one of the things Ali did that drew
Speaker 1: a lot of criticism from employees was he slashed the
Speaker 1: budget for research and development, So it's this is a
Speaker 1: computer company. Taking away their R and D meant that
Speaker 1: they could no longer be leaders and innovation well, and
Speaker 1: it killed them. By only UK and Germany were had
Speaker 1: successful branches of Commodore, or rather branches that were profitable,
Speaker 1: and on April twenty nine, Commodore filed for bankruptcy and
Speaker 1: transferred their remaining assets to trustees to pay off their creditors. Yeah,
Speaker 1: they essentially went into liquidation. So, uh, first you had
Speaker 1: part of Commodore, the UK branch, attempt to purchase Commodore International,
Speaker 1: but they themselves weren't really in a great position to
Speaker 1: do that. Yeah, once a parent company goes under, then
Speaker 1: they're just basically trying. They're they're holding on by selling
Speaker 1: off old inventory. So they liquidated. And then you had
Speaker 1: another company come in in ninety five and they buy
Speaker 1: Commodore International for just fourteen million dollars. This is the
Speaker 1: same company that made a billion dollars in sales of
Speaker 1: a of a successful PC. Well in Commodore bought a
Speaker 1: Mega for twenty four millions. So yeah, now you have
Speaker 1: the combined Commodore Amiga companies sold for less money than
Speaker 1: than common to respect for just Amiga. Well, this new
Speaker 1: companys com They split Commodore and Amiga, make them two
Speaker 1: separate companies again, and they try to grow Commodore really
Speaker 1: fast and it's too fast and they go into liquidation
Speaker 1: a year later. Yep. So then where does Amiga go. Well,
Speaker 1: Amiga gets sold to Gateway two thousand and Gateway had
Speaker 1: these big plans for the Amiga brand and and all
Speaker 1: these things they wanted to do, and they didn't make
Speaker 1: good on their promises, and a few years later in
Speaker 1: n they sold Amiga to Amino Development. And since then
Speaker 1: Amiga has been in a nut of lawsuits, passing patents
Speaker 1: around and eventually acquired by Commodore USA. And so you
Speaker 1: had another company, to computers that bought the Commodore brand
Speaker 1: in nine seven, they tried a few things, but nothing
Speaker 1: really took off, nothing really took hold, and so they
Speaker 1: eventually sold Commodore to uh yeah Ronemomo. Yeah, Rnemo Media.
Speaker 1: Okay here you're right, is yeah Ronimo. But that happened
Speaker 1: in two thousand four, Yes, in two thousand and ten
Speaker 1: is when we got Commodore USA. So that tells you
Speaker 1: how long Amiga had been floating around, and they had
Speaker 1: plans to make computers using the Commodore and Amiga names again.
Speaker 1: And the owner of Commodore USA passed away in two
Speaker 1: thousand twelve, and since then it's just all kind of
Speaker 1: faded away. Yeah, so it's it's sort of like not
Speaker 1: with a bang, but with a whimper kind of approach.
Speaker 1: And you may have heard like there was a like
Speaker 1: a Commodore sixty for sort of an emulator that came out.
Speaker 1: It was not that different from you know, the the
Speaker 1: NES emulator console, the tiny one that you can get
Speaker 1: and attached to your computers, got like thirty games attached
Speaker 1: to it. There was a version of that. There are
Speaker 1: also emulators online for some of these computers and computer systems.
Speaker 1: Their emulators that allow you to run old Amiga software.
Speaker 1: For example. Uh so there's still a community out there,
Speaker 1: a passionate fans of these computers, and I think if
Speaker 1: you ever explore any of those communities, you will see
Speaker 1: sort of not just fondness and nostalgia for the machines,
Speaker 1: but also just a deep sadness for what happened with
Speaker 1: the company. Yeah. I think a lot of what happened
Speaker 1: with the company maybe could have been staved off. They
Speaker 1: might have had a different outcome if Trammel hadn't been
Speaker 1: so cut throat. He had the pricing and the competitive
Speaker 1: side of business down, but he didn't have the relationship building.
Speaker 1: You need to make good with your consumers. You need
Speaker 1: to make good with the people who resell who sell
Speaker 1: your product or resell your product, and he just he
Speaker 1: didn't even make his employees very happy. So I think
Speaker 1: there was just a fundamental also mismatch between Gould and Trammel,
Speaker 1: and it just ended up being a problem that ultimately
Speaker 1: caused Commodore to collapse. And this isn't to put the
Speaker 1: blame on either party solely. I think it was just
Speaker 1: it was just one of those bad combinations, like occasionally
Speaker 1: in companies see combinations where you get like the idea
Speaker 1: man or idea person, I should say, and then you
Speaker 1: get like the business minded person, and then together they
Speaker 1: do amazing things because they compliment one another. In this case,
Speaker 1: I would say that the two styles did not compliment,
Speaker 1: They competed with one another. And uh, you know, I
Speaker 1: I don't know that the company would have succeeded with
Speaker 1: a different person backing it financially than Goold. I don't
Speaker 1: know that it would have done any better with Trammel
Speaker 1: just being in charge the whole time. I also don't
Speaker 1: know that it would have done any better had Gould
Speaker 1: picked somebody else besides Ali to lead the company towards
Speaker 1: the end of its life. Uh. Some people believe that
Speaker 1: Commodore was already too far gone even by that stage.
Speaker 1: So uh, it's it was a tough thing to to
Speaker 1: see happen, because again, it was instrumental in those early
Speaker 1: years in the personal computer age. And if things have
Speaker 1: gone differently, we might not be talking just about you know,
Speaker 1: the the Microsoft Windows based PCs and Apple computers. We
Speaker 1: might also still be talking about Commodore machines. And I
Speaker 1: would be such a computer whiz. I guess man, I
Speaker 1: really shouldn't have put all of my apples into the
Speaker 1: Amiga basket because now I don't know how anything else works.
Speaker 1: Spent all of my build points for computer nerd references
Speaker 1: on common or six. I mean, it's kind of how
Speaker 1: I feel about like using Microsoft Word to this day.
Speaker 1: I was raised on word perfect, so I I stole,
Speaker 1: I'm not the best at word and that's that's a
Speaker 1: ship that sailed like twenty years ago. Anyway, this was fascinating,
Speaker 1: it was it's it's one of those stories, like I said,
Speaker 1: that's just so dramatic with the politics involved in it
Speaker 1: and seeing how uh, these disagreements at the executive level
Speaker 1: can really affect a company. And in some ways you
Speaker 1: can say that this points back to the same old
Speaker 1: story we've told a thousand times on this show, the
Speaker 1: whole succession planning and leadership changes, and how that's absolutely
Speaker 1: fundamental to making sure a company succeeds and once in
Speaker 1: a while it works out great and then very frequently disasters.
Speaker 1: But whether it's disaster or success, today's story has come
Speaker 1: to a close. So arial what if someone wants to
Speaker 1: be like our wonderful listener today and suggest a topic
Speaker 1: to us, how would said hypothetical person reach out literally,
Speaker 1: they could reach out by emailing us at feedback at
Speaker 1: the Brink Podcast dot show that's correct, or you can
Speaker 1: also visit our website that is the Brink Podcast dot Show.
Speaker 1: You will find there an archive of all of our
Speaker 1: past episodes. You will also find a little more information
Speaker 1: about your beloved hosts. And this has been a fascinating
Speaker 1: walk down the history of a company. Can't wait for
Speaker 1: the next one, So you guys, just keep those suggestions coming,
Speaker 1: because it's it's fantastic. We love that you are a
Speaker 1: part of an integral part of this show and we
Speaker 1: greatly appreciate it. And until next time, I have been
Speaker 1: Jonathan Strickland and I have been aerial casting. M Business
Speaker 1: on the Brink is a production of I Heart Radio
Speaker 1: and How Stuff Works. For more podcasts for my heart Radio,
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