Written by Ian Matthews Nov 10 2018 – Last Revised Jan 3 2020
In the 1960’s Commodore was manufacturing typewriters and by 1965 founder and CEO Jack Tramiel‘s decided “vertically integrate” by purchasing a large office supply retailer named Wilson Stationers in Canada. Wilson’s was the largest stationary store in Canada and would be a natural fit to sell Commodore typewriters. There was just one problem; Commodore did not have enough money to buy Wilson’s so Commodore took a $3M ($24M in 2018 dollars) loan from Tramiel’s go to finance company Atlantic Acceptance.
It is notable that several of Atlantic’s board of directors had also joined Commodore’s board as part of previous loan terms.
Unfortunately for Commodore, on June 14 1965 Atlantic Acceptance bounced and $5M cheque and within a few days the whole company collapsed and that caused all of their outstanding loans to be called in.
Commodore had to scramble to stay afloat so CEO Jack Tramiel made a hasty deal at 11% on a 6 month loan. The prime rate at the time was just 5% so Commodore was paying hefty premium and even worse was the fact that they had to put up their German typewriter manufacturing wing as collateral. Needless to say, Jack wanted out of this bridge financing as fast as he could. Enter Irving Gould.
In the summer of 1965 Gould met Tramiel when one of the companies Gould owned brokered the sale of Wilson’s Stationers to an Idaho based company. While Commodore lost money on the deal Tramiel was happy to have escaped the Atlantic collapse with his main company Commodore in tact.
By November 1965 Commodore still had not paid $300K ($2.4M in 2018 dollars) of the outstanding debt to Gould’s company so the two of them cooked up a deal. Gould invested $.5M ($4M in 2018 dollars) in Commodore which gave him 18% of the company stock and he became chairman of the board.
Gould had money and Gould was connected so from that point on, Commodore had a ready source of capital to keep the company moving forward. Gould bailed Commodore out several times over the next decade.
Unfortunately for Jack, Gould was not just a figurehead investor. He was an activist and made it very clear to Jack who was the boss.
The company’s fortunes soared under both men’s leadership. In 1984 Commodore had almost 60% of the global personal computer market mostly due to the best selling computer in the world, the Commodore 64. Together they had a company with many firsts:
There were endless arguments about how to finance Commodore, Tramiel wanted to issue stock while Gould wanted issue debt. The stage was set for a final blowup. In their last heated fight in January of 1984, Tramiel wanted his sons, Sam in particular, to take important roles in the company and Gould was staunchly opposed. Tramiel quit and stormed out of the Commodore offices. He needed a break and set out on his first real vacation ever, a world tour with his wife.
After that infamous fight, Commodore has lost its visionary. Gould did not want to manage Commodore’s operations so he appointed several CEO’s like Thomas Rattigan and Mehdi Ali but tied their hands.
Gould was a solid financier but had no passion for and little understanding of computers. He famously told a reporter in 1988 that he did not own a computer or know how to operate one.
He had three residences, one in the US, Canada and the Bahamas, all of which he actively lived in to avoid personal tax. To facilitate this lavish lifestyle he used the Commodore
That cash drain combined with a lack of advertising and increasingly poor operations managers left Commodore to flounder. It slumped to just less than 5% of the global personal computer market and finally died in 1994 still under Irving Gould’s direct control.
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NOTE 1 – January 2020: We want to clarifiy the claim that MOS/Commodore produced the first single board computer, the KIM1. There were many single board machines prior to the KIM1, but none contained an integrated input (keyboard) and output (screen). The SOL, NOVA and others were lovely computers but NOT single board computers. Thanks to Maury M for requesting this clarification.
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