On the other hand, I had to establish formal interbusiness relationships. A Ford is bought from a Ford Dearship, not directly from the Ford Motor Corporation. I was to become a dealer for several computer product manufacturers so as legitimatly sell product to end users. Licensing agreements had to be negotiated, contracts signed. In that I had been working with representatives from these companies for sometime, this process went very smoothly.
I had two critical deadlines. The infrastructure had to be in place by January 1, 1989 or I, personally, would be taxed for any and all money held under my name. The other deadline was in regard to my primary client, I had to deliver product on time for the purchase orders that had provided the funds to set this business up.
It goes without saying, after recieving the big check in early November, 1988, I "hit the road 'a runnin' ." By January 1, 1989 it was all put together and product was delivered to a prompt and reliably paying customer, AT&T.
The Earthstation Management Center was the hub for all the hundreds of AT&T earthstations in the U.S. It developed, tested and standardized systems and techniques that would be applied, appropriately, to earthstations across the country, big and small, company owned, privately owned and military sites as well. This put Cinnabar in a very advantageous position, as once we had proceeded with the Management Center through the development to standardization process, we were relied upon to provide equipment and support to the subsequently upgraded earthstations.
The relationship that evolved between the Mangement Center and Cinnabar was that they would determine an operatonal objective then, as Cinnabar was in the middle of the leading technology of Silicon Valley, they would provide objective parameters to us and we would explore the variety of technology available to satisft these objectives. Cinnabar would provide the Center with results of the research. We would go back and forth, honing the difference between concept and reality, what was desired and what existed. Once we were confident of a reasonable solution, we would carefully build a prototype. Many earthstations were remote and some, unmanned. The Center insisted on the highest reliability of any system. Cinnabar was well aware of their demanding standards. We screened the Silicon Valley suppliers as per these standards. A significant portion of Cinnabar's income was from consulting fees as well as profits from equipment and software procurement.
At the end of our first year of business, several of our larger suppliers rated Cinnabar as the highest dollar volume reseller west of the Mississippi. Our gross billlings were over $1,000,000. We had a staff of four, I was the only one doing billable work. I had a support stuff of an office manager, a bookeeper and a shipping recieving/all around help person. If I wasn't on the phone, we weren't making money. We did have a local clientele, several large real estate firms, another AT&T communications division in Northern California and some smaller clients brought over from when I worked at DataSource.
The next couple of years things went on pretty smoothly, and we grew at a measured rate, I didn't want to expand beyond our expertise until we had a large enough cash reserve to cover any sort of screw ups that might arise. I learned my lesson with my ad agency. By the end of the third year, though, I acted on a knawing reality, an old printer's axiom; don't keep all your eggs in one basket, have golden goose clients, but have several, not one, for if the one goes down, so do you. At the end of the third year I turned an eye towards diversification. I had to keep servicing the golden goose, the Management Center, but we needed other significant income sources. I hired a MBA I had worked with in the past to develope a generalized product, accounting systems, which could be sold not to specialized clients, as I was doing, but to any small to medium sized business requiring sophisticated accounting systems. I also had targeted two other product centers which we could develope. I felt confident this was a healthy, even necessary, business strategy, the accountants agreed. All my work was on the phone. I never had to leave Los Gatos.
About this same time, out of nowhere, the company who manufactured our Unix computers based on a Western Electric processor, the computer's which the Management Center most heavily relied on, was going to make a basic change in their computer architecture. They were planning to switch to the Motorola processor. With this announcement, all of my AT&T customers suspended all activity. They needed more of the Western Electric based machines, to maintain reliable continuity in their upgrade program, as well as continued support and a parts replacement source. This pending new processor changed everything. Immediatly, the Western Electric machines, from the rigid reliability perspective, became obsolete.
All AT&T orders were withdrawn. Cinnabar had already placed purchase orders with suppliers for these orders. The suppliers knew all that we knew and they were nervous as well. They demanded that I honor all of my purchase orders, no less binding than any formal contract, at that point in time, totalling over a $500,000. We had the business general business fund, a business cash reserve, and my personal savings. I payed most all of this out in an attempt demonstrate good faith to the suppliers. As time went on, however, the suppliers with large amounts of inventory which they knew they would probably never sell and became panicky, demanding payment in full. I had kept a portion of my reserves for business restoration. But, the golden goose was gone. The Management Center suspended site upgrades. The suppliers had the nastiest collection people harrassing us. And, from a anonymus midnight call, I learned that AT&T Security was investigating me for some reason. I was furious with them, I had played it so straight and delicate with all AT&T entities through innumerable transactions, this was a knife in the back. The next day I went to the FBI who, locally, had worked with AT&T security previously. They said they would find out what they could. A few days later, the FBI agent called me up, telling me that allegations had been made against me but that AT&T had found them to be false. The damage was done, however. The investigation inside of AT&T had been going on for several months. I knew nothing about it, but inside AT&T the rumours had spread, my credability and good name within AT&T had been destroyed.
I tried for nearly a year to restart the business. The stress of the constant creditor harrassment, the shadow of the rumours, the lawsuits, all this pushed my agoraphobia to the point where I was housebound and went on disability.
