The storied history of Olcott International has been covered in detail over the last year and a half.
As you may recall from my post “THE END OF AN ERA,” the company had its origins when the proposed merger between the British patent leader Marks & Clerk and Bernard Olcott & Associates fell apart in 1969. The partners of the former founded Computer Patent Annuities in St. Helier, Jersey, Channel Islands. My Dad founded Olcott International in Weehawken, New Jersey. So it was henceforth a battle of the Jerseys. Think Bayonne versus Bermuda. (Rodney Dangerfield once boasted of his summer house in the former).
Remember how I wrote that it was Dad’s idea that their proposed joint venture be based in the Channel Islands (to avoid Inland Revenue’s excessive tax rates in the late 1960s)? The aforementioned partners of Marks & Clerk relocated to picturesque St. Helier setting up shop there (to reduce their tax bite). One of the partners, Ray Chinnery, has a son my age, Martin who informed me that, thanks to my Father, he grew up in Jersey, not his native Birmingham (England, not Alabama). Rock fever notwithstanding, Martin still lives and works there!
CPA, through the strength and depth of Marks & Clerk, quickly commanded the largest market share in patent renewals. Dad’s smaller operation nevertheless still benefited from a gilt-edged Forbes 1000 client list with corporate patent owners from the USA, Europe, and Japan.
But business competition became cut-throat. Dad’s discount pricing model, unfortunately, still left a LOT of margin on the table for competitors to undercut him and profit handsomely. CPA – together with the other competitors Master Data Center, Dennemeyer, CPI, and others – had a field day. Interestingly enough, I discovered that Olcott International could wield an unbeatable competitive advantage (over and above safety checks and insurance protection mentioned in my post “THE PROVENACE OF DILIGENCE“).
That advantage was in Olcott International’s cost structure, one of the most deadly differentiators. Wielded against the competition, the cost advantage can force and keep others out of your garden of commerce; it’s one of the sharpest arrows in the business quiver. And we had it. The rent was zero. Utilities were bare-bone. We had some kind of strange 15 year old (at the time) “electrofax” copy machine that cost way less than a Xerox (which produced oddly damp photocopies smelling slightly of kerosene). Dad bought it used to save even more money.
As for wages, he kept the salaries to a “Burger King” minimum wage level. That’s the way Dad himself described them. One of my work colleagues tried in vain many times to fight for increases for the staff from that minimum wage level; he told me Dad would shout back, fists upraised, “I want Burger King wages!”
Frankly, I preferred comparisons to Microsoft.
All our costs, everything, were low, low, low. Mike, the accountant, ran an analysis for me of our unit cost and I was persuaded that Olcott International had the lowest overhead in the industry. That meant we were capable of setting prices below our competitor’s shutdown cost.
However, Dad was singularly uninterested in exploiting that advantage. As I wrote near the end of my post “THE HOLEY LAND, PART 2,” he alarmingly preferred to pour excess funds generated from the business into spurious investments.
If we had lowered prices, we could have given the knock-out punch to the competition. At the very least we would have erected a formidable barrier to entry in this patent renewal niche. I saw that as a potentially worthwhile and productive investment for the future.
But Dad wouldn’t hear of it – it would have been costly to be sure (although he could have raised pricing again after finishing off the competition). He just wasn’t able to leave “money on the barrelhead,” as he put it. So Olcott International remained vulnerable on pricing. With the competition constantly nipping at our heels, we got hit by client defections. Every few months, we would lose one. Dad would review the client contract and try to find a clause to string out the engagement. It goes without saying that this was leaving me very unsettled. Why not put the time and energy in being more competitive, instead of argumentative? My point of view necessarily had to be long term.
Fortunately, we always seemed to gain a few new accounts every year; however these were of the lower margin variety as the old “10% discount” pricing model had seen its day.
So, as explained at the end of my last post, “BUSINESS PARTNERS,” my entry to Olcott International was smooth enough, as Dad accommodated some of my concerns. I was even promoted in January 1984 to the fancy title of “Executive Vice President in charge of Marketing.” Unfortunately for me, it was in name only, as I had no real authority to do anything. Awkwardness and decline followed.
As was made painfully clear to me the following May. One day that week, Dad came to my desk and informed me that I was, as of that moment, in addition to my ostensible duties as Trade Mark Manager, bestowed with the new role of “office manager.” Including hire/fire authority! That was a lot of responsibility, though I did aspire to participating in a hiring process where I could have more of a say.
However, within the next day or two, I witnessed an incident where I felt there was an expectation on me to impose discipline as the “office manager.” An employee, let’s call her Maria-Anna¹ came by the desk of another employee and chatted for about 30 minutes on non-work related topics. This was the kind of thing that would normally drive Dad berserk. Everyone knew it; no one ever did it if he was within earshot because it could trigger screaming and yelling. As for myself, I am not that kind of a hard-ass. And I was still kinda young to be asserting whatever authority had been delegated to me.
However, as Maria-Anna’s chat continued well into a second half-hour, I wondered if it might reflect badly on me? What if Dad came downstairs and observed both a full blown coffee klatch and me sitting by impassively? Wouldn’t he be annoyed with me if I didn’t impose some minimum degree of discipline? So, I decided to take action and reprimanded Maria-Anna for “wasting time.”
I may have been guilty of being a little harsh, for my taste, and or even a little heavy handed. But I felt I was doing the right thing, what was expected of me. Maria-Anna rejected my reproach and threatened to take it directly to the boss. “Go right ahead,” I said.
Well, the story about the lack of back-up in my post “I CAN’T STOP MY LEG” turned out to be a harbinger of things to come.
When I climbed the stairs triumphantly to receive what I thought was to be certain affirmation from the big boss man, CEO, a/k/a my Father, I discovered, to my profound dismay, that he refused to discipline Maria-Anna in any way whatsoever. Needless to say, this resulted in a profound loss of face for me as she smirked around the office for months afterwards until she finally left the office for God knows what reason. I shared no space with her during that interim.
Blessedly, within a month or two, the opposite situation arose whereby there was another extended coffee klatch in my presence and Dad happened by. The klatchers were all ripped new ones. He then upbraided me for not having taken disciplinary action myself. I reminded him of the previous incident. I was relieved of my non-existent “office manager” authority on the spot.
How the HELL are you supposed to deal with that?
What I desperately needed was a mentor to guide me because I surely had none. Honestly, I would have settled for an ally, any ally.
Gazing by Peter Max. From the Author’s collection.
¹ – Not her real name.