From: Canadian business reader 1986 Source: https://archive.org/details/isbn_0773720790/page/50/mode/2up It sounds like the plot for a CBC comedy: a little company headed by a man with no formal training in electronics takes on big out- fits like Tandy Corp.'s Radio Shack, Xerox Corp. and Wang Canada Ltd. in the most competitive high-tech markets of all—computers for homes and small businesses. Not only that, the company is in Winnipeg, Man., a long way from Silicon Valley South, North, East or anywhere. But Patrick Computer Systems Inc. is readying itself to shoot for the moon, and some serious investors are along for the ride. At forty-three, Robert Patrick is an improbable CEO and chairman of the board. He got his first electronics training in the 52 / Stephen Dewar RCAF's telecommunications branch, then worked on analog computers at Canadair Ltd. In 1967 he moved on to RCA Ltd., where he spent the next nine years in broadcasting, marketing and development programs. By 1978, he was in Winnipeg run- ning a small consulting firm, helping companies with marketing problems and advising them about computers. “This company was started out of desperation," says Patrick cheerily. "I'd had enough of working for others. I wanted to take all the chances myself." He scented opportunity when he agreed to do, at cost, a survey of small-business buying preferences for an office supply company, provided he could use the data. The survey showed that many small businesses were eager to com- puterize, but most business computers were too expensive and the computers with “business software" were inadequate. "People simply expected more from them than they could do," he says. Patrick thought he could make a connection. An earlier con- sulting job had introduced him to the world of electronics hobby- ists, and he saw that the components for sale to hobbyists were comparable in technology and quality he'd been selling at RCA-at one-third to one-tenth the price. So he decided to try using those low-cost, high-quality components as the building blocks for computers: do-it-yourself high tech. His first sale was to a Winnipeg businessman who bought a system Patrick put together from existing components (with a little help from his technical friends), The Shamrock, as he called it ("It went with my name," he says), could handle only data pro- cessing. He ultimately sold ten of them, but, he says, "the margin was too small. So we built a new product that added word pro- cessing epabilities and called it the Leprechaun, and thet evolved into the iC436 we're selling now. Patrick's answer to the low throughput (the input and output transactions of the computer) in minicomputers was simplicity itself. He bought chips from the same manufacturers who sup- plied the makers of minicomputers. Then he put more of them in, combining them to give the iC 436 a surprisingly large throughput capability and an ability to use more sophisticated software packages. In fact, the iC436 isn't simply a single computer: it has a separate memory and microprocessor on every function. Thus it can handle more information with more ease than most small computers, "It's like five Apples in terms of total processing capacity," says Patrick. The whole works—keyboard, elec- 3 Hi-Tech / 53 tronics, screen, printer, four-disk drive—fit into a neat desk-top package, competitively priced at around $16,000, One fan, Ed Hemmes, an electronics engineer who owns his own company in Calgary, says, "Is a terrific piece of equipment, easy to use, with a very sophisticated word processor system. But bright ideas are one thing and building a company is another. In 1979, Patrick gave his bank manager the happy news that the federal governement agreed to back a loan for $175,000. Under the impression that the bank would go along, he even wrote a cheque against the loan. But the bank balked. 'I already owed them $20,000 and the deal called for them to be responsible for only 10% of the loan. But they backed off, even though I pointed out to them that they’d come out of it exposed for only $17,500—less than they were already in for.” Patrick couldn't afford to bounce a cheque. At lunch with a former client, a local businessman, he looked so worried that the man asked what the problem was. Patrick told him, and that night he got a cheque for $10,000 against future goods and ser- vices. No strings, no interest. The money bought time for Patrick to find a more willing banker. He also found engineers who solved the remaining design problems in the prototype and figured out how to combine com- ponents from competing manufacturers. Everybody on staff was a novice at computer manufacturing. Patrick's son Roy, twenty- two, took on the job of final assembly. His second son, Blair, nineteen, actually assembled the first computer and is now the leading field service man. “Blair can tear the computer apart and have it back together again on your desk in no time," says Patrick with pride. Bruce Maunders, an engineer from the University of Manitoba with experience servicing word processors, is viee- president of engineering. "He had the smarts," says Patrick, "but he never had the chance before." Bob Sutherland, the presi- dent and chief financial officer, was a bank manager. "He didn’t know anything about computers," says Patrick, "but he knew about banks." In 1980, a venture capital company assessed the value of the five-man operation at an astonishing $10 million, taking into ac~ count the company's marketing potential and the design of the products. Patrick calls it "sweat equity": "What you've ac- complished, even though not apparent in dollars and cents, is still valuable." At that point, broker Rudy Schmichel of Canarim In- vestment Corp. Ltd., a group of underwriters based in Winnipeg 54 / Stephen Dewar and Vancouver, became interested. That October, Canarim took the company public on the Vancouver Stock Exchange, where adventurous investors have funded big dreams, dry holes and bonanzas for decades. The $2-million offering sold out in four hours at $2.30 a share. (Even in the depressed market of January 1982, the stock was trading in the $1.50-$2.00 range.) With the money, Patrick hired seventeen more people and got down to the hard job of setting up a plant capable of producing at least a hundred computers a month. With no local pool of talent, recruitment was slow and erratic, though Patrick says that the company is now capable of full production and will begin to pro- duce in that capacity as soon as the orders come in. So far Patrick has built only about a hundred of the iC 436s. He expects sales to jump this year to approximately $5 million from less than $1 million last year, with another estimated increase in 1983 to $10 million. His marketing hasn't fallen into place yet though, and, he says, "there's no point making more than we can sell right now." But his assembly operation has been performing well on a Kit 80 computer training kit called the EZ-80. So far they have shipped a thousand of the kits to China and have another three hundred on back order. A new Super EZ-80, com- parable to the Radio Shack TRS-80 and the Apple, is now going into production to provide the Chinese with another five hundred microcomputers. "The big problems now are distribution, marketing and sup- port, in that order," says Patrick. But in addition to the Chinese he has another big convert: Progressive Computer Assistance, a Texas-based chain of business computer stores, whose president, Don Brown, thinks he can sell twenty-five to a hundred a month, He's so enthusiastic that he's building model office environments in his new stores to showcase the product. In fact, Patrick has already signed on dealers worldwide. Prob- ably the toughest nut is-where else?-Canada, where dealers are suspicious of computers made in Winnipeg. "Here, every- body wants to know our entire pedigree and what right we have to be in the business," he says. With luck, hard work and a lot of selling, Patrick may soon be able to answer that question for the last time.