A big byte of success.

A big byte of success

After Kenneth Simonds graduated from East Tennessee State University, he began his intended career as a football coach and school teacher at a time when IBM Corp. was "hiring anybody who could walk and chew gum."

So Simonds, disappointed with "what they were paying coaches and teachers at that point," became a salesman for IBM in 1957.

Twenty-seven years later, when he was about to retire to a tranquil San Francisco Bay-area neighborhood, he was snatched by Teradata Corp. of Los Angeles, a fledging computer manufacturer that had lost millions of dollars and had virtually no revenues. His mission: To convince potential clients that Teradata's database computer was more efficient at processing lists when were IBM main-frame computers.

These days, while IBM is reducing its work force because of shrinking revenues, Teradata hires "between 100 and 150 people a quarter," according to Simonds. During Simonds' tenure, revenues have grown from $2.8 million in 1985 to $137 million in June, 1989. Losses for the company of $12.8 million in 1985 have turned into a profit of $16.3 million for fiscal 1989.

Teradata was founded in 1979 by four entrepreneurs, three with doctorates in electrical engineering and a fourth with an MBA. The company for the first five years had spent some $70 million in private venture capital to develop a new, powerful database computer.

In 1984, Teradata finally had a product ready for sale: a computer that can store hundreds of trillions of characters, or terabytes, compared with conventional mainframe computers, which can store only tens or billions of characters, or gigabytes. Teradata, whose named was formed by combining "terabytes" with "data processing," has a computer that can process database queries faster and at less cost than an IBM mainframe, says Simonds, and conceivably can eliminate the need for IBM mainframes in some cases.

The database computer can also be supplemental to the IBM mainframe. Using a Teradata computer can free IBM mainframe memory normally used to store databases. This allows the the expensive mainframe to perform the tasks it perform best.

Another great advantage of Teradata's computer, says Simonds, is the ability to link different types of computer systems to the database computer, so a company with mainframes, work stations and personal computers can have all its users work with the same copy of the information. Thus, a retailer can coordinate sales between stores, transferring slow-moving merchandise from one region to another where it might be in short supply.

One of Teradata's problems has been convincing new clients to spend $1 million a unit on a new product that had no customer references and that came from a new company.

The founders of Teradata needed help. They needed someone who understood the IBM marketplace, had respect from customers and had successfully achieved market penetration in another company that was a competitor with IBM, says Jack Shemer, one of the co-founders of the company.

"We were going head-to-head with IBM in the most difficult market you could probably imagine," says Shemer. "So we desperately needed credibility. Not very many people had fit these qualifications."

Simonds, a father of five who has an antique roll-top desk rather than a computer in his office because it "works fine," was the perfect candidate.

He had spent 18 years at IBM, working his way up in the data processing division, relocating around the country every two years. In the early 1960s, he was IBM's youngest branch manager, he says. His last job was to start a systems integration business that would move IBM to the commercial sector.

Simonds, a 54-year-old who displays a very subtle sense of humor, deadpans about his career at IBM: "The highlight was 1966-68 when I was in Green Bay, Wisc. as an IBM branch manager during the years that Lombardi had the two Super Bowl teams up there in football."

Bored and tired of being anonymous in a company of 250,000 people, he joined Amdahl Corp., a San Jose-based computer mainframe start-up that had been trying to recruit him for the past two years and competed directly against IBM.

He recounts an anecdote about his first week as a senior manager at Amdahl, when he was called into a meeting and asked to take a cut in pay.

He began to laugh, he says.

"Everybody in the room said `what's wrong with you?'" recalls Simonds, "and I said, `You know, I spent 18 years in the IBM Corporation and I never had the privelege of sitting in a meeting like this before.'"

In 1984, when Simonds was executive vice president of what became over a $1 billion (annual sales) company, he announced his retirement.

Amdahl had become too big, says Simonds.

"If you go through the excitement of the building years that we all went through," notes Simonds, "it's an excitement that's hard to hold onto."

One of the Teradata investors found out that Simonds planned on retiring and called, offering him "something exciting." Simonds says he replied, "No way, I'm not interested."

Simonds was looking forward to spending more time at his home in Los Altos Hills, an upscale neighborhood in a beautiful, mountainous area between San Jose and San Francisco.

But the Teradata investor persuaded Simonds to "at least meet for breakfast,'" recalls Simonds. "We did that, and 90 days later I was on my way here."

Simonds, soon after being named president and chief operating officer of Teradata, was able to convince big clients like Citicorp and AT&T to buy Teradata database computers.

His secret was to "find a situation where this technology provided a solution that couldn't be done any other way." AT&T had to be able to hook up all kinds of computer systems to the same copy of the information, says Simonds, and Citicorp had such a large database that even the largest of mainframes had trouble handling it.

"At first, we were doing a lot of missionary selling as well as selling the product," he says. "Then, once we got a base of 15-20 accounts and achieved some credibility, things began to move very well."

Teradata's database computer will not go out of style with newer generations of computer chips, notes Simonds, as the computer can incorporate a faster chip without any major architectural changes to the machine.

Sales jumped more than 500 percent from $2.8 million in fiscal 1985 to $17.2 million in 1986, and losses were cut in half to $6.2 million. Simonds was appointed chief executive officer that year, and later, after the company went public in 1987, he was named chairman.

The co-founders attribute Simonds' success to his amiable personality and ability to motivate people. He is a leader who believes in participatory management, they say, not unlike Ronald Reagan, a politician he actively supported for the presidency. (Simonds keeps a picture of himself and Reagan, taken at an event where he was also able to meet George Bush, in his office).

"There's a great similarity of style [to Reagan] in that Ken is not trying to be an expert in all areas," said Jerry Mode, a co-founder who still works full time with the company as senior vice president of marketing operations and emerging markets. "He depends on people who work for him."

Simonds is very intense and competitive, they say, despite his outward appearance of being very low-key - he speaks in such a low voice that sometimes his sentences are inaudible.

"That's the beauty about him," says Shemer. "He has the ability to be smooth and not overamplify."

Simonds says he motivates employees by telling them that they don't just have a job; they have a "mission," which he says is "a hell of a lot more fun."

"Our success is not just a financial success," he says. "We're changing the way computing is done in the industry, providing our customer with some strategic value that they never had before and those go a long way in making the job fun."

Simonds says he doesn't think about retiring because he's having too much fun, and he has an extremely ambitious mission for the next four years.

"We believe we can be a one-billion dollar [sales] company in 1994," he says.

His next move after this success at Teradata?

"My next move is to be a football coach at high school," he says. "Find me a high school football team who wants to run a single wing and I'll dust off the old playbook and come back."