The Barbarian Steps Down : Borland’s Colorful Founder Turns Over CEO Duties
Philippe Kahn, the colorful, French-born mathematician who founded Borland International and led it to the top ranks of the personal computer software business only to preside over its dramatic fall, stepped down Wednesday as chief executive of the company.
Once admired for solid software technology and shrewd marketing, Borland in recent years has been staggered by product delays, price wars and ferocious competition from Microsoft Corp. The company has lost money four out of the last five years--a total of $266 million over that period--and has been selling off products and firing employees in an effort to stay afloat.
More such measures are sure to come under Kahn’s successor, Gary Wetsel, who was promoted from executive vice president and chief financial officer. Although Kahn, 42, will retain the title of chairman, Wetsel insisted that as chief executive he will be in full control.
“There’s no more need for (Kahn) to have an office here than there is for any one of our other board members,” Wetsel said. “Philippe is a strong technologist and I intend to tap into that resource. But there are some very strong people here who have been overshadowed.”
The normally talkative Kahn, who has drawn heavy criticism from investors and analysts in recent months, could not be reached for comment Wednesday. In a prepared statement, he said: “It has become clear that my continuing as president and CEO has become a distraction at a time when Borland needs to be fully focused on the challenges ahead of it.”
A brilliant, sometimes blustering personality who stood out even in an industry known for its characters, Kahn could often be seen strolling around the company in short pants and sandals. Kahn cultivated--for himself and his company--the image of the barbarian, the outsider fighting the entrenched and corrupted powers. He was an accomplished musician who often played his saxophone at computer industry conferences. In the days when Borland was flying high, Kahn was a favorite with the press for his outrageous comments, many of them aimed at Microsoft Chairman Bill Gates.
Kahn is a veteran of the days when the software industry was young, filled with companies run by inventive programmers. Some saw his departure as a sad sign of the times. “The good old days when an entrepreneur could do magic from his garage are gone,” said Vadim Yasinovsky, a software developer who is a friend of Kahn’s. “Things are so corporate now. I’m very sorry to see Philippe gone. He was one of the few guys willing to take on Gates.”
Yet Kahn’s antics, endearing when Borland was doing well, grated when it was not. Kahn was forced to return company money for two CDs that he recorded with a band of well-known professional musicians. A broadside aimed at Microsoft at an industry gathering got him into a shoving match with Gates.
Taking on Gates at an industry conference is one thing; taking on Microsoft in the marketplace is quite another. Borland started out making products for software developers, a collection of customers very much like Kahn himself, and did very well.
But Kahn had bigger ideas: First, Borland bought Ansa, a company that made database software for businesses. In 1991, Borland spent $440 million to acquire Ashton-Tate, developer of dBase and one of the software industry’s biggest companies. And Borland developed a spreadsheet to challenge Lotus 1-2-3 and Microsoft Excel.
Suddenly, the company was competing head-to-head against Microsoft. Kahn built a palatial headquarters complex costing $100 million: “He told me, ‘I want it to be better than Microsoft’s,’ ” remembered Linda Gilcrest, a Borland employee who oversaw the construction of the building.
In the end, it proved too much for Kahn. New product releases--especially of Quattro Pro and, more recently, dBase for Windows, were woefully late. Once they were finally released, Microsoft countered with huge price cuts. Ex-employees say Kahn tried to oversee minute details. “He might not be involved in what you’re doing for a couple of months, but then he’d come in and turn everything topsy-turvy,” one said.
“It’s sad,” said Benjamin Rosen, a venture capitalist who stepped down as Borland’s chairman in 1987. “He had trouble managing an organization of the size and breadth that Borland became.”
Analysts says Borland’s prospects for survival as an independent company are dim. The company is still liable for pending damages to Lotus Development Corp. after losing a copyright infringement suit, damages that analysts say could reach $100 million. “With the cloud of the Lotus litigation, it might be difficult for Borland to be sold even in pieces,” said Jeff Tarter, editor of Softletter.
And, the company’s poor financial condition has scared away customers. “They’ve fallen behind in probably the worst category you can do that with,” Tarter said. “Borland’s core customers are developers. Developers are passionate about product upgrades. What Borland’s going through has got to scare them to death.”
And without the charismatic Kahn as company spokesman, there will be no one to convince them to keep the faith.
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Borland in a Bind
Under the leadership of its colorful founder, Philippe Kahn, Borland International Inc. became one of the largest and most influential companies in the personal computer software industry. But an ill-timed acquisition and the firm’s determination to compete in a broad range of products left it vulnerable in a fierce price war. Kahn resigned as chief executive Wednesday, and many observers expect the company to be sold.
KEY EVENTS * 1982: Kahn launches Borland International and sells his first software product, Borland Pascal, a computer language compiler. In less than three years, Kahn turns the start-up into a mail-order sales machine with revenue of about $2.5 million a month. * 1987: Borland purchases Ansa Software, developer of the Paradox database program, in a stock swap valued at $38 million. * 1989: Quattro Pro spreadsheet is launched, starting a spreadsheet price war between it and Lotus 1-2-3 and Microsoft Excel. Rewritten version of Paradox is launched. * 1991: Borland agrees to purchase Ashton Tate, maker of database management software, for $440 million. * 1992: Facing stiff competition from Microsoft’s Access database program, Borland announces deep price cuts on many of its software products. * March, 1994: In the midst of a cash crunch, Borland sells the Quattro Pro product line to WordPerfect for $145 million. * Jan. 11, 1995: Kahn resigns as chief executive. Gary Wetsel, executive vice president, is named as his replacement.
REVENUE
In millions of dollars:
1994: $393.5
EARNINGS / LOSSES
In millions of dollars:
1994: -$69.9
STOCK PRICE
Monthly closes, except latest:
Dec. 1991: $82.25
Wednesday: $7, up 25 cents
MARKET SHARE
Based on worldwide software sales:
1991 Microsoft: 28.0% Lotus Development: 12.8 Novell: 8.3 WordPerfect: 7.8 Borland International: 7.5 Symantec: 2.0 Software Publishing: 1.8 Oracle: 1.5 Claris: 1.5 Digital Research: 1.3
1994 Microsoft: 34.7% Lotus Development: 11.7 Novell: 7.5 Adobe: 3.1 Symantec: 2.9 Claris: 2.1 Borland International: 2.1 Intuit: 2.0 Corel: 1.8 Delrina: 1.1 Sources: Bloomberg Business News, Standard & Poor’s Corp., Infoworld. Researched by ADAM S. BAUMAN / Los Angeles Times
