A Perspective on the First 10 Years
LEMONADE FROM A LEMON
In October of 1979, I was president of a $70-million, multinational company that manufactured data-entry systems. My family and I had moved to New England 18 months earlier and I had discovered shortly after taking the new job that the company was in severe, and ultimately irreversible, financial trouble. As often happens in situations like this, the day after the company went into Chapter 11, the board asked the president (me) to resign.
The next day, Nibble was born.
As an Apple enthusiast, I spent a lot of time with my Apple II Plus. I had been toying with the idea of starting a newsletter to help people learn about the Apple -- remember this was 1980 -- and had written quite a few programs that could be used to seed the newsletter. I anticipated it would take three or four months to find a new job, and it seemed like a great chance to plant the seeds of independence.
Our first advertisement (reproduced here) was tediously prepared with a temperamental old IBM Executive typewriter and pressure-sensitive lettering (I drew the mouse myself). We didn’t have a word processor, so every letter was typewritten. And I began writing feverishly. In the first two weeks, I wrote the first issue — every word. In the weeks that followed, I went on to write the next three issues. In early January 1980, I picked up the Sunday New York Times and saw a front-page article in the business section that proved, statistically, the high risks of the publishing business. I’ll never forget one quote: “Ninety-six percent of all magazines fail in the first year.” And the odds of making it to the 10-year anniversary were infinitesimal. At that time, we set a goal that if we hadn’t built a base of 1,000 subscribers by June, we would cut our losses and wind it down. We gritted our teeth and moved forward.
THE FIRST YEAR
Our first subscriber sent in his order from Alaska and we were amazed. The trip to the mailbox was a daily adventure, and as the orders continued trickling in, we dreamed of a day when we might get as many as 20 orders in a day. Apple had an installed base of 250,000 Apple II computers, and an intense, growing customer loyalty.
Our first issue was 40 pages, printed in glorious black and white. We printed 5,000 copies, with about 50 subscribers booked. my wife thought we were crazy for printing so many. The first mailing of Nibble was in seven little mail bags, most of which were “freebies” to Apple dealers to let them know we were alive. I made a sales call on the computer store where I made my purchases and the store manager ordered 50 copies! We gathered on the living room floor pasting labels, licking envelopes, and wondering where it would all lead.
When the second issue was delivered, we discovered a bad copy, and then another. We laboriously leafed through every single copy, weeding out the bad ones. At midyear we changed our production staff and, before the year was out, switched printers twice. We were determined to deliver quality and value to our customers; it’s a philosophy we continued to hold strongly through the years,
About the time of our second issue, I got a job as a vice president of Citibank. They wanted me to make an acquisition of a software company in Colorado, then move there to run it. We had moved nine times in our married life and were committed to putting down roots. We worked frantically to build Nibble to critical mass to avoid making the move. Then an extremely lucky thing happened. I got a job offer to join a locally based subsidiary of Exxon Enterprises.
For the next year, my ex-wife Adele ran the business during the day. She worked tirelessly to balance the books, pack, ship, sell, type, enter orders, handle dealer and subscriber problems, decode the postal regulations, do market research, and coordinate advertising. Were it not for her, we wouldn’t have survived that first year.
I got into the habit of waking up at 3 a.m. every day to edit, write, program, answer letters, test programs, run labels, and everything else. It’s a habit that still persists -- there are distinct benefits to being a "morning person."
At midyear, panic was close to setting in; I was beginning to run out of my program and article backlog, and could see that I couldn’t continue writing the majority of the magazine. At the 11th hour, we began to attract the interest of some top free-lance authors. Over the years, we have been fortunate to have published the work of outstanding people, including:
PASSING THE THRESHOLD
In that first year, we hit our survival threshold of 1,000 subscribers in March. At midyear, we had reached nearly 5,000 —close to the circulation of Call A.P.P.L.E.. We were ecstatic and realized that we were on the way to reaching our dream of independence. We were still operating out of my one-room office at home and we hired a full time secretary, then a sales administrator, then a part-time packing assistant.
Since we were publishing eight issues per year, every six weeks the truck would back up to our living-room door and unload thousands of magazines. And we would pack, stuff, label, and mail nonstop until the job was done.
Apple had introduced the Disk II in June 1978, and the Apple II Plus in January 1979. It was fortunate, because our systems began to overflow almost every week and required a frenzy of redesign and reprogramming to contain the growing list of subscribers. We began purchasing a disk drive almost every week, and it wasn’t too long before we had 12 floppy disk drives stacked around an Apple II Plus to contain the list. By the time we installed our first hard disk (you couldn’t get them back then), our subscriber files spanned 36 floppies and had to be processed in batches of 12 diskettes —about 20 hours of disk flipping.
Finally, in the spring of our second year, we
realized we had to move the company out of our home or move out ourselves. Five
people working shoulder-to-shoulder demanded we rent our first office space. Two
formal offices were up for lease with less than a five-minute commute from home.
One was 700 square feet and the other was 1,100 square feet. The burning
question: Which to pick? After some agonizing, we rented the larger office. And
it seemed like a huge warehouse when we finally moved in. The time had also
arrived, with the move to honest-to-goodness offices, for me to leave Exxon. I
hired a successor to fill the presidency of the Exxon company and joined
Nibble as a full-time employee.
We hit 29,000 circulation entering our third year, and were beginning to explore new areas. We tried to enter the software distribution business but realized it really wasn’t our business. Price and extensive inventories were keys to success and it was becoming a commodities business.
In the third and fourth years, we launched the first of our commercial utilities and languages. Sandy Mossberg wrote GALE, one of the best Applesoft line editors on the market. We sold a lot of GALE packages, and we used it ourselves.., every day. In that same timeframe, Alan and Valerie Floeter wrote The Assembler and MacroSoft, In particular, MacroSoft was a significant innovation that let the user write Applesoft-like programs that converted quickly into high-performance machine language. We were very selective in the products we launched and they stood the test of time.
Early in the fourth year, heavyweight competition began to enter the Apple magazine market. InCider was launched in January and rumors abounded that Ziff-Davis was readying an Apple magazine. In November, it launched A +. There was a very strong temptation to throw bucks at the problem, but we gritted our teeth and kept doing what we were doing.
It was clear, though, that we should move to a monthly publication schedule. The plans were made during the summer. We brought on additional people. And we entered a frenzied period to build a buffer and accomplish the cutover. We published the first monthly Nibble in January 1984, and stayed monthly through the life of the magazine..
BRUISES & BUMPS
At the same time, the doomsayers started the grim forecasts of a shakeout. By summer, the industry was in turmoil. Recognizing that we would have to continue vertical integration to reduce costs, we began planning for in-house design and production, staffed during the summer, and designed and produced the very first totally in-house issue in January 1985.
We also recognized that we would have to diversify into other computers. We had been preparing to launch a PC-oriented magazine when along came the Macintosh. Like a lot of other people, we were entranced with the Mac and switched gears to edge into the Macintosh market with a Nibble Mac section in Nibble. Our readers were quick to respond — negatively. They let us know that they wanted an Apple II magazine and didn’t want the pages of Nibble invaded by something else.
In June 1985, we decided to launch Nibble Mac as a separate magazine.., in September! It was a frantic summer, with crash promotions, editorial planning, and production, But we did it. Nibble Mac made its debut in September.
WHEN YOU HAVE THE BEST PEOPLE...
We’ve always subscribed to the principle that having top people inevitably leads to top service and product quality. Since the Apple II appealed to the younger generation of users, we have tended to attract young people driven by enthusiasm and the will to succeed. We’re particularly gratified that in an industry characterized by high turnover, our core management has been with the company for more than five years.
The MindCraft staff: Starting from left: Kelley Clancy, Mike Harvey, Adele Harvey, Diane Carhart, Lisè Stern. Second row: Mary Crowley, Suzanne Daly, Lou Deshaies, Michele DesRochers, Andrew Mintz, Sally Abu-moustafa, Christie Sears, Jeanine Wheatley, Shery Beiferman. Third row: Laura Tsuk, Kevin Rushalko, Ray Monahan, Karen Murray, Dave Sears, Joyce Hennrikus, Rich Williams. Fourth row: Doug Herold, Andrew Maddox, Steve Sarsfield, Bob Soron, Randall Raja, Arthur Luckower, Susan Haskins, Paul Gagnon.
Kelley Clancy managed order processing, customer service, circulation, and subscriber fulfillment, She joined the company in 1981 as a receptionist. In that role, she took the initiative to handle customer inquiries and complaints at the front-end. She recognized the importance of customer service and eventually expanded the job into full-time customer service, Over the years, she continued to expand her knowledge and assume more and more responsibility — a characteristic shared by other successful people at the company.
Dave Sears was the manager of operations, single-copy sales, purchasing, shipping, contract negotiation, and production logistics. Dave exercised the initiative to learn printing technology, contracts, and a variety of technical detail — becoming extraordinary at finding the best quality for the best price. His business insight made him a key strategy advisor.
Kevin Rushalko was vice president of advertising sales and editorial director for new products. Kevin was an independent sales representative when we hired him more than five years earlier, and showed resourcefulness and resilience, keeping our advertising base serviced better than our competitors’. Kevin’s values and business insights made him a key part of our strategy and policy development.
Diane Carhart was vice president of finance and had the kind of uncompromising vigilance that has saved the company hundreds of thousands of dollars over the years. She shaped the structure of our systems and helped automate everything from accounts payable to the general ledger. Her job was pivotal in providing the information flow — weekly cash reports and monthly profit and loss summaries — that warned us we needed to act to stay healthy financially.
Paul Gagnon, our art director and production manager, joined the company in late 1984, just in the nick of time. We were preparing our first in-house issue when our new art director decided she didn’t want to work for a small company after all. Luckily we found Paul, who dived into the mess and saved the issue, He provided excellent graphic, structural, and production guidance to the magazines ever since,
Rich Williams was managing editor of Nibble, Rich is another long-timer who joined the cornpany in 1983 as a technical support assistant. Later, he became technical editor and then technical support manager for all our products. Early in1990, he earned a promotion to managing editor, to guide Nibble into its second decade.
Steve Sarsfield was managing editor of our second magazine, Macintosh Hands On. Steve followed Rich’s pattern of joining the company as technical assistant and earning a promotion to his current job.
Lisë Stern was acting managing editor of our
newest magazine, PC Hands On, and came with a strong publishing
background from The Atlantic.
PAY AS YOU GO
Even before we published our first issue, we had decided that we wanted to be totally independent of the pressures of banks and outside investors. We recognized that outside investors are interested in rapid growth, going public, and cashing in. We also knew that we would sacrifice market share and growth by guarding our independence. So we paid for everything out of our savings and set out to build the company on a pay-as-you-go basis. That is how we have operated over the first 10 years, and it was crucial to our survival.
We watched a great many computer magazines rise and fall. Venture capital groups approached us with offers of cash infusions to accelerate expansion. But we’d observed that excessive, unrestrained growth is one of the principal reasons for business failure, and we’ve resisted the temptation to go for broke. Instead, we’ve concentrated on basic values: quality and service at a reasonable price. The result was steady growth, early profitability, and staying power. We structured our business that way.
I had a drawing on my office wall that depicts Nibble as a little propeller-driven plane in the midst of big jets representing the biggest and most successful magazines of the time. The other magazines were: Creative Computing (no longer published), MicroComputing (no longer published), and Byte.
We were sorry and saddened to see other Apple magazines bite the dust too. Call-A.P.P.L.E. and Micro were the pre-eminent Apple magazines in 1980. With the publication of our very first ad, two other Apple magazines were launched, Softside and Computer Tutor. Both had big, expensive ads, and I thought, “Uh, oh... this looks like trouble.” Softalk started a while later and was an outstanding magazine that complemented Nibble. Along the way, II Computing, A+, A+ Disk magazine, and InCider also joined the fray.
At the ten-year mark the only two remaining monthly Apple II magazines were InCider and Nibble. Staying independent cost us some market share, but it was a great way to live, I’m convinced that if outside investors had gotten into the act, Nibble would probably have gone out of business long before the ten year anniversary.
SMALL IS BEAUTIFUL
In the avalanche of computer publications, most publishers spend millions of dollars trying to buy market share, The theory is that a dominant market share can justify very high advertising prices — to pay for massive distribution. One PC magazine spent nearly $10 million being launched in 1989. For a few companies, this approach works. For many others, it’s a short road to disaster.
Similarly, we saw a lot of new software and hardware companies going for broke with excessively expensive advertising and promotional campaigns.
Again, they’re playing the numbers game and consuming financial resources at breakneck speed.
Some of these ventures made it big. Most failed. Most operated on the theory that big, extravagant advertisements in big circulation magazines are bound to produce results. But this approach is strictly a numbers game, and a lot of large, well-financed startup companies that tried this strategy no longer exist.
If you think about it for a moment, it is far better to make a $100,000 profit on $500,000 of sales than to lose $100,000 on $5 million of sales. Early profit, on a smaller scale, pays for later expansion. Again, it’s called paying-as-you-go, and it’s a key to survival, We have seen potentially healthy $ l-million companies try to force growth to $10 million, and self-destruct in the process.
We’re not alone. There are a lot of small, successful companies that placed profit and survival ahead of early market share. They survived because they were able to define a secure market niche, where their products could thrive and grow steadily, and they exercised the discipline to carefully manage their growth.
In looking back over the years, I’ve been interested to see which of our early advertisers were still alive and prospering at the ten-year mark. It was an elite list, and you should easily recognize the names (in the sequence of their first appearance in Nibble):
Some of these companies became giants in the industry and of course Microsoft became the Goliath. It is impressive to see that nine of these companies were still closely held independents at the ten-year mark. For each of these companies that survived, there are dozens that didn’t.
THE APPLE II MARKET
Over the years, the Apple II crept into virtually every kind of application imaginable. It was used in scientific research, in small business, in the arts, in education, in writing, home entertainment, and more. We used a network of more than 25 Apple IIe and IIGS computers interconnected with 250 megabytes of hard-disk storage to run our company. The Apple II had one.of the richest collections of software and high-performance peripherals of any computer, including the Mac.
Ironically, in the late 80's Apple Computer has neglected the Apple II market just as IBM, Tandy, and the other PC-compatible manufacturers targeted that market as their highest growth opportunity. During that time, we repeatedly appealed to Apple Computer to recognize the value of the low-end market -- the product designers have managed to shoe-horn new products into the market — the Video Overlay Card and the IIGS System Software, v. 5.0. But nobody at Apple has been able to persuade Apple Marketing to put a marketing and sales punch behind the Apple II. And as a result, Apple Computer itself was frustrating the 5-million member Apple II customer base,
There’s a basic principle of business — if you don’t sell a product, people won’t buy it. And Apple missed a huge opportunity to leverage its traditional markets into a new generation of first-love Apple II enthusiasts.
It has been impressive to us that even with Apple Computer’s neglect, there was a strong, involved Apple II constituency at the ten-year mark that persisted in supporting, using, and expanding the Apple II applications base.
Nibble’s position was very simple. We continued to support the Apple II market. More importantly, we expected to continue supporting the Apple II market for years to come.
GROW OR DIE
While we’re continuing to maintain our Apple II presence, we also recognized that there is an immutable law of business which I call the Expense/Revenue Collision Model.
Reality dictates that the expenses in any business will continue to rise, no matter what you do. Inflation, benefits, salary increases, and other costs join to drive expenses up. As such, if a company does not consistently grow revenue, the expenses eventually collide with revenues and then exceed revenues.
At the end of 1988, we recognized that the time had come to pull our original plan for a PC compatibles magazine off the shelf and get going with it. At the time, there were skeptics in the company who said it couldn’t be done. It reminded me somewhat of our earliest days when the New York Times article blared the risks of trying to start a new magazine.
We purchased a Tandy and a Toshiba and for a brief time, I imagined sitting down to begin writing the first three or four issues, just like the first days with Nibble. But the strategy caught hold, blossomed, and we published the premier issue of our newest magazine, PC Hands On, in September. It never ceased to amaze me to see a small group of dedicated people in action, and to see what they can really accomplish. Our people rose to the occasion and did the impossible.
PC Hands On carried forward the Nibble tradition of publishing new, valuable programs in every issue, with articles showing how they work. During the first year though, we discovered that we were a mouse, running around between the legs of a herd of stampeding elephants. The PC market was simply too large and ferocious for us to compete successfully and we wound up selling the a PC Hands On to another publisher after two years.
At the ten-year mark, we were trying hard to be optimistic about the future. There were rumors that HyperCard would be ported to the Apple II and that Claris was going to scale up AppleWorks. There were rumors that a low cost Macintosh would include Apple II compatibility. And we were urging our readers to write to John Sculley -- CEO at the time -- appealing for some attention to the Apple II.
But sadly, those things just weren't meant to be. We hung on for nearly two more years, shrinking back to keep our expenses down. We eventually moved back into my family room at home and kept going for awhile longer. But the handwriting was clear and happily, A2Central was willing to fulfill the remaining portion of the subscriptions when we folded the tents.
The nearly twelve years that we published Nibble were the best and most exciting I can remember. And seeing a nostalgic interest in Nibble is a touching development that has conjured up all kinds of memories. For those of you who made those years so interesting, fulfilling and fun, once again let me offer a most heartfelt "Thank you!"
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