Compaq Computers: Rod Canion

In 1981, engineer Rod Canion left Texas Instruments and co-founded Compaq, which created the first IBM-compatible personal computer. This opened the door to an entire industry of PCs that could run the same software. PLUS in our postscript "How You Built That," how frustrated renter Melanie Colón created an easier way to communicate with noisy neighbors, called Apt App. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Speaker 00

  Well, it's assumed that if IBM enters the market, they take over and push everybody out. In February of 1984, IBM introduces their own portable into the market. Our orders stopped because before it actually was introduced, they were showing it to dealers and customers. And they just stopped ordering ours. That was a very, very life-threatening situation. We had this factory running full speed and no place to go.

• 0:36Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 0:50Guy Raz?

  I'm Guy Raz, and on today's show, how Rod Canyon's personal computer startup Compaq took on the biggest computer company in the world and won.

• 1:06Guy Raz?

  So if you have a PC at home or at work, and you buy some software like Word or TurboTax, it doesn't really matter if you have a Dell or an HP or a Toshiba, because if it's a PC, it will run PC software. And that makes perfect sense, right? But believe it or not, in the 1980s, in the early days of personal computers, that is not how it worked. If your computer was, say, an IBM, well, you needed software written for an IBM. And IBM was the biggest player by far. In fact, some people thought that IBM would eventually crush all of the competition and become the only PC maker. But all of that changed when Rod Canyon started Compaq.

• 1:51Guy Raz?

  Now, Rod wasn't your typical restless entrepreneurial guy. In fact, he had a good and stable job at Texas Instruments as an electrical engineer, and he was pretty happy there. But one day in 1981, his managers assigned him to work on a new project, and it was something that Rod believed would not work. And so he started to get frustrated.

• 2:14Speaker 00

  Basically, it was being told to go spend the next two years of my life beating my head against the wall and end up in failure.

• 2:20Guy Raz?

  So at that moment, Rod started to talk to two close colleagues at Texas Instruments, Jim Harris and Bill Murto, and he basically said, hey, maybe we should leave.

• 2:31Speaker 00

  We met and talked about how we were going to go start a company. And there were a lot of startup companies in California, in Silicon Valley. One of the first things we realized is, gee, these guys are having fun. They're making a ton of money and, you know, they're not any smarter than we are. They're just out doing it themselves. There was also this awareness that something really big is going on in that personal computer market. When IBM entered the market in August of 1981, we realized that that market was going to explode. And then what happened is that fall ComDAX came along. We went out to the conference and saw all of the companies and all of the things going on.

• 3:13Speaker 00

  It was just, that did it. We went back to Houston and talked about, we're going to miss this if we don't get going. So Jim Harris and I turned in our resignation right away. Bill Murto waited because his wife was about to deliver their first child.

• 3:29Guy Raz?

  And you had a family too, right? How many kids did you have?

• 3:32Speaker 00

  Three.

• 3:33Guy Raz?

  Were you nervous at all about just quitting without any income coming in? I mean, were you worried at all about doing that?

• 3:42Speaker 00

  You know, I don't remember being worried about it. The three of us, none of us had any money to invest. So what we did was we saved up money. And the idea was, we'll give ourselves a runway length of six months to come up with an idea and go get funding. You know, I think this was an adventure. Let's go see what we can do.

• 4:01Guy Raz?

  So when did the three of you sort of land on the idea that eventually turned into Compaq?

• 4:06Speaker 00

  Well, the idea came to me actually one morning. It was strange how you remember those pivotal points in your life. But I was thinking about the idea for a portable computer. There were a number of them that existed at the time, probably, I'll just guess, 15 or 20.

• 4:23Guy Raz?

  And what were portable computers like at the time?

• 4:28Speaker 00

  Well, most people remember the Osborne. It was made out of cheap molding and sort of strung together. It had a five-inch diameter screen. And it had two floppies, but you could immediately see some ways to make it a lot better. You know, we decided we could do a nine-inch screen in about the same-sized box. And while that seemed small, turns out it's about the same size as what the original iPad screen is. Hmm. And we could make it rugged so that when you carried it, it was not damaged. But not worth really spending the time on unless we could get some software that already existed.

• 5:09Speaker 00

  Because I had learned that the key software, like spreadsheets and word processors and others, every different brand of computer had to have its own version of the popular software programs. So I said, "Well, what if we could make this great portable run software that already existed?" And I knew that the IBM PC was relatively unprotected. It would be a challenge, but it could be reverse-engineered legally. And we could make our computer run the same software. And that was the idea that sent a chill down my spine. Wow, what's wrong with this idea? There's got to be something wrong with it. It's too good to be just hanging around here. And so at what point did you say, "Okay, we have an idea.

• 5:54Speaker 00

  Let's go look for money." So I called up Jim Harris and then later got Bill Murto involved. And we thought about it and talked about it and decided, "You know, that would be a great product if we can do that." Let's put together the business plan. And so that was the next thing we did. I mean, it was very quick, from the 9th of January to when the idea came up, to the 22nd of January, when we met with the venture capitalists. We basically put together a very short, four-page business plan and prepared to meet and discuss it with them. And what did they say when they saw it? Well, they were coming into town for another meeting, and we put this business plan in front of them and began to describe it. And... Then they started talking to each other.

• 6:38Speaker 00

  You know, one of them said, you know, I had this idea, you know, like three months ago. And I said, well, if you think it's such a good idea, why aren't you more excited about it? And they said, well, look, we like the idea, we like you guys, but we're new in this industry. So what you need to do is we need to send you out to Silicon Valley and go meet with Klanner Perkins. And if they'll invest, then we will. So we, we basically flew out to, to Silicon Valley and we went in to meet with John Doerr. And we spent a good morning, probably three or four hours, being questioned.

• 7:20Speaker 00

  And sure enough, about a week later, we got a call that they were willing to invest and so it was a go.

• 7:27Guy Raz?

  Okay, so it's 1982, I guess, and you've gotten your investors and what, do you get to work building a prototype?

• 7:34Speaker 00

  Well, first thing we do is begin hiring people. Because the three of us, we're sort of the head of each area, but we need engineers mainly to go figure out how to reverse engineer and how to design the things out. So we hired three engineers.

• 7:48Guy Raz?

  And presumably, they basically had to build something pretty similar to an IBM PC.

• 7:54Speaker 00

  Yeah, except "pretty similar" didn't cut it. You had to be exactly the same in order to run the software from an internal standpoint. And so they, they came to work for us right away and began first reverse engineering the product and then designing our own.

• 8:10Guy Raz?

  But were you convinced that you guys were going to succeed?

• 8:13Speaker 00

  You know, it never crossed my mind that we wouldn't succeed. And as I look back now, I think, wow, that was such a long shot.

• 8:21Guy Raz?

  Yeah.

• 8:22Speaker 00

  You know, our expectations were very low. What did succeed mean? It didn't mean become the industry leader. It didn't even mean become one of the leading companies. It meant build a company that doesn't go out of business, that has a product that solves a real need and you don't lose money on it. We felt like we knew how to do that.

• 8:44Guy Raz?

  How long did it take for you, from that point in, I guess, the first, you know, the early part of 1982, until you had a working prototype?

• 8:53Speaker 00

  So, we started the company February the 16th, and from March until early June, we had our first prototype ready. The deadline was determined by the National Computer Conference, which just happened to be held in Houston that year, the only time I think it was ever in Houston, to show to potential dealers, potential computer store owners who would sell it, to magazine writers who would write about it when it came out, you know, to get feedback, and others, basically, to find out what people thought about this product.

• 9:29Guy Raz?

  So, you come up with this prototype, and at that point, where are you even manufacturing these computers?

• 9:37Speaker 00

  We built a factory inside a leased building in North Houston. We hired manufacturing people. They put up a production line, hired people, trained them on how to build it, and began to build the product. And we had a plan that basically allowed us to build probably, I'm going to say, 20, 25,000 computers by the end of 83. We didn't begin, actually, turning out finished units until January of 83.

• 10:05Guy Raz?

  Just to be clear, I mean, when you talk about a portable computer in 1983, you're talking about a machine that weighed, what did it weigh?

• 10:15Speaker 00

  28 pounds.

• 10:16Guy Raz?

  20, this is not even hand luggage on an airplane.

• 10:20Speaker 00

  Well, we did use it as hand luggage, but there was some skepticism about that. Not only that, you had to plug it in. It was, people began to call them transportable computers, which was more accurate. It was also very rugged. One of our key engineering talents was to build it so that it, when you dropped it, it would survive.

• 10:40Guy Raz?

  And, of course, your portable would run any software written for the IBM, and none of the competition did that, right?

• 10:48Speaker 00

  That's right. And basically, late in 82, as we had our first prototypes, Bill Murto and then I joined him, because there were a lot of computer stores around the country, we would go out and make an appointment and go in and show the computer store owner our product. And showed them the computer. They liked the way it looked. And when we showed them how it worked, it was very nice. The screen was nice. But when we told them, "Okay, just pick any of the IBM software off of the shelf. It's in a shrink wrap box. And put it in the computer and see if it runs." And when they did that, and it ran, their eyes lit up. They got excited. They thought about it a minute, and they wanted to order some

• 11:30Speaker 00

  right then. They would say something like, "Okay, I need five of these next week," or, "I'll give you an order for 25 if you can ship them in the next month." Bill and I got back to Houston and compared notes. It was like, wait a minute, every one of these dealers said the same thing. What we just stumbled onto is this pent-up demand for a portable version of the IBM PC. Now, it seems subtle, but we had never thought of our product that way. This is a portable computer. It fits a niche. And you have software because it runs all the IBM software. But if you just step back and turn that over and say, "Everybody out there has an IBM PC in their office, and what they need, every one of them needs one or more of, is a portable version of it. And we happen to have that product."

• 12:15Guy Raz?

  Huh.

• 12:15Speaker 00

  People were wanting to take these things home for the weekend, or even overnight, to finish their work. They wanted to take them out to customers to show them their work. And so it was a much bigger market than anybody anticipated, once we had all the ingredients together.

• 12:31Guy Raz?

  Weren't you worried in 1982, when you were going to dealers and showing them your product, and saying, "Hey, you know, this is basically, this can do everything an IBM can do, except it's portable." Weren't you guys worried that IBM would come after you?

• 12:47Speaker 00

  No, because we hadn't broken any laws. You know, we had reverse engineered the ROM following advice from top-notch intellectual property lawyers. So we were very careful around that. Their product was not protected by patents in any other way. They had followed, more or less, the general industry direction. And so, building a computer that was similar or close to it was not a problem at all. The fact that we took the time to figure out exactly how theirs made the software work, and made ours do the same thing, it was not illegal.

• 13:21Guy Raz?

  But it sounds like you guys really launched this in a stealth way, that IBM probably didn't even care about you. They thought you were just probably just a fly speck of a company that was making this product. And when you launched it in 1983, I don't know, did they even know who you were?

• 13:38Speaker 00

  Oh, no. No, they had no idea, nor did they care.

• 13:41Guy Raz?

  Yeah.

• 13:42Speaker 00

  I mean, even after we began to sort of get some positive results in getting into stores, remember, we were portable. They didn't have a portable. So initially, it was very easy for them to ignore us because we were truly a fly.

• 13:59Guy Raz?

  In that first year, 1983, how did the company do?

• 14:06Speaker 00

  We sold $111 million worth of compact computers.

• 14:10Guy Raz?

  Wow. How did you, I mean, you must have been expanding like crazy. I mean, I'm assuming at the beginning of that year, you just had like a few hundred, maybe like less than 100 people working there.

• 14:22Speaker 00

  We had about 100 people at the end of the first year. That's about right. And about 600 by the end of 83. So you can imagine how much hiring we were doing and expanding. And now, this was not a one thing at a time. This was a multitasking, bringing on very competent people in every area so they could, here's what needs to be done, and go get it done.

• 14:44Guy Raz?

  How much were you selling that first portable computer for?

• 14:48Speaker 00

  It was listed for $29.95 for a single floppy. Unbelievable.

• 14:54Guy Raz?

  And who were your customers? Was it businesses? Was it individuals?

• 14:58Speaker 00

  It was mostly businesses, but a surprising number of individuals could see the value in it. And if their company wasn't buying it for them, then they would buy it for themselves.

• 15:08Guy Raz?

  Okay, so 3,000 bucks for this computer, and you guys are selling tens of thousands of these. I'm assuming that at this point, IBM is starting to notice.

• 15:17Speaker 00

  Oh, absolutely.

• 15:18Guy Raz?

  They did?

• 15:19Speaker 00

  Absolutely. They, you know, in February of 1984...

• 15:24Speaker 00

  IBM introduces their own portable into the market. Now, our orders stopped because before it actually was introduced, they were showing it to dealers and customers, and they just stopped ordering ours. It's assumed that if IBM enters the market, they take over and push everybody out. So we had this factory running full speed and no place to go. That was a very, very life-threatening situation.

• 15:48Guy Raz?

  So you guys are freaking out.

• 15:50Speaker 00

  We're freaking out. The industry's freaking out. It's like, there goes Compaq. They've had a good run, but it's over.

• 16:01Guy Raz?

  When we come back, Rod Canyon made sure that it wasn't yet over. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 16:24Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So 1983 was a really good first year of sales for Rod Canyon and Compaq. But to put it in perspective, Compaq sold about 53,000 computers. In that same year, IBM, they sold 750,000 computers. And so in 1984, when IBM decided to compete with Compaq head to head, everyone knew it was a major threat. So Rod called together the management team for an emergency meeting.

• 16:57Speaker 00

  You know, what do we think we ought to do? Well, the manufacturing people said, we've got a lot of temporary people. We were hiring so fast, they came on as temporaries initially. And so we can lay all them off immediately, and we can really cut back production, cut back our costs. And it was, I have to say, a very dire tone to the meeting. Everybody was like, you know, it's all over. And I took all that and added it all up, and I realized, you know, if we're going to come out of this with a happy ending, there's only one way that's going to occur. And that is, let's assume for a minute that IBM's product is not better than ours, that maybe it's in limited supply, and the dealers, once they see it, begin to order our product again.

• 17:41Speaker 00

  We need to have product available to fill those orders.

• 17:44Guy Raz?

  Yeah.

• 17:45Speaker 00

  So here's what we're gonna do. We're gonna keep building these things. We're gonna store them and wait for the orders to come. If the orders never come, yeah, we're in deep trouble. But you know what? We're in deep trouble anyway if the orders don't come. So that was the plan. I'm not sure everybody was, you know, on board with it, but that's what we went off and did. We ended up storing these things in the trailers, tractor trailers, you know, 18-wheelers back-

• 18:08Guy Raz?

  Yeah.

• 18:09Speaker 00

  And parking them in our parking lot. When that filled up, we borrowed space in friends' parking lots around the town. And by mid-February, we had about 20 of these trailers, full of computers, sitting around Houston.

• 18:24Guy Raz?

  So what happened? How did you survive that?

• 18:26Speaker 00

  Well, what happened is IBM introduced us the product. They kicked the tires. It's announced that it is in limited supply for a while. It was not a better product. It wasn't a bad product. It just wasn't better. And so, just as we had hoped, almost the best possible situation is the orders came in and we had the computers to fill them.

• 18:46Guy Raz?

  Hmm.

• 18:47Speaker 00

  It's like they had been holding them back. And so, not only were they ordering at the normal rate, they were sending all the orders that they had been holding. Everything fell into place just at the right time, and we took advantage of it.

• 18:58Guy Raz?

  So what explains, what explains the fact that they didn't crush you? I mean, it sounds to me like it was one of two things. It was either total luck, or it was that the IBM portable computer just wasn't that good, or maybe both?

• 19:14Speaker 00

  Well, any way you look at it, it was luck. I mean, there was a lot of luck involved. But what had happened is, we had had a year to build great relationships with the dealers. The dealers actually liked having somebody other than IBM, because IBM was the, you know, the 500-pound gorilla. And they knew it. In any case, we continued to sell like crazy and outsold the IBM portable throughout the year. I think by the end of the year, we were outselling it seven or eight to one.

• 19:42Guy Raz?

  End of 84?

• 19:44Speaker 00

  By the end of 84. And we tripled to 329 million in our second year.

• 19:51Guy Raz?

  So by your second year, you've tripled sales. When's the first time you remember Compaq becoming part of like the mainstream conversation in America?

• 20:03Speaker 00

  Well, it depends on how big the mainstream is. I think by the end of 83, everybody in the industry knew about Compaq and was sort of marveling at what was going on here. This idea that people could use all the same peripherals, all the same things that were designed and built to run in an IBM PC, whether it was software or hardware, would work on our computer. IBM maybe underestimated us. They didn't really study what had made our product successful. They could have easily put us out of business if they had come out with a real comparable product.

• 20:33Guy Raz?

  Yeah, and I mean, once you guys showed that you could build an IBM clone, a lot of other companies realized that it was possible to do the same thing, right?

• 20:42Speaker 00

  That's right. And the fact that we took off and set sales records, I mean, everybody else did it, including, by the way, the big guys, HP, TI, DEC, all finally followed suit. But by then, we had really established ourselves in the market. And the thing that took us from 600 million in '86 to 1.2 billion in sales in '87, we came out with our own desktop, which was essentially three times faster than IBM's desktop for about the same price, and began to establish ourselves as not only the portable company, but also the high-performance company.

• 21:18Guy Raz?

  Didn't IBM try to kill off all the clones when they released the PS2 in 1987, which was this computer that was designed so it could not be cloned, right?

• 21:31Speaker 00

  Yeah, that's right. That was an attempt to take this thing that had gotten out of control, mainly due to Compaq, and bring it back under IBM's control. So IBM comes out with their new architecture and claims that this is the way to go, that that old architecture has run its course, it's going to run out of gas very soon, and so you don't want to follow it to the end, you want to get on this new horse, and IBM has it, and so let's go. And that's where IBM's marketing strategy got them in trouble, because this thing not only didn't run all the software, it didn't run any of the software.

• 22:10Guy Raz?

  Wait, stop for a second. IBM's new computer did not run IBM's own software?

• 22:15Speaker 00

  It didn't. Now, they came out with new IBM software. So if you wanted to buy this new product, you could buy all-new peripherals and all-new software, and they would claim that it would outperform anything else in the market.

• 22:29Guy Raz?

  So at that time, though, Rod, I mean, you're saying that presumably companies, many companies, already had PCs and software. And IBM was saying, "Buy this new PS2." Oh, and you're also going to have to invest in new software?

• 22:43Speaker 00

  You know, you make it sound crazy. To them, it was normal. That's the way the industry had always worked. And they still hadn't bought into this industry standard idea. People believing that and understanding that it was important to be able to run your old software on a new computer. It had never happened before. Compaq pioneered it, and then they wanted to get rid of it as quick as they could.

• 23:05Guy Raz?

  Was there a moment where you were worried that actually they would succeed?

• 23:09Speaker 00

  Oh, yeah. No, there was never a question that they had a good chance to succeed. Now, what kept us going and what, I guess, gave us confidence that we had a pretty good chance was we outperformed IBM's best products every step of the way. And so there was a significant part of the industry that looked at IBM's claims. The magazines aren't afraid to write, "Compaq outperforms the IBM by 50 to 100 percent." So in spite of it being IBM, we're holding on to a pretty solid position in the market because ours was always higher performing.

• 23:48Guy Raz?

  I mean, it seems like at any juncture in your first several years, IBM, had they just done something a little bit smarter strategically, could have crushed you.

• 24:01Speaker 00

  There's no doubt IBM could have crushed us a number of different ways at that point in time.

• 24:11Guy Raz?

  Okay, Rod, so it's five years from the time you launched to the time you're doing a billion dollars in revenue, right?

• 24:17Speaker 00

  That's right.

• 24:18Guy Raz?

  How did your life, your own personal life, change? Because all of a sudden, you're like, I'm assuming you've become kind of a rich guy.

• 24:27Speaker 00

  Yeah, you know, certainly compared to where I had been, I was rich. But then again, we knew that that was a fragile part of it. I did get a divorce in 1987. You know, it was just a sad part of what happens in that era. But I'm sure it had something to do with the stress associated with all of the work, the time I spent at work.

• 24:51Guy Raz?

  So in 1987, you're going through a divorce. I mean, even a simple divorce is hard. And then IBM comes out with this new computer designed to basically put you guys out of business. So how did you deal with that? I mean, how did you cope with all that happening?

• 25:09Speaker 00

  You know, looking back on it, I would say it's probably denial. You know, that's a pretty effective tool. You know, not letting things impact you as much as they might in sort of other situations is something you have to do there. I mean, I felt like I was learning as I went, and I was doing a good job. There was personal turmoil. If you want to throw another layer on top of that, Radio Shack tried to buy us in late 86 and early 87. And so that was going on at the same time all this was happening.

• 25:42Guy Raz?

  So you were just, as far as your personal life, you were just kind of, you compartmentalized that? You just had to put that in a box and focus on this stuff and not let that depress you?

• 25:54Speaker 00

  Yeah. Now, I've got three kids, and they're getting to be teenagers. And there's Little League, and there's all of that. And I'm trying very hard to get away at the right time, go see a school play. That's where most of the stress came from, trying to do it all. If you could just cut off part of it and say, "I'm not going to worry about that," it would be one thing. But trying to do it all and not drop any balls, that was pretty stressful.

• 26:21Guy Raz?

  Were you going home, eating like takeout Chinese food? I mean, what was happening once you were done with your day?

• 26:29Speaker 00

  Crashing usually, yeah. No, I see pictures now of me carrying fast food, you know, a McDonald's bag or a Wendy's bag. You just ate when you could. That was sort of secondary. Getting everybody taken care of, getting the meetings done, getting decisions made. You know, you could look at my role as making decisions.

• 26:50Guy Raz?

  Yeah.

• 26:51Speaker 00

  I wasn't making all the decisions, but all of the key ones I had to be involved in, so.

• 26:55Guy Raz?

  Wow.

• 26:55Speaker 00

  And there were always a lot.

• 26:57Guy Raz?

  And Rod, I guess about, like, what, 10 years after you guys launched Compaq, you're ousted. I mean, the board of directors, they fire you.

• 27:06Speaker 00

  Almost exactly 10 years later, that's right.

• 27:08Guy Raz?

  Why? What was going on?

• 27:11Speaker 00

  Well, there's several levels of looking at the dynamics there. On the surface, it's a matter of disagreement over how fast to move into the lower-cost arena.

• 27:24Guy Raz?

  Like, like lower-cost PCs?

• 27:26Speaker 00

  Yes. The chairman of the company, Ben Rosen, thought we ought to move very quickly, and so quickly that, in fact, we ought to go buy a product from a Taiwanese, or a Japanese, or a Korean supplier. And my argument was, look, it's not what it seems. We can get to market as fast as anybody with our own design. And I think at the board meeting, the board decided to replace me with the number-two guy, with Eckard Pfeiffer.

• 27:55Guy Raz?

  How did you, how'd you get that news?

• 27:57Speaker 00

  Well, we had a board meeting where Ben proposed that idea, and I left the room, and they deliberated it for quite a while, and then made the decision to make the change. But it was clear that was the direction they were going. I knew that's what it was going to be. I was also somewhat burnt out, and I was of a strange mindset, you know? I kind of wanted to get out of that, that pressure. It was, it took me a while to really look back and understand that I was a big part of the problem of why it ended up going down that path. And I regret that, but it is what had happened. And I guess, under the stress I was under, and kind of gotten into this frame of mind where I need to get away, the disagreement over the low-cost speed to market.

• 28:41Speaker 00

  It was just the catalyst that allowed it to happen. I almost guided it to the point where I was going to be fired.

• 28:49Guy Raz?

  So when you were out, I mean, this is the company that you founded, that you built.

• 28:53Speaker 00

  Yes.

• 28:54Guy Raz?

  And then you were removed from that company. I think a lot of people hearing that would say, God, that sounds like such an injustice because it's your idea, you created it, it was your sweat, and then it was taken away from you. But it sounds like, from your perspective, that was fine. You were kind of, your time was over there.

• 29:17Speaker 00

  You know, let's be clear. We're a Fortune 500 corporation. You know, we're a leader in a big industry. And just because you started the company doesn't give you any right to continue to run the company. You know, it needs to be run by somebody that can make good decisions and can manage that complex and operation, which I think I was doing OK, or maybe even very well up to that point in time. So that's, I don't see that as the reason that I needed to leave. I think it had more to do with my frame of mind and sort of a burned out situation.

• 29:53Guy Raz?

  You were in your mid 40s at that point, so still a pretty, pretty young guy.

• 29:59Guy Raz?

  You accomplished a lot. Did you walk out of the company with, you know, financially secure? Were you set for life at that point?

• 30:07Speaker 00

  Yes, absolutely. You know, of course, continued my life. Actually, the home life became much less stressful. And then I got involved in investing in some startups and early-stage companies and tried to help them succeed. Not all of them did.

• 30:23Speaker 00

  But then finally evolved to where I really just liked helping entrepreneurs start their company and tried to help them avoid a lot of the mistakes that new companies make.

• 30:33Guy Raz?

  Can you think about Compaq? It was such a powerhouse in the 80s, a Fortune 500 company, does a billion dollars in revenue within five years. And then you think about all of the companies that it was associated with or that it competed against, you know.

• 30:50Guy Raz?

  Apple, IBM, Dell, Microsoft, Texas Instruments. All of those companies still exist. And Compaq doesn't exist anymore. It was folded into HP and that brand is no longer here. In a way, is that a cautionary tale for some of these powerhouses we see today like Snapchat or Uber or Facebook companies? We can't even imagine not existing.

• 31:17Speaker 00

  You know, it really is. That's certainly something I didn't envision when I left. I guess I just wasn't thinking that far down the road.

• 31:26Guy Raz?

  Yeah.

• 31:27Speaker 00

  And of course, you never know the future. The decision to merge in with HP was a financial decision. But the end result of the way it happened is that Compaq no longer exists. And that is sad because it's got such a great history and played such a key role in actually forming the way the world works today. And yet, most people you run into on the street have never heard of Compaq.

• 31:52Guy Raz?

  It's crazy, isn't it?

• 31:53Speaker 00

  It is crazy, yes. It's sad, but it's also life. We started out to build a company that would last. And I think that's the case with any-- if you look at Dell or Microsoft or Apple, the leaders of those companies maintained enough control to make sure that it never got into the hands of somebody that looked at it just purely from a financial standpoint. If I had been there, if I had been leading the company, we would never have sold. We would have figured out a way to solve the problem.

• 32:29Guy Raz?

  How much of your success at Compaq was because of just your hard work and smarts and the hard work of Jim and Bill? And how much of it was luck?

• 32:43Speaker 00

  If you had asked me that in the 80s, let's say the late 80s, I would probably have said it was 90% intelligence and insight and work and 10% luck. But to tell you how perspective changes with time, I would say today it was the other way around. Wow. We did a lot of good things. We came up with a good idea. But if you look back at any of the things that could have gone wrong and would have either slowed us down or stopped us, I mean, there's an endless list of those. And so the fact that, you know, OK, we dealt with those issues as they came along, but the fact that there was a successful path even available is pretty, pretty doggone lucky.

• 33:29Guy Raz?

  Rod Canyon, he founded Compaq Computers with Bill Murto and Jim Harris in 1982. Rod still lives in Houston, where he mainly invests in other people's startups. By the way, the story of Compaq's David and Goliath's struggle against IBM was the subject of a very cool documentary. It's called Silicon Cowboys. What kind of computer do you use today?

• 33:53Speaker 00

  I use a MacBook Air and an iPad Pro and iPhone.

• 33:58Guy Raz?

  You started the PC revolution. You're an Apple guy.

• 34:00Speaker 00

  I'm an Apple guy.

• 34:13Guy Raz?

  And please do stick around because in just a moment, we're going to hear from you about what you're building.

• 34:22Guy Raz?

  Hey, thanks for sticking around because it's time now for how you built that. And if you happen to share a wall with your neighbor, well, Melanie Cologne's story... Might just resonate.

• 34:34Speaker 02

  I was sleeping and all of a sudden I heard this huge pounding and booming on the other side of the wall. And what was going on is my neighbor was watching some sort of thriller movie and the bass was literally shaking my bed.

• 34:50Guy Raz?

  Oh, I have been there, Melanie. Anyway, as you might imagine, Melanie first tried to talk directly to them.

• 34:57Speaker 02

  One time I went to my neighbor's door. I knew they were in there. I could hear them talking, but they wouldn't answer their door.

• 35:03Guy Raz?

  Melanie and her husband Luis tried everything.

• 35:06Speaker 02

  You know, the creative note leaving, or hitting the ceiling with a broom, or stomping your foot on the ground.

• 35:12Guy Raz?

  And none of it was working for them.

• 35:14Speaker 02

  So we looked around for a solution. We asked our friends in the apartment industry, is there anything that we can use to help us with this? And there was absolutely nothing. And so we thought of the neighbor-to-neighbor notification tool, where neighbors can notify each other completely anonymously and confidentially about a disturbance from their neighbor.

• 35:31Guy Raz?

  And so finally, about a year and a half ago, Melanie and Luis hired a team to start developing an app, which they named AptApp, as in apartment app. And here's how it works. The property management agrees to use the app, sends over the blueprint of the building, and then when neighbors have issues, they can log onto their app and anonymously contact the actual unit they're having an issue with.

• 35:54Speaker 02

  So let's say Joe has a neighbor that is playing their music too loud upstairs. He can select that square, choose a preset notification, so this one would be fitting for a please turn down your music. So he can select that and then send it to the neighbor upstairs. And then that neighbor is able to respond with resolved, or sorry, not me.

• 36:17Guy Raz?

  The property manager can also see if the neighbor has responded, or if an intervention is required. Melanie and Luis beta-tested it in a big apartment complex in Missoula, Montana, with 100 units.

• 36:28Speaker 02

  It went really well. Everyone was really excited about all the tools that were available, and how easy it made communication with staff and residents.

• 36:37Guy Raz?

  In last November, Melanie quit her job as a nurse to work full-time on AptApp.

• 36:42Speaker 02

  There's definitely been times where we thought, you know what? We are literally putting all of our money into this, and how easy would it be to go back to our day jobs? But at the same time, it causes so much stewing in us that we can't even stand the thought of it, and we get right back to work.

• 37:00Guy Raz?

  That's Melanie Cologne. She founded AptApp with her husband Luis. They're partnering with 32 apartment buildings in the Denver area where they live, plus buildings in Missoula and Chicago will start using AptApp this summer. Soon, they're hoping to branch out to student housing and even hotels. If you want to learn more about AptApp, head to our Facebook page. Just search "How I Built This" on Facebook. And of course, if you want to tell us your story, go to build.npr.org. We love hearing from you. And thanks for listening to the show this week. If you want to find out more or listen to previous episodes, you can go to howibuiltthis.npr.org. You can also write to us. That's h i b t at npr.org.

• 37:43Guy Raz?

  And if you want to send us a tweet, it's @howibuiltthis. Our show was produced this week by Casey Herman with original music by Ramtin Arablouei. Thanks also to Neva Grant, Sanaz Meshkhanpour, Claire Breen, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I Built This from NPR.