Richard Keith Latman - The Blog

iCarMagic Sold Again - Microsoft Buys Company

Last night while I was on a IM session I heard that once again iCarMagic had been sold to yet another suitor: this time Microsoft was buying us. After about 45 minutes of laughter I thought about how ridiculous that transaction would really be. I mean, can you imagine me signing a deal with Bill Gates & Co? Keith Latman would be a Microsoft employee? That's really funny...

Every time I reboot my Microsoft-based phone when it jams up I remember how many viruses or bug fixes they do every week for every product they offer. I think about how dealers will react during a deal when it just locks up or how F&I guys will love the speed decrease they get with their new tools. I think I'll just watch this one from the sidelines, it will be well worth the price of the popcorn.

To be fair I do have close relations with many Microsoft people, and can see the natural synergy but Microsoft will likely try to turn its new Dynamics suite (which is comprised of companies they have purchased like Great Plains) into a full circle solution. Much like Reynolds and ADP have done, this will create a closed-loop product that will be competent, but not cutting edge in any sense of the imagination. I suspect it will be "hosted" (terminal server-based) or hardware based at the dealership, be very slow and be full of 'features' that we would all call bugs. They will do as they always do, release an immature product, over promise and dealers will end up with yet another Microsoft product that looks really good on a Powerpoint slide but one that nobody uses. How many Microsoft Word features do you use beyond the basics? Done any real-time XML connectivity while writing a letter lately?

Isn't it ironic that Microsoft, the prince of the anti-trust World, will now come into the car business to propose open standards and connectivity to all? I think that's the same thing they said in the online music business (http://news.zdnet.com/2100-1040_22-6097935.html) before throwing their "playforsure" partners off the ship. In any event this will no doubt raise the price of NADA booths, squeeze competition and lower the overall dealer satisfaction with DMS software even further. The only thing that might save them is that their competition in the space is worse then they are.

Why Microworkz Failed Part 1

I receive a ton of emails every week and by far the biggest question I am asked is why Microworkz failed. The answer I am afraid is complicated and although I'd love to say it was only one thing, in reality it was a combination of factors that led to our downfall:

• First off we were too small and got way too much national attention. When we appeared on the front page of the Wall Street Journal in Feb 1999 we had 10 employees and occupied 2100 sq feet of primarily retail space. VC's ran in with money, we rented 125,000 sq ft of manufacturing space and tried to hire over 200 people. In 3 months we attempted to build infrastructure, train technicians and sales people, secure parts relationships overseas and handle the over 1000 phone calls a day we were receiving. Remember this was the dot com days, VC's told us anything was possible if we thought like billionaires. They were wrong and our task was impossible
• Microsoft played a huge part in our failure as Bill Gates and Company made sure we were distracted by audits, awful licensing terms, huge deposits (over $250,000) and negative press from MSNBC early on about how our systems were not reliable (of course we won "best buy" from PC World 2 times in a row)
• Peter Lewis of the Seattle Times wrote articles every week about us and it became a self fulfilling problem. Once the articles were written, customers canceled orders and demanded refunds in huge quantities. At one point over 20% of our order load was canceled due to his panicking the public. Further the negative press in Washington lead to the Attorney General action (even though the FTC cleared us of any wrongdoing) and the subsequent shutdown. His unethical and dishonest reporting was a major factor in us losing lucrative sponsorship deals for the iToaster and many, many distribution deals. I have no doubt that if Peter Lewis was not making a career of reporting on us nobody would have lost a penny and we'd still be in business today. In all my experience with the media (9000 articles, 700 interviews and over 50 television appearances) he was the ONLY one who wrote about us and me this way.
• Production was a huge nightmare and we just couldn't get it right fast enough. Remember Microworkz grew from nothing to a huge operation literally overnight. We had to learn as we went and it was much more difficult that we expected.
• Technical support was another area that we did not excel at or accurately predict the volume of. We mistakenly planned that these systems were easy to use, so when the calls flooded in from users that were novices and first-time buyers we were woefully unprepared. It drained our resources, resulted in returned units that were not defective and helped fuel Peter Lewis and his vendetta.
• Promotion was one area that we excelled in and we just sold too many units. In hindsight, quoting long lead times would have allowed managed growth and time to build out our infrastructure. My mistake was making all sales people commission and letting them sell to their hearts content.
• Not realizing we were going down was one of the biggest mistakes of all. When one of our investors, Sterling Crum, brought in a professional COO I should have allowed him more control. In those days everybody had a young, inexperienced CEO and for months the VC's had told me how great I was. I believed them and my lack of experience led to critical damage control errors that eventually cost me the company

I will write more as time permits about the lessons learned and give you more details about the issues we faced. It's hard to believe that this company was really only on the national stage for about 8 months and created so many positive and negative legacies. We did do many things well and next time I'll tell you about how we got the publicity and why Microworkz became a household name for tens of thousands of happy customers.

Richard Keith Latman Pleads Guilty

For the past 6 years I have had to deal with the fallout on my personal life from the Microworkz.com collapse, and it has been very difficult. This afternoon I have pleaded guilty to one count of concealing assets from the bankruptcy trustee in early 2000. The charge is serious, I committed the offense and I was wrong to do so.

I won't spend any time here justifying my actions or try to minimize the fallout that may occur from my decisions then or now. It was a very difficult time in my life (Microworkz had just collapsed as had my career and marriage) and I made some bad choices that were both illegal and morally wrong. Despite the fact that no individuals or creditors were hurt by my actions, I regret the time and expense incurred by the U.S. Trustee in this case and look forward to a restitution order to pay for her legal expenses.

I will address the substance of the case and detail the charges for you after sentencing late in October. The case of the United States v. Richard Keith Latman is over...