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The Rise and Decline of Vector Graphic : Management Mistakes and IBM Crush Couple's Computer Venture

August 20, 1985|DANIEL AKST | Times Staff Writer

Remember Lore Harp? The housewife-turned-MBA who was splashed on the cover of Inc. magazine, lionized in Savvy and interviewed at reverent length by the Harvard Business Review?

If you have forgotten, it's not surprising. Vector Graphic, the company Lore and Bob Harp founded nine years ago on their kitchen table in Westlake Village, was ambushed a few years back by management blunders and a good-sized competitor by the name of IBM.

Today Vector is as shrunken as a punctured beach ball and right back in Westlake Village--practically on a kitchen table again.

Vector's history is a classic story of success and failure in the computer business, a cautionary tale for energetic entrepreneurs caught up in the mystique of management.

The company is controlled these days by the ill-starred venture capitalists who helped fund it. Few people work there. Its stock has plummeted.

Merger Postponed

And now the company, whose chief executive boasted of facing down Wall Street underwriters with her unyielding demands, is wanted mostly for a transferable tax loss exceeding $10 million. Even so, a proposed merger to exploit the loss has been postponed.

The Harps, meanwhile, are divorced.

At its peak in 1982, Vector Graphic was a computer company with $36.2 million in sales, $2.4 million in profits and an important place in the up-and-coming personal-computer industry. It had 425 workers in a huge Thousand Oaks facility,

What went wrong? "It was a series of blunders," said Donald Sinsabaugh, who used to follow the company for the securities firm of Swergold, Chefitz & Sinsabaugh in New York. Lore Harp, he said, "is not to blame alone. But she was the leading light of that company. Being the person who would have taken the credit, she's the one who has to live with the failure."

Sinsabaugh said he doesn't follow Vector anymore, because "no one cares about dead horses."

Both Harps have moved on to other things. Bob is chairman of Corona Data Systems, a privately held computer company in Thousand Oaks that he founded a month after leaving Vector. Corona, which posted sales of $64 million last year, reported turning its first profit last year and that it is roughly breaking even this year.

Success Story Turned Sour

Lore Harp is in San Mateo, where she has started a new company, Aplex Corp. Earlier this summer, she said it was planning to patent a feminine hygiene product.

She is reluctant to talk about Vector now. But when she does, she says several things turned her success story sour--"the entry of IBM," "too many cooks stirring the broth" and, finally, "lots of things."

A strong-willed German emigrant, Lore Harp was 32 back in 1976 and dissatisfied with her comfortable suburban life as mother and homemaker. She tried law school, but the workload, coupled with the demands of her family, were too much. At the same time, her husband, who holds a Stanford doctorate in electrical engineering, was looking for someone to market a computer memory board he had designed.

Bob Harp was working for Hughes Research Laboratories, and Lore Harp wanted to start a business. So she and the Harps' next-door neighbor, former bond trader Carole Ely, decided to market the memory board themselves.

After the company was mapped out in the kitchen, the headquarters became the downstairs bedroom. Capital was $6,000. The product was a kit for Bob's circuit board, a device to expand a computer's memory, packed on the floor by Ely and Lore Harp. Letters signed by Lore Harp had LH/mtf typed in the corner, which looked official, but stood for "Lore Harp/my two fingers."

Bowls Held Components

Growth was accommodated by getting bowls from the kitchen to keep the little components separated. The children were enlisted as assemblers. Later, high school students were hired part time.

In December, 1976, five months after incorporating, Vector moved to 1,200 square feet of rented space and hired two full-time workers. Five months later it moved into even larger quarters.

Once the company was a going concern, Bob Harp quit Hughes and joined Vector full-time, designing its first full-scale personal-computer system. It hit the market in 1977, and Vector was off and running, in the forefront of the personal-computer boom. The company soon became a leader in small, multiuser systems.

By 1980, Lore Harp had obtained her MBA from Pepperdine University, and, by her account, felt challenged and fulfilled in her role as president and chief executive. Bob Harp was chairman and vice president for research and development, using his expertise to design Vector's products.

Curse of Fixed Keyboard

Those products were well-regarded generally, but they weren't perfect. Critics complained that the Vector 3, for example, was uncomfortable to use.

"The thing that killed the Vector 3 was a fixed keyboard," said Michael Murphy, editor of the California Technology Stock Newsletter. "It never caught on."

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