Jack Tramiel, King of the Home Computer
Written by Ian Matthews April 12, 2006
Last Update May 30, 2006

UNDER CONSTRUCTION: DRAFT 3.6

See Jack 'Live' on Video:
Jack Tramiel is King of Low Cost Computers	TV	1985	0:13	.2MB	.2MB
Jack Tramiel Computers For the Masses	TV	1985	0:20	.5MB	.3MB
Jack Tramiel Impromptu Interview After Move to Atari	Promo	1985	1:31	3MB	1.2MB
Commodore Amiga vs Atari ST	TV	1985	29:17		7MB

Legendary is a word that is used all to often these days.  Like "Hero", it has lost most of its meaning.  But Jack Tramiel certainly deserves the to have the original vigor of the word applied to him.  This site has dozens of pages with more than passing reference to him, yet I think there is still more to say... and here it is:

"He was a big, ebullient, tough, brawling businessman who had no fear and only one item on his agenda: winning the game."  But like most titans, he did not start out that way.

THE CAMP: Breaking the Branches
In 1939 at just 10 years of age he watched the Nazi's invade his home town of Lodz Poland and was thrilled by the spectacle.  "It was a fantastic thing" he recalls.  His birth name is Idek Tramielksi and so by 1944 his family had been railed to Auschwitz.  There, he was personally examined by "The Angel of Death" Josef Mengele and within months his father was dead from what he thought was overexertion.  Jack later learned it was the result of a Mengele "experiment"; an injection of gasoline.  Only a few months later the Americans liberated this death camp. 

For the next couple of years he took odd jobs, including one in an American Army kitchen, and not surprisingly focused his life on food.  He also found his mother had not perished in the camps and he was able to meet her again in Lodz.  Soon after, in 1947, he married another survivor Helen Goldgrub and then promptly emigrated to the US. 

Jack took more handyman type jobs and learned English from watching American movies.  At this point in his life he had already become bold and brash, "I figured I could handle just about anything" given his camp experiences.  "60 individuals (lived) from 10-thousand people. I was one of those 60. So from there on nothing was difficult to me."

In 1948 he joined the US Army and became responsible for repairing primarily mechanical office equipment in the New York City area (remember there were not much in the way of electronics back then) .  "At the same time I attended an IBM School for Office Technology.  It was also there where I learnt to repair electric typewriters."  

UNDERSTANDING MOTIVATION: The Key to Success
After four years in the military he took a job for just $50 a week in a downtrodden typewriter repair shop.  He worked his military connections to secure a service contract on several thousand machines but was shocked when he did not get a raise or a bonus.  "I have no intention of working for people who had no brains" he told his boss on his way out the door.

This is one of the early events showing, Jacks understanding of the necessity for reward.  Later in life he would hone his personality evaluation skills to the point where he could very quickly figure out what motivated an individual.  Money, benefits, praise, corporate titles were all equivalents to Jack which could be traded depending on the person.  This is the kind of motivation analysis is taught in every Business School but it remains an elusive skill which very few managers are able to calculate.

Another "tipping point" in Tramiel's life was his first foray into independent business.  "Together with an old friend whom I knew from the Army, I started a small company which was all about selling and repairing electrical typewriters. So we bought 200 IBM typewriters from the United Nations, repaired them and at least had a stock to sell. With the profit we gained we bought a small company from the New York Bronx, named Singer Typewriters.  And it was just because we both had been in the army so the bank gave us $25,000 each for good conditions – that was our starting capital." 

Given Jacks interest in the foreign countries and his travels to date "it was no large step to move to Toronto (in 1954) with my activities later on. I thought that in a country smaller than the US my chances would be bigger... And here we did exactly the same thing again: we fixed used typewriters for stores which sold them. Incidentally we bought a agency of an Italian typewriter manufacturer named Everest." 

COMMODORE: A Name of Strength
To get federal government orders, he needed a Canadian made product so he arrange a licence for Consul Typewriters.  "We bought the parts in Czech and assembled them in Canada, so our typewriters were true Canadian products. But we still had no name for our company. One day while Erik and I were around in Berlin driving in a taxi, we discussed some probable names – and suddenly I saw a car with Commodore on it, and because our favourite names General and Admiral were already in use, we named our typewriters Commodore. And so in 1958 this well known company name was created. But I still did not have much money so I could only trust my own personal abilities. So I went to my customers and said: If you want me to build typewriters for you, you will have to pay me first. The first load I got was from (the Canadian operations of) Sears & Robuck, $170.000."

Note the emphasis on self reliance and that business is all about performance for Jack.  Don't just sign the deal... write a cheque!

To broaden the business and reduce dependency on a limited set of large clients, he expanded into the manufacture of mechanical adding machines using German parts.   "I overtook the agency for Canada and the US. In 1962 I bought the whole company and suddenly a German company with 2000 workers, most of them in Berlin, was mine."

WORK TO LIVE or LIFE TO WORK: A Childs Truth
As a result of the acquisition "I literally worked 24 hours a day. However, my family was not so happy with this situation because I was barely at home. One day my oldest son who was just 13 back then: Dad, when I’m grown up I don’t want to be like you, I want to have time for my family. I tried to give him a reply: Well, you know, normal people have a family similar to  a tree with his strong branches, but my tree has been just cut down. As a result I have to build a new one and you are one branch of it. Please, you have to understand it: I have to rebuild everything – and that’s why I have just so little time."

This is someone who understands adversity as a motivator.  "That surely was a turning-point in my life. From there on my family was very important to me."

ATLANTIC ACCEPTANCE: What Happened to the Money?
In 1962 Jack needed money to pay back high interest loans Commodore had taken from C Powel Morgan, President of Atlantic Acceptance.  He took Commodore public, selling shares at the bargain basement price of $2.50.  By the mid-1960's there were allegations of fake financials and dummy companies used to jack up (pardon the pun) the stock price.  Atlantic, Canada's sixth largest financial institution, went bankrupt and Commodores good name went with it.  The Canadian Federal Government began hearings into the scandal.  T and things looked pretty bleak for Jack.  Out of a 3 year 1700 page report, 200 pages were devoted to Commodore or Jack Tramiel. 

While writing this article we interviewed several former Commodore mangers who claim that while nothing was definitively proven, it was clear that Jack had serious involvement in these schemes.   Although Morgan public blamed Jack for his direction in some of the "bad" loans, Jack was able to avoid prosecution when Morgan, soon to die for leukemia, accepted much of the responsibility for the frauds.  One ex-Commodorian who wants to remain anonymous said "He took the blame for everyone".

SAVIOUR or NEMIESIS:  Jack Meets Irving
Because Jack was persona-non-gratta with the financial world, he turned to a private investor for capital.  Irving Gould had a lot of money from developing the now common concept of the cargo container (the truck sized metal boxes used by the millions to move cargo from sea port to sea port).  In 1966, Irving gave Jack $400,000 in exchange for 17% of the company and the title of Chairman of the Board.  There were not many men that were not intimidated by Jack Tramiel, Irving was one such man.  Chuck Peddle explains that Jack understood authority and he knew that when it came to Irving, Irving was in charge.

Irving told Jack about the Japanese electronics business and sent him on a multi-month Asian trip to learn about electronic calculators.  Within a few years, much of Commodores operations and Jack personally had moved to California's Silicon Valley.

THE WESTERN DESIGN CENTER: Jack & Bill
In an effort to woo Bill Mensch back to Commodore after leaving MOS in 1977, Jack made a deal to contract his services, while gambling in Vegas.  Often the story is told that Jack paid to set up a new company for Bill.  However, Bill says the story goes like this: After winning about $10,000 at Black Jack, he was given an unwritten contract for exclusive rights to his work; Bill set up the Western Design Center (WDC) in Mesa Arizona in 1978 using his own money.  Bill says that the confusion of this story is easy to understand because Jack himself, "...told people he owned the Western Design Center.

Bill was supposed to design chips for Commodore's primary revenue stream in 1978; calculators.  The first project was to develop an "equivalent to the the Toshiba LC5K3" Bill recalls.  Bill agreed to work for little more than expenses paid twice a month by Commodore and his big pay off was "...supposed to be a royalty paid on each chip."  But he never got a dime because Jack had no intention of using Bill's designs; "they were used to barter with the Japanese!"  Jack would go to Toshiba, show them Bill's design to prove he could manufacture his own chip then Toshiba would capitulate.  Jack was fond of saying he "would get the Japanese price".  After Bill designed another Japanese clone, Jack used the same technique to negotiate substantial price concessions from Japanese manufacturers.

Bill says, "(Jack thought), I wasn't a loyal son because I bought a building Jack did not approve. ...Jack pulled up stakes. He sent a truck to take HIS stuff." The thing to remember is that very little, if anything, at the WDC was owned by Jack or Commodore, yet Bill let his office get cleaned out just to avoid incurring Jacks wrath. Jack and Bill never had a relationship that supported the type of aggression others experienced and Bill had heard about. "Perhaps because I had just that one meeting in Las Vegas on Mother’s Day, May 13, 1978; thus, I was isolated from Jack’s brutal behavior."  From the tone of Bill’s voice I could tell Bill appreciated Jack.  "I will be forever grateful for his agreeing to help set up The Western Design Center, through contract design service agreements. "Very few if anyone would have taken the risk at that time."

A TIPPING POINT: The Calculator Wars
Jack pushed into making calculators with Texas Instruments designed chips and Commodore flourished.  He expanded Commodore into worldwide manufacturing and distribution.  A friend of mine worked for Irving Gould in the mid 1990's and was surprised to hear him say "I made more money on calculators than those fucking computers."  Like all products however, there is a lifecycle and when demand softened, Jack made the mistake of letting  inventories build up.  Then the unthinkable happened; without warning, Texas Instruments (TI) started retailing their own calculators for less than Jacks manufacturing cost.  In 1975 Commodore lost $5 million on sales of $50 million.

Jack learned that suppliers can not be trusted and Commodore's now famous vertical integration model was initiated.  Commodore sourced their TI calculator chips from a so called "second source" (a company that manufactures a product under licence from the inventor).  That company was MOS Technology of Norristown Pennsylvania.  Because Commodore was in financial trouble, MOS was in financial trouble.  Some historians believe that Jack intentionally strung out payments to MOS just to make their situation worse.  Jack had Commodore borrow $3 million (personally guaranteed by Irving) and then bought MOS.

Jack just made the single most important decision of his business life.  With MOS came three things which would soon turn Jacks typewriter / calculator company into a global juggernaut which would set the standard for success for the a decade:

1. chip design and production capability

2. ownership of the brand new 6502 processor

3. an inventive engineer name Chuck Peddle and his ideas for a real Personal Computer

From here things move very quickly for Jack.  He agrees to let Chuck Peddle design and produce what would become the Commodore PET, the worlds first Personal Computer.  The problem is that he had spent all his money keeping the company alive and buying MOS.  "It would take a lot of money I still did not have."  Jack went back to basics and just like his Sears contract days he said, if you want it, you'll have to pay in advance.  Jack guessed the PET would be profitable in volume at $599 a machine so he ran newspaper adverts offering six week delivery on pre-paid machines.  He received a whopping $3 million in cheques.  When ordered the PET into production for Europe he doubled the price and sold more than ever

Jack had every territory operate independently:  The American head office developed new products but each region of the world had almost complete control over distribution and promotion.  When the C64 came out the Australians did not want to have a particular feature installed on it and told head office that they would open every box and remove it!  The Japanese barely saw the Commodore 64 but were the only market to received the MAX Machine.  Germany started making IBM PC Clones; they build their own factory and came up with their own Europe wide distribution system. 

It is in this environment and at this scale where Jack's harsh management style which shines.  His credo is "Business is War" and it shows in nearly everything he does:

• He personally signs every cheque over $1000: Jack insisted suppliers payment terms be stretched beyond their maximums in an effort to make them even more dependent on Commodore.

• He rewards only performance; quickly firing those who let him down:  So called Jack Attacks, where he yells and pounds his fists sometimes for hours, become common.  In his book the Home Computer Wars, Michael Tomczyk tells a great story about how he provided a disappointing VIC-20 marketing presentation and Jack screamed at him for an entire afternoon.  When Tomczyk came back the next day, Jack started up where he left off for several more hours.  Wholesale terminations of entire management teams were not uncommon.  It is useful to note that throughout his book, Tomczyk states repeatedly that he has never seen anyone figure out what motivates people faster and more accurately than Jack Tramiel. 

• Jack refuses to allow budgets to be used because he believes "they are a licence to steal":  To this day, no one has even a solid guess as to what it cost to engineer and prototype the best selling computer in the world, the Commodore 64.

• Jack used Commodore's legal department into a strategic tool: By the early 1980's Tramiel's Commodore was so 'law suite happy' that a joke inside the company was that the legal department had become a profit center.  Chuck Peddle  explained that Jack also used it as part of his tactics; "The strategy is just to slow you down... give them time to catch up". 

• Jack would frequently and without regret renege on deals and even contracts if they did not suite his interests at the time: The largest North American computer store at this time was Computerland and they had a long standing relationship with Commodore and the PET.  When the VIC-20 came out Jack made a deal with mass marketer K-Mart to sell the machine to consumers at a price below Commodores wholesale price sold to Computerland.  As you might expect Computerland was furious so when the 64 came into being Jack again met with Computerland executives and said he would not "screw them".  Naturally, Jack immediately did it again and Computerland pulled the Commodore line completely.

• Jack focus' exclusively on the consumer market:  Jack's now famous "computers for the masses not the classes" is heavily promoted throughout Commodore literature and internal culture.  Even though some of his senior engineers and many marketing staff wanted to develop more profitable business computers, he insisted on perusing the other end of the spectrum, a super-low cost computer designed to kill the TI-99 / Sinclair line.  In 2005 the Plus/4 lead engineer Bil Herd told Commodore.ca, "After Jack left the layers of middle management had their way, from the God awful software, to the price, to even making it talk.  So I guess the TED project was badly engineered as stated on your site, but I can say the engineering itself was good".  The only version of the Plus/4 that had any market success was... wait for it... the stripped down, cheap model called the 116.

• Jack Does Not Tolerate Dissent:  Years before the IBM PC, Chuck Peddle spearheaded a group of Commodore managers who wanted to replace the aging fleet of PET computers with an updated line of real business machines.  At a fateful April 1980 meeting in London England, Tramiel was late and the group made the mistake of openly considering splitting the company into to parts, a consumer division and a business division.  Chuck knew that Tramiel's heart and expertise was in the consumer line and Chuck felt it was only natural that he would lead the business line.  When Jack arrived and found out what was going on, he wrongly interpreted the meeting as a mutiny.  "Or maybe it was?" says Chuck.  Jack was furious and Chuck was going to take the brunt.  The next day Jack ordered the Chuck's R&D office in California closed and the staff to be relocated to Commodore's head office in Pennsylvania.  Most of the staff including Chuck Peddle quit on the spot.

The harshest but perhaps most telling quote describing Jacks personality during these years came from former President of Commodore (1982) James Finke when he said "He comes in like a lighted flare in a darkened room. He illuminates the scene with such brilliance that you're almost blinded. But his vapor trails take a lot of the oxygen out of the air and when he leaves the room there's no more light."

Chuck Peddle also had an interesting quote in a recent Commodore book, "(Jack) destroyed me, he destroyed my family, he did all kinds of terrible things".  In an interview with www.commodore.ca Chuck made it clear that while Jack was exceptionally tough he was ethical "Jack Tramiel never stole anything from anybody to my knowledge".

Under his rough brand of management, Commodore became the worlds first computer company to reach a billion dollars in sales and a million units sold.  Unfortunately Jack burned so many suppliers and employees in California, they had to leave.  Vendors just did not want to sell to him.  This cut throat reputation would dog him the rest of his business life.

FUNDAMENTAL DISAGREEMENT: Irving vs Jack
After moving the company to a massive new Head Office / R&D facility / Manufacturing Plant in West Chester Pennsylvania, Irving Gould's perceptions of Jack as a "loose cannon" would sew the seeds for Jacks demise.  He thought Jack would be unable to take the company from $1 Billion in sales to $10 Billion in sales.  The Jet setting Gould thought Commodore needed, budgets and bureaucracy to ensure accountability. 

Irving also wanted to leave a substantial debt in place while Jack did not.   Jack said "...we never had a raise of stock since we went to stock market in 1962. With the 120 million dollars we would have earned by giving away 2 million new shares we could have paid back all debts we had at the banks and by that strengthen the companies position. The man I worked for (Irving) was of the opinion that this would weaken his share of the company and cut his influence – which was totally wrong."

At this point Jack's sons were coming to work for Commodore in mid-level but appropriate roles and there were rumors that Irving was very unhappy with this because strengthened Jacks political position in the company and diminish his own. Remember Jacks focus on his family.  In a 1986 interview Jack states "My dream was that my sons continue within the same branch like me and that they try to be the best like I tried, but without forcing them to stay in the same business. Despite of that I tried to show them what I do, to integrate them and to discuss the successes and failures."

Jack and Irving had it out during the Consumer Electronics Show while he was announcing his new Commodore Plus/4,a low cost TI-99 Killer.  "We came to that point when I said, that I will have to quit if I cannot do what I think would be best for the company. He said very kindly that if I will not do what he wants to do, then I could leave. And so I left."  At the public announcement on January 15, 1984, the computer industry, Commodore shareholders and financial analysts were shocked.  Irving had removed the founder and visionary leader of a the worlds largest and most powerful home computer company.

COMMODORE v2: The Atari Years
At 55 years of age, with $100 Million in assets, Jack decided to take a year off and travel around the world with his wife.  In typical Jack style, six months in he left a Mediterranean cruise ship, flew back to the US and bought the computer division of nearly bankrupt Atari for almost nothing from Warner Brothers (now AOL Time Warner).  Given his ability to quickly calculate a persons motivation, Jack could negotiate with the toughest people in the world and come out on top.

Within a few weeks he closed all Atari offices worldwide, save one in Silicon Valley and immediately fired 95%+ of the staff.  Back to basics... computers for the masses not the classes!  He ordered all work be cancelled except for items relating to the as yet unreleased ST line. 

Several suppliers refused to honour their contracts with Atari, now that Jack was at the helm.  They just did not want to work with him.   I believe but have not been able to verify that Jack's Atari  began litigation against some of these suppliers, including Amiga (just prior to its being bought by Commodore).  In the end he got the product to market near budget and on time.

Jack brought two of his sons, Garry and Sam on board right away but Leonard stayed at Commodore for a few more months.

By 1986 he had turned Atari around and made it a household name again.  That year Atari had a profit of $25 on $258 million in sales.  Atari's new slogan was true to Jack's heart; Power without the Price.  The 1040ST was the first personal computer with 1MB of RAM and was designed to be the 'next Commodore 64'.  The ST line became quick popular in Europe but, like Commodore products, it struggled for North American acceptance. 

1987 brought the acquisition of Federated Group, which owned an electronic retail chain.  Again, Jack wanted to control as much of the system as possible.  By 1990 Atari sold 26 of Federated's stores to "Silo" and closed the balance. 

His exit from Commodore did little to reduce Jack's litigious ways.  In 1989 Atari released the Lynx Gaming system which, while technically solid did little to penetrate the market.  In 1992 Atari lost its $160 million law suit against Nintendo which alleged that Nintendo monopolized the video game market. 

Given his reputation, Jack was not able to attract the quality skilled labour and suppliers he needed to invent the next big thing.   Sales of Atari's primary products were in free fall and they were forced to restructure and drastically downsize again.

 ROUND TWO: Can't Get the Cat Out of the Bag
Never one to give up hope, Jack put Atari's efforts into developing the cutting edge 64-Bit Jaguar Interactive Media Game System in an effort to beat the competition.   At $250 each, Atari sold 200,000 units in 1993.  While most observers say the Jaguar hardware was ahead of its time, many say that the resources invested in this line made it a sink or swim situation.

In an effort to raise cash to keep the company liquid, Jack traded a licence to Atari's old games to Sega for $90 million in 1994. 

By 1995 Atari's days were numbered.  Prices dropped to stimulate demand but earning still collapsed and in 1996 Atari formed a new company called Atari Interactive to distribute it's classic games redeveloped with 3D graphics and sound for the Microsoft DOS and Windows platforms.  IBM PC clones ruled the day.  They knocked out CP/M, Commodore, and now Atari. 

Jack owned a hard drive manufacturer called JTS which had a large OEM contract with DELL.  I believe JTS was largely run Jacks sons at this point but have been unable to verify this. JTS produced inexpensive old technology hard drives with very high failure rates.  I am a computer dealer in my real life and I remember selling JTS drives... not a good decision! 

At the end of 1996 Jack pushed the remnants of the once great Atari into JTS Corporation.  Hasbro bought the Atari Division from JTS in March of 1998. HOW MUCH.  JTS was formally shut down in 2000. VERIFY DATE

I am sure Jack was disappointed with the failure but he likely takes solace in the fact that Atari outlived Commodore which started shutting down in 1993 and formally went bankrupt.

In 1986 interview he said "Well a very happy person because I, I'm just looking at that in 1945 I was reborn, I don't look back, I do remember (the Nazi camp) but I don't have any hate in me. I have built a company, I have built a family, I have three sons and four grandchildren and they all know about my background and about success and they're all working together with me, my three sons are part of my company, and we are very happy with what we've accomplished."

Today Jack Tramiel lives a life of luxury from his primary palatial estate atop a foothill in Monte Sereno California.  He manages his money, enjoys his Rolls Royce's and refuses to publicly talk about Commodore or Atari.  However, he does a provide periodic speeches at Holocaust related events and supports Jewish causes such as the "Holocaust Memorial Museum".

WHAT MORE CAN YOU SAY: Jack is a Legend
Descriptions of Jack from people who knew him include words like: charming, harsh, intelligent, driven, challenging, difficult and demanding.  While many have very strong opinions of the man and his myth, no one can argue that he was not a great pioneer who blazed a new trail that affected all our lives.

NOTES:

In May of 2006 it was reported that an investigation of Jack Tramiel's acquisition of Atari property resulted in a $1.8M judgment against him.  Read all the details HERE or look at all our magazine articles HERE.

Another interesting theory of Jack's historic split with Commodore was presented by Bill Mensch during an April 2006 interview with www.commodore.ca.   "Jack is far too shrewd to think HE quit Commodore... he knew the limitations of Commodore's technology.  He knew the impact IBM, Microsoft, and Intel would have.  (Commodore was) doomed by the competition.  ...You can bet he cashed out his stock; he knew he was at the peak."  Bill believes that the stories of a fight with Irving are likely accurate, just incomplete.  "Jack would have instigated a fight... so he could sell his stock without being investigated by the FTC (for insider trading)."  It is important to note that this is just a theory and not an accusation or statement of fact.

In May of 2006 as a rebuttal to this, Michael Tomczyk, (Jack's personal assistant) told us: "The thought that Jack instigated his own departure is totally false.  He was caught by surprise and was on a flight back to California while the board meeting was still in progress, that's how off-guard he was by the vote.  He did cash out because Irving who is a fair minded businessman, bought out half his shares, and he dumped the rest on the market which crashed the price from $90 to $6 in six months.  Jack was planning strongly to bring his three sons into the company to continue the culture he began and there was never any thought of his cashing out at that time in history.  Anyone who believes or asserts that is trying to revise history.  I believe I am quite informed because I was there and was in contact with many of the participants at the time this occurred."

Bill has since responded with “Well then that worked out very well for Jack and I can forget the idea that Jack cashed out because he saw the light. Jack deserved a break from everything he experienced in life up until then and it would appear that although Michael’s claim is no doubt true the timing for Jack getting out was impeccable and perhaps guided by a higher power!”