Tune In, Turn On. Dad: Drop Out!

By David Graulich

The television show that made Michael J. Fox a star, Family Ties, had a simple premise: What happens when children are more conservative than their parents? Fox's character, a teenager named Alex, was a business-minded Young Republican-type who was frequently at odds with his liberal, "I'm OK, you're OK" parents. When they talked about idealism and social justice, Alex talked about investments and William F. Buckley.

Family Ties is now in reruns, but if Alex were still around he'd have an MBA, ready to launch a fast-track career. And you can bet it wouldn't be in a business with his father or mother.

Pity the real-life Alexes, however, who are desperately trying to rein in their "tune in, turn on, drop out" CEO dads, before the family business goes to pot.

The aging CEOs, dressed in psychedelic neckties, or bobbing in a hot tub spouting the wisdom of Timothy Leary, could get by running their companies as a family-wide "life experience" in the seventies and even early eighties, because the U.S. economy was hot. Some were quite successful. But in the last half-decade the economy has gotten extremely tense. And it is up to the post-Woodstock generation now entering business to somehow get their parents to take a serious reality check.

Such is the plight of David Kay. His father, Andrew, described in press accounts of the time as "brilliant, if highly eccentric," founded Kaypro Corp. Kaypro made lots of money in the early days of the PC industry with its Kaypro 2 computer. But last March the company filed for Chapter 11. Why? Dad based projections on karma rather than cash flow.

Kaypro headquarters is one mile from the beach near San Diego. Many of Kaypro's early staffers were surfers, and meetings were often conducted in the ocean. A free health bar offered freshly-made carrot juice.

Unfortunately, all that carrot juice didn't help Andy see his market any clearer. The company fell behind in technology, and David, who ran marketing, tried to counter his father's chronically overoptimistic sales projections — to no avail. Andy kept on ordering parts, which piled up so quickly the company had to erect a circus tent in the parking lot just to accommodate them all. Exasperated, David moved his desk to the company loading dock and shooed away truck drivers before they could unload.

Even as orders slumped, Andy announced that he planned to open warehouses around the country. David pleaded with him to reconsider — so Andy announced a new plan. From now on, Kaypro would hire mostly Mormons. "Howard Hughes did it," he explained to his son. David quit.

Since 1986 Kaypro has lost $41 million. To blame was the Alex Syndrome — a conservative son or daughter who couldn't overcome a wayward parent.

Others have succeeded. Witness Christie Hefner, who has been in the news discussing how Playboy Enterprises is issuing a new class of stock to assure family ownership. As Playboy's CEO, her language is laden with enough biz-speak to make Alex proud: "equity dilution," "recapitalization," "acquisition strategy." Having moved hedonistic Hugh, her dad, out of day-to-day management, Christie is now obliging all 14,000 single-share Playboy stockholders to sell back their shares. The stock certificates became instant collectors' items when Hugh issued them in 1971 — each is decorated with a nude Playmate. Christie's reasoning for retiring the shares is not moralistic but pragmatic: eliminating small shareholders will save about $100,000 a year in mailing and handling expenses alone.

Meanwhile, guys like Andy Kay, still chairman of Kaypro, just won't learn: Andy hailed a recent comeback plan by saying, "The seas will be calmer..."

If this were Family Ties, Alex would smile nervously, shield his wallet, and take his investments elsewhere.


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September 1990

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