Ted Waitt

Cofounder of Gateway

• Born: January 18, 1963
• Place of Birth: Sioux City, Iowa

Primary Company/Organization: Gateway

Introduction

Ted Waitt founded Gateway, a company that specialized in providing quality computer hardware at a low price to individual customers. He made his fortune with the company, capitalizing on the fact that he entered the business at a time when the market for personal computers was booming, then left in his early thirties to pursue other interests. After leaving Gateway in 2000, Waitt became a well-known philanthropist. He returned to Gateway from 2002 to 2005 to help the company through difficult times.

Early Life

Ted Waitt was born in Sioux City, Iowa, to a family in the cattle business. Although not an outstanding student in high school, he enrolled as a marketing major at the University of Iowa. Waitt became interested in the computer business after visiting friends who worked for Century Systems, a computer retailer, and dropped out of the university to work at Century; he was fascinated by the process of long-distance retail and would use that concept when establishing his own company. He and a colleague from Century, Mike Hammond, founded the Texas Instruments Personal Computers (TIPC) Network, which began retail operations in 1985. They renamed the business Gateway 2000 in 1987, the name signifying that Waitt wanted to work for the company only until the year 2000.

Life's Work

Waitt founded Gateway as a retail computer hardware business that specialized in providing current, quality computers at a low price to the general consumer. Gateway computers began as a family operation in many ways: The loan for Waitt's original company, TIPC Network, was secured by his grandmother, and the company was originally located on his family's cattle ranch. Waitt provided the vision and marketing expertise for the company, while his colleague Hammond provided the computer expertise; Waitt's brother Norman joined the company in its first year as financial manager. As the TIPC Network, Gateway began as a membership organization: Customers paid a $20 fee to join and have the privilege of purchasing discounted computer hardware from the company. This business model succeeded because of the low price for TIPC/Gateway products: Customers saved more than the membership fee through discounted purchases. Originally Gateway targeted a single specialty market: owners of Texas Instruments computers who wanted the add-ons that would allow them to run IBM software on their computers.

Gateway grew rapidly in its early years. In its first partial year of operation (September–December 1985), Gateway Computers sold $400,000 worth of computer equipment. In 1985, the company saw $1 million in sales. The company began selling complete computers in 1987 and was able to sell a complete IBM-compatible personal computer (known colloquially as a clone) for 33 percent less than a comparable model cost if ordered from Texas Instruments: $1,995 from Gateway as opposed to $3,000 from Texas Instruments. In 1992, sales reached $1 billion, and Gateway was identified as the fastest-growing company in the United States. Gateway went public in 1993, raising $150 million on its initial public offering (IPO); at this point, members of the Waitt family owned 85 percent of the company. Waitt emphasized the midwestern location of his company through ads featuring a black-and-white spotted cow and the slogan "Computers from Iowa?" Both were contrarian strategies, subtly playing on the presumed association in the American consumer's mind between the Midwest and qualities such as stability and honesty; the purpose of the strategies was to set Gateway apart from the numerous other companies then in the personal computer business, many of which went out of business fairly quickly.

By 1996, Gateway was making more than $1 billion in sales per quarter and had a global workforce of more than nine thousand employees. Gateway continued to expand, entering the international computer marketplace with forty overseas stores as well as production facilities in Ireland and Malaysia. In 1998, the company changed names again, becoming simply Gateway (not Gateway 2000). In 1999 Waitt retired from the company and left Jeffrey Weitzen in charge as president and chief operating officer.

As it evolved, Gateway used many strategies to keep costs low. The company originally operated from a building on Waitt's family's cattle ranch and did not move to an office in Sioux City until 1987. Waitt later moved the company to South Dakota to avoid paying Iowa's personal and corporate income tax. The company kept a lean inventory of parts, and PCs were assembled on demand, a strategy that also ensured that the most up-to-date components would be used. The company had a streamlined operation, paid relatively low wages, had no budget for research and development, and produced most of its advertising in house.

Gateway was innovative in including many features on its computers that eventually became standard, such as CD-ROM drives. These choices were driven primarily by Waitt's instincts, which proved in line with the way the computer business was developing. After Gateway experienced serious financial losses in the second half of 2000, Waitt fired Weitzen and returned as chief executive officer (CEO). However, he retired again in 2005, unable to restore the company to its former heights. In 2007, Gateway was acquired by Acer, a computer manufacturer based in Taiwan.

Waitt later formed the Avalon Capital Group, an investment company focusing on entertainment, health care, finance, technology, and real estate ventures that make innovative uses of technology. Companies in which Avalon Capital Group invested include Vizio, Lava Supply Chain Solutions, and Fisker Automotive.

Personal Life

Waitt married Joan Waitt, a businesswoman and philanthropist, and the couple had four children together. After they divorced, Waitt married Michele Merkin, a model.

Waitt engaged in a number of philanthropic ventures. In 1993, he established the Waitt Foundation, which has given more than $118 million to charitable and nonprofit organizations. The original focus of the foundation was on helping people in at-risk communities in Sioux City and the surrounding region. In 1999, the foundation moved to San Diego and broadened its charitable programs. It has on ocean conservation, supporting the creation of marine protected areas, improving fisheries management, encouraging cooperation among nongovernmental organizations, and promoting sustainability. In 2005, Waitt created two new institutes, the Waitt Institute and the Waitt Institute for Violence Prevention. The Waitt Institute focuses on research and exploration; notable expeditions carried out by the Institute include a 2009 deep-sea search for the remains of Amelia Earhart's plane and a 2010 search for the Air France plane designated for Flight 447, which crashed in the Atlantic Ocean in June 2009. The Waitt Institute for Violence Protection focuses on preventing bullying and gender violence; initiatives include the documentary film Bully and the Sioux City Project, a five-year effort to increase awareness of violence and bullying.

Waitt also held roles with other organizations. He joined the board of the Salk Institute for Biological Studies in 2004, and served as that group's chair from 2016 to 2017.

Bibliography

"Board of Directors." Waitt Institute, https://www.waittinstitute.org/board. Accessed 8 Mar. 2024.

Booker, Katrina. "I Built This Company, I Can Save It." Fortune 143.9 (2001): 94–102. Print.

Dessner, Michael, Greg J. Packard, and Andy Sherrell. "Waitt Institute Completes Pacific Survey Utilizing AUV Technology." Sea Technology 51.6 (2010): 19–24. Print.

Ericksen, Gregory K. What's Luck Got to Do with It? Twelve Entrepreneurs Reveal the Secrets Behind Their Success. Hoboken: Wiley, 1997. Print.

Tiku, Nitasha, and Jason Del Ray. "Revolutionary Roads." Inc. 31.3 (2009): 100–01. Print.