Lotus's Influential Head Decides To Call It Quits

By David E. Sanger
The New York Times

July 11, 1986

Mitchell D. Kapor, the freewheeling software entrepreneur whose Lotus 1-2-3 program transformed him into a cult figure in the computer industry, resigned yesterday as chairman of the Lotus Development Corporation, saying that he wanted to ''explore other endeavors.''

The move comes scarcely five years after Mr. Kapor and a few associates began tinkering with the business-productivity program that turned Lotus into the world's largest independent personal computer software house, generating revenues of $256 million last year. Mr. Kapor, whose influence in the industry extends far beyond his own company, is frequently referred to as the software equivalent of Steven P. Jobs, the mercurial founder of Apple Computer Inc., although Mr. Kapor is the more personable, and some say the more creative of the two.

But in recent times, the 35-year-old Mr. Kapor - whose Hawaiian shirts and beer-in-hand approach to software development gave Lotus its carefully nurtured image of laid-back creativity - had increasingly withdrawn to Lotus's research labs. And the responsibility for managing Lotus had fallen to Jim P. Manzi, the company's president and chief executive, who yesterday took on the additional title of chairman.

Looking for His Freedom'

''He's been losing interest in the business end of the business,'' a friend of Mr. Kapor's said yesterday. An associate at Lotus added, ''It doesn't look like a palace coup here; it just looks like Mitch is once again looking for his freedom.''

In a brief telephone interview yesterday, Mr. Kapor laughed off any comparisons between his own resignation and Mr. Jobs's stormy departure from Apple a year ago. ''When Steve left Apple, he didn't remain a director and a consultant,'' Mr. Kapor said, noting he was retaining both roles. ''All he had was a lawsuit,'' now settled.

Neither analysts nor company insiders expect major changes at Lotus in the wake of Mr. Kapor's resignation. With 1,100 employees and more than two million users of 1-2-3, Symphony and Jazz, the company's main products, experts say the enterprise has grown so large that its fortunes no longer rise or fall on Mr. Kapor's talents.

But over the long term, one company executive conceded yesterday, ''it's very possible that we could be hurt by the fact that Mitch's spark doesn't ignite new ideas.'' The last product in which Mr. Kapor was directly involved is expected to be introduced in the next six months - a desktop productivity program that makes use of a number of artificial intelligence techniques.

Little Hint

Speaking to surprised company employees yesterday at Lotus's headquarters at the edge of the Charles River in Cambridge, Mass., Mr. Kapor gave little hint of what he planned to do next. During the telephone interview, however, he said he had decided against entering politics in Massachusetts, where he is among the state's best-known business executives.

''I don't want anyone sending me any business plans,'' he said. ''I will go where my sensibility leads me, and I expect I'll be wandering for some time until I just get interested in things. That's how I got started working on Lotus.''

''I guess I fall into the genre of founders of companies,'' he added, ''who seem more often than not to flourish in the early phases.''

In fact, the speed with which Lotus flourished in its early days, after Mr. Kapor spent a brief career as a disk jockey and then a software developer for Visicorp, surprised Wall Street and the company's founder and employees.

When Mr. Kapor left Visicorp, which introduced the first electronic spreadsheet in 1979 but since has merged with another company, he signed a ''non-compete'' agreement, common in the volatile high-technology industry, that prevented him from going into business against the spreadsheet maker. But at the last minute, he had his lawyers insert an exception to the contract, allowing him to pursue the development of what became known as an ''integrated'' software package, combining several programs in one. It was an idea that Mr. Kapor had been unable to sell to Visicorp's founders.

Sales Soared

Within months of its introduction in 1983, Lotus 1-2-3 and the I.B.M. PC for which the program was designed contributed to each others' sales. The sales projections made by Mr. Kapor and his investors underestimated first-year revenues by 1,700 percent.

Lotus quickly emerged as the leader of the personal computer software industry, rivaled only by the Microsoft Corporation and Ashton-Tate. But its growth owes much to the continued success of 1-2-3, which allows users to calculate complex financial projections and display the results in charts and other formats, rather than any blockbuster successes since.

Lotus's next generation of integrated software, Symphony, has sold well, but it never matched the success of 1-2-3. By the time it appeared, personal computer users were already turning away from bulky ''all-in-one'' programs, complaining that they were capable of handling a number of tasks acceptably but few of them exceptionally.

And Jazz, designed for Apple's Macintosh, was delayed by technical snafus, and came out just as Lotus and Apple were discovering that the Macintosh was not being accepted by business users, the most lucrative market. ''We made some mega-mistakes,'' Mr. Kapor later conceded. ''But who's perfect?'' In the last year, Lotus has focused more and more on the business and scientific markets, earlier this week introducing its most expensive line of programs ever - the Application Connection - intended to link microcomputers and mainframes. Company officials say Lotus will focus more and more on software that allows workers to share data through computers linked together in clusters in the office.

''What strikes me the most about our early days was the inseparability of skill and luck,'' Mr. Kapor said yesterday. ''But now factors other than just product genius are critical, and that was not the case when I started.''

GRAPHIC: photo of Mitchell Kapor (AP); graph of Lotus's net income, in millions of dollars

Copyright 1986 The New York Times Company