Kapor, Founder of Lotus Development, Resigns as Chairman of Software Firm

Kapor, Founder of Lotus Development, Resigns as Chairman of Software Firm

By William M. Bulkeley
The Wall Street Journal

July 11, 1986

Lotus Development Corp.'s founder and chairman, Mitchell D. Kapor, resigned unexpectedly, saying he wanted to "explore other endeavors."

The 35-year-old Mr. Kapor, who started the Cambridge, Mass.-based software concern in 1981 and helped author 1-2-3, a spreadsheet that became the best-selling program in the personal computer software industry, resigned as chief executive officer in April.

Jim P. Manzi, 34, who remains president and chief executive, will become chairman as well. Mr. Kapor will remain a director and said he will continue to consult with Lotus on development of a "major product" during the next year. While Mr. Kapor said he doesn't have any specific plans at this point, he added, "I'm not going to engage in anything that conflicts with Lotus's fundamental business interests."

Mr. Kapor's departure isn't likely to change Lotus's business strategy or outlook in the near term. However, the move could affect Lotus's new product development, the area of the company in which Mr. Kapor was most deeply involved.

Harvey Bundy, an analyst with William Blair & Co. in Chicago, said, "Wall Street has gotten to like Mitch and view him positively in terms of new product development." Mr. Bundy added that Mr. Kapor's resignation, "won't make any difference in earnings for the next four to six quarters," because existing products will carry Lotus for that period.

Lotus made the announcement shortly before 5 p.m., after the markets had closed. In national over-the-counter trading yesterday, Lotus closed at $33.50 a share, down $1.25.

Mr. Kapor said that he had been rethinking his role at Lotus for several months. He said that leaving a large company "is a natural evolution for founders and entrepreneurs." Five years ago, he said, "we were a small band setting out on a great adventure. Now we have 1,200 employees and two million customers. It's a radically different situation."

Mr. Manzi and other Lotus directors were told of Mr. Kapor's decision earlier this week. Lotus employees were informed of the move at a companywide meeting in Cambridge late yesterday afternoon.

Alexander V. d'Arbeloff, a Lotus director and president of Teradyne Corp., Boston, noted that Mr. Kapor has been turning over management responsibility to Mr. Manzi for almost a year, a trend that was capped by the transfer of the chief executive's title in April. Once that process starts, "it's almost inexorable," said Mr. d'Arbeloff. He added that Mr. Kapor's resignation is difficult for software developers at Lotus because, "he's a guru." However, Mr. d'Arbeloff said, "It would have been far worse for him to kind of drift off while remaining at the company."

Mead Wyman, a former Lotus executive now working as a venture capitalist with Hambrecht & Quist, said the resignation may demoralize Lotus's programmers. "Mitch has really been the technical leader. Jim (Manzi) has leadership of the sales and marketing side," he said.

Mr. Kapor, a Yale graduate who worked as a radio disk jockey and as a transcendental meditation instructor before he started programming personal computers, said he expects "to lay low" until he completes his year of working on the undisclosed new product at Lotus. "My interests are in having options and freedom of choice," he said. Mr. Kapor denied speculation by industry analysts that he plans to go into politics.

Mr. Kapor has ample resources for his endeavors. Although he has sold Lotus stock steadily, including a 500,000-share sale in May for $17.4 million, he retains 1.6 million shares, or more than 10% of Lotus's stock. At current market prices, Mr. Kapor's remaining stake is valued at about $53.6 million. The company, whose stock has risen sharply in the past six months, has been buying back its shares lately and declined to disclose the current amount outstanding.

Mr. Kapor's resignation continues a pattern in the rapidly maturing personal computer industry, in which pioneers who founded companies leave top jobs or are fired. For instance, Apple Computer Inc. founder Steven Jobs was pushed out last year in a messy management battle. At Lotus, only two of the 13 top officers were there three years ago.

"Things are in very good shape at Lotus in all respects," Mr. Kapor said. "If I didn't think things were in such good shape here, I couldn't resign."