buying workstations and personal computers.
At the same time that was going on, the Cold War was coming to an end.
Many of our customers were defense-related. Major customers were large
intelligence agencies in the United States, for example, or other defenserelated
applications. So that market dried up. Revenues turned down very
steeply in the late ’80s.
Livingston: How did your investors react?
Gruner: We had a situation where a lot could be learned about the pros and
cons of using venture capital. Things were going south quickly and badly. We at
the board level had to make a decision as to what we should do. One part of the
board was saying, “Let’s take our time; work this thing through; live with this for
2 or 3 years; get things fixed; transition into another segment, and move in that
direction.” Another segment of the board was saying—and I don’t mean this in
a derogatory way—“Let’s take more risk, roll the dice. If it works, it will work
out big, and, if it doesn’t, it disappears and let’s move on to the next deal.”
One of the things that I think is dogma within venture capital is that you
don’t want to manage what they call the “living dead.” I don’t know what the
numbers are now, but back when I was working with venture capitalists, their
rules of thumb were: typically one out of ten companies is a really big hit;
roughly three out of ten go belly up pretty quickly, and you get rid of them. The
other five to six are what they call the “living dead.” They grow nicely, organically,
but don’t generate spectacular returns, and they take management time
and energy. Those are the kinds of companies they prefer not to deal with,
because it simply doesn’t make sense. They have a fiduciary responsibility to
their limited partners to generate a significant return, so they want to deal with
firms that will tend to do that.
The lesson I learned at Alliant in dealing with venture capitalists was that
they’re quite impatient with a difficult situation. They have to be. They have no
choice.
So it came down to making a decision. What were we going to do with the
company and how were we going to transition it? I was in disagreement. I was
saying, “Let’s take the slower, more methodical approach over time, and we can
work it out.” The other approach was, “No. Let’s change the architecture of
the computer, move into the newer technologies quickly, etc.” You can argue
either one.
So I left the company. I left the board of directors. I was chief executive for
10 years. I basically got fired when it came down to saying, “I can’t live with this

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