Ted Waitt Talks
By Ron Donoho
Ted Waitt dropped out of the University of Iowa in 1984. The Gateway story began two years later, funded by a $10,000 loan guaranteed by his grandmother. Waitt and friend Mike Hammond began selling personal computers over the phone, initially a two-person operation based in a Midwest farmhouse. It was tough work, but Waitt was driven.
Within a decade, Gateway 2000—the 2000 was dropped earlier this year—was doing more than $3 billion in sales a year. Today, Waitt’s personal worth is said to be in the neighborhood of $3.5 billion. He has more than 14,000 employees working around the world. Though there have been quarters in which the company lost money, Gateway has never ended a single fiscal cycle in the red.
The announcement that the publicly traded company would open an administrative office in San Diego made local boosters giddy. Indeed, who wouldn’t want a Fortune 500 company as a corporate neighbor—even one with a funny, spotted-cow logo?
In his first San Diego interview, Waitt talks with San Diego Magazine about the move, perceptions about San Diego and even a little about his closely guarded personal life.
San Diego Magazine: There’s a buzz in San Diego about Gateway and you. Why do you think this city is so excited?
Ted Waitt: I’m not sure. We’ve always been a fairly high-profile company in the way we’ve had an impact on the PC market. I think San Diego is proud to have us here, and we’re happy to be here.
SDM: You recently bought a house on Mount Soledad. Is it more for personal reasons, or is it more business related that the company is setting up an office here?
Waitt: That the company is setting up an office is strictly business related. It was all about growth and growing the business. We needed to attract additional people to our management team. The way the economy is now and the way the employment market is now ... it’s extremely competitive. And San Diego is such a great place to live. I had knowledge of the area because I had a beach house here [in La Jolla] for several years. I knew this was a great place to live. It didn’t have a lot of the negative factors of our business like the [San Francisco] Bay Area does and the Pacific Northwest, or some East Coast areas. Things just came together. One thing that happened was, from my perspective, I ended up screwing up my vacation spot.
SDM: What was the first thing that attracted you, personally, to San Diego? Why did you get that beach house?
Waitt: Well, when we were living in South Dakota we needed a place to get away for weekends. We rented a house out here for a few years—just as a getaway. That was great. And then we weren’t getting out here very much because we were busy after our second child was born. We were going just about everywhere else in the country. We took a lot of four-day weekends to other places, and kept comparing them to San Diego. We just liked this place better than anywhere else.
SDM: Then what was it about the business climate that made you want to set up administrative offices here?
Waitt: I think the good base in technology had a lot to do with it. And [San Diego] isn’t overhyped or overdone like the Bay Area. It’s still on the upward growth curve, rather than at its peak, like some of the other areas are. When you go to the Bay Area, you can attract the people because the people are there. But you can’t keep people. With our company, we’re not building a mercenary management team. We want people who are going to be with us for a long term. San Diego has the ability to keep people, because once people live here, they love it. From a cost perspective, the three areas we were looking at all came out fairly equal.
SDM: What were the other two areas?
Waitt: Chicago and Denver.
SDM: Was there any one person or group of people in San Diego—politicians or friends—who really played a big role in convincing you to move?
Waitt: Mayor [Susan] Golding and some others had something to do with it. We were progressing on a pretty tight timeline. We had Coopers & Lybrand working on the issue and doing the background investigation for us on various things. We were doing it on an unnamed basis because it was really confidential. And we were pretty far down the decision path. But [Golding] did a great job closing the deal.
SDM: How many Gateway people are going to be based in San Diego, and how big are the offices going to be?
Waitt: We’re not sure. North Sioux City has been our base, and it’s going to continue to be a huge base for us. We’ve got a ton of great people there; it’s a great place to live; it’s home for me. Right now we have about 20 people in San Diego. It’s a very small staff. We feel that we’ll probably grow upwards of 100 people pretty quickly and upwards of 200 by the end of next year. But that depends on how our business goes. Our business is changing very rapidly and moving very quickly. Our initial office is about 60,000 square feet. We have another building that we have the ability to expand into.
SDM: But it will be your top executives who’ll be based here?
Waitt: It’s not all of our top executives. It’s what we call our administrative headquarters. Our president and chief operating officer, Jeff Weitzen, and I will maintain offices here and in North Sioux City. Our CIO, CFO, chief administrative officer and top marketing person will be in San Diego. But our top manufacturing person, our top support person, our consumer business, our desktop business and our core business will be in North Sioux City.
SDM: Is it going to be tough for you, going back and forth? How much time do you anticipate spending in one place or the other?
Waitt: I’ll probably spend a third of my time in San Diego, a third there and a third on the road. I travel quite a bit.
SDM: Do you think Gateway’s move to San Diego will send a signal to other companies that they, too, can manufacture somewhere else but set up a headquarters in a place with a great climate and so many things to offer?
Waitt: I think so. I think people will watch and see how well it does for the company. In some cases, though, the real root and foundation of economic development is from companies that are growing and building, rather than just strictly large companies. Again, it’s a balance thing. I don’t think San Diego needs a lot of Fortune 500 companies to have a successful and vibrant economy.
SDM: Have you looked into the possibility of manufacturing plants down in Tijuana or elsewhere across the border?
Waitt: We’ve looked at that from a logistic standpoint, and it’s not something that’s on our plate right now and was not a driving factor in this decision.
SDM: Is it something that could happen down the road?
Waitt: I’m not going to write it off or say that it’s not going to happen, but it’s not on our near-term agenda. We’re not even researching it at this point.
SDM: You were once quoted as saying, “Business is simple. It’s not easy, but it’s simple.” What do you mean by that?
Waitt: One of the things that is often missed is basic common sense. I mean, the basic tendencies of business are fairly simple and straightforward. They’re hard in many cases to execute and they’re hard to stick to because you get distracted with all the noise that goes around in an industry. But the basic idea should be to treat your customers with respect and treat your employees with respect. What comes around goes around. Making a decision is usually common-sense oriented, but that’s not so common at the end of the day. But the basic philosophies of business are not rocket science; executing them is the key challenge, and that’s where it’s simple but not easy all the time.
SDM: In a Time magazine story someone said of you, “Anyone who really knows Ted Waitt knows that there are things more important to him than money...” Do you remember how that quote ended?
SDM: It said “Gateway and its people” are more important than money. That was someone else talking about you. Is that a correct assessment?
Waitt: That’s a fair assessment. If I were going to edit it, I would add “family” as well. But at the end of the day, anyone who has money realizes that it’s one less thing to worry about and that it’s not the most important thing in the world.
SDM: In North Sioux City you were involved with the United Way charity. Any plans for involvement in something like that here?
Waitt: Yes. We had a fairly active private family foundation in South Dakota that’s still operating there. We did a tremendous amount of things for the local community, and we just believe in that. My wife, Joan, and I believe in giving back to the community. So we’ll be fairly active in that regard.
SDM: Do you have an idea how active you’ll be in local society? Are you a party kind of guy? Do you like to go to black-tie galas and things like that?
Waitt: No, not really. I’ll do a few to get to know people in the community. There are a lot more things I’d rather do than go to a black-tie gala fund-raiser, but I haven’t done that in this community, so...
SDM: Are you a political animal?
Waitt: How do you describe a political animal?
SDM: Do you get involved in politics, particular issues, campaign contributions? Are you a Republican or a Democrat?
Waitt: Yes [he laughs]. I’m partial to both parties, and I’m fairly active in terms of political contributions.
SDM: Have you contributed more to Republicans or Democrats?
Waitt: It’s been fairly split. I back people rather than parties. I’m not one way or the other. I’m socially liberal, fiscally conservative.
SDM: Are you registered one way or the other?
Waitt: No, I’m not.
SDM: A lot has been made of the house that you bought on Mount Soledad.
Waitt: Do you have to talk about my house? Can I whine now?
SDM: Yes. But I still have to ask. It was reported you paid $14.4 million for the house. It’s 16,000 square feet, has 15 bathrooms, a pool and tennis courts. Is there anything else you can tell us about it?
Waitt: It’s a nice house.
SDM: Okay, let me ask you a hypothetical question: What would you do if [computer industry rival] Mike Dell decided to set up shop in San Diego? Do you think he would want to build a bigger house or set up the company to a bigger extent here?
Waitt: If Mike Dell did? Well, I really doubt that would happen; I know Mike Dell. It wouldn’t bother me. I’d really wonder what he was doing, but I wouldn’t lose any sleep over it. I can’t speak for what he would do. I don’t care about the size of my house; if he wanted to build a bigger one, I think that would be really funny.
SDM: Let’s talk about San Diego and the match with Gateway. I don’t know that the cow logo fits in with this locale. Any plans of putting little surfer guys on the outside of your shipping boxes?
Waitt: Not at all. Our cow logo is part of our heritage. It’s a symbol to us to not lose sight of our roots, not lose sight of what got us to where we are. We’ll have 100 people out here, and we still have more than 5,000 people in South Dakota. We still consider ourselves a Midwest company, and that’s a value that we take with us wherever we go. We have a tremendous amount of equity in that as well. It talks more about us and the people at Gateway, and a symbol of our values, than anything else.
SDM: Are you going to move your family to San Diego?
Waitt: For privacy reasons, I prefer not to talk about where my family is. For security reasons, I don’t want to talk about where my kids are going to school or any of that kind of stuff. You have to understand, there are a lot of strange people out there. I’m not paranoid about it. We happen to be where we are, and we happen to be a very tight-knit family.
SDM: What kind of hobbies do you have? What do you like to do on a weekend?
Waitt: Mostly I hang out with my kids and just relax. I run a pretty hectic pace during the week. I play a little golf every now and again.
SDM: Are you, by any chance, a surfer?
Waitt: I tried to surf once and it didn’t work out so well for me. I prefer to watch the waves.
SDM: In the time that you have spent in San Diego, are there some specific things you’ve done, restaurants that you have gone to,
a favorite beach, places you might like to shop that you can mention?
Waitt: Nothing I can think of specifically. I’ll catch some of the music—there’s a good music scene here.
SDM: What kind of music do you like?
Waitt: A lot of blues and good rock bands. I’m going to see [alternative rockers] Matchbox 20 tonight [September 1] at the Coors Amphitheatre.
SDM: About your famous ponytail: You’re in your mid-30s; any plans to get rid of it by a particular age?
Waitt: No plans—I’m playing that one by ear. I’ve been close in the barber chair to just telling them to cut it all off. But then it brings up all these issues.
SDM: Is it a trademark for you?
Waitt: I don’t think of it that way. I’m not attached to it like some other people are.